A Practical Approach to the Circular Business Model Transformation
Ed Weenk and Rozanne Henzen
Global consumption of raw materials currently goes beyond the earth's regenerative capacity, but the circular economy offers a more sustainable model which also provides new business opportunities.
Mastering the Circular Economy is an introduction to circularity from a business and value chain management perspective. With many reflections and exercises throughout, the book draws a direct link between relevant recent theory and practice and offers students and practitioners a deeper understanding of the topic. It looks at both the macro and micro context of the circular economy, from the government and societal view to the impact of new business models in an individual company.
Starting from the corporate imperative of moving from linear to circular business models, Mastering the Circular Economy covers the associated opportunities and challenges for organizations, from regulation and risk to value chain collaboration, reverse logistics and product quality. Part two of the book helps students to pull together everything they've learned and see how the concepts play out in the real world by guiding them through application in the online business simulation game The Blue Connection (free basic access is included with the book). Readers are continuously asked to reflect on the choices they would make in different roles to demonstrate a full understanding of the strategic and operational implications of the circular economy.
Ed Weenk is Senior Lecturer of Global Supply Chain Management at Maastricht School of Management and Senior Associate Professor at EADA Business School Barcelona. As a freelance trainer and consultant he also teaches at many other business schools around the world. He is based in Maastricht, the Netherlands.
Rozanne Henzen is a researcher and circular economy expert within the Sustainable Transformation Lab (STL) of Antwerp Management School, based in Antwerp, Belgium. She is currently recognized as one of the Sustainable Young 100 of 2020 in the Netherlands.
Noah Schaul(contributor) is one of Inchainge's master trainers for the circular business game, The Blue Connection. Noah is developing circular learning programs and inspiring companies to go circular in The Netherlands and beyond
List of figures ix
List of exercises xiv
About the authors xvii
About the contributor xix
Foreword: Game on! xxii
Foreword: Hands-on guidance for future proofing your business through circularity xxiv
Foreword: The corporate circular imperative, through the lenses of Philips and ING xxvi
Preface: The corporate circular imperative: narrative and numbers (1) xxviii
Structure of the book xxxiv
Guided tour, web resources and business simulation game xxxvi
PART ONE: Exploring the circular economy1
01 Exploring the context of circularity5
The current momentum of the circular economy 7
The context of academia: research areas, concepts and definitions 8
The context of planet and society 13
The context of global programmes for a better world 16
The context of rules and regulations, incentives and standards 19
The context of business and industry 23
The context of criticism and other complicating factors 27
02 Exploring the company perspective of circularity35
Purpose (why?) 36
Business models: an introduction 48
Segments and value propositions (what and for whom?) 52
Circular strategies (how?) 55
Revenue models and cost structure (how much?) 78
Finance and financing 80
Selecting and capturing a circular business model 85
03 Exploring the perspective beyond the company boundary92
Interfirm collaboration 99
04 Circularity: the leadership perspective118
Leading by leveraging polarity: balanced objectives and scorecard(s) 121
Leading by spanning boundaries: silos and stakeholders 126
Leading change: innovation, uncertainty and transformation 129
Leading by shaping culture: organization and team dynamics 135
The (transformational) leader in the value chain 139
05 The corporate circular imperative: narrative and numbers (2)144
Wrapping-up Phase 1 of Project ‘Circularity’ 144
Final reflection on Part One 148
PART TWO: Mastering circularity151
06 Getting started with The Blue Connection: game on!153
The Blue Connection business simulation game (TBC) 153
Introducing: Team Superbike! 155
Introducing: Catherine McLaren! 155
The Blue Connection: the company, the mission, the experience 156
What’s wrong with The Blue Connection? 161
TBC gameplay: what you need to know 167
07 Mastering the company perspective of circularity173
Decisions, inputs, installed base and decision support tools 174
Business model canvas 184
Circular strategies: mapping 185
Segments and revenue models 187
Mechanisms to monetize circularity: additional revenue 188
Mechanisms to monetize circularity: savings potential 191
Cost structure: newly introduced costs 191
Fine-tuning the chosen business model 194
08 Mastering the perspective beyond the company frontier200
Interfirm collaboration 205
09 Mastering the leadership perspective of circularity208
Leading by leveraging polarity: balanced objectives and scorecard(s) 209
Leading by spanning boundaries: silos 215
Leading by shaping culture: organization and team dynamics 215
Leading by spanning boundaries: process and stakeholders 218
10 The corporate circular imperative: narrative and numbers (3)224
Wrapping up Phase 2 of Project ‘Circularity’ 224
Final reflection on Part Two 227
PART THREE: Imagining the transformation from linear to circular value chains229
11 The transformation from linear to circular231
Visualizing the initial linear value chain: purpose, strategy, KPIs 231
Visualizing the initial linear value chain: Business Model Canvas 233
12 Imagining the transformation from the company perspective239
Imagine the transformation: purpose and strategy 241
Imagine the business model transformation: circular strategy 241
Imagine the business model transformation: customer relationships 242
Imagine the business model transformation: suppliers and partnerships 242
Imagine the business model transformation: revenue models, cost structure
and financing 243
13 Imagining the transformation from the perspectivebeyond
the company boundary 249
Imagine the transformation: legislation 250
Imagine the transformation: interfirm collaboration 251
Imagine the transformation: ecosystems 254
Imagine the transformation: education 254
14 Imagining the transformation from the leadership perspective259
Imagine the transformation: objectives and scorecards 260
Imagine the transformation: innovation 260
Imagine the transformation: dealing with uncertainty 262
Imagine the transformation: change management 274
15 Conclusion: the corporate circular imperative:narrative
and numbers (4) 275
Wrapping up the journey of Project ‘Circularity’ 275
The corporate circular imperative: narrative and numbers 281
Prof Dr Wayne Visser, presenter of Closing the Loop, the world’s first feature length documentary on the circular economy; holder of the Chair in Sustainable Transformation at Antwerp Management School; Fellow of the University of Cambridge Institute for Sustainability Leadership
The transition to a circular economy is a do-or-die choice facing business and society. More and more companies are willing to make the journey, but still lack the necessary insight, skills and tools to succeed. “Mastering the Circular Economy” is a must-have guidebook for transforming business into a proactive force for good. This vital book by Rozanne Henzen and Ed Weenk will broaden your perspective on the circular economy, deepen your knowledge and raise your aspirations to do more and better. The chapters weave together important concepts and best practice examples, while offering helpful tools to turn ideas into reality. This book gives vital clues to how we can and must avoid overshoot and collapse in nature, society and the economy. I highly recommend it.
Valentina Carbone, Professor ESCP - Paris Campus, Scientific Co-director of the Circular Economy Chair
Here my two suggestions on how to enjoy this very practical and at the same time rigorous book: Either as a perfect complement to the The Blue Connection businens simulation game (my favourite option!) to design a whole course around these two clear and powerful teaching tools and get the most out of them; or as a source of inspiration for a multitude of mini-cases and exercises to have a hands-on learning experience on the circular economy.
Dr. Desirée Knoppen, Head of Academic Department. Associate professor of circular economy and supply chain management, EADA Business School Barcelona.
Hands-on and engaging writing style with a brilliant structure where the reader is taken on the journey from idea to practice, and towards envisioning the future. Truly recommendable!
At last: supply chain featured prominently in “Mastering the Circular Economy!” Operationalizing the circular economy poses a great challenge across our industry and profession: this book gives a solid foundation to grasping the importance of supply chain as we transition our operations, business models, and economies towards circularity.
Prof.dr.ir. Bart Vos, professor of supply chain innovation and scientific director Brightlands Institute for Supply Chain Innovation (BISCI), Maastricht University, the Netherlands.
“Mastering the circular economy” is a very timely and appealing book for multiple reasons. First, and foremost the transition from traditional linear models to circular ones is of course a major societal and business challenge. Second, the book contains numerous relevant practical examples and exercises, with a prominent role for the Blue Connection simulation game. Third, the book provides a truly integrated learning approach, hence facilitating an experiential learning journey. And finally, this learning experience is supported by numerous inspiring illustrations. My favorite? It is difficult to make a choice, but I would opt for Figure 4.9, “The T-shaped supply chain manager”. This picture elegantly captures the complexity of the circular economy challenge, starting already in primary education. So, in the spirit of The Blue Connection simulation: Game on!
Dr. David Dinwoodie, Center for Creative Leadership
Co-author of “Becoming a Strategic Leader: Your Role in Your Organization´s Enduring Success”
Mastering the Circular Economy is an engaging and hands-on approach to applying the concepts of circularity to business practices and developing the leadership competencies to drive organizational transformation. It gives clarity where we tend to see complexity and makes caring for our people, our organizations, and our environment accessible for managers worldwide. It is a must read for purpose driven people leading purposeful organizations.
Denyse Julien, Associate Professor, Cranfield University School of Management
Our current linear approach has got to change and adapt to a more mindful approach that recognises the impact our activities are having on the world. Adopting a circular approach that seeks to reduce our impacts that benefit all stakeholders is critical. One major challenge is – How to transition existing linear supply chains and business to a more circular approach? Managers both current and future will need to develop their understanding of the different strategies to achieving this.
The Blue Connection is a simulation that allows us to manage this transition for a electric bicycle manufacturer, it surfaces many of the challenges we will face in reality and allows us to test different solutions and approaches to understand the interactions and inherent complexities. The book Mastering the Circular Economy which integrates the theory with the simulation will provide a unique opportunity for circular education and training and significantly enhance the experiential learning curve.
Yann Bouchery, Associate Professor in Operations Management & Logistics, Head of the Center of Excellence in Supply Chains, KEDGE Business School
Circular supply chains are getting momentum as a way to answer to the world’s limited resource availability and to the trend towards more responsible consumption. However, translating the idea into practical actions has proven to be challenging and we need to educate and train the current and next generations of leaders. “Mastering the Circular Economy” is a very useful textbook to this purpose.
ao. Univ. Prof. Mag. Dr. Barbara Stöttinger, Dean WU Wien Executive Academy
I have got to know Ed Weenk as an excellent scholar and outstanding executive educator. In the classroom, he leverages his academic background with his longstanding professional experience. For these qualities, he is truly appreciated by our students in the Executive and Professional MBA programs. His substantial understanding for the field is not only demonstrated in the classroom setting, but clearly displayed in his books. Therefore, I am happy to see that in his latest publication, co-written with Rozanne Henzen, the focus is on a timely and crucial topic - circular economy. It needs experts like Ed and Rozanne to bring these pressing issues close to students at all levels and executives to make sure such that it also transcends fast and effectively into today’s business practice.
Eric Dooms, Associate professor of Strategy at TIAS School for Business and Society together with Mirjam Minderman, Policy Adviser & Lecturer Business and Society at TIAS School for Business and Society
This timely book provides a thorough overview of the different aspects of the circular economy and concrete tools and exercises for implementing a circular strategy. The combination with The Blue Connection simulation game enables an experiential learning experience that will ensure that students master knowledge and skills needed in the circular economy. Both the didactical approach and the contents resonate very well with what TIAS stands for as School for Business and Society: transformative learning based on a combination of business modelling, sustainable innovation, collaboration and responsible leadership. The book covers these various challenges in an integrative manner.
Evelyn Thomchick, Ph.D., CTL, Associate Professor of Supply Chain Management
Department of Supply Chain & Information Systems at The Pennsylvania State University, University Park, PA 16802
I have used The Blue Connection simulation in my sustainable supply chain management course. I believe the textbook, Mastering the Circular Economy, will be an excellent resource to help integrate the simulation concepts with the course content of a sustainable supply chain management course, as well as provide guidance for the students in playing The Blue Connection simulation.
PhD Viktor Elliot, Senior Lecturer in Accounting and Finance at Gothenburg University and Director of Bitlab.
This book offers an excellent contribution to the important topic of circular economy. It is practically relevant and academically rooted, it is well-balanced and interesting and in combination with the circular business game it serves as a fun and inspiring teaching tool that deals with the realities of today and tomorrow. It is my sincere pleasure to recommend it!
Hedda van Raalte, Lecturer Logistics Management/ Supply Chain Management, Afstudeercoordinator
The book is an impressive combination of theoretical frameworks and practical tools on Circular Economy, supported by the online game on the virtual company ‘The Blue Connection’ of Inchainge.
A must have for lecturers in the field of Circular Economy and logistics!
Mario Chong, Professor at Universidad del Pacifico, Peru
“Mastering the Circular Economy” provides comprehensive insights to our new reality post Covid-19. This book offers a theoretical and practical advice to rethink, reimagine, revalue and be resilient in a new business environment. The research by Henzen & Week reveals how the circular economy is the responsibility of every leader. This new approach is a major step toward the new humanity era.
Søren Schulian, Associate Professor, cphbusiness Copenhagen.
Circular Economy will most certainly be one of the top issues when companies develop strategies for the coming years. At the universities, the circular perspective will become a major topic when teaching students supply chain skills. This book, in combination with the game “The Blue Connection”, provides a practical and concrete tool for both top level executives in companies and for professors at universities.
Bas Hillerström - Head of operations Circo NL
Great timing! Now that the concept of Circular Economy is embraced more and more by governments and companies around the world, more practical questions in regards to implementation start to arise. This book helps fill the knowledge gap that exists between abstract Circular Economy policies and plans and the most practical level of implementation.
Wendy L. Tate, Ph.D.
William J. Taylor Professor of Business
Cheryl Massengale Faculty Research Fellow at University of Tennessee, Knoxville, TN
Henzen and Weenk have done an excellent job in “Mastering the Circular Economy”. With their book, they bridge the gap between the theoretical value chain concept and direct applications. They take the complex idea of circularity and clearly explain concepts and relationships using The Blue Connection to fully integrate different circular challenges. They also provide many examples and cases for the learner to think about how to apply data and overcome these challenges.
Christian van Delft - Professeur Associé à HEC Paris.
Mastering the circular economy : from (easy to explain) theory to (difficult to obtain) supply chain circular efficiency. The book is a combination of an extensive description of theoretical concepts and an online supply chain serious game, allowing the reader/user to recognize that the devil is in the details in order to master the circular economy and to understand that a coordinated functional strategy for the different circularity factors impacting the supply chain is necessary to succeed.
Ashleigh Morris, CEO & Co-Founder of Coreo
Mastering the Circular Economy is an honest and powerful resource to learn what the circular economy is and how people can master its application. The book will provide the reader with foundational knowledge, spark their curiosity, challenge their ideologies and fundamentally support the reader to take action. This is a book to not only sink your mind into but your whole being into. I am excited by what Mastering the Circular Economy will do for catalysing action, our most critical need now is to move beyond theory to implementation and this book has the power to catalyse that.
Maayke Damen, CEO of Excess Materials Exchange
A hands-on approach to learn all about how to transition to a circular economy! Especially the integration of a business simulation in a textbook is refreshing. I think it allows the learner to apply the theoretical circular concepts right away in a realistic and dynamic context, making it a powerful learning experience.
Andrea Orsag, Co-Founder of MissionC & Circular Economy Evangelist
For anyone keen to explore Circular Economy and even implementing it into practice, this is a great in-depth go to guide. It takes you from a theoretical concept of CE through the practical challenges and considerations to an actual change in strategy and business models. All while providing insights on the market landscape, organisational lens, role of leadership, changing cashflows and value generation. This is done in an engaging way through exercises, examples and gamification. The Blue Connection game is simulating an actual business environment where you are developing circular products and services. Circular Economy is crucial in the Sustainability Transition which is the only way to secure a liveable future for ourselves and the next generations. If you are keen to be a part of it, this book is a very good game plan to start with.
Drs. Olaf J. Blaauw, Senior Consultant on Systems Thinking based Transition and the Circular Economy
The proof, the pudding, the tasting. Our current transition from a linear to a circular economy is fraught with many obstacles, mostly of our own making. We spend and lose a lot of energy and capital by optimizing linearity through the reuse and recycling of materials trapped in ‘end of life’ linear product designs. We have ‘the why’ of a circular economy figured out to a large extent, but ‘the how’ apparently not so much. We must therefore go beyond analysis, which shows us what we’re doing wrong, and get to applying the design methods that are intrinsically right. Application means implementation, and that is where this tome comes into its own. Circularity is a design principle which does not simply allow for the reuse of existing scarce materials, much more importantly it allows design for future reusability. This allows functional and material value to be available for future use. This only works if we allow this value, available through design for dis/reassembly, to be utilized in both financing and in use associated costs and revenues. In this way, circular business models can easily trump linear business models, without the need for an accountancy revolution. Classic sustainability inspired mitigating measures will add costs to your balance, without adding value to the required functional performance of a product. Value preservation over multiple use-cycles adds return on investment, instead
The methods and training-exercises contained in Mastering the Circular Economy are therefore aimed at allowing physical design choices regarding material use and re-use to be integrated with economic design choices. They allow students to work with fundamental concepts in a highly practical matter. My own excursion into The Blue Connection was quite insightful, as it showed me the reality of compromise when it came to real world decision making against the background of idealized principles. As a bonus, it did so in an extremely accessible format. The exact same can be said for Mastering the Circular Economy, here before you. We cannot build a perfect world in parallel to our own, so we must make the changes necessary where feasible, scalable and appropriate, in this one.
Mastering the Circular Economy will help you reassess the value proposition of products by taking (functional) residual value into account, alongside the lesser burden on operational expenses that a flexible, future ready product design allows for. As a logical result, this more often than not leads to superior competitiveness in an economy that will foolishly continue to rely on exponential quantitative growth within a finite system for a considerable number of years to come. How about outcompeting the market whilst saving the planet? This book will help you achieve this goal, better than most.
Julien Atgé, Head of Supply Chain Management, Weleda Switzerland.
This comprehensive guide sets a new standard that is relevant for anyone wanting to learn how to increase the circularity of his value chain.
Lawrence Suda, CEO at Palatine Group / Management Worlds, Inc.
Mastering the Circular Economy presents an innovative multimedia format that turns the book from an inevitable alphabet soup of concepts into a gourmet delight with true business substance. As a reader, I found myself exploring the book’s concepts through various media and highlighted by a practical and robust computer simulation that gets you immersed and engaged. Don’t just read this book – experience it!
Wineke Haagsma, Director of Corporate Sustainability PwC The Netherlands & EMEA
Very comprehensive reference book on the topic of circularity. You will find the entire journey from theory into execution. Really informative and useful for your circular transformation.
At a time of rupture, as the Covid pandemic reveals our prevalent economic models as even less sustainable than we thought, systematising circular economy models is seen as one of the solutions. So Mastering the Circular Economy is on cue, the kind of book many students, professionals and educators wanting to understand, implement and teach the subject will rejoice in: it’s accessible, clear, unpretentious and includes recent thinking on circular economy as well as a comprehensive overview of the topic looking back. It will please both the ‘hands-on’ and the more reflective reader, student or professional, with an array of exercises and tools and an extensive bibliography. A must-read for those engaging on the topic, and a complement to The Blue Connection circular economy business game, which is also an integral part of the book. Let's build back circular!
Brendan Edgerton, Director of Circular Economy, World Business Council for Sustainable Development
Through a business lens, the circular economy is a strategy framework allowing a company to mitigate linear risk and capture circular opportunities more effectively than its competition. Mastering the Circular Economy uses this perspective in equipping its readers with practical tools and replicable examples that allow them to start their circular transitions immediately.
Markus Bjerre, Special Advisor at the Danish Business Authority
Great insights into the circular economy seen from a business perspective in this book. Taking part in the testing of the Blue Connection simulation game I found it a true eye opener into the circular decision making in companies and into the complexity of producing bicycles based on circular principles - and how great it felt, when we succeeded in making our successful change of your production to a more circular business model.
Do you need any help with designing a course on Mastering the Circular Economy? There are multiple ways that we can support you.
On Tuesday May 25th from 3.30 pm to 5 pm Ed Weenk, Rozanne Henzen and Noah Schaul will share their experiences and thoughts about designing a course on Mastering the Circular Economy in a webinar.
Integrated Learning Approach
This concept is built on the foundation of Kolb’s learning cycle of experiential learning and other related learning styles. It aims to directly link theoretical knowledge to development of skills through active participation in learning. With this approach, you will reach the highest learning effect.
Interested to know more?
Coming soon: A whitepaper on Experiential learning and the use of business simulations and teaching cases: an Integrated Learning Approach by Ed Weenk.
The Blue Connection
The Blue Connection is a cross-functional business strategy simulation focused on Circular Economy. The simulation game challenges the participants to transform a linear supply chain into a circular value chain while increasing the Return on Investment of a (virtual) manufacturing company of e-bikes.
The Blue Connection is versatile and can be used for courses of varying complexity at all levels of education or corporate training. Additionally, it can be used to help foster cross-functional alignment within your company and highlight the importance of a Circular Economy and likewise business strategy.
Schedule a call with us
Ask for a free consultative call on how to integrate Mastering the Circular Economy and The Blue Connection in your curriculum.
We would like to support educators with their decision to integrate this book into their curriculum as much as possible. Get free samples of the book:
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