HSG researchers present Circular Economy Navigator

(CONNECT) The circular economy is “not a trend, but rather an existential necessity”, according to Fabian Takacs, Richard Stechow and Karolin Frankenberger in their book “The Circular Economy Navigator” (in German). The authors see businesses as core stakeholders in this process of change. These are said to have the potential to be catalysts for value creation and could also drive the transition from a linear to a circular way of thinking.

The Circular Economy Navigator offers an eight-step guide to support this transition. The starting point is to motivate those who will be involved in shaping the transition and defining their own role. After this, companies can conceptually design their own circular ecosystem and integrate this onto a business model. To make this vision a reality, external partners must be brought on board and the business model needs to be rolled out in practice. Finally, this must be internalized by everybody involved.

The book offers practical descriptions on the basis of examples of 40 circular economy business models, organized according to four key dimensions. The first dimension focuses on closing the loop, with an emphasis on aspects such as reusability, recycling, circular design and the utilization of waste as input, in addition to the development of a reverse logistics.

The next dimension concerns improving circularity. Measures here include, for example, longevity, repairability, eco-efficiency, material reduction, increased functionality, regionalization and localization, as well as a focus on demand-based production rather than to build up stock. Materials must be detoxified, while energy must be generated from renewable sources and recovered.

Monetization of the loop is another priority. This can be achieved if users pay per use or where consumers opt to rent over purchase. Common ownership, for example as part of cooperative models, is another consideration to go alongside schemes such as user participation in revenues, crowdfunding platforms and incentivized take-back programs.

The relationships between businesses and consumers are also evolving. We are seeing a transition from product sales to solutions, from mere consumption to experiences, while marketplaces are increasingly seen as a replacement for the traditional department store. This also facilitates deeper relationships between companies and consumers based on long-term customer loyalty.

“The Circular Economy Navigator” has been published by Hanser Fachbuch in Munich. Fabian Takacs is a postdoctoral researcher at the Institute of Management & Strategy at the University of St.Gallen (HSG). Richard Stechow works for BMI Labs, a spin-off from HSG. Karolin Frankenberger is Professor of Strategy and Innovation and Director of the HSG Institute of Management & Strategy. ce/ug