Circular business models - how exactly do they look like?

Today, as part of the circular design content monographic, we are writing a very basic article to understand what exactly circular business models are.

When we think of circularity we may think directly of sustainable products, but what exactly does it mean to have a circular business model?

In this article and through a simple analysis we tell you exactly what a circular business looks like to get a clear idea of what the transformation from a linear to a circular model would entail. 

On the circular economy and circular business models 

To understand what a circular business looks like it is important to first understand what the circular economy is.

The main objective of this model is to reduce both the acquisition of virgin material resources from our planet and their waste. In other words, to look for an ethical and sustainable way of acquiring resources and to find a way to reuse them by extending their useful life:

So what are the characteristics of a circular business model?

At Lúcid we have looked for a graphic way to show you what circular business looks like and we give you some key points that will allow you to delve a little deeper into how we can transform the business in each of the phases.

As we can see in the infographic, circular models are based on turning the traditional linear model based on get - make - use - throw away into a circular process.

And how can this be achieved? Basically by finding ways to recycle, repair, reuse or return the resources that are part of the process.

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Fast fashion, an example of a non-circular model

To understand this infographic, it is quite useful to look at the fast fashion industry, which seems to be taking a closer look at product sustainability lately. But have they really transformed their business models?

It is common in fast fashion to see labels referring to sustainability and sustainable sourcing of materials, but in order to be considered circular they should answer the following questions:

• Do all the resources used by these brands come from recycled materials or are they of natural origin?
• What do I do with your parts once I no longer want to use them, and can I return them with some kind of incentive?
• Where and under what conditions do you manufacture your products?
• Do you encourage reuse and repair of your products?

When these questions cannot be answered, we will not be in front of a circular model. To create a circular business model requires a deep analysis of the current business to achieve a total transformation, in which design plays a very relevant role.

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At Lúcid we love this kind of challenges, and we would love to be part of the adventure of transforming your business towards a circular model. Do you want us to help you? Don't hesitate to contact us to explore solutions for a better world.

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