Circular Business Models
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Circular Business Models

Developing a Sustainable Future

Mats Larsson

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eBook - ePub

Circular Business Models

Developing a Sustainable Future

Mats Larsson

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About This Book

This book explores the need to develop business strategies, organise and fund transformation projects and manage the transformation programme in order to further a circular economy. Circular Business Models outlines sustainable business models that can be used by companies to move transformation forward on a large scale. In addition to business models the book will cover and discuss a number of other factors necessary for a successful transformation, such as business and innovation strategy, entrepreneurship and change management. Including original interviews with circular economy practitioners, this book will be applicable to industries as diverse as manufacturing, food processing, transportation and mechanical engineering. Addressing the different challenges that meet circular economy visionaries, it outlines strategies and business models needed to gain momentum in these different sectors.

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Information

Year
2018
ISBN
9783319717913
© The Author(s) 2018
Mats LarssonCircular Business Modelshttps://doi.org/10.1007/978-3-319-71791-3_1
Begin Abstract

1. Mankind vs. Reality

Mats Larsson1 
(1)
Lund University, Lund, Sweden
 

Keywords

SustainabilityTransformationDecision theory
End Abstract
Efforts to develop a sustainable future have only recently started. The development of solutions has relatively little to do with the analysis of emissions and other sources of pollution and much more to do with business and economics and how concepts within these areas can be creatively applied in order to develop sustainable systems. Humanity is facing a number of challenges of unprecedented magnitude and complexity . Yet, scientists and experts are at an early stage of analysing the problems and developing solutions that can help solve them. Part of the problem is that the challenges are not only large and complex, but also the solutions need to be developed in a very short space of time, in order for countries to be able to implement them before the problems become severe. Understanding the problems and identifying the possible solutions require a significant effort of abstract reasoning. Waiting until the problems become apparent is a very risky strategy. Solutions need to be developed and implementation needs to start before problems become clearly visible.
Many solutions have been and are still discussed, and there are strong proponents that advocate one or the other remedy to the situation of climate change, resource depletion, and imminent supply constraints. When these solutions are scrutinized it becomes clear that, while the entire complex of issues is daunting in itself, some solutions may be realistic while others seem inadequate. A number of solutions that seem to be logical first steps for a transformation towards a sustainable society turn out to be downright impossible when looked at from a long-term and large-scale perspective.
The issues range from pollution, unsustainable production systems, and business practices to impending resource shortages. Many of these have been analysed in great detail in other contexts. The awareness and debate has progressed from an awareness of environmental issues to a focus on sustainability and, in particular, emissions of carbon dioxide and climate change, and more recently to a solution that is embraced by increasing numbers of both business leaders and politicians, namely to transform existing linear production and distribution systems to circular flows. This transformation is expected to take place in the coming decades. Yet, few analysts or decision makers have started to look into the organization and financing of the large-scale projects that will become necessary in order to accomplish this.
Some politicians expound the view that the cost of the transformation does not matter, because it has to be done anyway. To this it can be said that the transformation is necessary, but the investment need, cost, time frame, and availability of resources are paramount, because, in order to drive change forward at the pace that is needed, alternatives need to be preferred that can be achieved in less time and at the expense of fewer resources. The need to choose and the need to discard unrealistic alternatives may be difficult to accept, but choices, and sometimes harsh ones, need to be made in order to try to save as much as possible of the society and the cultural values that previous and the present generations have contributed to building.
The stakes are high and it is probably not an exaggeration to state that governments and the global community at large will have to fight a battle. The battle will be fought against time and resource constraints and with the need to transform as much as possible of the global economy to circular flows, so that future generations will be able to lead as happy and fulfilling lives as the present generations do. No general would go into war without a strategy and a clear picture of the enemy’s resources, strengths, and weaknesses. The leaders of a campaign would also need to know exactly which of their own resources that can be mobilized at different points in time and they would calculate the resource needs and risks of alternative tactics. In preparation for the battle, leaders would study the topology and layout of the terrain and try to find out as much as possible about the task at hand. They would, of course, determine which resources that would be necessary for a surprise attack tomorrow at dawn and weigh this alternative against waiting for more troops to arrive and instead strike in a week’s time. Alternative strategies, although in very different settings, need to be considered for the transformation.
This book attempts to sort out the possible alternatives from the less realistic, or even impossible, and analyse alternative routes forward from the perspectives of time and resources. The result can form a basis for a further discussion on how to draw up the road map for the transformation journey.
The process will include problem solving on a grand scale. There will be a need to reframe problems in order to open up doors to new sets of solutions. In order to succeed, the tool chest available to practitioners needs to be expanded and the visions of leaders need to be broadened. The transformation is not primarily a political issue, where the present generations are free to choose the tools and methods that best correspond to a particular ideology or political point of view. The choice is about pragmatically selecting alternatives that are likely to work on a large scale and avoid the ones that most probably will not. In order to do this, leaders and experts need to use tools that have been developed in the realm of business and change management. Companies and entire value chains need to be transformed, new industries need to develop and expand, and consumers and procurement officers at companies and public organizations need to develop new sets of priorities.

The Science of Problem Solving

The present society is without doubt the one in history that possesses the highest level of knowledge about the largest number of aspects of nature, society, and our entire existence. Still problem solving, where knowledge from different areas needs to be put together to form the basis for navigating the future for countries and for the global community as a whole, presents numerous risks and possible pitfalls. The solving of complex issues is fraught with peril on a number of levels, and societies through history have repeatedly experienced unexpected developments, due to fallacies of reasoning and lack of attention to critical aspects of reality. Researchers have identified a number of sources and explanations behind these often tragic events. One of the sources seems to be the in-built tendency for speed and efficiency in human thought processes, which gives rise to a number of logical fallacies, some of which have been exposed through the pioneering research of Daniel Kahneman and Amos Tversky . In “Thinking, Fast and Slow,” Daniel Kahneman argues that people tend to automatically utilize mechanisms for thought that are well suited to solving familiar problems, even when they approach issues that would demand systematic analysis. Tversky and Kahneman gave the two systems that are adapted to solving familiar and unfamiliar problems the names System 1 and System 2. Kahneman describes System 1 as a machine for jumping to conclusions:
Jumping to conclusions is efficient if the conclusions are likely to be correct and the costs of an occasional mistake acceptable, and if the jump saves much time and effort. Jumping to conclusions is risky when the situation is unfamiliar, the stakes are high, and there is not time to collect more information . These are the circumstances when intuitive errors are probable, which may be prevented by a deliberate intervention of System 2.1
Other researchers, such as Herbert Simon in his discourse on economic man, have attributed fallacies to the human inability to deal with all aspects relevant to a decision to limited cognitive resources. In “Organization Man,” William H. Whyte attributes the inability of individuals to express their personal views to the belief that organizations are able to come to better conclusions than individuals, and Nils Brunsson , in “The Organization of Hypocrisy,” identifies the existence of two sets of standards—one that is used internally in an organization and another that is expressed to external parties—as a source of failure of entire organizations to approach sensitive issues in a constructive manner.
The book analyses the opportunity to develop and expand circular business models from the perspectives of the long-term development of society and its organizations and the struggle of humans to drive forward a complex development that no individual expert or decision maker has full control of. It seems as if the development of the present global economy, which has been going on for more than two centuries, has come to a crossroads that neither the proponents of continuous growth nor the advocates of sustainability have fully understood. It is now up to the present generations to make sense of the situation and develop the tools and solutions that will become necessary in order to solve the problems that the development up until now has created.

References

  1. Brunsson, N. (1989). The Organization of Hypocrisy. Chichester: John Wiley and Sons.
  2. Kahneman, D. (2012). Thinking, Fast and Slow. London: Penguin Books.
  3. Whyte, W. H. (2002). The Organization Man. Philadelphia: University of Pennsylvania Press.
Footnotes
1
Kahneman , Daniel—“Thinking, Fast and Slow,” p. 79.
 
Part IBusiness and Organizational Aspects of Circular Economies
© The Author(s) 2018
Mats LarssonCircular Business Modelshttps://doi.org/10.1007/978-3-319-71791-3_2
Begin Abstract

2. Development as a Process of Organization

Mats Larsson1
(1)
Lund University, Lund, Sweden

Keywords

Organizational processesDevelopmentSpecializationSupply chains
End Abstract
Development, as people experience it over decades and centuries, can be described as a process of organization, as much as it can be described as a sequence of technology development. It could be a process of organization around ideas, such as democracy and freedom, or around totalitarian and restrictive ideas, such as the systems within the former Soviet Union and its satellite states. In this book we will study the development and gradual refining of the processes and institutions that form pillars of the global economy, supply chains, and companies and organizations that provide us with the goods and services people need and enjoy. It could also be the process of organization around technologies and products, the study of an entrepreneur who invents a new product, builds a company to develop and produce it, and recruits suppliers who, in their turn, recruit sub-suppliers. As the process of development goes on, researchers at universities study the technology and the systems that have been developed and teach students the knowledge and skills they need in order to work in the industries that form and expand, and public organizations act as suppliers of financing , regulators, or customers of the new innovations. With each additional individual who is added to the workforce, teams of experts, or managers, the organization around a technology grows. It is no exaggeration to state that the society of the early twenty-first century is highly organized and that society as a whole is organized to a level unprecedented in history.
Organization processes go on, literally, for centuries. When Gottlieb Daimler built his first automobile, many of the parts and sub-systems were produced by him and a small number of suppliers closely connected to the inventor. Over time the small organization for building cars has been developed and a number of technical and organizational innovations were made that contributed to making production more efficient. At the beginning cars, and most other products, were made as unique individual specimen of a construction made by the innovator. Each part was custom made for a particular vehicle, gun, or kitchen range. This meant that all parts were unique and they tended to differ slightly from the parts of other individual products of the same model from the supplier. A door made for one car could not be exchanged for a door made for another vehicle, because they were made to measure and the measures differed slightly between product specimens.
This was gradually changed, first by the American military that developed the Americ...

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