The document discusses a conceptual framework for disrupting business models to transition industrial systems towards circular economy ecosystems. It proposes that disruptive business model co-innovation can act as a mechanism for this transition. The framework takes the perspective of industrial company managers and aims to help them understand how to lead the transformation. It also defines key concepts like circular economy ecosystems and value circles, and highlights the importance of governance innovation.

1. VTT TECHNICAL RESEARCH CENTRE OF FINLAND LTD
Exploring disruptive business
model innovation for the
Circular Economy
Anna Aminoff, Senior Research Scientist
Katri Valkokari, Maria Antikainen, Outi
Kettunen
KES SDM 2017
@AminoffAnna
@AarreResearch

2. 16/08/2017 2
Background
Recently the Circular Economy (CE) has attracted growing interest as a novel economic model
aiming to foster sustainable economic growth and boost global competitiveness, economic
growth is decoupled from resource consumption as end-of-life products are seen as
resources rather than waste
A system-wide disruptive innovation changing the whole process of value creation is needed
to tackle the current challenges and transformation to the CE. This system-level change sets
big challenges for established companies, and might even disrupt the usefulness of their
existing capabilities, networks, and business models.
Still the academic literature has focused on a resource scarcity and environmental impact,
only little attention to out the economic benefits of industrial actors
The CE concept itself might create barriers for implementations, as it might be perceived as
being too radical or too complex to be fully adopted.
The language of the concept is rather abstract, and the definition and interpretation of the
term needs to be understood

3. 316/08/2017
Objectives
 The aim of this paper is to synthetize the
previous literature to a conceptual framework
for shaping the industrial systems towards CE
ecosystems
  Building blogs
 Framework is based on various streams of
literature
 Circular economy
 Value chains, interorganizational
relations and business ecosystems
 Innovation management/ distruptive
innovation
 Business models/ Business model
innovation
 Reserach questions:
 How does a disruptive business model
(co-) innovation work as a mechanism
that changes industrial systems
towards CE ecosystems?
 How to support business model co-
innovation that utilizes opportunities
created by the breakthroughs of a CE?

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A conceptual framework for shaping the industrial
systems towards CE ecosystems
 The preliminary framwork proposes a
disruptive business model (co)-innovation
as a mechanism that shapes industrial
systems towards CE ecosystems
 It takes the viewpoint of the managers of
an industrial company.
 To be able to lead the transformation,
managers need to understand the
mechanisms to shape industrial systems
towards CE systems.
The framework offers building blogs
CE Ecosystems
Current industrial systems /
supply chains
Distruptive business model
innovation

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From supply chains towards CE
ecosystems
 The concept of value chain is important in a CE, since CE
requires the key actors involved in value flows to be
defined. However, it is not enough; instead of seeing
themselves as isolated entities and only taking
responsibility for their part, companies need to be aware
of themselves as part of a bigger network
 Thus, introducing an ecosystem approach to the CE would bring novel
understanding to re-conceptualize of supply/value chains and industrial
systems
 We define CE ecosystems as co-evolving, dynamic and potentially self-
organising configurations1 in which actors integrate resources and co-create
circular value flows in interaction with each other
 The CE rethinks partnerships,  the shift towards value co-creation
highlights interactions, joint resource bases (e.g. sharing economy),
(engagement) platforms and ecosystemic approaches as new means for
business
1

6. 16/08/2017 6
Value circles and CE ecosystem
 From value chains  value circles
 The value circle includes the full range of
activities, performed by different actors,
which are required to bring a product or a
service to a user and back to the system. A CE
ecosystem composes of various value circles
1).
Modified from (Porter & Kramer 2011; Fearne et al. 2012)
 The value is shared across different value circle actors through innovative
governance and collaboration.
 In reflecting the regenerative and restorative principles of a CE, the value is
considered mutually beneficial for value circle actors, the environment and
society.

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Distruptive business model co-innovation
Value creation
innovation
Clauss, T., 2016.
Value proposition
innovation
Value Capture
innovation
How and by what means firms create
value using the resources and
capabilities
New capabilities, new
technology/equipment, new
partnerships, new processes,
A portfolio of solutions for customers,
how they are offered
A new offering, new customers and
markets, new channels and new
customer relationships.
How value propositions are converted
into revenues.
New revenue models and value cost
structures
Searching for new value circle actors,
composing new value circles
(Lewandowski 2016; Lieder & Rashid
2016)
Re-thinking partnerships within a CE
ecosystem (Bocken et al. 2014;
Lewandowski 2016; Lieder & Rashid
2016; Peltola et al. 2016)
Mapping value to different value circle
actors (Adner & Kapoor 2010;
Antikainen & Valkokari 2016; Bocken
et al. 2013)
Creating novel flows of resources,
knowledge and value (Aminoff et al.
2016)
Engaging suppliers into CE principles
(Boons & Lüdeke-Freund 2013)
Engaging users in co-innovation
(Hippel 2005)
Implementing CE principles in the
value proposition (sustainable value
proposition) (Patala et al. 2016;
Bocken et al. 2013), for example,
related to PSS (Tukker & Tischner
2006; Lewandowski 2016)
New channels, new markets and
customers (Clauss 2016)
New revenue & costs models in value
circles (Antikainen & Valkokari 2016);
a financial model reflecting an
appropriate distribution of economic
costs and benefits among value circle
actors – a ´win-win-win` setting
(Boons & Lüdeke-Freund 2013;
Aminoff et al. 2016)
New revenue models based on, for
example, selling product-based
services as performance-based
services (Tukker 2015; Lewandowski
2016)
Networked business
model innovation is
highlighted in the
transition towards a
CE.
Distruptive innovation: A
disruptive innovation is an
innovation that creates a new
market and value network and
eventually disrupts an existing
market and value networks
(Christiansen)

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Conlcusions
 We synthetized previous literature to a conceptual
framework, that
 suggests business model innovation as a mechanism to
transfer the supply chains into CE ecosystem and
includes the critical elements of disruptive business
model co-innovation
 We defined a CE ecosystem and value circle and proposed
that a CE ecosystem is composed of various overlapping
value circles:
 We highlight that the concept of value circles would be beneficial in clarifying the
co-existence of several overlapping value circles and how they differentiate from
linear value chain models
 In the definition of the value circle we emphasize governance innovation, since
network-level governance structures are what bring actors into a working
relationship together (Governance innovation future research avenue)

9. Thank you
anna.aminoff@vtt.fi

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11. 16/08/2017 11
Background
Recently the concept of the Circular Economy (CE) has attracted growing interest as a
novel economic model aiming to foster sustainable economic growth, boost global
competitiveness, and generate new jobs; economic growth is decoupled from resource
consumption and pollutant emissions as end-of-life materials and products are
conceived as resources rather than waste
The academic literature has focused on a resource scarcity and environmental impact,
only little attention to out the economic benefits of industrial actors
The CE concept itself might create barriers for implementations, as it might be
perceived as being too radical or too complex to be fully adopted. The language of the
concept is rather abstract, and the definition and interpretation of the term needs to be
understood