Transforming business models by the use of a transition management approach

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Employing
a transition management approach
Leen Gorissen, Saskia Manshoven & Karl Vrancken
IST 2013
to discover a new role for the social
enterprise ‘Recycling Shops’ in a region
aiming at climate neutrality

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© 2013, VITO NV
Intro

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The Organisation
» Recycling centers in Belgium represent a social enterprise that recycles
donated goods for reuse and sells these at local recycling shops (eg thrift
shops). At the core of the activities of the recycling centers lies
sustainability: they employ disadvantaged personnel (people), they
recycle and repair used goods (planet) and they sell second hand goods at
low prices (profit).

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The Quest
» What is the new role for the social enterprise ‘Recycling Shops’ in a region
aiming at climate neutrality ?
» Business model under pressure
“Dependent on the goodwill of policy makers”
“Increasing competition for key resources”
“Dependent on subsidies”
“Tension between product reuse and material recycling”
“Vulnerable to political changes”
“Not resilient, not adaptable to changing dynamics”
Interview Quotes

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Methods

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The Approach
» The involved research team used the transition management framework
as inspiration to guide the process of discovering the recycling shop’s new
future role in a region aiming at climate neutrality.

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The TM Approach
» Process guided by a ‘transition-team’ that co-designs and feeds in relevant
information to the local transition ‘arena’.
» The arena is the actual initial incubator of change:
» empowerment of niche-actors by creating ‘space’ to exert innovative power
» connecting niche-actors to each other so that they can form a broader and
stronger network, a ‘niche-regime’ that can exercise transformative power
» connecting niche-actors to regime-actors that can exercise constitutive power
to establish a new distribution of resources at a structural level and anchor
the new roles and collaborations at the regime level.
» The arena is well balanced in terms of innovative niche players and
change-inclined, open-minded regime players.
» Aims to develop a new discourse with higher ambition level, a reform
agenda inspired by systemic thinking, a shared language, new
networks/coalitions, shared transition experiments, returned trust

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The Activities
Internal group Transition arena
Meetings (ranged from 3 to 8 hours):
- (1) Business Canvas exercise
To envision the future business model and review the current
businessmodel (strengths, weaknesses, risks and
opportunities)
- (5) Synthesising of results and feedback on
arena results and transition approach
To stimulate an internal dialogue and prepare a concept
note for the new management agreement and an internal
engagement declaration to formalize the shared strategy; to
synthesise the new vision and strategy in an attractive
brochure for communication
- (6) Conceptnote and engagement declaration
To further discuss different views and perspectives; to
finalize the conceptnote and sign the engagement
declaration
Workshops (ranged from 3.5 to 4 hours):
- (2) System analysis
To explore the system (actors and factors) and learn about
niche innovations and landscape trends; to learn about
perceptions of threats and opportunities
- (3) Envisioning
To reflect upon values and principles; to develop a narrative
on a desirable future state that can give direction to
short/medium term action
- (4) Transition pathways
To translate the vision into future-oriented plans; to identify
trend breaks/shifts that are required to realize the vision; to
identify breakthrough experiments in function of the
required shifts/realization of the new roles
Internal group + Intermunicipal waste company
Meetings:
- (7) Exchanging visions
To exchange the vision of the recycling shop and of the
intermunicipal waste company; to identify points of synergie
and points of divergence; to stimulate anchorage of the new
vision in the regime
- (8) Towards a new management agreement
between the recycling shops and the
intermunicipal waste company
To discuss how a new role for the cycle shops can be
translated into the new management agreement; to discuss
a mutual transition experiment
PhaseI:
Vision&Pathways
PhaseII:
Anchoring

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Results

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In the future, the recycling centers of the province of Limburg are anchored into the
local communities and create substantial shared value in terms of the community
feeling and fabric. They root into the local couleur locale by embracing the motto
‘think global, act local’. The recycling centers are an important engine for
innovation and entrepreneurship in the creative and circular economy. Thanks to
new business models focusing on shared value creation and handicrafts, more
meaningful employment is created for people from marginalized groups. The
centers make both money and talent work - but differently than in the past. This
way, the social cohesion is strengthened while people from marginalized groups are
empowered to deliver an acknowledged and meaningful contribution to society.
Happiness and talent are the keystones on which the recycling centers' business
model builds. The centers initiate and exploit new collaborations focused on closing
cycles and they provide tailor-made high quality products and services. The
recycling centers have a positive environmental impact: through their activities the
environmental quality is enhanced instead of deteriorated. To achieve this, new
ways have been developed to work in harmony with the environment, family and
community life. Through their focus on simplicity, legitimacy, resilience and slow
rhythms/patterns, the centers renew the attention for craftsmanship and quality.
The centers will ‘de-care’ the customers which means that they will provide
coherent services that aim to make sustainable choices easy. In their multi-
perspectif ambition, improvement of quality of life of the people in their local
communities is central. The centers are connected by a shared and supported vision
that avoids monocultures and embraces diversity.
Results Phase I: The Vision
The recycling centers of Limburg round the circle and co-create an inclusive and circular
economy

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Material Match Maker
Closing material and resource cycles requires
labour and coordination. The centers can use
their expertise on collection, sorting and
dismantling to enhance circularity and explore
new pathways of higher shared and added
value.
Service Match Maker
Making sustainable choices easy requires an
extension of the service portfolio towards
customers. The centres can use their expertise
on repairment, refurbishment and restoring to
enhance product life cycles and promote and
preserve these ‘forgotten’ skills. Because of
their local anchorage, they can also unfold,
organize and promote product-service
systems to reduce material consumerism.
Results Phase I: The Pathways

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» Towards a concept note and internal engagement declaration
The internal group translated their ambition into an internal engagement declaration
that commits the five non-profit organisations to the future vision.
-> even though there is shared support for the vision, there are
different views when it comes to short term action
» The vision from the intermunicipal waste company (IWC)
It was striking to note that the vision formulated by the intermunicipal waste
company was very similar to the vision that had been developed in the arena session.
-> co-creation in arena did result in ‘ownership’ of the vision
» Towards a new management agreement with the IWC
The NMA currently being drawn up will allow experimentation and reorientation of
the recycling centers’ future role while at the same time offering stability in current
practices. A first joint breakthrough experiment is being set up.
-> towards a more synergistic relationship between recycling centers
and IWC
Results Phase II: Anchorage

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Conclusions

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Is the transition management framework a workable approach to discover a
new role for the social enterprise ‘recycling shops’ in a region aiming at
climate neutrality and did it deliver the objectives?
Research Question I
» promoted systemic thinking by thinking about the bigger picture;
» the formulation of a new discourse with a higher ambition level;
» development of new business model concepts that fit in an envisioned
future society that functions within the boundaries of significantly
different material management principles
» initiation of a more synergistic collaboration with the local intermunicipal
waste company
» first seeds of anchorage in regime through the new business
management agreement allowing experimentation and reorientation of
the recycling centers’ future role
» joint steps wit IWC in setting up breakthrough experiment(s);
» dispersion of new ideas and concepts into new and relevant networks (i-
cleantech antenna Limburg, umbrella organisation KOMOSIE)
Y
E
S

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Is the transition management framework a workable approach to discover a
new role for the social enterprise ‘recycling shops’ in a region aiming at
climate neutrality and did it deliver the objectives?
Research Question I
» no shared sense of urgency and no collective motivation to develop the
new future role between the five centers jointly;
» no shared trust and confidence between the five directors;
» no joint strategy across the five centers;
N
o
» Several aspects have contributed to this : (1) the fact that not all the directors were
congruent to the ‘frontrunner’ profile that is the preferred profile in transition
arena settings due to restrictions in the assignment; (2) the diversity in starting
points/short term focus between the centers; (3) the thereby related diversity in
perceived sense of urgency; and (4) the different views on the need for
transparency between centers.
» In fact, our empirical example shows that frontrunner profiles are critical to
prompt action and that early involvement of non frontrunner profiles actually
complicates and decelerates progress.

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Did the TM approach contribute to the development of new business
models for the social enterprise ‘recycling shops’?
» The TM approach did contribute to the development of new business model
concepts (material match maker and service match maker) that fit in an
envisioned future society that functions within the boundaries of significantly
different material management principles.
» The identified concepts are all inspired by closed lean cycles of materials and/or
products thus fit the concept of the circular economy.
» Some of the emerged concepts are being investigated for their business potential
and new collaborations around these concepts are being explored at this very
moment.
Research Question II
Call from i-Cleantech Flanders to fund
feasibility studies for new business cases in
Limburg:
• 2 recycling centers and IWC formed a
consortium and IWC will co-fund half of
the budget.

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Did the TM approach contribute to transformative and constitutive power?
» The delivered objectives clearly show that a niche-regime interaction has
unfolded to both enable transformative and constitutive power
» In the new management agreement :
• an opening is created for a more synergetic collaboration between both
organizations;
• an addendum is inserted that will enable joint new experiments focusing
on (1) new ways to deal with resources /new resource distribution
options that favour more effective product reuse or upcycling and on (2)
new roles for recycling centers that can be developed.
» The ideas have dispersed into new and influential networks that
» (1) can upscale the ideas from the province of Limburg to the whole of
Flanders (e.g. the umbrella organization KOMOSIE that represents all the
recycling centers named ‘kringloopwinkels’ in Flanders)
» (2) can provide funding opportunities (e.g. the policy group of the i-Cleantech
Antenna Limburg);
Research Question III

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Did the TM approach contribute to transformative and constitutive power?
E.g. new funding opportunities:
» New business model concepts of ‘material match maker’ and ‘service match
maker’ have been picked up by the policy group I-Cleantech Limburg, that will
fund feasibility studies for the most promising business ideas.
» This policy group is comprised of many influential members (eg Governor of
Limburg, a representative of the Ministry of Innovation, several CEO’s and general
managers…).
Research Question III

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Did the TM approach contribute to transformative and constitutive power?
» The examples illustrate that the TM approach fueled niche-regime
development that can probably lead to up scaling of the formulated new
activities and roles from the province to the wider Flanders region
» The interaction with regime actors resulted in first explorations around
transformations of current resource distribution
» A shift in resource distribution in the new management agreement with IWC
» Proposal for joint transition experiment, co-funded (50%) by the IWC
» If proposal gets granted; they managed to successfully redirect innovation funds
towards new business models concepts concerning the circular economy
» The new management agreement opens the door for a more synergetic
relationship between the recycling centers and the IWC
» Transitionizing the regime or Lock-in?
» Time will tell…
Research Question III

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Questions?
Something old, something almost new,
something borrowed, something to redo.
Saves more euros in your shoe.
Leen.gorissen@vito.be