This is a slide deck about different types of business models that align with circular economy principles. Feel free to use the slides in your teaching, consulting, or in any other purposes. If you need the original ppt file, feel free to contact us!

1. SIX WAYS TO BUILD CIRCULAR BUSINESS MODELS
Nancy M.P. Bocken
Professor of Sustainable Business
Maastricht University, The Netherlands
Paavo Ritala
Professor of Strategy and Innovation
LUT University, Finland

2. Slide deck/ teaching note
• This teaching note accompanying the following paper:
• Bocken, N. and Ritala, P. (2022). Six ways to build circular business models.
• Journal of Business Strategy, 43(3), 184-192.
• Full paper link: https://doi.org/10.1108/JBS-11-2020-0258
• The creative commons license applies: you can use and build on it by giving
credit to the original work using the above citation, and/ or, the other specific
citations per slide

3. An inefficient system to manage resources
1. Dependent on high turnover of products and fast-paced consumption
2. Suffering from decreasing product lifetimes and high levels of waste
3. Leading to a loss of value embedded in products and materials
Linear Economy

4. Circular Economy
Extending the
useful life of
products
(including avoiding
overconsumption)
Recycling
(at material level
e.g., primary,
secondary)
Minimising resource
use per product
(e.g., efficiencies in
manufacturing, light
weighting products)
Source: Bocken, N.M.P., de Pauw, I., van der Grinten, B., Bakker, C. 2016. Product design and business
model strategies for a circular economy. J. Industrial & Production Engineering, 32 (1), 67-81.

5. Circular business models
Achterberg, Elisa, Jeroen Hinfelaar, and Nancy MP Bocken. 2016.
"Master Circular Business with the Value Hill." White paper
Current linear economy Circular economy

6. Circular Business Models
• Circular business models focus on delivering superior customer value
propositions while slowing resource loops by providing products that
last longer (e.g. through premium pricing, services), closing resource
loops, by recycling materials post-multiple consumer (re)uses, and
narrowing the loop by using less material per product and in
manufacturing processes

7. Open Innovation
• Open innovation refers to openness of the innovation outcome or the
innovation process
• Innovation outcome: those that benefit from the innovation might
involve a limited or broad open audience
- Circular economy’ example: iFixit, whose community consists of people who help
each other ‘fix stuff’ for free with tips and tricks
• Innovation process: might be open or closed, thus involving a limited
or large number of innovators and stakeholders
- Circular economy’ example: circular hackathons’, where the process of innovating
is open to all
- In the following framework the focus is on the process aspect of open innovation
Huizingh, E. K. (2011). Open innovation:
State of the art and future perspectives. Technovation, 31(1), 2-9.

8. Foundations of the framework
• Resource strategy refers to the key aim of the circular business model, which
we divide in three aspects, based on narrowing, closing loops or slowing
resource loops (Bocken et al., 2016).
• Innovation strategy refers to the classic division between “closed” and
“open” innovation, and in the context of our study, to the strategic openness
of the business model in question (Chesbrough & Appleyard, 2007).
Bocken, N.M.P., de Pauw, I., van der Grinten, B., Bakker, C. 2016. Product design and business model strategies for a circular economy. J.
Industrial & Production Engineering, 32 (1), 67-81.
Chesbrough, H. W., & Appleyard, M. M. (2007). Open innovation and strategy. California management review, 50(1), 57-76.

9. Circular business model strategy framework

10. Example: Open-narrowing
Value proposition (example):
Reduce waste and resources in
design and production processes
Value creation & delivery: Reduce
cost and negative impact through
new technologies and processes in
collaboration with suppliers,
customers and others
Value capture logic:
Save cost and resources
Open-narrowing
Source: https://www.theconsumergoodsforum.com/wp-
content/uploads/2018/04/Environmental-Sustainability-Refrigeration-Case-
Study-Booklet-2019.pdf

11. Example: Closed-narrowing
Value proposition (example):
Reduce waste and resources in
design and production processes
Value creation & delivery:
Reduce cost and negative impact
through internal technology,
process and design innovations
Value capture logic:
Save cost and resources
Closed-narrowing
Source: https://www.businessinsider.nl/apple-cut-down-on-
plastic-use-by-making-2-simple-changes-to-iphone-packaging-
2017-10?international=true&r=US.

12. Example: Open-slowing
Value proposition (example):
Reuse resources to broaden the
offerings to the customer (e.g.
vintage, second-hand)
Value creation & delivery:
Create value by connecting
internal and external resource
flows via generative models
Value capture logic:
Increase the number of
transactions in an ecosystem via
reuse of products
Open-slowing
Source: https://www.ifixit.com

13. Example: Closed-slowing
Value proposition (example):
High quality products with high
customer value
Value creation & delivery:
Long lasting design, repair
services; Create more value from
less resources
Value capture logic:
Charging of price premium
through achieving quality
leadership and customer loyalty;
create value from the same
product multiple times
Closed-slowing
Source: https://www.vitsoe.com/eu/about/ethos

14. Example: Open-closing
Value proposition (example):
A circular offering which involves
lower environmental footprint and
resource burden
Value creation & delivery:
Combine resource flows from
external ecosystem into
customer offerings
Value capture logic:
Lower the cost of resources used
in customer offerings, improve
brand/corporate image
Open-closing
Source: https://net-works.com/about-net-works/

15. Example: Closed-closing
Value proposition (example):
Connect with customers by
using, recovering, and
maintaining post-consumer
materials
Value creation & delivery:
Increase customer retention and
repurchases via take-back plans
Value capture logic:
Resource efficiency, improve
brand and reputation, reduce
cost for materials
Closed-closing
Source: https://mudjeans.eu/pages/our-mission-about-us

16. Guiding questions for practitioners
Narrowing loops Slowing loops Closing loops
Open business
model
innovation
Which of our current
ecosystem partners are ready
to improve their resource
efficiency together with us?
Are there new horizontal or
vertical collaborations that we
can initiate to boost resource
and material efficiency?
Can we create digital platforms or
partner with platform providers
that allow reusing and sharing of
valuable resources to customers?
What is our own added value to
such ecosystems?
Can we build on an existing
customer base or do we need to
attract new customers?
Are there existing producers of
leftover material that is valuable
but currently underutilized?
Can we create external
ecosystems that collect such
materials?
Can we bundle these materials
into competitive customer value
propositions?
Closed business
model
innovation
How can we minimize
resource usage in internal
processes?
Are we able to build on those
resource savings into concrete
cost savings?
Are we able communicate
those efficiencies to
customers and business
partners?
Can we create a well-functioning
repair or refurishment
organization to serve existing
customers better?
Are we able to take a risk of long
warranties?
Can we charge premium prices
from customers in exchange for
product longevity?
Can we identify valuable ways to
take back products from our
existing customers and use it as
an input in the same or different
products?
Can we design a win-win take-
back or repurchase scheme with
our customers?
Can we use closed-loop process
effectively in marketing and
branding?

17. Concluding thoughts
Circular Business Model Strategy Framework includes six alternative circular
business model innovation approaches
• The approaches are built on the premises of narrowing, closing or slowing
loops as well as closed or open strategies for innovation
• These approaches are not mutually exclusive: one company can engage into
multiple of these at the same time (e.g. Patagonia is a good example of
focusing on most of these)
Closed approaches enable firms to maintain control over the coordination of the
whole circular process, leading to less uncertainty and better control over the
value capture.
• Yet, few process are truly ‘closed’ in the circular economy and at the very least
involve some collaborations and innovations with direct customers and
suppliers
Open approaches enable building “circular economy ecosystems” that facilitate
material reuse and innovation among producers, users, and complementors

18. Author contacts*
ritala@lut.fi
Twitter: @PaavoRitala
LinkedIn:
https://www.linkedin.com/in/
paavo-ritala-6475a31/
Maastricht Sustainability Institute (MSI)
Nancy.Bocken@
maastrichtuniversity.nl
Twitter: @NancyBocken
LinkedIn:
https://www.linkedin.com/in/
nancy-bocken-b7384614/
*Let us know if you need an editable Powerpoint-set of these slides

19. Appendix
This appendix includes the editable versions of the
figures of our paper (please cite the original paper
when using further modified version).
Bocken, N. and Ritala, P. (2022). Six ways to build
circular business models. Journal of Business Strategy,
43(3), 184-192.
Maastricht Sustainability Institute (MSI)

20. Value proposition (example):
Connect with customers by using,
recovering, and maintaining post-
consumer materials
Value creation & delivery:
Increase customer retention and
repurchases via take-back plans
Value capture logic:
Resource efficiency, improve brand
and reputation, reduce cost for
materials
Innovation
strategy
Resource strategy
Open
Closed
Closing loops
Slowing loops
Value proposition (example):
A circular offering which involves
lower environmental footprint and
resource burden
Value creation & delivery:
Combine resource flows from
external ecosystem into customer
offerings
Value capture logic:
Lower the cost of resources used
in customer offerings, improve
brand/corporate image
Value proposition (example):
High quality products with high
customer value
Value creation & delivery:
Long lasting design, repair services;
Create more value from less
resources
Value capture logic:
Charging of price premium through
achieving quality leadership and
customer loyalty
Value proposition (example):
Reuse resources to broaden the
offerings to the customer (e.g.
vintage, second-hand)
Value creation & delivery: Create
value by connecting internal and
external resource flows via
generative models
Value capture logic:
Increase the number of transactions
in an ecosystem via reuse of
products
Narrowing loops
Value proposition (example):
Reduce waste and resources in
design and production processes
Value creation & delivery: Reduce
cost and negative impact through
new technologies and processes in
collaboration with suppliers,
customers and others
Value capture logic:
Save cost and resources
Value proposition (example):
Reduce waste and resources in
design and production processes
Value creation & delivery: Reduce
cost and negative impact through
internal technology, process and
design innovations
Value capture logic:
Save cost and resources
Open-narrowing Open-slowing Open-closing
Closed-narrowing Closed-slowing Closed-closing

21. Narrowing loops Slowing loops Closing loops
Open business
model
innovation
Which of our current
ecosystem partners are
ready to improve their
resource efficiency together
with us?
Are there new horizontal or
vertical collaborations that
we can initiate to boost
resource and material
efficiency?
Can we create digital platforms
or partner with platform
providers that allow reusing and
sharing of valuable resources to
customers?
What is our own added value to
such ecosystems?
Can we build on an existing
customer base or do we need to
attract new customers?
Are there existing producers of
leftover material that is valuable
but currently underutilized?
Can we create external
ecosystems that collect such
materials?
Can we bundle these materials
into competitive customer value
propositions?
Closed
business
model
innovation
How can we minimize
resource usage in internal
processes?
Are we able to build on
those resource savings into
concrete cost savings?
Are we able communicate
those efficiencies to
customers and business
partners?
Can we create a well-
functioning repair or
refurishment organization to
serve existing customers better?
Are we able to take a risk of long
warranties?
Can we charge premium prices
from customers in exchange for
product longevity?
Can we identify valuable ways to
take back products from our
existing customers and use it as
an input in the same or different
products?
Can we design a win-win take-
back or repurchase scheme with
our customers?
Can we use closed-loop process
effectively in marketing and
branding?