The Circular Sprint: Circular business model innovation through design thinking
Santa-Maria, Tomas; Vermeulen, Walter J.V.; Baumgartner, Rupert J.
(2022) Journal of Cleaner Production, volume 362, pp. 1 - 14
(Article)
Abstract
The process of developing sustainable and circular business models is quite complex and thus hinders their wider implementation in the market. Further understanding and guidelines for firms are needed. Design thinking is a promising problem solving approach capable of facilitating the innovation process. However, design thinking does not necessarily include
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sustainability considerations, and it has not been sufficiently explored for application in business model innovation. Given the additional challenges posed by the need for time-efficiency and a digital environment, we have therefore developed a design thinking-based framework to guide the early development of circular business models in an online and efficient manner. We propose a new process framework called the Circular Sprint. This encompasses seven phases and contains twelve purposefully adapted activities. The framework development follows an Action Design Research approach, iteratively combining four streams of literature, feedback from sixteen experts and six workshops, and involved a total of 107 participants working in fourteen teams. The present paper describes the framework and its activities, together with evaluations of its usefulness and ease-of-use. The research shows that, while challenging, embedding sustainability, circularity and business model innovation within a design thinking process is indeed possible. We offer a flexible framework and a set of context-adaptable activities that can support innovators and practitioners in the complex process of circular business model innovation. These tools can also be used for training and educational purposes. We invite future researchers to build upon and modify our framework and its activities by adapting it to their required scenarios and purposes. A detailed step-by-step user guide is provided in the supplementary material.
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Keywords: Action design research, Business model innovation, Circular economy, Design thinking, Sustainability, Sustainable business model, Renewable Energy, Sustainability and the Environment, General Environmental Science, Strategy and Management, Industrial and Manufacturing Engineering
ISSN: 0959-6526
Publisher: Elsevier
Note: Funding Information: In recent years the circular economy (CE) has been promoted as a potential solution in the urgent transition to a more sustainable economic system (Schroeder et al., 2019; Velenturf and Purnell, 2021), however, in practice, the implementation of sustainable and circular business models continues to remain relatively low (Bocken et al., 2017; OECD, 2019). This is also reflected in the ongoing call for more sustainability-oriented innovation tools and comprehensive business model innovation process frameworks, which is itself a reaction to the relative complexity of operationalizing CE-based ideas and the lack of practical guidelines for firms (Blomsma and Brennan, 2017; Kalmykova et al., 2018; Pieroni et al., 2019a). Design thinking (DT) is an innovative problem solving approach with the potential for supporting sustainability-oriented processes, such as the development of circular business models (CBM) (Buhl et al., 2019). DT-based frameworks have gained popularity in recent years as they have proved useful in addressing complex challenges, where a multidisciplinary team is guided through a collaborative and iterative process of understanding, ideating and testing (T. Brown, 2008; Carlgren et al., 2016b). Even though the support of DT has been explored in the development of CE-based ideas, DT research and practice have tended to focus more on product-level innovation (IDEO and Ellen MacArthur Foundation, 2017), or on specific elements of the CBM - e.g. circular value proposition (P. Brown et al., 2021). Furthermore, the few frameworks that offer guidance for an end-to-end circular business model innovation process (Guldmann et al., 2019; Shapira et al., 2017) remain rather explorative, thus inviting future research on the topic. This is particularly relevant as firms are now often faced with a highly dynamic business environment in which innovation at the business model level has become a key question of competitive advantage (Verma and Bashir, 2017) – or even of survival (Breier et al., 2021), and where the degree of time efficiency may determine the success or failure of an innovation process (Eisenhardt and Brown, 1998). In addition, one also needs to consider that online collaboration and digital transformation have become key organizational capabilities in recent years, and that this ongoing trend has been accelerated as a result of the COVID-19 pandemic (Kudyba, 2020).Given the considerable challenges involved in conceptualizing and implementing novel business model configurations, numerous tools to facilitate the process have been proposed, such as the widely used business model canvas (Osterwalder and Pigneur, 2010). These tools can be found in both the traditional management literature and on the grey, practitioner-oriented literature (Heikkilä et al., 2016; Massa and Tucci, 2014; Täuscher and Abdelkafi, 2017). Furthermore, as in recent years sustainability and the CE have received increasing attention, a considerable number of sustainability-oriented innovation tools to support the SBMI or CBMI process have also been proposed (Bocken et al., 2019; Breuer et al., 2018; Pieroni et al., 2019a). However, many authors urge the development of approaches that address SBMI and CBMI as a continuous/holistic process, approaches which integrate CBMI, SBMI and traditional BMI, and which adapt/customize existing tools to fill the research gaps identified (Pieroni et al., 2019a). This is all addressed in the present paper. Furthermore, the present research draws on best practice and takes account of the 10 criteria for CBMI tool development compiled by Bocken et al. (2019). In their review of CBMI innovation tools Bocken et al. suggest that such tools be (i) purpose-made for CBMI, (ii) rigorously developed on the basis of research and practical insight, (iii) iteratively developed with potential users, (iv) integrate cross-disciplinary knowledge, (v) tested and assessed by practitioners. They also suggest (vi) that transparent guidance on tool use be provided, (vii) that CE and sustainability objectives be firmly integrated, (viii) that the tool be simple to use and not time-consuming, (ix) that it inspires or triggers change and (x) that it be adaptable to different contexts.Based on the information provided in sections 2.1 and 2.2, DT appears to be a well-suited approach to dealing with the challenges of CBMI. It clearly facilitates the guidance of multi-stakeholder collaboration and experimentation process, is capable of collecting lifecycle or system-wide insights, and supports the ideation, testing and refinement of CE-based ideas. However, as previously mentioned, CBMI requires that (i) solutions be framed at the BM level - beyond that of product or service level innovations-, (ii) that CE strategies are embedded with the novel BM, and that (iii) SBMI principles are employed to generate positive sustainability outcomes. These three aspects are not necessarily considered in conventional DT processes (Garcia and Dacko, 2016; Shapira et al., 2017). Nevertheless, DT has still been found to be suitable in guiding sustainability-oriented innovation processes, as in Geissdoerfer et al. (2016) Sustainable Value Ideation process, Baldassarre et al. (2017) Sustainable Value Proposition Design and other studies (P. Brown et al., 2021; He and Ortiz, 2021). Furthermore, both Buhl et al. (2019) and Kagan et al. (2020) discuss how and why DT can foster sustainability-oriented innovation, for instance, by arguing how experimentation and visualization in DT support the aim of positive sustainability outcomes, how DT integrates diverse perspectives through the involvement of intra and extra-organizational stakeholders, and suggesting the use of “sustainability checkpoints” in the process, aligned with the recommendation of Hansen and Große-Dunker (2013).The action design research approach applied in the present research resulted in the development of the Circular Sprint framework and its twelve tools (see Fig. 2 and Table 5). This is a conceptual process model based on design thinking that can guide practitioners in the early development of a CBM, in a time-efficient manner and in an online context. It is an adaptable framework that can be applied in different situations, from supporting a start-up engaged in the initial conceptualization and testing of a CBM, to assisting a large firm aiming to diversify or transform its current business models toward the CE. This working framework may be adapted for face-to-face or hybrid contexts with limited additional effort, and the tools and activities provided are also adaptable in order to meet specific needs. Although individual activities may be used in isolation for specific innovation purposes the strength of the Circular Sprint lies in its sequenced and iterative application of exercises. The present paper illustrates those activities which we found to work best. However, we invite researchers to continue with the framework refinement process in future studies.The final expert feedback survey (n = 9) was designed to obtain an indication of the extent to which the Circular Sprint complied with its main objective (i.e., supporting early-stage CBM development) and its six desired key characteristics (see Table 1). The results are presented in Table 8. The results suggest that, according to expert opinion, the main objective of the framework is strongly supported (IM = 4.4), and indicates a positive evaluation of the six key characteristics. Experts considered that the characteristic best achieved was the adaptation to an online environment, followed by that of effectively addressing all stages of a DT process, and that of successfully embedding sustainability and circularity in the process. Nevertheless, the characteristics that according to expert opinion were less achieved are the effective generation of outputs at the business model level and time efficiency, although opinions diverged considerably on the latter (Range = 3).As mentioned in section 2, the Circular Sprint approach outlined here aims to fulfil each of the eight SBMI criteria proposed by Breuer et al. (2018). An indication of how each activity contributed to this goal is presented in Table 9. The most relevant aspects are: Systems-thinking is aimed for by replacing a conventional “customer journey map” (usually combined with a “persona” or “empathy map” activities) (Knapp et al., 2016; Lewrick et al., 2018) with a “value chain map” activity which facilitates understanding from a systemic and lifecycle perspective. Sustainability-oriented thinking is also supported by the inclusion of a “vision co-creation” exercise and the related backcasting logic (Broman and Robèrt, 2017; Vergragt and Quist, 2011), by the addition of an inspiring CE introduction session (Bocken et al., 2013; Guldmann et al., 2019), by the support of the ideation activity with CBM pattern cards (Lüdeke-Freund et al., 2019), by aiding the key decision moment with sustainability-oriented criteria in the “sustainability scan” - which also serves as a sustainability checkpoint - (Buhl et al., 2019; Hansen and Große-Dunker, 2013), and by using a sustainability-oriented modification of the BM canvas (Bocken, 2015; Mentink, 2014) in the prototype stage.This project has received funding from the European Union's Horizon 2020 research and innovation programme under the Marie Skłodowska-Curie grant agreement No 765198. The financial support of the Austrian Federal Ministry for Digital and Economic Affairs, the National Foundation for Research, Technology and Development, and the Christian Doppler Research Association are gratefully acknowledged. The funding sources were not involved in study design, data collection or analysis, report writing or article submission. Funding Information: This project has received funding from the European Union’s Horizon 2020 research and innovation programme under the Marie Skłodowska-Curie grant agreement No 765198 . The financial support of the Austrian Federal Ministry for Digital and Economic Affairs , the National Foundation for Research, Technology and Development , and the Christian Doppler Research Association are gratefully acknowledged. The funding sources were not involved in study design, data collection or analysis, report writing or article submission. Publisher Copyright: © 2022 The Authors
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