Circular business opportunities : exploring a win-win-win situation from a design thinking perspective

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Circular business models opportunities: exploring a win-win-win situation from a design thinking perspective

School of Innovation, Design, and Engineering, Mälardalens Högskolan

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Abstract

The transport sector is one of the main contributors to greenhouse gas emissions worldwide. A current solution to this problem is the introduction of electric vehicles into our transport fleets. However, this solution comes with its challenges; for instance, the environmental impact of batteries once they reach their end-of-life. The circular economy is an approach to manage ecological electromobility issues while providing economic and societal wellbeing. A starting point for the implementation of a circular economy can be found in the implementation of circular business models. Because the circular economy requires its actors to think in systems, the collaboration between multiple stakeholders is essential. However, most circular business model frameworks are focusing on the focal firm, which is not sufficient to encourage cross-collaboration between organizations. Therefore, this study outlines the development of a new framework that focuses on a multi-stakeholder perspective. I propose the “framework for multi-stakeholder circular business model innovation” to explore win-win-win scenarios for the management of 2LB. I conducted a study in collaboration with Svealandstrafiken, Mälarenergi and Västerås Stad. The organizations were involved in data collection via a series of interviews and the validation of the framework through a workshop. The proposed framework consists of a process of four phases subdivided into eight steps that meant to address key challenges organizations are facing to achieve circularity. Within these four phases, the framework encourages discussions on shared values and visions between all stakeholders at an early stage. As a consequence, better collaborations and relationships are formed, which positively benefits the development of circular business models.

Keywords: Circular business models, multi-stakeholder perspective, value co-creation, second-life battery, business model innovation.

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Acknowledgments

The journey of writing this thesis has been full of challenges, chaos and long nights. Yet, full of rewarding experiences, new learnings and memorable instants. Throughout the process, I got the chance to meet and collaborate with great and experienced people in the field of Innovation & Design and show my skills and abilities.

I want to acknowledge that this work would not have been possible without the support of several people. Firstly, to my supervisor Koteshwar Chirumalla, for not only guiding me and giving me feedback during the process, but for connecting me with the partner companies. Likewise, I would like to thank Geert Schaap from Svealandstrafiken and Niklas Björkbacka from Mälarenergi, for giving me the time and the will to share your knowledge and opinions. Thank you, Geert, for introducing me to the big project you have been working on the topic of 2nd life batteries and letting me contribute to it. Thank you, Niklas, for the great insights and discussions, and for helping me organizing the workshop for validating my work, I have no idea how I would have gathered all those participants without your support.

Thanks to my family. Mom, dad and lovely brother, this goes for all you. Thank you, for always encouraging me to pursue my dreams and goals, and for giving me the opportunity to study my master in Sweden. I would not be here without your immense support.

Lastly, but not least, I am thankful to all my friends in Mexico, Sweden and Europe for all the motivation and the support that was given. The effort and time spent in this thesis are undoubtedly rewarding.

Lizbeth Guerrero Reyes

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List of Figures

Fig 1. Thesis structure. Own creation.

Fig 2. The value framework (Den Ouden, 2012)

Fig 3. Value creation spheres (Grönroos & Voima, 2013).

Fig 4. The co-creation process of product-service solutions (Rönnberg Sjödin, Parida, & Wincent, 2016).

Fig 5. Challenges in the linear model turned into opportunities for circular economy. Own creation, based from Ellen MacArthur Foundation (2015).

Fig 6. Drivers aims and requirements for circular economy. Own creation.

Fig 7. Overview of the circular economy. Own creation, based on Ellen MacArthur Foundation (2012) principles and Ranta et al. (2019) transitioning elements.

Fig 8. Business model framework. Own creation, based from (Richardson, 2008).

Fig 9. Circular business model framework. Own creation, based from (Oghazi & Mostaghel, 2018; Richardson, 2008).

Fig 10. Design steps in the STOF method (Bouwman H., De Vos H., Haaker T., 2018). Fig 11. Five steps of Guided choices towards circular business models (Joustra D., de

Jong E., Engelaer F., 2013).

Fig 12. The triple layered business model canvas (Joyce & Paquin, 2016). Fig 13. Value mapping tool (N. Bocken, Short, Rana, & Evans, 2013).

Fig 14. The sustainability model strategy roadmap (SSR) (Lüdeke-Freund, Massa, Bocken, Brent, & Musango, 2016).

Fig 15. The business model thinking framework (Lüdeke-Freund et al., 2016).

Fig 16. The ecology of business model experimentation (EBME) (Bocken, Boons, & Baldassarre, 2019).

Fig 17. The design thinking framework for circular business model innovation (CBMI) (Guldmann, Bocken, & Brezet, 2019)

Fig 18. The Cambridge business model innovation process (Geissdoerfer, Savaget, & Evans, 2017).

Fig 19. The flourishing business canvas (Upward, 2017).

Fig 20. The 4I- framework (Frankenberger, Weiblen, Csik, & Gassmann, 2013).

Fig 21. The framework for multi-stakeholder circular business model innovation (CBMI). Own creation

Fig 22. Research through design methodology (Stappers & Giaccardi, 2017). Fig 23. Examples of visual aids for workshop. Own creation

Fig 24. Compilation of photographs from workshop. Own creation

Fig 25. Final version of the framework for Multi-stakeholders CBMI. Own creation Fig 26. Value mapping tool used to map the different forms of value captured and

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List of Tables

Table 1. Levels and perspectives of Value. Adapted from den Ouden (2012)

Table 2. Challenges of circular business model (CBM) (Oghazi & Mostaghel, 2018). Table 3. Definition of the tool, method & framework concepts. Own creation retrieved

from (Pieroni, McAloone, & Pigosso, 2019)

Table 4. Frameworks, methods & tools classification. Own creation Table 5. List of tools and methods selected for analysis. Own creation

Table 6. Identified shared gaps among the analyzed frameworks, tools and methods. Own creation

Table 7. Phases covered from the framework for multi-stakeholder CBMI against existing frameworks tools and methods. Own creation

Table 8. List of participating interviewees. Own creation Table 9. List of participants for the workshop. Own creation

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List of Abbreviations

2LB: Second Life Batteries BM: Business Model

BMI: Business Model Innovation SBM: Sustainable Business Model CBM: Circular Business Model

CBMI: Circular Business Model Innovation SD: Service Dominant

GD: Goods Dominant CE: Circular Economy EV: Electric Vehicle

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1. Introduction

1.1 Background

The challenges companies are facing are becoming more complex day by day. Thus, require a more holistic perspective in order to be addressed and solved in the best possible way. As the primary resources on earth are becoming short in supply (Ellen MacArthur Foundation, 2012; Lacy, Long, & Spindler, 2019), a major task now is to find out a way to overcome the harms of the current production and consumption model. Electromobility (the use of electric cars, e-bikes, e-buses, e-trucks, among others) can develop a distinctive approach and enabler towards the circular economy (CE). Electric vehicle (EV) batteries can be a significant driver to achieve the goals of a more sustainable environment and society. Soon, a large volume of EV batteries will reach their end-of-life cycle. This mainly due to safety regulations, where it is not allowed to use the batteries when they no longer meet the EV performance standards (maintaining 80% of total usable capacity) (Casals, Amante García, & Canal, 2019). However, batteries are still able to perform a second use in less demanding applications, such as stationary energy-storage services. For this matter, an enlargement of battery life is beneficial to reduce its impact regarding the environment (Casals et al., 2019).

The CE refers to a “regenerative and restorative economic system” (Ellen MacArthur Foundation, 2012). It has attracted increased attention as one of the most powerful moves towards sustainability across different industries (Oghazi & Mostaghel, 2018; Ranta, Keränen, & Aarikka-Stenroos, 2019). Switching from a linear model of the economy to a circular one is the incentive for major global companies to innovate and keep up to date in the business. This because of the vast financial, social and environmental benefits the CE model promises to bring. Besides, the CE can enhance higher levels of collaboration among businesses, hence, achieve new ways of creating and delivering value.

Thus, a CE approach offer possibilities to narrow or close loops in the EV battery value chain, instead of becoming waste (Olsson, Fallahi, Schnurr, Diener, & van Loon, 2018). Therefore, for a company to become more sustainable-oriented, various changes have to be taken into account in its production and management lineaments (Lozano, 2018). For instance, shaping and changing the process of value creation is indispensable to approach the current challenges and transformation to the CE (Aminoff, Valkokari, Antikainen, & Kettunen, 2017).

As Chesbrough (2007) states, “innovation must include business models, rather than just technology and R&D”. Business models (BMs) help to get an understanding of how a company does business and how value is created. In addition, BMs help to focus on how

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8 all the elements of the system fit together as a whole (Lozano, 2018). One important element is the stakeholder. For the purpose of this study, a stakeholder is defined as a group of people such as customers, academia, citizens or employees who are involved or directly affected by a project. Therefore, they have responsibilities or interests in its success. “In a CE context, the stakeholders are interdependent but independent” (Bianchini et al., 2019). Therefore, collaboration between multiple stakeholders is of great importance. The CE offers an opportunity for collaboration among businesses in which other societal stakeholders, citizens and the government should also be engaged (Ellen MacArthur Foundation, 2015). Consequently, new BMs that support organizations for the development and implementation of CE in a multi-stakeholder environment is needed. However, current BM frameworks are not comprehensive or are difficult to use. Such frameworks are difficult to read and require extensive guidance (Geissdoerfer, Bocken, & Hultink, 2016). In addition, the barriers for the practical implementation of circular business models (CBMs) within organizations such as; partner restrictions, stakeholders’ relationships or conflict of interests (Bianchini, Rossi, & Pellegrini, 2019) make the transition to circularity more challenging.For this reason, the use of design thinking (DT) can potentially provide an alternative to tackle this complexity for business model innovation (BMI) (Evans et al., 2017; Linder & Williander, 2015). DT is appropriate for dealing with uncertainty in contrast to traditional management (Guldmann, Bocken, & Brezet, 2019) due to the set of tools available. DT can enhance better collaboration, communication of ideas and value mapping among stakeholder for a better business modelling process.

Visualization is a frequently utilized DT tool (Liedtka & Ogilvie, 2011) to organize and communicate ideas. Visualization make use of various elements such as drawings, graphics, illustrations, colors, and more (Täuscher & Abdelkafi, 2017). The use of visualization as a tool for designing new CBM opportunities is beneficial because it supports the cognitive process of the human mind (Täuscher & Abdelkafi, 2017), or in this case, the different stakeholders. Additionally, visualizations are “conducive to organizational communication and collaboration effectiveness” (Täuscher & Abdelkafi, 2017). Hence, visualizations can improve the relationships between the organization and its external stakeholders by creating “a common understanding of mental models, a physical space for experimentation, and a tangible outcome of the collaboration process” (Täuscher & Abdelkafi, 2017).

1.2 Problem Statement

There is a growing interest in the literature regarding the topics of CE & sustainability (Aminoff et al., 2017; Bocken, Schuit, & Kraaijenhagen, 2018; Lewandowski, 2016; Oghazi & Mostaghel, 2018). Society has been wide open aware of the sustainability issues

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9 surrounding their environment while demanding organizations for better products and services without putting in risk the environment.

Exploring and implementing solutions that proclaim a positive impact on the environment has risen among organizations and researchers (Bocken et al., 2018; Martinez-Laserna et al., 2018; Nußholz, 2017). Consequently, the different challenges corporations are facing is affecting the way we see traditional BMs; describing the way a company makes money by delivering products and services to customers (Richardson, 2008). Corporations have started to see a bigger picture by adding sustainability as a dimension into their former business and taking into consideration the entire life cycle of a product or service from extraction to disposal (Lozano, 2018). In addition, they are striving to have better engagement with stakeholders, triggering advantages to customers, the company, the environment and the society.

Stakeholder theory suggests that value creation is a collaborative effort in relationships, where the focal business and the stakeholders are the benefactors (Freudenreich, Lüdeke-Freund, & Schaltegger, 2019). Added to that, den Ouden (2012) discusses that

“societal and environmental challenges need a collaborative effort by large corporations,

non-profit organizations, governments and citizens” in order to create “meaningful

innovation”.

Due to the high complexity that entails dealing with sustainability-related issues such as, energy or resource usage, a multi-stakeholder collaboration and engagement (Freudenreich et al., 2019) in where value can be captured and delivered for every part is required. Thus, meaningful innovation (den Ouden, 2012) can be built on shared values from all the stakeholders and create a more holistic view in which “the value of the whole

is perceived as more than the sum of its parts”. However, due to the broadness of the CE

concept, there is still a gap between the concept and its practical implementation in the industrial sector (Antikainen & Valkokari, 2016; Bianchini et al., 2019; Linder & Williander, 2015). Mainly because of the several barriers and challenges transitioning to circularity brings to companies such as the design and implementation of new BMs that support the CE. Designing a CBM concept is more than generating a new idea; it involves integrating multiple parts into a logical whole. This requires integrative thinking, as the conflicting needs of the different stakeholders will need to be combined into one overall value proposition (den Ouden, 2012). Thus, response and input from multiple stakeholders are essential.

There has been a series of new frameworks, tools and methods to support and enhance businesses in the process for becoming circular (Bocken, Short, Rana, & Evans, 2013; Geissdoerfer et al., 2016; Joyce & Paquin, 2016; Lewandowski, 2016). The BMI field has gained much more attention from practitioners and researchers as a way to elevate performance in businesses. However, the stakeholders perspective BMs has gained little

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10 research attention into how multidirectional value flows between a company and its stakeholders (Aminoff, Valkokari, & Kettunen, 2016; Freudenreich, Lüdeke-Freund, & Schaltegger, 2019)

Currently, there is a lack of a framework for supporting and guiding the organizations to identify the multidirectional value in a CE. The existing view of value creation is seen as a uni-directional stream that divides stakeholders into those who receive value and those who create it (Freudenreich et al., 2019). Consequently, if value creation is not seen as a mutual benefit for all parties, stakeholders will not be interested of being part of the CE. The ideal business is the one that is able to create value and synergies within the economic, social and ecological matter, not only for themselves and the customers, but for all stakeholders (Tyl, Vallet, Bocken, & Real, 2015). Such synergies can be considered “win-win-win” as they create value for all stakeholders (Elkington, 1994), in contrast to the traditional “win-win” interactions. For this reason, there is a need to keep investigating BM tools and frameworks from a multidirectional value creation perspective, in where organizations can clearly see the opportunities and benefits of circularity through visualization, and in consequence reduce the cultural and institutional challenges for circular business modelling.

Since there is a lack of focus on multidirectional value in the current literature, this thesis addresses this problem by using DT and BMI tools.

1.3 Purpose & Research Question

The research performed for this thesis explores CBMs in the electric bus batteries sector and the opportunities that can be generated for the different stakeholders involved in the research by looking at it from a design thinking perspective. The purposeof the thesis is to identify the multidirectional value among stakeholders in the value creation process and be able to visualize and describe a CBM opportunity in which the win-win-win situation of all actors is evident. Therefore, the following research question is formulated as:

-How can a multi-stakeholder CBM framework be developed for the electric bus battery value chain to assist in the realization and visualization of win-win-win

situations?

For this reason, this research will try to map the multidirectional forms of value created among the stakeholders in the electric bus batteries sector. To merge the gap in communication between stakeholders by the development of visual aids to show how value flows among them and why it is a good business opportunity. By making use of a design thinking perspective, the ways of visualizing the win-win-win situation and the value creation among stakeholders can be clearly described.

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11 Additionally, to support the development of answering the research question, three sub-questions are formulated as:

SQ1-Why are circular business models needed?

SQ2-What are the opportunities of circular economy for this case?

SQ3-What are the challenges & barriers for the implementation of 2nd_life batteries?

1.4 Research delimitation & Scope

The research is conducted through a specific case study, including three well-established organizations, Svealandstrafiken, Mälarenergi & Västerås Stad. It will give a perspective on challenges and opportunities for CBM from each organization. Despite the nature of the research of having a multi-stakeholder perspective, a research limitation will be not to consider external effects outside these three organizations, such as other stakeholders’ participants in the value chain, this due to the time frame. However, the participation of these three organizations can still bring interesting insights in the given way.

1.5 The Context of the Study

This study is conducted in collaboration with the transport company Svealandstrafiken in Västerås, Sweden. The firm is currently in the transition from biogas driven buses to electric driven buses. To this date, there is one existing electric bus which battery is about to reach its life expectancy. Therefore, there has been an increased interest in the second life batteries of the buses and the benefits that this can bring to the firm in the long term, for example, being able to produce and store their electricity. The firm aims to be able to reuse the batteries of their electric buses once they all accomplish their lifecycle. Hence, be more sustainable not only by prolonging the life of the batteries for using them a second time but for being able to store and produce their source of electricity. For this matter, several numbers of activities are needed to be taken into consideration, such as preparing the area where the buses are going to be charged, testing batteries, provide a suitable power grid for charging the buses, establish new partnerships for the development of the project, among others. Therefore, the need for exploring circular business models in the electric bus batteries in order to explore all possible opportunities around this field. The need for collaboration and co-creation is needed to achieve the ultimate goal of the firm, which is to be more sustainable by repurposing second life batteries. Thus, the participation of other stakeholders is fundamental.

The use case is explorative by nature, and the objective is to explore the possibilities for value creation and collaboration among stakeholders.

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12 1.6 Thesis Outline

This thesis investigates the extent to which methods and tool for design thinking can be used to improve the design of circular business models in the bus battery field.

The research starts with an introductory chapter, including the background of the topic, problem area, purpose and research question, where the context of the study is situated, and its limitations are presented.

Chapter two aims to give a deep understanding of three central concepts surrounding the research topic; Second use of Electric Vehicle Batteries (EV Batteries), Value Co-Creation and Circular Business Models (CBM). In addition, the concept of Design Thinking is presented. Finally, different tools and frameworks for BMI and CBMs are introduced. Chapter three introduces the development of a new circular business model framework. The framework is constructed on the analysis and identification of shared gaps in the described tools and methods for BMI and CBMI.

The methodology used for this research is discussed in chapter four. The thesis is a qualitative study based on research through design and pragmatism taking as inspiration the Designing for Growth-method by Liedtka & Ogilvie (2011). Data is collected through a literature review, interviews from three different companies involved in the field and through feedback from a workshop with the participants.

The empirical results are described in chapter five. In this section, the three sub-questions mentioned in Fig1 are answered. Additionally, the perspectives and experiences of the developed framework are explained.

The discussion section is described in the sixth chapter. It is lead around the empirical findings and the theoretical background. Theoretical and practical implications of the study are also highlighted.

The seventh and final chapter presents the concluding remarks of the work. In addition, limitations of the study and future work are highlighted.

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13 Fig1. Thesis structure. Own creation

1.7 Relevance of the Study

This study contributes primarily to the innovation management field, specifically to the transition towards the circular economy. In addition, it contributes to the innovation and product realization (IPR) research field, mainly to the value-driven innovation & foresight group, since it focuses on how innovation is expressed from a value-creating perspective through innovative tools and the development of future business models (IPR, 2020).

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2. Theoretical background

2.1 EV Batteries

The transport sector is one of the main contributors to greenhouse gas emissions worldwide. It is accountable for 24% of direct CO2 emissions from fuel combustion (IEA, 2020). The use of electric vehicles is a promising solution to decrease such emissions. Nevertheless, a vast volume of EV batteries is reaching their end-of-life cycle, mainly due to safety regulations. However, these batteries maintain around 80% of total usable capacity for other purposes (Casals et al., 2019). These bring up the question of what the possibilities and opportunities for sustainable management of the end-of-life batteries are. Recovering value from these batteries for different purposes could potentially be a mean for the transition towards a more sustainable transport sector (Reinhardt, Domingo, Garcia, & Christodoulou, 2017).

Among several alternatives considered, battery second life has been considered as a potential solution to generate new revenue streams and business opportunities (Martinez-Laserna et al., 2018), as it extends the battery lifespan value (Reinhardt et al., 2017). The concept of giving a second life to electric vehicle batteries entails the reuse of batteries that do not meet any longer the standards of automotive applications but can still be used on less-demanding applications (Martinez-Laserna et al., 2018). Batteries are still able to perform a second use in less demanding applications, for instance as stationary energy-storage services. Thus, being able to become part of a circular economy instead of becoming waste (Olsson et al., 2018). Using second life batteries can help to achieve the principles of the CE approach by optimizing resources and minimizing waste (Reinhardt et al., 2017) besides, offer a cost-effective solution to current expensive costs of energy storage systems (Reinhardt et al., 2017).

Allowing a shift towards a circular economy for EV batteries in secondary applications can possibly avoid the manufacture of new batteries or the use of contaminating energy solutions such as fossil fuels (Martinez-Laserna et al., 2018). Energy storage systems will play an important role in the electricity market. Taking into consideration that nowadays, batteries remain too expensive to deliver such services with economic profit (Casals et al., 2019).

On the other hand, EV batteries are also seen as “greenwashing” because a vast majority of the vehicles are still being charged with non-renewable electricity (Reinhardt et al., 2017). The environmental window to advance towards a cleaner world can be successful if the electricity is generated with friendly environmental technologies (Casals et al., 2019). In consequence, EV batteries have recently attracted increased attention from the energy markets, as they can deliver valuable services such as peak load shifting combined

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15 with renewable energies. (Reinhardt et al., 2017). Power generation is driven by power demand. If batteries are used to reduce the instant power demand, less power generation infrastructure should be required. Therefore, if the energy is stored during low demand periods (usually at night), and consumed during high demand period (during the day), the emissions from electricity generation could decrease, contributing to the reduction of energy from other pollutant sources of power (Casals et al., 2019).

According to Reinhardt et al., (2017), there are two significant business opportunities for second-life batteries; “to create groups of battery packs for larger commercial/industrial applications or for smaller applications such as residential related or commercial offices and buildings”. In addition, Casals et al., (2019), argues that the possible energy business scenarios where 2LB may be adequate are: transmission and time of use, deferral, area regulation and support to renewable energy generation. Besides, 2LB may provide peak shaving and energy quality services (Casals et al., 2019).

2LB may be able to deliver the same purpose as newly fabricated batteries in energy storage applications but at noticeably lower costs. Various publications in the literature coincide that the use of 2LB energy storage systems joint with renewable energy resources can provide substantial environmental benefits for diverse applications (Martinez-Laserna et al., 2018). Energy storage devices are foreseen as a solution to stock energy during overproduction times and to deliver it when energy production is under the load demand (Casals et al., 2019). Simultaneously, the use of second-life batteries can accelerate the transition towards improved integration of irregular renewable energy. (Reinhardt et al., 2017).

A significant challenge towards the implementation of 2LB is always the question of how long will these batteries last? It is difficult to accurately assess the periods and effectiveness of the battery in other applications without a precise battery lifespan prediction (Martinez-Laserna et al., 2018). Therefore, the ageing performance of the batteries remains ambiguous. The reliability on the batteries for any technical or economic aspect strongly depend on the battery degradation performance. (Martinez-Laserna et al., 2018) In addition, the constant price reductions of newly fabricated batteries and the advance of technologies entering the market will lead to a drop in the prices of new energy storage systems. Thus, representing a strong competition to the 2LB market (Reinhardt et al., 2017).

Batteries second use market is not only dependent on the battery sector and the automotive industry. The ageing of the first life of the battery will continue to determine ageing performance during the second life. It remains hard to predict how climatologic conditions or driving habits may influence the performance of 2LB (Canals Casals, Amante

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16 García, & Cremades, 2017). Data is still required to adopt any model as a meaningful approach for 2LB (Canals Casals, Amante García, & Cremades, 2017)

Another challenge for 2LB is the collection, refurbishment and transportations of the batteries. Thus, giving a negative influence on such positive environmental improvement. The outcome of the roundtrip and the need for battery replacements would reduce the environmental benefits that could be accomplished from such renewable energy and storage system scenario. (Martinez-Laserna et al., 2018)

From a BM perspective, the use of 2LB interrelated with different industries as a mature BM is still distant (Martinez-Laserna et al., 2018; Reinhardt, et al., 2017) The central elements of the BM remain unclear such as the value proposition and roles within the stakeholders (Martinez-Laserna et al., 2018; Reinhardt et al., 2017). Therefore, through BMI, modifying or changing elements of the company’s current BM (Chesbrough, 2007; Nußholz, 2017), new sources of value and reconfigurations of the network of stakeholders can be developed around the 2LB field. Leading firms to no longer act separately but in close collaboration, while having a positive impact on the environment and society.

One of the various examples of implemented energy storage systems made with 2LB is the Xstorage, in the Amsterdam Arena. This system is made in collaboration with a car manufacturer, the arena and a power company. It facilitates energy management and backup power services to the arena. Moreover, it allows energy power to the surrounding neighbourhood while providing other services, such as load following or frequency regulation (Martinez-Laserna et al., 2018)

Inter-industry collaboration, as part of BMI, is fundamental to create additional sources of value. Multi-stakeholder perspectives and how companies interact to use 2LB in BMI efficiently can serve as a trigger for achieving sustainable competitive advantage (Reinhardt et al., 2017).

2.2 Value Co-Creation

In today’s dynamic and complex environment, collaborative effort in its various forms such as cooperatives, joint ventures, strategic alliances, public-private partnerships to mention some are becoming highly important (Yaqub, Srećković, Cliquet, Hendrikse, & Windsperger, 2020) to transform and enhance innovative solutions for society. Driven by unpredictable environments, firms are converting their strategies and moving to collaborators and value co-creators as a way of reducing or eliminating uncertainty (Yaqub, Srećković, Cliquet, Hendrikse, & Windsperger, 2020). Co-creation in the words of

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17 Prahalad & Ramaswamy (2004) is the joint agreement of customer, provider and other stakeholders to mutually create an entity.

These reconfiguration of strategies, value chains and BMs are actively influencing business network structures and creating new networks and forms of value creation (Yaqub et al., 2020). Such collaborative networked constructions pursue to generate greater value through dynamic exchanges between enterprises and their suppliers, strategic partners, customers, as well as other stakeholders (Yaqub et al., 2020). Collaboration and integration of mutual and opposite ideas, from different social and economic disciplines, is required to grow the understanding of value and value creation (Vargo, Maglio, & Akaka, 2008).

The concept of “value”, according to den Ouden (2012), can be perceived at four different levels and four different perspectives (Table1).

Table1: Levels and perspectives of Value, adapted from den Ouden (2012) with examples derived from the author.

Levels of Value Perspectives of Value Examples of levels & perspectives of value User + Economy Value for money

Organization + Psychology Employee engagement

Ecosystem + Sociology Reciprocal relationships

Society + Ecology Electric buses for noise reduction

She proposes a framework in where the four levels and perspectives are integrated (Fig2) in concentric circles. Such framework is meant to position and evaluate innovations among the different categories of value. This for the purpose of creating “meaningful innovations” in where value is created for people, organizations and society (den Ouden, 2012).

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18 From an economic perspective (den Ouden, 2012), we can see two general significances of value; value in exchange and value in use (Vargo et al., 2008). Value in exchange is produced by the firm and distributed in a market, mostly through the sale of goods and money (Vargo et al., 2008). This traditional view is usually referred to as goods dominant (GD) logic. In this viewpoint, the roles of producers and consumers are evident, and the value creation is often held by the firm (Vargo et al., 2008). On the other hand, the value in use is find outlined by how useful a product or service is to a given person or situation (den Ouden, 2012). This view is often linked with the service-dominant (SD) logic (Vargo et al., 2008). In SD logic, the role of producer and consumer are not clearly delineated. Therefore, it can be said that value is co-created by numerous interactions between provider and beneficiary throughout the integration of resources and application of skills (Vargo et al., 2008). Value is co-created by these shared and reciprocal constructive relationships (Vargo et al., 2008).

Ramírez and García-Peñalvo (2018) described that value co-creation is an “open innovation” that incorporates knowledge, information and skills in different organizational environments. Hence, it promotes multi-agent participation, which is an important base for organizations to obtain competitive advantages. From a SD logic, knowledge and skills are resources for competitive advantage. Hence, value co-creation emphasizes in the combination of collaboration and adaptation of firms, customers, stakeholders, government agencies, among others, (Vargo et al., 2008) to build a favourable environment to all parties.

The co-creation of value, however, can only happen when all parties (customer and provider) interact in the value creation process (Lenka, Parida, & Wincet, 2016). Grönroos & Voima (2013) suggested a model of the value creation process (Fig3). In this model, the potential value emerges from the provider sphere. On the other hand, the value creation appears in the customer sphere, when the service/product is used. However, it is during the joint sphere, where value co-creation takes place. Thus, followed from a set of direct and indirect interactions where the customer and provider engage for creating such collective value.

Value creation generally requires resources from a cross-party system, often involving a firm, customers, suppliers, employees and other network partners. When value creation is seen from a service systems perspective, all participants contribute to the creation of value for themselves and others. (Vargo et al., 2008)

In the words of Ramaswamy (2011), value co-creation is “the process by which mutual value is expanded together”. The co-creation process then requires a variety of interactive environments among different entities. In consequence,value co-creation results from the engagement and contribution of these entities (Sheth, 2020), as new knowledge is generated, and exchange happens within the system (Vargo et al., 2008)

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19 Fig3: Value creation spheres (Grönroos & Voima, 2013)

Value co-creation is frequently used as a driver for business innovation and the development of new products and services (Alves, Fernandes, & Raposo, 2016). Such collaboration between organizations is implemented to create more value for both parties, rather than one providing its services unilaterally to the other (Watanabe, 2020). Various advantages can be pointed out when value co-creation is achieved from quality improvement and cost reduction for the organizations to minimizing the carbon footprint and improve the lives of the society. In other words, value co-creation is about a win-win-win for all entities. The central aim of value co-creation is to enhance the wellbeing of the consumers and their ecosystems, such as the society and the environment (Sheth, 2020). Nevertheless, value co-creation is not a linear process (Grönroos & Voima, 2013) and brings many challenges and uncertainties to the organizations. In order to address such ambiguities and challenges, Rönnberg Sjödin, Parida, & Wincent (2016) outline three phases of the co-creation process: requirement definition, customization & integration and implementation & operation (Fig4). In addition, they highlight activities such as, mapping the need of every stakeholder, that should be considered to facilitate interaction in the value co-creation process (Rönnberg Sjödin et al., 2016).

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20 Fig4: The co-creation process of product-service solutions adapted from (Rönnberg Sjödin et al., 2016).

Essentially, value co-creation denotes that all parties take an active role in creating value through numerous interactions (Rönnberg Sjödin et al., 2016). Grönroos & Voima (2013) argued that the quality of such interactions in the process is a key factor to value co-creation. The relationship between the enrolled members must be viewed more dynamic from all the sides. In turn, the roles need to be redefined to reduce friction between parties in the co-creation process.

Rönnberg Sjödin, Parida, & Wincent (2016) point out three particular types of barriers to co-creating value across the value co-creation process; role clarification, role definition and role adaption. It is due to the fact that co-creation of value happens from a set of interactions, where different roles are played over the whole process that actors in these relationships struggle with setting expectations, defining responsibilities and aligning their role around the different phases of the value co-creation process (Rönnberg Sjödin et al., 2016).

In such a process, it is indispensable for organizations to prioritize targeted subjects. (Watanabe, 2020). Essentially, the SD logic, where the roles of producers and customer are less definite (Vargo et al., 2008), hence, more ambiguous, supposes a significant challenge in the roles of the different actors. When transitioning to value co-creation, irregularities regarding what to expect or how to behave may output less performance and effectiveness in businesses (Rönnberg Sjödin et al., 2016). New role expectations for each actor must be discussed and clarified in order to reduce uncertainty (Rönnberg Sjödin et al., 2016). The actors will be compulsorily required to operate outside their personal and technological comfort zones, share delicate information, and participate in joint learning to evolve the relationship and understanding of the co-creation process (Rönnberg Sjödin et al., 2016).

Requirement definition

•Mapping needs that are not

clearly articulated. •Create a joint understanding of the expectations and roles. •Understanding eachothers businesses. Customization & integration •Jointly design and map out technological and operational

processes and roles for selected

products and services solutions. Implemention & operation •Delivering and installing the solutions. •Discovering new opportunities for co-creation.

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21 The challenges are mostly related to conceptualizing the key activities associated with implementing and operating the product–service solution (a hybrid approach between SD & GD) due to the complexity of the environment itself (Rönnberg Sjödin et al., 2016). Consequently, clarifying roles and responsibilities through joint process maps, shared meeting protocols, among others forms of operational frameworks and work structures can help to dissolve such ambiguity and build better interactive relationships over time (Rönnberg Sjödin et al., 2016).

Understanding these dynamics in the value co-creation process is essential for achieving circularity between businesses.Ultimately, industry involvement and cross-government department collaboration are fundamental for enhancing circularity. Involving various stakeholders throughout the process of value co-creation towards circularity is significant for identifying CE opportunities and barriers in a specific sector, create an initial alignment on a shared direction between the organizations (Ellen MacArthur Foundation, 2015) and, exhibit the value for the network of participating organizations (den Ouden, 2012).

2.3 The Circular Economy Concept

There has been an increasing interest in the recent years among many global markets and companies towards shifting from the “traditional” linear model of the economy to a circular one (Lewandowski, 2016b; Ranta, Keränen, & Aarikka-Stenroos, 2019). One of the main reasons for such attention and popularity is due to the high economic and environmental benefits the circular economy (CE) promises to bring, such as waste generation reduction, resource efficiency, reduced raw material extraction, carbon neutrality (Nußholz, 2017; Ranta et al., 2019). Switching to a circular economy is a promising strategy for managing the present environmental issues while providing economic and societal wellbeing. (Bianchini, Rossi, & Pellegrini, 2019).

A linear model that follows a “take-make-dispose” logic relies on infinite access to different resources and energy for producing goods (Ellen MacArthur Foundation, 2012). Such linear industrial economy has nowadays been challenged, and the various organizations have been adapting themselves and are steering away from that model towards other practices. Fig 5 describes some of the challenges that the current linear model of the economy is facing. Additionally, a series of opportunities can be seen for transitioning to a circular model. Hence, the CE encourages organizations to innovate the way they do business towards a closed-loop resource flows (Nußholz, 2017) and creating long-lasting economic, environmental, and social outcomes (Ranta et al., 2019).

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22 Fig5: Challenges in the linear model turned into opportunities for circular economy. Own creation, based

from Ellen MacArthur Foundation (2015)

The concept of CE has existed for a long time and is a concept with various understandings among scholars and practitioners. Therefore, there is no such thing as an exact definition (Kirchherr, Reike, & Hekkert, 2017). Nevertheless, there are similar opinions about what drives the transition towards a CE, as well as its aims and what is required to be addressed to accomplish such transition (Fig6)

Fig6: Drivers, aims and requirements for Circular Economy. Own creation

The CE refers to a “regenerative and restorative economic system” (Ellen MacArthur Foundation, 2012) largely driven by the ongoing innovation and sustainability transition across different industries and economies (Oghazi & Mostaghel, 2018; Ranta et al., 2019). In general, the CE aims to create value by providing new possibilities for economic development through improving the use of finite resources and reducing waste (Oghazi & Mostaghel, 2018; Ranta et al., 2019). Additionally, the central goal of CE is to innovate ways to keep producing and delivering products and materials with the same quality and value by reducing the environmental impact (Oghazi & Mostaghel, 2018; Ranta et al., 2019) and reusing resources.

In the CE, value is meant to be built on novel innovations that guarantee multiple benefits to wider societal stakeholders (Ranta et al., 2019). Therefore, understanding the business

CHALLENGES IN THE LINEAR MODEL

• Natural system degradation • Higher prices for raw materials • Use of non-renewable resources

as supplier

OPPORTUNITIES TO BECOME CIRCULAR

• Lower costs of renewable energy • Advances in the technology • Consumer awareness and

acceptance to new BM Drivers of CE • Sustainability • Economic Development • Innovation • Linear economy challenges Aims of CE • Economic growth • Optimize resources • Reduce waste • Value creation Requirements for CE

• Aligments and participation of all actors

• Thinking in systems • Collaboration

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23 model innovation role is fundamental for firms that are transitioning to the CE (Bocken et al., 2018; Ranta et al., 2019). There is a need for innovating and redesigning business models. Circular business can take advantage of stakeholders’ collaboration to maximize the value of products and materials while contributing to minimizing the decadence of natural resources (Howard, M. Webster K. 2018).

According to Ranta et al. (2019), the transition to the CE demand attention in four important elements: Product design and materials, new business models, global reverse network and enabling conditions. This transition not only entails total changes in the way companies generate and deliver value in their products, technologies and processes but also the development of new business models (Bianchini et al., 2019). Thus, comprehensive knowledge on designing CBM is fundamental to encourage the implementation of the CE (Lewandowski, 2016). Additionally, the Ellen MacArthur Foundation (2012) entails that the CE is built on five principles:

1. Design out waste

2. Build resilience through diversity 3. Rely on energy from renewable sources 4. Think in systems

5. Waste is food

Understanding and conceptualizing the CE entails a wide scope. This is mainly because its principle of “thinking in systems”, which aims to address all aspects of the CE: legislations, the environment, technology, the user, economy and business models (Mentik, 2014). Built mainly upon the principles of the Ellen MacArthur foundation and including elements for transitioning to a CE provided by Ranta et al. (2019), the following visualization (Fig7) creates a better understanding of the CE concept. From the figure, we can derive that the CE is primarily about profitably optimizing resources. In addition, it is noticeable that the basis for enhancing actions, such as collaboration, finding new business opportunities, and building resilience is the principle of “thinking in systems”. However, it does not automatically mean that the other principles and elements are insignificant or less valuable. Rather than aiming for a business to transition to the CE, it is better to start by understanding “how parts influence one another within a whole, and the relationship of the whole to the part” (Ellen MacArthur Foundation, 2012).

Taking into consideration the broadness and complexity of the CE concept previously mentioned, the analysis is being limited to a business perspective. Specifically, the design of circular business models.

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24 Fig7. Overview of the circular economy based on Ellen MacArthur Foundation (2012) principles and Ranta

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25 2.4 From Business Models to Circular Business Models.

For a better understanding of the Circular Business Model (CBM), it is important first to describe what a business model (BM) is and why there is a transition from “traditional/linear BM” towards a more up to date CBM.

2.4.1 Business Models (BM)

Different points of view can be seen throughout the literature on what a business model exactly is (Beattie & Smith, 2013; Chesbrough, 2007; Magretta, 2002; Osterwalder & Pigneur, 2010; Richardson, 2008; Zott & Amit, 2010). While some authors define the term as the way a company does business, others argue that it is more a conceptualization of a company’s strategy of doing business. Nevertheless, there is a joint agreement on the literature that BM is developed for creating value (Freudenreich et al., 2019; Geissdoerfer, Savaget, & Evans, 2017). In addition to this, some authors refer to BM as a way to support and communicate a company strategy to different stakeholders (Frank Boons & Lüdeke-Freund, 2012).

A business model in the words of Richardson (2008) is “the conceptual and architectural implementation of a business strategy and the foundation for the implementation of

business processes”. He also proposes a framework (Fig8) for BMs centred on the concept

of value, split into three dimensions; value proposition, value creation and value capture & delivery (Richardson, 2008).

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26 Richardson’s definition does not vary significantly from the one given by Osterwalder & Pigneur (2010) “the rationale of how an organization creates, delivers and captures

value”. More specifically, Osterwalder & Pigneur (2010) describe a business model as a

series of elements: the value proposition, customer segments, customer relationships, activities, resources, partners, distribution channels, cost structure, and model.

A business model can be used as a way to understand and visualize how main components and functions are integrated to deliver value. Most importantly, how these parts are interconnected within the organization and stakeholders’ networks.

It can be stated that a BM portrays a company’s value creation strategy (Salvador, Barros, Luz, Piekarski, & de Francisco, 2020). In other words, a BM describes how the company will create value for different internal and external stakeholders and what will this value bring back to the company (Lozano, 2018).

2.4.2 Business Model Innovation

BMs are dynamic and develop over time resultant from the constant pressure to adapt the business itself and other drivers from the outside environment (Linder & Cantrell, 2001) such as the current focus on sustainability and circular economy. From a strategic point of view, companies already understand the need for business model innovation (BMI) to ensure survival and growth as they deal with an external threat of continual innovation (Bocken et al., 2018).

Exploring and innovating BMs have been a focal point in research in the recent years for achieving novelty by many authors (Richardson, 2008; Teece, 2010). The literature usually frames BMI in a span of changing the value proposition for the customer. Yet, it is more than just changing the offering for the customer. According to Amit & Zott (2012) BMI comprises changing ‘the way of doing business’, rather than ‘what you do’, hence, go beyond products and services.

BMI is about having a different approach to create, capture and deliver value. It is concerned with developing novel configurations of the business model by changing one or more components of it (Chesbrough, 2010; Frankenberger, Weiblen, Csik, & Gassmann, 2013). BMI embodies shifting the focus away from developing individual configurations towards creating new systems.

In addition, Sommer (2012) highlights that BMI involves more than the firms’ perspective. It implicates a broader set of stakeholders, hence, a broader value-network focus for being able to transform the business model. In the same way, Beattie & Smith (2013) and (Zott & Amit, 2010) add that BMI act beyond the entity of the firm, reaching its customers and shareholders, without taking aside the value captured for key stakeholders (e.g.

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27 suppliers). Therefore, for BMI to be successful, the value can no longer be created by firms performing separately, but by them collaborating with other parties external to the firm (Beattie & Smith, 2013) Nevertheless, to the date, firms are still facing significant challenges and barriers towards working with change and transformation of their business (Olsson, Fallahi, Schnurr, Diener, & van Loon, 2018). Since BMI involves modifications in one or multiple BM components, firms view the process of BMI as complex and uncertain (Olsson et al., 2018), and rather not take that approach for fear of failure.

However, BMI may be a key point in changing businesses towards more sustainable development (Evans et al., 2017; Geissdoerfer et al., 2017; Romero & Molina, 2011). It can be said that the focus now is on transitioning from linear business models (LBM) or “the old way of doing things” to enable circular strategies and in consequence create greater environmental and social value while delivering economic sustainability.

2.4.3 Circular Business Models

The circular business model (CBM) is an emerging field of research (Guldmann, Bocken, & Brezet, 2019) as a consequence of the mission to achieve sustainability and reduce the carbon print. In addition, the high demands of clients, users and other stakeholders stress the need for innovation in business models for products and services to satisfy such requests.

Guldmann et al., (2019) define a CBM as follows: “In a circular business model, the

business model elements are joined together to provide a compelling value proposition to customers, generate economic profit to the value network, and minimize environmental impacts by means of slowing, intensifying, dematerializing, closing and narrowing resource loops”. Taking into consideration such definition and Richardson (2008) BM

framework, we can depict that CBMs are still founded by the creation, capture and proposition of value (Fig9). Nevertheless, CBMs incorporates co-creating value propositions and integrating better relationships to improve the quality of the customers by including the environment and society as equal to all the other stakeholders’ interests (Oghazi & Mostaghel, 2018)

As the CBM follows the principles of the CE, new value networks among companies and other stakeholders have to be developed to create and deliver novel products and services that entails the new forms of company collaboration and customer interaction (Guldmann et al., 2019). Hence, CBM innovations are by nature networked: they demand collaboration, communication, and coordination within complex systems of interdependent but independent stakeholders (Bocken et al., 2018).

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28 Fig9: Circular Business Model Framework. Own creation, based from (Oghazi & Mostaghel, 2018;

Richardson, 2008)

Organizations can take diverse approaches to develop their CBM (Guldmann et al., 2019). Bocken, et al., (2016), propose that such approaches for CBMs can be categorized into strategies to: slow loops (prolonging the life of the product) close loops (recycling of used products and materials back into the economy at the end of their functional life) and narrow resource loops (designing products, services and systems for resource efficiency) (Bocken et al., 2016; Lüdeke-Freund et al., 2018)

There are various benefits for adopting CBMs into organizations. Such is not only limited to environmental impact but an improved relationship of economic, environmental and social value creation (Guldmann et al., 2019; Oghazi & Mostaghel, 2018). CBM can help to create value from waste (Ellen MacArthur Foundation, 2012), optimize the use of a product and develop novel means for value capture (Salvador et al., 2020). Thus, by generating profits from a frequent course of reused materials and products over time, by capitalizing on the value enclosed in the products or services (Guldmann et al., 2019) and by offering the same quality in services and products to the customers.

One of the main characteristics of CBMs is the emphasis on collaboration, as firms do not create value autonomously (Oghazi & Mostaghel, 2018) but jointly with other partners. Such a tie in the relationship among suppliers, partners and customers, requires greater

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29 interaction and mutual trust (Oghazi & Mostaghel, 2018). Hence, transitioning to a CBM requires multiple strategies, methods and tools to go hand in hand.

Nevertheless, innovating towards CBMs can lead to many uncertainties, mainly because of the collaborative nature of such innovation (Bocken et al., 2018). The study realized by Oghazi & Mostaghel (2018) identified value capture and revenue models as a primary challenge for implementing CBMs. Secondly, the value creation and relationship with different partners and, thirdly, the design of new sustainable offerings or best known as the value proposition. In addition, they provide a more extensive list of challenges based on a literature review for barriers to CBMs (Table2).

Table2: Challenges of circular business model (CBM) (Oghazi & Mostaghel, 2018)

The ambitions of reusing, recycling, and reducing materials and products are not achievable without internal and external collaboration (Oghazi & Mostaghel, 2018). Therefore, the importance of co-creation in transitioning to CBMI.

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30 2.5 Design Thinking

Design thinking (DT) can be understood as a method to develop innovative solutions for complex problems (Brown, 2008). This approach to innovation has gotten increasing attention in recent years (Carlgren, Elmquist, & Rauth, 2016; Dorst, 2011; Geissdoerfer, Bocken, & Hultink, 2016; Guldmann et al., 2019). Also, it has spread into other fields outside the design one, such as innovation management, development of strategies, business models, and organizational structures (Seidel & Fixson, 2013).

DT in the words of Guldmann et al., (2019) can serve as an innovation management tool, to guide the process of designing new CBMs by integrating “conflicting viewpoints on

what is desirable in a given (business model) design”. This capacity of DT to be able to

integrate multiple viewpoints is significant in the CBMI context, in which various actors are crucial to create systems innovation (Antikainen & Valkokari, 2016; Geissdoerfer et al., 2017). Liedtka (2015) portrays the innovation process as: “iterative cycles of

exploration... followed by the generation of multiple ideas and concepts and then prototyping and experimentation”. Therefore, it can be said that the DT process is

iterative or sometimes chaotic by nature (Brown, 2008).

Seidel & Fixson (2013) describe design thinking as “the application of design methods by multidisciplinary teams to a broad range of innovation challenges”. For instance, role-playing activities, mind-mapping, and visual and narrative visualizations can be applied in all stages of the process for enhancing innovation. DT has various qualities that can benefit the business modelling processes. In particular, the main strength can be found in the ability to communicate ideas and developing a shared understanding of the created value propositions in multidisciplinary teams (Geissdoerfer et al., 2016). However, taking a DT approach to innovation is not so much about the specific tools utilized in the innovation process, but about applying the relevant ones in the specific context, that support an iterative movement between the exploratory, the idea generation, and the testing areas, and that support collaboration and a learning process (Guldmann et al., 2019).

2.6 Existing methods and tools for Circular Business Model Innovation

Organizations recognize that meeting their sustainability goals does not only require new technologies but innovation on a BM level (Geissdoerfer et al., 2017). The challenges for implementing a CE described in section 2.4 and Table 2 are some of the obstacles organizations frequently encounter during a CBMI process. Throughout the BM literature (Pieroni et al., 2019), there can be found several methods, tools and frameworks for BMI in general or CBMI, for instance, the Triple-Layered Business Model Canvas (Joyce & Paquin, 2016), or the Value Mapping Tool (Bocken, Rana, & Short, 2015). Such tools, methods and frameworks offer companies insights or guidance to facilitate the design of

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31 BMs and assist innovative attempts. In this section, various existing tools methods and frameworks for BMI or CBMI are described (Table 5). Table 3 entails the definition of the concepts, retrieved from the systematization of Pieroni et al., (2019). The selection criteria of such tools and methods are further described in section 3.1.

Table3. Definition of the tool, method & framework concepts. Own creation retrieved from (Pieroni et al., 2019)

Definition Example

Tool Instruments supporting the execution of determined BMI

activities.

Canvas, game, cards

Method Procedures guiding on how to perform BMI Process mode,

guidelines

Framework Theoretical approaches promoting common understanding

or conceptual alignment about BMI

Diagrams, requirements, ontologies

2.6.1 STOF Method

The STOF method by Bouwman et al., (2008) is a business model framework designed around four business model domains (service, technology, organization, and finance), initially developed for mobile service design (IT) solutions. The STOF method consists of four steps and focused mostly on the early stages of innovations. The steps include a quick scan (outlining the value proposition from the point of view of the customers and/or end-users), an evaluation with critical success factors (CSF) (creating value for end-users and service providers), refinement of the BM with critical design issues (CDI) (redesigning or detailing of design variables), and evaluation (concerning robustness and adaptivity). The STOF method is a structured approach to design viable, feasible and robust BMs.

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32 Fig10: Design steps in the STOF method (Bouwman H., De Vos H., Haaker T., 2018)

2.6.2 Guided choices towards a circular business model

Guided choices towards a circular business model by Joustra D., et al., (2013) is a comprehensive five-step guide ideally thought as a source of inspiration and support for SME’s to implement the CE in their businesses. It is organized as a workbook with concrete questions and tasks. It offers a series of easy to follow steps to assess whether the business is ready to implement CBMs. It provides an initiation phase to read and learn about the CE, in order to get a common understanding of the topic, its challenges and opportunities. In addition, it offers concrete tasks and promotes trying and testing the potential “innovation”.

Fig11: Five steps of Guided Choices Towards a Circular Business Model (Joustra D., de Jong E., Engelaer F., 2013)

2.6.3 The triple layered business model canvas (TLBMC)

The Triple Layered Business Model Canvas developed by Joyce & Paquin (2016) is a tool for studying sustainability-oriented business model innovation. It is based on the original BMC from Osterwalder & Pigneur (2010) and extended to have a more holistic perspective by adding two more layers: an environmental layer based on a lifecycle

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33 perspective and a social layer based on a stakeholder perspective. These added layers allow an integrated view on how organizations can generate multiple types of value (economic, social and environmental).

One of the advantages of this tool is the easiness and rapidness in which it can be used since it is built on the highly known BMC (Osterwalder & Pigneur, 2010). The TLBMC tool seeks to creatively innovate towards economic, environmental, and social value creation in a joined manner. In addition, the TLBMC provides an intuitive visualization of the whole organization. The visual representation promotes a better understanding of the different layers and value creation, which may be used to motivate conversations around specific changes in an organization. “The ‘visualized’ business model through the TLBMC can facilitate the understanding and creation of new business models ideas by highlighting the interconnections of key elements within the business model” (Joyce & Paquin, 2016).

Fig12: The triple layered business model canvas (TLBMC ). (Joyce & Paquin, 2016).

2.6.4 A value mapping for sustainable business thinking

The value mapping tool of Bocken et al., (2013) was developed with the aim to support firms on creating value propositions that will suit better sustainability purposes. The tool introduces three forms of value (value captured, value missed/destroyed or wasted, and value opportunity) and four key stakeholder groups (society, customer, environment and network actors). Due to the nature of the tool, it promotes multiple stakeholder views of value, instead of the classic firm centric view. This tool seeks to help business modelling