Developed in collaboration with:

CIRCULAR
BUSINESS MODEL
DESIGN GUIDE

A practical guide to help business

leaders identify circular opportunities
and design business models that create,
deliver and capture value
CONTENTS

INTRODUCTION 02
OPPORTUNITY ASSESSMENT: WILL IT WORK? 05
1 WHERE TO PLAY  06
2 HOW TO WIN  13
3 HOW TO OPERATE  18
4 HOW TO PROFIT  21
FINAL OPPORTUNITY ASSESSMENT 24
CONCLUSION AND NEXT STEPS 25
SUPPORTING MATERIAL 27
COMPLETED EXAMPLES 37

01
INTRODUCTION:
Creating value in new ways MENU

with the circular economy Mining/materials

Manufacturing

Farming/
An economic case that collection

delivers on sustainability PARTS Recycle

Biosphere MANUFACTURER
restoration
The circular economy (CE) is a key enabler of the shift to
sustainable business practices, represented in the UN
Sustainable Development Goals as SDG12: responsible PRODUCT Refurbish/
production and consumption. It has an important role
MANUFACTURER remanufacture

in protecting life on water and on land (SDGs 14 and 15)

and contributing to climate action (SDG13). Biogas
SERVICE Reuse/
redistribute
According to a report by the Ellen MacArthur Foundation PROVIDER
(EMF), only five per cent of the material value of goods
produced is recovered.1 The CE provides a genuine economic UT AL N
L N RI NIC
alternative. Restorative and regenerative by design, it aims A H

EN

UT
LOGIC

TEC
Maintenance

TS
to maintain the value and use of products, components and

RIENT
materials at all times. This means enabling reuse, multiple Anaerobic

IO
S
digestion/ B
uses, cascading uses, or fully closed loops for technical composting

or biological resources.
Circular businesses have an important role in the transition
to the circular economy, and there is commercial Extraction
of biochemical
opportunity to recover, generate and maximise value within feedstock

production and consumption systems. This is delivered

CONSUMER USER
through product life extension, re-use, remanufacturing, © Ellen MacArthur Foundation
up and downcycling, and recycling. New business models,
the use of new disruptive technologies and new mindsets, LEARN MORE ABOUT THE CIRCULAR ECONOMY ON THE EMF WEBSITE
particularly around technology, are also key.

02
ABOUT THIS GUIDE
MENU

Purpose of the guide Authors Who is it for? How to use it

The case for moving to the CE is The guide has been created through The guide is for any business wanting The guide can be used in two ways:
compelling and necessary. It offers an EMF CE collaboration project, led to understand how they can create,
• sequentially, working step by step
a way of improving resource and and developed by experienced business deliver and capture value from circular
in a structured way to identify and
economic efficiency while reducing design, sustainability and CE experts practices. Regardless of sector, region,
define new opportunities in an area
the impact on the natural environment, at PA Consulting and Exeter Business business activity, size or maturity,
of business you are interested in
biodiversity and climate, and it’s an School. Progress was informed by it can be used to:
opportunity worth $1.8 trillion in value regular testing and feedback from • or with a focus on particular areas
• identify new ‘greenfield’
in Europe alone by 2030.2 large and small businesses, across to test and refine for those with an
circular business opportunities
sectors and regions, from early stage existing circular business concept.
While technology, policy and regulation and define the business and
start-ups to established multi-nationals.
have critical roles to play, the transition operating models required Circular business design is an innovative
to a CE will be powered by businesses of process, so be prepared to test key
• explore and define how existing
all sizes finding new, circular ways of assumptions, test and learn, and iterate
linear businesses can become circular
creating, delivering and capturing value. your business model with experience.
• refine existing circular business
This guide helps businesses explore The steps and tools can be used
concepts and pilots.
and design circular business models. independently or in a workshop setting.
It provides practical steps and The guide explores how to create,
templates to navigate an area of deliver and capture value in its NAVIGATING THE GUIDE
enormous opportunity. different forms, recognising that this
is critical to investable and scalable
circular business models.

V1 NOV 20

03
 NAVIGATING THE GUIDE
MENU

Four steps to seize the CE opportunity

Opportunity assessment
This guide will help you identify and define the
opportunities for circular business models for your
business. The following four steps will help you make WILL IT WORK?
decisions about: Continuously assess circularity feasibility
WHERE TO PLAY – identify circular
1 business opportunities, using the
circular value system mapping tool

HOW TO WIN – create win-win

2 circular value propositions, using
the partner mapping tool and circular
value proposition template

HOW TO OPERATE – identify the circular WHERE HOW HOW TO HOW TO

3 capabilities your business will need,
TO PLAY TO WIN OPERATE PROFIT
using the circular capability checklist

HOW TO PROFIT – select the right Identify circular Create Identify Select
4 circular pricing strategy, using business
opportunities
circular value
propositions
circular
capabilities
circular pricing
strategy
the pricing strategy checklist.

Throughout these four steps, the opportunity

assessment tool will help you assess and refine
the feasibility of the opportunity. And our Identify the Explore the
opportunity opportunity
completed examples, using a fictional organisation
called ‘FashionCo’, offer further support.
Click graphic to navigate to a section.

04
 OPPORTUNITY ASSESSMENT: WILL IT WORK?
Use this template as you work through each step of the guide to assess COMPLETED NAVIGATION MENU
EXAMPLE
and refine the choices you make. Scoring is subjective.

WHERE How much potential value could this opportunity provide? Think about:
TO PLAY • how long it will take to realise that value
• how well does the opportunity align with organisational strategy.
Little to no perceived value Very high perceived value

To what extent is there potential in the value exchange

HOW between the business, customers and partners? Think about:
TO WIN • if there is a market for the value exchange
• whether customers and partners want to be part of the opportunity.
No value exchange opportunityHigh value exchange opportunity

How great is the gap between existing capabilities and the

HOW TO capabilities you require? Think about:
OPERATE • the cost associated with closing the capability gap
• how much effort it will require to close the capability gap.
Current capability not compatibleCurrent capability highly compatible

To what extent will the pricing strategy enable financial

HOW TO sustainability? Think about:
PROFIT • if the pricing strategy will enable flexibility
• if the pricing strategy is right for your current and new
customers now and in the future. Not financially sustainableVery financially sustainable

How will this impact the business and its staff due to the amount
BUSINESS of change required (including the emotional cost)? Think about:
IMPACT • what it will require to launch the opportunity
• how the opportunity identified will affect the
company’s culture, processes, structure and staff. Negative impact Positive impact

What is the level of risk associated with pursuing or not pursuing

RISK this opportunity? Think about:
• how this opportunity could create or prevent
financial and organisational risks
• the extent to which the opportunity will High riskLow risk
affect new and existing customers.
TOTAL/30
05
 1 WHERE TO PLAY
NAVIGATION MENU
Identify circular business opportunities

This section has three tools:

The aim of this step is to
identify circular business  A: MAP EXISTING  B: CONSIDER  C: IDENTIFY
opportunities VALUE FLOW LOST VALUE AND CIRCULAR VALUE
VALUE AT RISK OPPORTUNITIES
There are three parts to this step.
It considers the existing value in the Objective Objective Objective
business system, where value is lost and
at risk, and opportunities to recover lost Identify the existing flow of Identify where value is lost Based on the insights from 1A
value and maximise existing values. value within your system, what within your system and and 1B, identify ways of creating
Two circular concepts will help you kind of value it is and how it what value is potentially and/or closing loops to recover
complete this step: is measured at future risk lost value, maximise existing
value or conserve value at risk
• the power of circularity – Think about: Think about:
which describes how to create Think about:
economic value through looping • What value do I provide? • Where is this value being
of resources and products lost? Where are there • What opportunities are
• What part of the value
broken or incomplete there to recover or create
• a categorisation of typical circular chain do I manage?
loops? Why is it not new value? Could any
business models that put these
being captured? of the typical circular
looping approaches into practice.
business models help?
• What future customer,
These are detailed further in the
supply or policy changes • Who benefits from
supporting material.
may put current value this value?
creation at risk?

06
 1 A: Map existing value flow
NAVIGATION MENU

USE POST-IT
NOTES TO
ADD MORE
OBJECTIVE
BOXES
OR USE OUR
VALUE YOU LARGE-FORM
TEMPLATE
CONTROL AND
MANAGE
THINK ABOUT

INSTRUCTIONS

SEE COMPLETED
EXAMPLE (P38)

VALUE YOU
DON’T MANAGE

07
1 A: Map existing value flow – notes
BACK TO
TEMPLATE

Objective: Instructions: Supporting concept:

four types of value3
Identify the existing flow of 1 Use post-its to identify the key stages of
the value system you are considering (e.g. Resource value
value within your system. from resource extraction, manufacturing, Product, materials, energy, people, space, processes,
distribution, sales, use, end of life disposal). waste streams
Place these in a circle and annotate with any
Consumer value
critical aspects of the value creation process
Benefits provided to the change to consumer through
2 Map how value flows across the chain the product or service
Think about:
at each of these stages. Separate the
Data value
value you control and manage on the
• What value do I provide? What type of value? Data collected from your product or services,
inside of the circle, and value you don’t
patents innovation
• What part of the value chain do I manage? manage on the outside, such as value that
is managed by a supplier or partner Relationship value
Value of networks and partnerships, consumer loyalty,
3 Consider the four types of tangible
consumer lifetime value
value and how these exist within your
system (see supporting concept, right) Within CE and sustainability systems, it is also important
that a multi-stakeholder perspective is considered, i.e. that
value is provided to:

• environment
• society
• economy.
SUPPORTING
MATERIAL (P27–28)

08
 1 B: Consider lost value and value at risk
NAVIGATION MENU

Value that is lost or at risk:

1 A: 2

OBJECTIVE 3

VALUE YOU 5
CONTROL AND
MANAGE

6
THINK ABOUT
7

VALUE YOU 8
DON’T MANAGE

9
INSTRUCTIONS 10

11
SEE COMPLETED
12 EXAMPLE (P39)

09
1 B: Consider lost value and value at risk – notes
BACK TO
TEMPLATE

Objective: Instructions: Supporting concept: the power

of circularity
Identify where value is 1 Looking at your system map from 1A,
identify where any types of value might The power of the inner circle
lost within your system be lost because of linear flows or broken Materials and resources are reused, refurbished
and what value is loops (see supporting concept, right) or remanufactured through concepts such as
potentially at future risk. 2 Identify what value within the modularity and second hand markets
system might be a risk due to future The power of circling longer
changes such as resource security, The products, components or materials are designed
climate change, regulation etc. to last longer, be more durable and easier to repair
3 Consider how much value is being lost The power of cascaded use
Think about: or is at risk, and why (e.g. existing Product and materials have secondary and
industry structure, competitive forces tertiary uses rather than disposal
• Where is this value being lost? Where and technical barriers)
The power of pure circles
are there broken or incomplete loops? 4 List out and prioritise value risk areas Closed loops are created where waste materials
Why is it not being captured? based on the importance and impact to and disassembled products and components
• What future customer, supply or your business can be used as feedstock for new products4
policy changes may put current
value creation at risk?

SUPPORTING
MATERIAL (P29)

10
 1 C: Identify circular value opportunities
NAVIGATION MENU

Value that is lost or at risk:

Resource Circular
1 recovery supplies
2

OBJECTIVE 3

4
USE POST-IT

B:
NOTES TO
1
5
ADD MORE
6
Product lifetime BOXES
7 extension OR USE OUR
LARGE-FORM
THINK ABOUT 8
TEMPLATE
9

10
Sharing
11 platform
12

INSTRUCTIONS

Idea description: Idea description: Idea description: Idea description:

USE POST-IT
CIRCULAR IDEAS

NOTES TO
ADD MORE
CAPTURE

BOXES

Type of value generated Type of value generated Type of value generated Type of value generated
& who benefits: & who benefits: & who benefits: & who benefits:

SEE COMPLETED
EXAMPLE (P40)

11
1 C: Identify circular value opportunities – notes
BACK TO
TEMPLATE

Objective: Instructions: Supporting concept: types of circular

business models5
Identify opportunities to 1 Create a new version of your
1A existing value flow map Sharing platforms
create or close loops to Enable increased utilisation of a product by
2 From 1B, utilise the list of value lost or at risk
recover lost value, maximise enabling shared use/access/ownership, often allowing
3 Using the looping concepts and circular
existing value or conserve business models as inspiration, consider
consumers to access products more cheaply

value at risk. for each item how to create and close Product-as-a-service
loops to recover or conserve value. Products are no longer owned but accessed
On the worksheet, draw arrows between by one or many customers through lease or
stages to illustrate where this happens pay-for-use agreement
Think about: 4 Capture your ideas to identify what kind of Product life extension
value is generated and who benefits from it Extending the working life of a product to
• What opportunities are there to ensure it can be valuable in its current form for
close loops? Where could you deploy as long as possible
typical circular business models?
Resource recovery
• Who benefits from this value? Recovering energy and materials used in the
creation and use of products to ensure they
can be used again
Circular supplies
Minimising the natural and renewable resources
used, and designing these to be re-used or recycled
SUPPORTING
MATERIAL (P30–31)

12
 2 HOW TO WIN
Create circular value propositions NAVIGATION MENU

This step identifies how you can create value for customers Supporting concept:
and key partners
Linear models and traditional customer value propositions
There are two parts to this step. First, to identify which customers and key partners are based on exchanging money for products or services.
will be critical to a successful business model, and secondly to define win-win In a CE, a richer relationship that creates mutual benefits
propositions that create value for both parties. is often required. Much of the value being recovered
or created is enabled by a relationship sustained over
time, with an exchange of information. For example,
This section has two tools: mechanisms to recover products and materials from
customers after use, or to know details about the
condition and use of these products and materials.
Rather than thinking purely about a customer/supplier
A: IDENTIFY B: DEFINE MUTUALLY
relationship, we think about a two-way partnership
CUSTOMERS AND KEY BENEFICIAL CIRCULAR where the costs incurred are outweighed by the benefits
PARTNERSHIPS NEEDED VALUE PROPOSITIONS each party receives in relation to their needs.

YOUR BUSINESS YOUR PARTNER

Objective Objective

To gain an understanding of the Identify the needs of customers Resource Need

(Cost) (Benefit)
value exchange required for the and key partners, and define what
opportunity you have selected, you a mutually beneficial circular value
will need to identify the types of proposition is.
Need Resource
partners who will be critical to your
(Benefit) (Cost)
business and the circular
opportunity identified.
Proposition

13
 2 A: Identify customers and key partners
NAVIGATION MENU

What type of organisations are required How critical will they

to make the opportunity possible? be to your success?
(High / Medium / Low)

OBJECTIVE

THINK ABOUT

INSTRUCTIONS SEE COMPLETED

EXAMPLE (P41)

14
2 A: Identify customers and key partners – notes
BACK TO
TEMPLATE

Objective: Instructions:

To identify the key customer 1 Review the value system you created
and ideas you generated in steps
and partner groups critical template 1A, template 1B, template 1C
to your success. and pick an idea to explore
2 List out in the 2A template (see previous
page) the types of organisations you will
need to interact with or will be dependent
Think about:
on to make the opportunity you identified
in the previous section possible
• customers
3 Consider different types of value
• suppliers
exchanges with organisations
• go-to-market partners
across the whole value system
• infrastructure providers
4 Assess how critical they will be in
• the whole lifecycle of products
delivering your idea and how much
and materials.
power they will have in capturing value

15
 2 B: Define mutually beneficial circular value propositions
Now you understand who you need to partner with, use the value exchange template NAVIGATION MENU

below to understand their needs and develop the offer.

Opportunity

Customer or partner Your organisation

What outcomes are they pursuing What goals are you pursuing
that you can help with? that require a partner?
Outcome

Needs What are their specific needs? What are your specific needs?
Needs

OBJECTIVE Why would your potential partner Why would you exchange value
Why exchange value with you? with the potential partner? USE SEPARATE
exchange? LARGE-FORMAT
TEMPLATE
What is our offer to each of those needs? What do you need the partner to
The offer How does this address the partner goal? offer to meet your needs?

What are the unique and additional benefits What benefits will you receive
THINK ABOUT that differentiate you from competitors’ offers? from the partner?
Benefits

Proposition How would the exchange work?

INSTRUCTIONS Exchange SEE COMPLETED

model Through what channels will it be delivered? EXAMPLE (P42)

What will the partner NOT get from you What will you NOT get from the partner?
(that may be available from competitors)?
Trade-offs

16
2 B: Define mutually beneficial circular value propositions – notes
BACK TO
TEMPLATE

Objective: Instructions:

Define a win–win value 1 Complete template 2B for each

critical partner you identify
proposition for customers
2 Start with the outcome and specific
and each critical partner. needs you and the partner have
3 It may help to consider different segments,
or use personas of customer journey maps
Think about: to understand your partner’s perspective
4 Develop mutual win-win propositions,
• exchange of products and materials, and define how these will work in practice
data and services, not just money
5 Engage with partner organisations
• exchanges over time, not just at and consider collaborating with
purchase point them on this exercise
• customer pain points that exist
today and that could be barriers to
a circular proposition.

17
 3 HOW TO OPERATE
Identify circular capabilities NAVIGATION MENU

This section has one tool:

This step identifies the key
circular capabilities your  A: IDENTIFY KEY Supporting concept:
organisation will need in CIRCULAR CAPABILITIES
Business capabilities are a helpful way to
order to be successful.
Objective think about what your business will need to
do and what tasks it will need to perform.
It explores both operating and support
Identify the capabilities needed to successfully They are a way of defining the ‘what’ of the
capabilities, organised by typical circular
operate your new circular business. operating model.
business models. These are prompts to
inspire you to identify the circular To deliver capabilities successfully, businesses
capabilities your business will need, and need a combination of resources (such as
should not constrain your thinking. people, information, applications and
facilities) organised in the right way
The section focuses on circular specific
(processes and structure, for example).
capabilities which may be new or have
critical differences. The operating and support capabilities
required will differ between the various
circular business models.

18
 3 A: Circular capability tool
NAVIGATION MENU
Now that you understand who you need to partner with and their needs,
use the circular capability tool to define the capabilities to operate successfully

Key activity Step 1 Step 2 Step 3 Step 4

steps

Capability

Capability
OBJECTIVE

Capability USE SEPARATE

LARGE-FORMAT
TEMPLATE FOR
MORE SPACE
Capability
THINK ABOUT

Capability

Capability
INSTRUCTIONS

Critical resources
needed: SEE COMPLETED
EXAMPLE (P43)

19
3 A: Circular capability tool – notes
BACK TO
TEMPLATE

Objective: Instructions: Supporting concept:

circular capabilities
To identify specific circular 1 Identify the key value-adding activity steps
for your circular initiative and add these • operating circular capabilities (p32)
capabilities that your to the top of the table (see page 19)
• circular supporting capabilities (p33).
business will need. 2 Break down each step into the
capabilities required to perform it
(use the capability prompter list in
the supporting concept box, right)
Think about:
3 Identify any critical resources you will
• operating and supporting capabilities. You need for these capabilities. Consider key
can use the next two pages as a prompt. and scarce skills, facilities or equipment,
information, technology and relationships
4 Colour code the maturity of each capability SUPPORTING
to guide where you will need to focus MATERIAL (P34)
development activity:

Red – capability does not exist

and cannot be easily acquired
Amber – capability exists or can be
acquired but will need to be developed
Green – capability exists or
can be easily acquired

20
 4 HOW TO PROFIT
Identifying the pricing strategies required to develop financially NAVIGATION MENU

sustainable business model(s)

This section has one tool: Supporting concept:

This step identifies pricing Previous steps have focused on a broad

strategies that will help your A: PRICING STRATEGY TOOL concept of value, recognising the important
contribution the CE can make to the
business monetise the value
it creates, making it viable Objective environment and society.
To be successful, your business needs to
and able to scale. To understand the potential pricing strategies capture enough of the value it creates for
that can be employed to help achieve your customer and partners as income, in order to
It includes prompter material on
CE goals. finance itself.
different pricing strategies and how
they can apply in the CE. To attract investment capital, cover costs, invest
in the future and scale, the business must be
The pricing strategy tool helps you
financially viable, not just creating value in the
choose a suitable strategy and evaluate
value system.
the implications.
This can be a challenge in the CE, given it often
necessitates understanding and maximising
value over the whole life of products and
materials, potentially through multiple owners.

21
 4 A: Pricing strategy tool
NAVIGATION MENU
Now that you understand the value exchange propositions, use the pricing
strategy tool to define the right pricing model(s) for your opportunity

Opportunity name: Implications:

What are the benefits of your

chosen pricing strategy over linear
OBJECTIVE competitors? (Identifying value)

How will you capture and report non-

financial value that would otherwise
have been lost? (For instance, the
social and environmental impact)

Which pricing How will your customers benefit

THINK ABOUT model fits from this pricing strategy?
best with the (i.e. meeting needs)
opportunity?
(Pay for
ownership How much are your customers
or access) willing to pay? (Consider different
pricing for different segments)
INSTRUCTIONS

What are the organisational

implications for your business?

How will this pricing strategy

impact your revenue and costs? SEE COMPLETED
EXAMPLE (P44)

22
4 A: Pricing strategy tool – notes
BACK TO
TEMPLATE

Objective: Instructions: Supporting concept:

To understand the potential 1 Identify which pricing model (see • paying for ownership – pay for the right
supporting concept, right) fits best to own the product indefinitely
pricing strategies that can with the opportunity identified
• paying for access – pay for the right to
be employed to help achieve 2 Consider the questions in the pricing access the product on agreed terms.
your CE goals. strategies (see supporting material) and
how these will align to your business model
3 Once you have identified a pricing model
that works with your business model, use
the pricing strategy tool template to think
Think about: through the implications for your business

• Which pricing model fits best with the

circular opportunity identified?
• What are the implications of the
chosen pricing strategy in terms SUPPORTING
of impact and benefits? MATERIAL (P35)

• Who are the beneficiaries and what

is their willingness to pay?

23
FINAL OPPORTUNITY ASSESSMENT
Assess and review the potential of your opportunity NAVIGATION MENU

WHERE How much potential value could this opportunity provide? Think about:
TO PLAY • how long it will take to realise that value
• how well does the opportunity align with organisational strategy.
Little to no perceived value Very high perceived value

To what extent is there potential in the value exchange

HOW between the business, customers and partners? Think about:
TO WIN • if there is a market for the value exchange
• whether customers and partners want to be part of the opportunity.
No value exchange opportunityHigh value exchange opportunity

How great is the gap between existing capabilities and the

HOW TO capabilities you require? Think about:
OPERATE • the cost associated with closing the capability gap
• how much effort it will require to close the capability gap.
Current capability not compatibleCurrent capability highly compatible

To what extent will the pricing strategy enable financial

HOW TO sustainability? Think about:
PROFIT • if the pricing strategy will enable flexibility
• if the pricing strategy is right for your current and new
customers now and in the future. Not financially sustainableVery financially sustainable

How will this impact the business and its staff due to the amount
BUSINESS of change required (including the emotional cost)? Think about:
IMPACT • what it will require to launch the opportunity
• how the opportunity identified will affect the
company’s culture, processes, structure and staff. Negative impact Positive impact

What is the level of risk associated with pursuing or not pursuing

RISK this opportunity? Think about:
• how this opportunity could create or prevent
financial and organisational risks
• the extent to which the opportunity will High riskLow risk
affect new and existing customers.
TOTAL/30

24
CONCLUSION AND NEXT STEPS
NAVIGATION MENU

Making your circular opportunities a reality

Next steps Acknowledgments

This guide is a starting point for your We would like to thank those individuals who
journey into creating, delivering and have contributed to developing the guide,
realising value through circular providing feedback, or testing it:
business models. From the Ellen MacArthur Foundation network and other
organisations: Frances Kärsten, Peter Bartel and Arne
Circular business design is an innovative
Janssen (C-ECO), Gaurav Sharma (Schneider Electric),
process, so be prepared to test key Mark Lancelott Merryn Haines-Gadd Peter A Lindeblad and Pia Huusfelt (INGKA), Nitesh
assumptions, test and learn, and iterate Magdani (Net Positive Solutions), Sophie Thornander
your business model with experience. Sustainability and Researcher in Circular and Raquel de Mira (Philips), Jan Konietzko and Brian
Baldassarre (TU Delft), Isabelle Gubelmann-Bonneau
business design expert Economy and Design
We would love to connect with you to and Imre Horvath (Solvay), Sarah Jones (Siemens),
PA Consulting University of Exeter Dhruv Boruah and Nicky Adamo (CommonVC),
hear your experiences and help you along
[email protected] [email protected] Domini Hogg (Tried and Supplied), Adam Vine
your journey. Your feedback will also
(Relay. eco), Elliot Warren (Giftdrop)
shape the guide's ongoing development.
From University of Exeter: Fiona Charnley,
Complete our questionnaire or get in Adam Lusby, Delfina Zagarzazu, Ken Webster,
touch directly. Oke Okorie, Katie Cooke, Kim Nettleton-Croley,
Allen Alexander and David Monciardi
From PA Consulting: Finuala Alexander, Elodie Aubanel,
Tom Bovingdon, Olivia Christen, Donna Fiegert, Kati
Gardner, Georgina Gately, Nicola Keen, Anne-Marthe
Developed in collaboration with: Kristiansen, Annabelle Livingstone, Sam Maguire,
Stephan Metcalfe, Michael Milton, Josh Morris, Richard
Owen, Natalie Podd, Sukh Plaha, Grace Rawcliffe,
Rishi Sharda, Eelco Spinhof, Amelia Yeomans

25
SUPPORTING
MATERIAL

26
 SUPPORTING MATERIAL
NAVIGATION MENU

This section is divided into six key topics:

The aim of this section:
1A: Value 1B: The power 1C: Circular business
The aim of this section is to provide taxonomy of circularity models in practice
further information on the supporting
concepts for the steps and tools in
Objective Objective Objective
the main section.
This information is to help guide you Identifies types of tangible Provide insight on how Describes five various circular
through your exercises and provide and intangible value and circularity can create value in business models, how they work
inspiration when identifying your organisation can achieve within four ways. in practice, their benefits and how
circular opportunity. It will also help their CE system. they can create value in relation to
set which circular business model will the power of circularity.
best fit and is most relevant for
your organisation.

 3A: Operating  A: Circular supporting

3  4A: Innovative
circular capabilities capabilities pricing strategies

Objective Objective Objective

Use this list of operating Use this list of supporting Examples of pricing strategies
capabilities to help identify capabilities to help identify within ‘pay for ownership’ and
the circular capabilities your the circular capabilities your ‘pay for access’ for your
business will need. See also: business will need. See also: chosen circular business model.
3A: Circular capabilities list. 3A: Circular capabilities list.

27
 1A: Value taxonomy
The value taxonomy framework identifies different types of value available within the circular system, and will help in completing step 1A. SUPPORTING BACK TO
MENU NOTES

The Taxonomy of Value framework,

developed by Haines-Gadd and Charnley, TYPES OF TANGIBLE/EXPLICIT VALUE
helps to identify and understand the
different types of value available within Resource value Consumer value
the CE system.6 Through literature review
and case study analysis they propose Product, materials, energy, people, space, Benefits provided to the consumer through the
there is tangible/explicit and intangible/ processes, waste streams product or service
implicit value within the CE.

Data/knowledge value Relationship value

Tangible/explicit value is value
that can be capitalised upon: Data collected from your product or service, Value of networks and partnerships, consumer
patents, innovations loyalty, consumer lifetime value
Resource value, customer value,
relationship value, data/knowledge value.

Intangible/implicit value is
value that is generated as a TYPES OF INTANGIBLE/IMPLICIT VALUE
result of circular systems:

Stability and control, symbiosis, positive

social impact, altruism, behaviour change. Stability Positive
and social Altruism Behaviour
control impact change

28
 1B: The power of circularity
Circularity can create value in four ways.7 Read the descriptions about the four different ways circularity can create value to SUPPORTING BACK TO
MENU NOTES
assess whether it inspires any new ideas about opportunities for your business when completing step 1B. Pages 30–33 outline
five business models linked to these circular values.

THE POWER OF THE THE POWER OF THE POWER OF THE POWER OF

INNER CIRCLE CIRCLING LONGER CASCADED USE PURE CIRCLES

This involves minimising the materials This looks at ways to extend the life This business model optimises the Products within this concept of
and resources required for reusing, of products through innovation and use of the product from delivering its value creation are created from
refurbishing or remanufacturing. technology, minimising the resources primary purpose, to secondary use pure, raw materials. When they are
For example, the modular design of required for full product or component after this, and then tertiary use etc. For redistributed, the quality is maintained,
Nike Zvezdochka shoes replaces worn creation. For example, Caterpillar has example, H&M sell first-hand clothing extending product longevity. For
parts rather than the whole shoe. an engine block with a removable as a primary purpose, may re-sell to example, Desso carpet use pure nylon
sleeve. When the component is different markets as second-hand, then because products made from pure
recovered, this material can be turn the clothing into other products components are easier to disassemble
removed and replaced to return the such as cleaning cloths, followed by use to create new products in both the
engine to as-new performance. as textile fibres for insulation material. biological and technical cycles.

29
 1C: Circular business models in practice
Circular business models use loops to create and retain value within the system. Below are examples of typical circular SUPPORTING BACK TO
MENU NOTES
business models and describes what benefits they offer, to help complete step 1C.8

BUSINESS MODEL THE NEED CIRCULAR SOLUTION THE BENEFIT

A lot of equipment owned by individuals A peer-to-peer sharing platform Access to a wide range of high-end
Creating a sharing platform is used only a few hours in its lifetime. for technical equipment; a thriving equipment at an affordable rate for
SHARING An effective sharing economy model marketplace for lenders and borrowers the consumer, extra revenue from
PLATFORMS Example: Fat Llama would help realise underutilised potential with insurance covered by Fat Llama idle assets for asset owners and a
strong incentive to create equipment
that lasts for the manufacturers

Products are used by one or many Plastic printing cartridges are An IoT subscription model that Reduced packaging eliminates up to
expensive to the customer, often increases cartridge recovery and 57% of waste. Ink costs for consumers
customers by means of a lease single use, and rarely recycled recycling by using connected printers reduced by up to 50%. Data helps inform
or pay-for-use arrangement. to send customers replacement system designs for manufacturers to
PRODUCT AS cartridges, with pre-paid envelopes minimise waste, improve serviceability,
Example: Hewlett-Packard for returning used cartridges durability, and customer satisfaction
A SERVICE

Extending products’ lifecycle Electronic products are very difficult Trade-ins allows users to trade in their Fewer devices are being thrown away
through initial product design and to recycle, expensive to produce, phones or laptops for an Apple gift or recycled while still useable. The full
and use up a lot of resource in both voucher. The product is then refurbished value of the materials and resources is
refurbishment or remanufacture manufacturing and recycling and made available for resale or reuse being gained before they are effectively
enabling the resale of products recycled and the parts used in new
devices, benefitting the organisation
PRODUCT-LIFE- Example: Apple
EXTENSION

An enormous amount of material Rede Asta has partnerships with Impact at scale: wide network
Upcycling or recycling products value is lost in landfill sites. For hundreds of companies in Brazil to means discarded materials can be
example, everyday in Brazil around collect waste or unused equipment. recovered nationwide, creating value
Example: Rede Asta 200,000 tons of solid waste is collected They then offer bespoke designs and reducing liabilities for companies.
and only around 3% is recycled using these discarded materials to Over 80% of the products for consumers
RESOURCE suit specific marketing purposes are made from recovered materials
RECOVERY

High utilisation of resources and energy Google is the primary manufacturer of all Active transition to a CE for Google that
Redesigning products and efficiency required in all hardware, its server parts and tests all components combined with a circular approach to
software and all infrastructure every quarter. This helps it maintain/ optimise the end of life of servers have
supporting operations across Google Data Centres prolong, refurbish/remanufacture, reuse/ resulted in hundreds of millions per year
Example: Google Data Centres redistribute or recycle as needed for in cost avoidance for the organisation
the longest lifecycle product possible
CIRCULAR
SUPPLIES

30
 1C: What value can business model strategies create?9
Below is a mapping that shows how the typical circular business models can create value, SUPPORTING BACK TO
MENU NOTES
using the value taxonomy described on page 28.

RESOURCE VALUE CUSTOMER VALUE KNOWLEDGE/DATA VALUE RELATIONSHIP VALUE

• revenue from selling access to a product • can reduce reliance on individuals • improved understanding of when customers • longer customer and company relationship
for a specific period of time or ‘uses’, to invest in paying for the product require goods and what they need them for • relationships with customers who
and retaining material ownership • more flexibility by providing functions/ could not afford product outright
• revenue from increased utilisation rate of products, products only when needed • ability to develop supply chain or
enabling shared use/access/ownership • provides increased access partner goals to deliver the platform
SHARING • reduction in the resources used and wasted due to to variety of products
PLATFORMS shared rather than individual ownership of products

• ability to create new services as • can be more cost effective for • delivering products as a service can facilitate • reach more consumers at a lower price
unique value propositions consumer as reduces upfront improvements in the ability to collect data point and lower cost to the organisation
• more consistent and predictable income costs on high value items particularly where the service is digital • ability to develop supply chain or
streams from service subscriptions • provides flexibility, less commitment partner goals to deliver the service
• potential for reduced resource usage and waste • increased product value from repairs
creation through delivering as a service • provides more options for
PRODUCT AS
A SERVICE how to pay for the service

• revenue from providing after-sales maintenance • reduces the amount that individuals • maintaining products gives exposure • longer customer/company relationship
or upgrading services on longer life products have to pay to replace items to how consumers are using products, • relationships with contractors/suppliers
• revenue from sales of refurbished, remanufactured • extended use of products that which is valuable in future marketing • ability to develop supply chain or partner
or repaired units and components are long lasting and reliable and design activities goals to enable the extension of product-life
• reduced resources used instead of replacing • allows consumers to trust they are
items, consumers maintain existing products making sustainable purchases
PRODUCT-LIFE-
EXTENSION
• revenue from recovering resources out • cost-efficient option from using • greater knowledge about resource • creates the potential for longer customer
of disposed products or by-products/ pre-used materials and resources. properties and infrastructure can relationships as it provides a reason for
resourcing end-of-life and end-of-use • the ability to make eco-conscious support understanding of opportunities customers to come to you at the end of
• resources recovered can be used to save purchasing decisions of products that for new product development use. This also allows stronger and longer
money in other areas e.g. capture of have a lower environment burden relationships with contractors/suppliers
heat or light during manufacturing • ability to develop supply chain or partner
RESOURCE • reduced waste as valuable materials are goals to enable the recovery of resources
RECOVERY extracted for re-use/reducing waste and
production waste by reproducing materials

• reduced waste and pollution from • knowledge that products used • can be more transparent in data • longer lasting relationships with partners
intentionally using resources and materials will be properly and appropriately about the products to be used • ability to develop supply chain or partner
designed to be used and re-used managed and disposed as a product differentiator goals to enable the use of circular supplies.
• potential cost reductions from
minimising resources used
CIRCULAR
SUPPLIES

31
 3A: Operating circular capabilities
Use this list of operating capabilities to help identify the circular capabilities your business will need. SUPPORTING BACK TO
MENU NOTES

Circular business model type

Circular business
model types

Operating circular Sharing Product as Product-life Resource Circular

capabilities platforms a service extension recovery supplies

Effectively ensure material and component flows are clean so they can be reused by customers, partners etc.
Clean material flows
or reused in manufacturing of new products

Repair and re-use products and

Product maintenance Repair and collect products, and provide maintenance for longer components through your own
and repair term use by the customers manufacturing process to produce
new products

Circular redesign Redesign products for circularity in order to provide upgrades Upgrade and redesign re-used products
and upgrades for longer term use by the customers and materials to develop a new product

Effectively collect and manage returned

Take back schemes /
Effectively manage return and collection of used products used products and byproducts from
manage returned
from customers other organisations, stakeholders,
products and materials
suppliers and from potential customers

Re-market
upgraded or
Re-market upgraded or repaired products for further use
Re-market products N/A repaired products
by customers
for further use
by customers

32
 3A: Circular supporting capabilities
Use this list of supporting capabilities to help identify the circular capabilities your business will need. SUPPORTING BACK TO
MENU NOTES

Circular business model type

Circular business
model types

Circular supporting Sharing Product as Product-life Resource Circular

capabilities platforms a service extension recovery supplies

Data analytics Get insight on customer need, demand, product information and usage, and identify market trends. Manage
management the data collection and analysis. Use this information to improve the circularity of your product or offering

Manage flexible Enable short- and long-term contracts with

pricing models/ pricing options for customers. Consider platforms,
N/A N/A
reprice products/ memberships and different pricing levels for first buys,
manage pricing services services, repairs, collection/delivery and refills

Assess quality of materials and re-used

Assess quality of products, and ensure that the reused
Manage quality materials to be used in the manufacturing
products and refilled products are in good condition
standard processes of new products and assess quality of
to be further used by existing or new customers
finished products to be sold to customers

33
 3A: Circular capabilities list
Providing a list of operating and supporting circular capabilities that will help identify what capabilities your business needs. SUPPORTING BACK TO
MENU NOTES
Operating capabilities directly create value for customers, whilst support capabilities do this indirectly, enabling the operating capabilities.

CIRCULAR CAPABILITIES LIST

OPERATING CAPABILITIES SUPPORTING CAPABILITIES

Supporting capabilities Management of distribution channels

Assessment and/or inspection of materials Effective platform management

Inventory management Service subscription and/or service contract management

Management of innovative packaging/repacking products Matching supply/demand real time assessment

Asset management and tracking/remote monitoring Supplier management

Management of product cleaning and refill processes Customer relationship management

Management of remanufacturing, refurbishment Circular supply chain management

and recondition of products

Understanding new product uses and applications Circular lifecycle planning

Management of circular production processes Forecasting and monitoring market prices

Understand utilisation of products Management of circular procurement processes

Manage R&D processes Management of partnerships

Management of sustainable sourcing Conducting market analysis

Design of products for disassembly, recovery, end of life Management of legal processes
and life extension

Product condition assessment/inspection of products/ Contract management including outsourcing contracts

conducting product fault analysis

Collection of waste Management of financial incentives schemes for recovered parts

34
 4A: Innovative pricing strategies
SUPPORTING BACK TO
Examples of pricing strategies within ‘pay for ownership’ and ‘pay for access’ for your chosen circular business model.
MENU NOTES

WHAT PRICING OPTIONS DO I HAVE?

If I offer my customers ownership of a product If I offer my customers access to a service

What are the pricing Pricing Number of What are the pricing Pricing Number of
strategy options? implications transactions strategy options? implications transactions
Sell and The customer owns Separate price strategies Pay for Consumer has access Pricing based on one-
buy-back MANY one-off
the product until required for primary to an asset for a off access based on the
for re-sale usage
and reuse another buys it markets and secondary period of time length of usage– e.g.
“used” markets – e.g. Airbnb, Rent the Runway
eBay, Depop, Gumtree (occasion), Filippa K
MANY
Sell and The customer owns Flexible pricing strategies Pay for Pricing based on Access to a service on
refurbish product and receives sub-
as it needs to include expected uses over a subscription basis –
for re-sale scription
a deposit/incentive refurbishments and resale of lifetime and timing e.g. Netflix, Rent the
on return of product products and components Runway (monthly)
or core component - e.g. Caterpillar REMAN,
The Real Real, Patagonia
Sell and Customer owns until Pricing strategies may
take- manufacturer takes be closest to traditional
back for
recycle back for recycling models – e.g. reGain,
H&M, Zara, C&A FEW

Supporting concept: Paying for ownership – Supporting concept: Paying for access –
pay for the right to own the product indefinitely pay for the right to access the product on agreed terms

35
COMPLETED
EXAMPLES

36
 C
 OMPLETED EXAMPLES
NAVIGATION MENU

Inspiration examples to help you complete the exercises…

The organisation Where to find the examples How to use the examples

We will be using fictional organisation Each exercise template links to a Use FashionCo’s examples as a guidance
called ‘FashionCo’ to demonstrate how completed version from FashionCo’s when you are struggling to get started
you can go about completing perspective. or are in need of inspiration.
these exercises.
FashionCo is a fashion brand that
currently operates in a linear manner.
The business is run in a traditional sense;
it sources raw materials, designs styles
and manufactures the clothes into these
styles using these raw materials. It then
packages and brings the clothes to retail
This section includes examples to the
stores to sell on to customers. tools provided throughout the guide:
Until now, FashionCo has made certain
attempts to instil circularity into its ‘FASHIONCO’ COMPLETED EXAMPLE
present operations, however it is
looking to progress this significantly FashionCo objective
and introduce circularity as a
fundamental concept. Provide examples to the exercises throughout the guide to help and
provide inspiration when using the CE Design Guide.

37
1 A: Map existing value flow [completed example]
Suppliers A, B, C – virgin
BACK TO
resources (plastic, metal,
TEMPLATE
cotton) used to produce
FashionCo fabric and components

Products most likely Packing waste

FashionCo manufactures end up in landfill or handled by waste
and sells clothing in the second hand market in Resources: manager supplier
UK and EU. developing countries Fabric (China), dyes
(India), components – zips,
They mapped the buttons, thread (China)
lifecycle of one of their
product lines (seasonal
wear) and tracked how End of life: Manufacturing:

and where value flowed Two factories

Details: in Shenzhen
across the key stages of
their system. unknown VALUE YOU 100 employees
Reusable
CONTROL AND pallets
MANAGE returned
to supplier
Capture consumer
emails at point of sale

Use/maintain: Offcuts
Garments not repaired or Distribution/sales: Sent to landfill
No info on how long maintained and discarded
product is used UK based distribution Old machinery sent to
Garments worn very products sold on landfill at end of life
infrequently company website &
Details: with retail partners
unknown
Packaging LPDE
disposed (landfill)
by consumer
VALUE YOU
DON’T MANAGE

38
1 B: Consider lost value
and value at risk [completed example] BACK TO
TEMPLATE

FashionCo Value that is lost or at risk:

Input/resources: Virgin materials at risk due to climate change
Looking at the map from 1A, 1 and resource scarcity

FashionCo identified where they are Manufacturing: Do not reuse or repurpose waste products of
losing value across their system and
2 manufacturing process (e.g. unsellable pieces, offcuts)

where value might be at risk in the Manufacturing: Equipment ending up in landfill once it
3 becomes obsolete
future due to external factors.
Distribution/sales: Having issues with unsold seasonal stock that
4 ends up incinerated or recycled

Use/maintain: No data or insights are collected about the product

in use, i.e lifespan, how often worn or used, or where it ends up at
5 end of life

1 A:
Use/maintain: No value is captured from the product during the
6 use phase

Use/maintain: Seasonal stock (coats etc.) have low utilisation rates

7 of 3–4 months per year

Use/maintain: Garments not used when out of favour, don’t fit or

8 fall out of fashion

Use/maintain: The packaging only protects the product inside and

VALUE YOU
9 yet it comprises a significant proportion of the costs
CONTROL AND
MANAGE End of life: Many of our products are not getting repaired or
10 refurbished so end up in landfill

End of life: Products not designed for disassembly,

11 material recovery

End of life: Consumers unsure of how to dispose of unwanted

VALUE YOU
12 products so end up in landfill
DON’T MANAGE

39
 1 C: Identify circular value
opportunities risk [completed example] BACK TO
TEMPLATE

Value that is lost or at risk:

Resource Circular
FashionCo 1 recovery supplies
Input/
2 resource
Utilising the list of
lost and value at risk, 3

FashionCo generated
ideas for how to recover
4

5
1 B: End of life Manufacture
the lost and at-risk value,
as well as how to create
6 [Completed Product lifetime
new value within
7
example] extension
their network. 8

9
They used the typical
Use/ Distribution/
circular business models 10
Sharing maintain sales
as inspiration. 11 platform
12

Idea description: Idea description: Idea description: Idea description: Idea description:
CIRCULAR IDEAS

Use recycled materials Repurpose unusable Create an initiative for Set up rental scheme of Organise take-back scheme
such as pre-worn cotton as materials – sell unwearable customers to share, swap seasonal clothes such of unwanted clothes for
inputs to reduce risk and clothes as dish cloths or sell unwanted clothes as coats, gloves etc upcycling or material recovery
CAPTURE

burden of virgin resources

Type of value generated Type of value generated Type of value generated Type of value generated Type of value generated
& who benefits: & who benefits: & who benefits: & who benefits: & who benefits:
Reduces overall carbon New revenue stream, Extends the use of the Increase utilisation of the Diverts resources from landfill,
footprint, benefiting better perception of the products, creates community products, creates a new creates potential new resource
the environment company’s ethics between consumers revenue stream, opens up to a stream for manufacture
different customer segment

40
2 A: Identify customers
and key partners [completed example] BACK TO
TEMPLATE

What type of organisations are required How critical will they

FashionCo to make the opportunity possible? be to your success?
(High / Medium / Low)
Picking ideas from stage
1C, FashionCo decided to
explore the rental of Logistics partner to manage distribution and take back of clothing High
seasonal clothing (coats
etc.) as a new circular
initiative. They decided to
incorporate data capture Existing customers High
as part of their activities
to track product usage
and improve their
knowledge about their Technology partner to manage online platform and collect data Medium

customers and products.

They listed all the
partners they need to
Analytics partner to manage and interpret data captured Medium
make this idea happen.

Partner to clean, repair and inspect clothing High

41
2 B: Value exchange template [completed example]
BACK TO
TEMPLATE

Opportunity
FashionCo
Customer or partner Your organisation (FashionCo)
After listing all the
potential partners in the Clothing that provides comfort, warmth Increase our customer base and capture
previous step, FashionCo Outcome and style at the time of year I need it value from a products during the use phase

picked their customer as

Coats for different occasions (work, casual, Continuous and reliable revenue stream,
the first partner to fill in Needs outdoor), varying sizes and styles increased knowledge of products
Needs
the value exchange
Saves space in wardrobe, reduce They will pay to access to clothes and
template. Why environmental impact, gives consumer facilitate data capture on our products

This allowed them to exchange? ability to have new coat each season,
can get different sizes if needed
refine what the consumer
We will provide customer focused, data- Customers will provide economic
value proposition would driven on-demand access to seasonal value and a willingness to engage with
be for their initiative. The offer clothing. The service will stock the latest data capture aspect of the service
designs, provide style suggestions, as well
They would then repeat as cleaning, repairing and storing services
this step with another No other seasonal coat service Diversify our customer base, customer
partner, such as a currently available, consumer and loyalty, data on utilisation and lifespan of
Benefits data focus of the initiative products, maximise the value of our assets
potential repairing and
cleaning partner. Proposition
Using an online platform, customer will pay a subscription for coats for a season. Data will be
captured on coat in use through RFID and then will be taken back when no longer needed
Exchange
model
Delivered by courier or through local dry cleaning network

Won’t have the ability to own and Lack of certainty that the coats
keep their coat all year round. Would will be cared for while in use
Trade-offs
need to re-order every year

42
 3 A: Circular capability tool [completed example]
BACK TO
Now that you understand who you need to partner with and their needs, TEMPLATE

use the circular capability tool to develop your offer.

Key activity Source Matching Distribution Refurbish

FashionCo steps clothing clothing to and take back and re-pack
customer needs clothes clothes
FashionCo had to gain a Capability Ability to understand Manage flexible Manage distribution Re-pack products
clear view on what sustainability impact pricing models and and network
capabilities are critical for for clothing setting the right channels
pricing strategy
the success of their rental
Capability Effective collection Analytics to Monitor item usage Add materials
of seasonal clothing
of materials and understand
(coats etc.) as a new products customer needs
circular initiative at each
Capability Stock management Conduct customer Take-back schemes/ Check quality
activity step of their value research and scheduling of
flow. This includes what feedback return and repairs
capabilities are needed to
Capability Manage customer Provide options and Inventory Product maintenance
make this opportunity insight help customer ‘select’ management/ and repair/refurbish
successful at each step, track quantity
identify capabilities Capability Manage sustainable Manage data usage Effective platform Inspect materials
FashionCo currently have sourcing and privacy management and products
(green) and identify
critical capability gaps Capability Communicate Manage ethical Subscription Product redesign
(red). In addition, and engage with marketing management and upgrade
FashionCo had to assess customers to
promote ‘give back’
what resources are
Critical resources • collection points • trained staff • trained staff • packaging
needed to make
needed: • trained staff • customer segments • sales statistics solutions
this happen. • analytics software statistics and trends • distribution • trained staff
• storage/warehouse • robust data platform. • cleaning/upkeep
space. platforms and equipment.
security software.

43
4 A: Pricing strategy tool [completed example]
BACK TO
TEMPLATE

Opportunity name: Implications:

FashionCo Rental of seasonal
clothing (coats etc.)
FashionCo needs to set a
What are the benefits of your
pricing strategy for their Avoids upfront cost, enables access to new garments, easy
chosen pricing strategy over linear
new rental of seasonal to budget for, and avoids hassle of storage or disposal
competitors? (Identifying value)
clothing (coats etc.)
How will you capture and report non- Track multiple use of garments and repairs to extend
circular initiative and
financial value that would otherwise life. This can be compared to a baseline of ‘normal’
assess the benefits and have been lost? (For instance, the garment use to calculate potential avoidance of landfill,
implications for this social and environmental impact) and natural resource usage from new production
chosen pricing strategy.
Two key segments:
Which pricing How will your customers benefit 1. FashionCo consumers and new consumers
model fits from this pricing strategy? who are environmentally conscious
best with the (i.e. meeting needs) 2. Consumers who are looking for an easy and
Pay for
opportunity? affordable way to change their garments
access
(Pay for
ownership How much are your customers
or access) Segment 1: £20 p/month for 12 month subscription service
willing to pay? (Consider different
pricing for different segments) Segment 2: £15 p/month for 24 month subscription service

Financial management is critical – pricing and profit

What are the organisational management over customer contracts and garment
implications for your business? lifetime. Management of stock will be critical,
including refreshing range with new/retiring items

Steady revenues from subscription need to be balanced

How will this pricing strategy
against stock depreciation; capital investment in
impact your revenue and costs?
garment stock required; management of financial risk

44
 Opportunity assessment [completed example]
BACK TO
TEMPLATE

WHERE How much potential value could this opportunity provide?

TO PLAY Think about:
• how long it will take to realise that value
• how well does the opportunity align with organisational strategy. Little to no perceived value Very high perceived value

To what extent is there potential in the value exchange

HOW between the business, customers and partners? Think about:
TO WIN • if there is a market for the value exchange
• whether customers and partners want to be part of the opportunity.
No value exchange opportunityHigh Value exchange opportunity

How great is the gap between existing capabilities and the

HOW TO capabilities you require? Think about:
OPERATE • the cost associated with closing the capability gap
• how much effort will it require to close the capability gap.
Current capability not compatibleCurrent capability highly compatible

To what extent will the pricing strategy enable financial

HOW TO sustainability? Think about:
PROFIT • if the pricing strategy will enable flexibility
• if the pricing strategy is right for your current and new customers now
and in the future. Not financially sustainableVery financially sustainable

How will this impact the business and its staff due to amount of
BUSINESS change required (including the emotional cost)? Think about:
IMPACT • what it will require to launch the opportunity
• will the opportunity identified will affect the company’s
culture, processes, structure and staff. Negative impact Positive impact

What is the level of risk associated with doing or not doing this
RISK opportunity? Think about:
• how this opportunity could create or prevent financial and organisational risks
• the extent to which the opportunity will affect new and existing customers.
High riskLow risk

TOTAL 16 POINTS /30

45
ENDNOTES
NAVIGATION MENU

No. Reference No. Reference

1 Towards a circular economy: 6 ‘Creating a taxonomy of value for a circular economy’

business rationale for an accelerated transition by Haines-Gadd, M. & Charnley, F (2019),
www.ellenmacarthurfoundation.org, May 2015 in Sustainable Design and Manufacturing 2019, Springer, 2019

2 As above 7 Towards a circular economy:

business rationale for an accelerated transition
3 ‘Creating a taxonomy of value for a circular economy’
www.ellenmacarthurfoundation.org, May 2015
by Haines-Gadd, M. & Charnley, F (2019),
in Sustainable Design and Manufacturing 2019, Springer, 2019 8 ‘A conceptual framework for circular design’
by Moreno, M. De los Rios, C. Rowe, Z., & Charnley, F. (2016)
4 Towards a circular economy:
in Sustainability, 8(9), 937
business rationale for an accelerated transition
www.ellenmacarthurfoundation.org, May 2015 9 As above

5 ‘5 Business models that are driving the circular economy’

by Lacy, P., Rosenberg, D., Drewell, Q., & Rutqvist, J. (2013)

Click reference number to navigate back to context.

46
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