What are the organizational challenges to designing and selling circular products? How can these challenges be overcome? What to do within your company and how to arrange your network cooperation? Professors and researchers at Groningen University and Radboud University decided to combine forces on the subject of sustainable and circular innovation, as a result of the IOP IPCR research program. They started working on a practical guidelines for companies, addressing questions like: This session reveals a tip of their research ‘iceberg’ and shows the main conclusions of their book ‘How to organize for the products that last?’ (expected early 2016)


3. Organising for
Products that Last
Kristina Lauche
Kristian Peters
Hans Wortmann

4. Why sustainability matters - Kristina Lauche
Challenges of integrating sustainability and
how to address them - Kristian Peters & Hans
Wortmann
We gratefully acknowledge the support of the Research
Program ‘Integral Product Creation and Realization’
of the Netherlands Ministry of Economic Affairs.

5. Why sustainability matters
Kristina Lauche, Radboud
University

7. “Volkswagen AG to be Removed
from the Dow Jones Sustainability Indices”
=> Sustainability as reputational risk management

8. Sustainability as a management topic
“AIR FRANCE KLM is pleased to
confirm its leading position as best
airline on the Dow Jones
Sustainability Index for the tenth
consecutive year.”
“KLM’s Corporate BioFuel
Programme helps many companies to
achieve environmental goals and
accelerates the growth of sustainable
aviation.”

9. • Pressure from numerous stakeholders:
firms expected to take ownership of
externalities they generate
• External forces :
– Regulation
– Corporate Social Responsibility reports
– Investor relations
• Internal drivers: Sustainability strengthens
employee identification => performance
• Reduces transaction cost in the long run
Drivers for Sustainability

10. Implementation slow
• Internal resistance (Fenwick 2007)
• Missing translation of strategic goals into operational
practices (Haugh and Talwar 2012)
• Sustainability initiatives often lack sense of urgency
(Slawinski and Bansal 2012)
– Relevance needs to be fought for
– Effects often not directly visible
– Requires specialist knowledge
– Conflicts with short term financial goals
– Not woven into the fabric of organisational practice

11. Integrated approach needed
Economic
Costs
Market potential
Revenues
Fit with existing knowledge
base
Time (to market)
Ecological
Energy consumption
Materials consumption
Toxicity potential
Biodiversity
Emissions (air, water, soil)
Risk potential
Social
Employees
Customers
Local & national
community
International community
Future generations
CRADLE-TO-GRAVE
Supplier assessment
Organization’s
production/services
Customer use /
disposal

12. You cannot do sustainability in isolation
“Our head of the sustainability group was going to give a presentation
on how well everything works with our suppliers in China. I told him
that it is not true.”

13. From chain to network
• Other partners needed to
accomplish transformation
• Benefit often not where the
investment is made
• NGOs and local
communities as pressure
groups
=> Diverse institutional settings

14. Selling sustainability internally
Change processes towards
sustainability frequently start as
local initiatives that need to be
‘sold’ internally and create
momentum for change (Howard-
Grenville 2007)

15. Creating momentum
Initiation of
sustainability
practice
Emergence / pockets of
sustainability practices
Internal actors
take up personal
responsibility
Creating
commitment
of local group
Upscaling and
maintenance of
sust. practices
Learning
loop
Practices
become
embedded
Practice fades out
Practice remains
local
Institutionalising
practices
Blazevic, Lauche, Janssen, van Riel (2015)

16. Challenges of integrating
sustainability and how to address
them
Kristian Peters and Hans Wortmann
Rijksuniversiteit Groningen

17. IoP-IPCR project: DoSym
Slurry pumps
Domes-c appliances
Centrifugal pumps (liquids)
Document systems
Electrical switching gear
Hot water and hea-ng boilers
Vanenburg
so,ware
FME/LMN
University
of
Groningen
B2B
B2C
B2B
B2B
B2B
B2B
Type of
Business

18. The problem
Given today’s importance of sustainability, and the
‘green’ intentions of many manufacturers, why do
many manufactures still find it difficult to improve the
environmental sustainability of products?

19. Two alternative business
perspectives
Market
perspective
Capability
perspective
P of Planet
P of Profit

20. Question to the audienceMarket
To what extent is sustainability an important
selling point?
– Not important
– A little bit important
– Of average importance
– Important
– Very important

21. Drivers
New markets
Expectation of improvement of
corporate reputation and image
Environmental regulations
and policies
Competitive advantage
Order qualification
Cost reduction
Risk management
Market demand and market
stakeholder pressures
Market

22. Case study resultsMarket
Driver General trend DoSym Co’s
Cost reduction Highly optimized already
In contrast, it usually increases costs
Corporate reputation /
image
Customers are mostly interested in price
and quality
Environmental
regulations
Oftentimes still very limited
Market demand /
pressure
No or very little demand for sustainable
products
Or only for specific types of
sustainability
No Greenpeace , No Milieudefensie …
Competitive advantage /
benefits
Competitive disadvantage
Competitors are not doing it as well

23. PerspectiveCapability
Environmental
capabilities
ENPD, green
R&D and green
production
Environmental
skills and
knowledge of
employees
Environmental
management
systems and
procedures
Environmental
vision and top
management
involvement
Green supply
chain and other
stakeholder
network
embeddedness
Environmental
capabilities
Environmental
products
Competitive
advantage/
success
Aligned
Market

24. 0,00
1,00
2,00
3,00
External analysis
Vision and strategy
Targets
Measuring
Included in normal
design prac-ces
Value proposi-on
Strandardiza-on,
modularity and
Material
consump-on
Energy consump-on Low impact
resources
Life-me
op-miza-on
Evalua-on
Audi-ng of suppliers
Supply chain
engagement
Reverse logis-cs
Product ownership
Financial model
Re-use
Ambi-on Current Maturity Level 5
Maturity Level 4 Maturity Level 3 Maturity Level 2
Maturity Level 1
DoSym Capability Maturity Tool
0 - Incomplete 1 - Ad-hoc 2 - Controlled 3 - OpLmized
1b. Formulate an environmental
vision and strategy on the highests
level of the organisation
None
Environmental strategy
for the next generation of
products
Long term vision and
environmental strategy
Vision and
environmental strategy,
goals, roadmap and
tactical decisions for
long term innovation
0 - Incomplete 1 - Ad-hoc 2 - Controlled 3 - OpLmized
20. Evaluate the environmental
performance throughout life cycle
phases (extraction, manufacturing,
distribution, usage, end of life)
Not evaluated
Ad-hoc with a small
sample and a few
metrics
Periodically with a large
sample and a few
metrics
Continually with a large
sample and a large set
of metrics
0 - Incomplete 1 - Ad-hoc 2 - Controlled 3 - OpLmized
22. Ensure supply chain engagement
and cooperation on environmental
issues throughout the life cycle
(suppliers, distributors, customers)
None
Little contact and hardly
any cooperation
Structural contact and
some cooperation to
improve environmental
performance at different
life cycle stages
Continually and open
communication and
close cooperation to
improve the overall
environmental
performance at all life
cycle stages

25. Case study results
ENPD, green R&D
and green production
++ ++ + + +
-
Green supply chain
and other stakeholder
network
embeddedness
+ + - - -
-
Environmental vision
and top management
involvement
++ ++ + + +
-
Environmental
management systems
and procedures
++ + + + + +
Environmental skills
and knowledge of
employees
+ + - - -
-
Strategy
Current strategy is focused on
short term operational
excellence results à No room
for long term innovations à
no affordable new
environmental technology
High costs
Negative
effect
Green
SCM
No existing reverse logistic in
place à Collecting used
products is inefficient
High costs Negative
effect
Business
model
Selling newly manufactured
parts and products is more
profitable than selling used/
remanufactured parts and
products à Focus of NPD in
on designing new products
Lower
incomes
Negative
effect
Business
model
Selling remanufactured
products is more profitable
than selling newly
manufactured products
Higher
income
Positive
effect
Capability

26. Study results
Environmental
capabilities
Environmental
products
Competitive
advantage/
success
Market/competition
Rules & regulations
Other pressures
Market
Positive feedback
Negative feedback
Capability
“Vicious Circle”

27. Conclusions
Economic advantage is a key driver for investing in
environmental products
Existing capabilities can prevent companies to capture the
economic value of environmental products
– Business models, structures, strategy, incentive system, etc.
Investments in a bundle of (new) environmental capabilities are
required
– Our maturity tool helps companies to design and develop
organizations for products & services that last

28. Interactive Discussion
Statements:
1. Every company becomes part of the circular
economy
2. Every company that becomes a part of the
CE, should adopt a fitting business model
3. In order to adjust the business model, a
positive financial business case is required

31. Book for
Practitioners
Expected early 2016
• Guidelines
• Cases
• Link between
sustainability and CSR
• Internal change process
• Network approach
Duurzame innovatie:
organisatie, implementatie,
successen
Wortmann, Peters, Lauche