Don't miss the mark – here's what it takes to make your circular business fly

There are several examples of companies that have managed to combine circularity with economic success. Easy-to-navigate second-hand sites are one example, reliable car-sharing services another. The common denominator? Companies have created attractive circular offers with the end user in mind.

"Instead of making money by using finite resources and selling them cheaply, these companies are making money by closing loops so that resources can continue to flow. Many circular business models are about retaining ownership of the products in order to better control the flows. In practice, this can mean that the users are not the real owners of the product," says Anneli Selvefors, senior researcher in business design at RISE.

But what about companies with a long history based on a linear business model? According to a report from Luleå University of Technology published in 2024, there are no examples of large companies that have successfully scaled up a circular business model and replaced the old one. "There are many aspects that make it easier to stay in the linear world," says Sara Renström, senior researcher in technologies for interaction at RISE.

"It is difficult to convert an entire company, and the fact is that it is still financially viable to work with the linear business model. But in a future where resources are even more scarce than they are today, it will be harder to sustain that way of working."

Do you really understand your users?

Sara Renström and Anneli Selvefors have researched the enablers and barriers to creating attractive circular offers. Circular offers are a prerequisite for the transition to a circular business model. After interviewing 13 companies at different stages of their transition and reviewing the literature on the subject, the researchers identified a number of different areas that are important for companies' ability to develop circular offers that customers actually want.

Much depends on understanding your users and their needs. It may sound simple, but research shows that simply asking your customers what they need and want is not enough. Often users don't know what they need until the solution is available.

"For creative design work, which we believe is critical to creating really good circular value propositions, you need to start looking at what people do and use. That's one level deeper than just talking to customers. The next level is to find out what they feel and dream about," says Sara Renström.

More collaboration along the value chain

Getting to know your customers actively, for example through user surveys, is therefore a prerequisite for creating attractive circular offers. It is also important that the team conducting these surveys is in close contact with the company's production and marketing departments. Then the insights don't get stuck at the first stop.

"If the user perspective is allowed to permeate all departments of the company, it becomes something to collaborate on. Of course, it is possible to run a successful business anyway, but we have found that an organisation working together on this issue can more easily develop attractive circular offers," says Sara Renström.

It's not just a question of getting good cooperation within your own organisation, but also cooperation with other actors along the value chain. For example, a company that wants to move from selling products to renting them can enlist the help of an IT provider to create a digital platform from which the rental can take place.

"There are opportunities for all businesses"

It is a challenge to move away from the linear approach that has served companies well for decades and to create entirely new, circular offerings. This is where RISE comes in. RISE has extensive expertise in circular value propositions and business models.

"We can help identify user needs in relation to the client's specific niche. We can also help at a strategic level, thinking together about how they can work with users during the development process. It can also be about identifying possible partners in the value network and initiating the collaborations needed to move forward," says Sara Renström.

"There are opportunities for all companies to strengthen their own capabilities and conditions for developing circular offerings and business models that are more attractive than their linear predecessors," says Anneli Selvefors.