A circular business model articulates the logic of how an organization creates, delivers, and captures value to its broader range of stakeholders while minimizing ecological and social costs.
Linear business models are based on the following logic: take natural resources, make products for consumers that eventually become waste. Circular business models contribute to a circular economy by adhering to the circular economy’s three fundamental principles.
To better understand the relationship between a circular economy (the bigger picture) and circular business models (the smaller picture), it’s helpful to understand how businesses form a value chain. No singular business is the circular economy. That is to say, the circular economy is not one single vertically-integrated business.
Companies are like dots along the circle, forming a network between suppliers and customers called a value chain. This network can either be organized as a straight line between natural resources and landfills (linear economy) or creating a perpetual cycle of value with zero waste (circular economy).
1. Source products and materials from the economy, not from ecological reserves.
2. Create value for customers by adding value to existing products and materials.
3. Create valuable inputs for businesses beyond your customer.
Dive deeper into how we do circular business design.
Circular economy business models come in all shapes and sizes, here are some examples we think are great.
Make a profit, while doing good for society with different business model ideas:
Default pricing: products with a mark-up
Subscription / rental revenue model
Platform-based business models
Intro to the Circular Economy, building better business models, define your strategy.