From linear to circular – eight things to keep in mind

In January 2021, the Swedish government adopted an action plan for a transition to a circular economy.  
The change from linear business models to circular is currently one of the major driving forces in society, but how should companies and other organisations begin their work with transition? Going from a linear to a circular business model is a transformative process that affects employees, customers and business partners. RISE has extensive experience and expertise in the circular economy field and Josefina Sallén, transition coach, explains how change activities can be structured as well as some things to keep in mind.  

Decide why

“The first thing a company has to do is determine the motivation for making the change,” says Josefina Sallén. “It can be different for different companies. Why should we do this? Most often, it is not climate that is behind it, but it may be that the change is specifically demanded by customers, or that the business arrangement you have is not sufficiently profitable and that profits would increase with another business model. You look at the values and benefits you can deliver rather than the product you have to sell. If you start there, you’re off to a good start.”  

Set a vision and formulate the company you want to be

“A transition like this entails disruptive change,” Josefina Sallén explains. “It’s then a good idea to establish a vision for what you want to achieve. There might be change later, but a vision is needed to alter ingrained ways of thinking. It's otherwise too easy to return to the ways you did things before. If you succeed in establishing the vision and, above all, formulating what you really represent to your customers, you will also begin looking at your business in a new way. SKF for example, expresses the company’s vision as ‘extending the life of its customers' equipment’, and sells availability rather than ball bearings.”  

Seek help 

Changing your entire business from within can be overwhelming even for the strongest companies and can end in a step backwards instead of forwards. That is why it is important to seek help.  

“You can seek somewhat different kinds of help depending on the situation,” says Josefina Sallén. “When it comes to challenging your business model and your approach, there are many talented people who can help; we can do it but others can do it too. But we are not primarily business consultants. We are happy to educate others so that they can spread our methods further; this is when research can be utilised in the right way.”  

Ensure that the business model is sustainable 

One of the most important steps. “All work with the transition to a circular business model is based on the business model being sustainable both economically and ecologically – that it can show reduced impact on the climate and that it is sufficiently profitable,” says Josefina Sallén.  

“It’s important that you include circularity as well as other aspects of sustainability. This is one of RISE’s main strengths. We do these kinds of calculations for many companies by looking at the big picture. It can be a matter of life cycle analyses or different measures of circularity. These can be very complex, but we develop methods and tools to make the complexity manageable for both companies and business advisers, at the same time as we make the connection with business impact and profitability.”  

Involve customers and find new business partners 

A circular economy is not based on the same traditional roles as the linear with sellers and buyers; they instead work together towards meeting a special need.  

“In a circular economy, you are more partners with your customers than in a linear economy,” says Josefina Sallén. “It’s then good to establish that partnership from the beginning. And feel free to go beyond your usual customer contacts. They’re often accustomed to things being done a certain way. Talk more with those whose needs you intend to fill.”  

Dare to put your business to the test 

Do not be afraid to put your business to the test, even if not everything is completely clear.  

“We encourage you to test on a small scale early on, learn from the experiences and then test again,” says Josefina Sallén. “Just get underway, because you’ll learn a lot. “Additionally, you don’t need to have all the solutions in place, and if you have a dialogue with the customer, you can develop and improve the solutions together.”  

Explain what you’re doing 

Circular economy is still a very new concept and many companies have a long way to go. There is thus much to be gained by being open with your company’s plans.  

“Many companies are still uncertain and everyone is looking for good examples,” says Josefina Sallén. “So right now, there are still opportunities to be out early and gain competitive advantages by explaining your circular business solution. It doesn’t matter if it’s on a small scale as long as you are honest and transparent. In this way, others can be inspired and customers who are interested in circular business solutions can find your company.”  

Abandon the linear business model 

Few companies have made the journey from linear to circular. But if you have a circular business model that does the job, it is important to scale up and increase volumes, otherwise you will never reach your goals. 

“You can leave behind the linear business model once you feel safe and comfortable with having products and services that are the most profitable and sustainable. Until then, you can absolutely continue with both a linear and a circular business model. There is no contradiction in that,” Josefina Sallén concludes.