How do you translate circular economy principles into a solid business development strategy?

It has become widely accepted that the circular economy is the most viable model for the future. From a business perspective, it makes sense to redesign your strategy and operations now rather than stick to the outdated model of the linear economy.

The European Union (EU) is establishing itself as a market for the circular economy. The recently adopted working plan for the Ecodesign for Sustainable Products Regulation and the Energy Labelling Regulation, which introduces the Digital Product Passport, is laying the foundation for circular product design, transparency and traceability.

Regulations, such as the Right to Repair, require manufacturers to extend the lifespan of products through improved repairability and the provision of spare parts, while the Critical Raw Materials Act aims to reduce the EU’s dependency on imported critical materials.

Globally, countries are moving in the same direction; for example, Australia’s Circularity Framework and the circular economy laws in Chile and Mexico reflect a novel approach to production and consumption.

This shift is not just regulatory – 76% of global consumers prefer environmentally friendly products. The second-hand clothing market alone is projected to hold a 23% market share by 2030.

Most are familiar with the core principles of the circular economy:

While the principles provide a useful starting point for discussion among the management team, they are insufficient for developing your business.

This is where the “circular design framework” – an approach I developed through client projects with nearly 150 companies since 2016 – comes into play, which helps you redesign operations systematically according to three focus areas:

The point is not to choose just one aspect to develop – quite the opposite. Iteration between all these three dimensions is key and the parallel development of business, service and product is the foundation of circular strategies.

Several case studies demonstrate how businesses are transitioning to circularity.

To meet the growing demand for sustainable healthcare, Dutch health technology Philips is pioneering circular solutions that reduce environmental impact while delivering cost-effective care.

At the business end, it set up a goal of generating 25% of its revenue from circular solutions by the end of 2025.

Service-wise, its “Circular Edition” portfolio of refurbished medical equipment is offered at a 25% lower cost. Full product circulation is supported through maintenance and take-back systems.

Meanwhile, its modular product design enables the reuse of 80% of recovered parts, significantly reducing the need for virgin materials.

Of its system design, the company’s sustainability director Harald Tepper says, “The healthcare sector itself recognizes that it is quite a polluting sector, accounting for over 4.5% of global CO2 emissions and 10% of global material use. Hospitals are increasingly asking detailed questions about the environmental impact of our products.”

Houdini, the Swedish Sportswear company, offers another example.

The company has set the following business goal: Houdini’s entire ecosystem, spanning value chains and user phases, is designed for circularity, enabling circular flows of materials, products and knowledge by 2030.

Houdini’s regeneration lead Malva Carlsson summarizes its services design approach as follows: “Instead of transactions, we want to build relationships with our users. How can we move from a transactional business to a relational business? And how can we offer new ways of using our products?”

One of their initiatives is the Houdini Circle in Stockholm, where second-hand products, repair services, rentals and subscriptions are on an equal footing with the purchase of new products.

To guide the product design process, they have developed the following designer’s checklist:

In its systems design approach, it asks: “How are we part of the system Earth? How can we do business within planetary boundaries?”

The company has developed the Planetary Boundaries Assessment and uses it as its North Star for research and development work.

For example, using recycled fibres instead of virgin fibres has shown a very positive impact on water, land, biodiversity, and land use, as well as on biogeochemical emissions, while also having a positive impact on other aspects, including climate, air, oceans, the ozone layer and harmful chemical emissions.

Designing long-lasting garments and providing repair and rental services had a very positive impact on all planetary boundaries.

To summarise, a successful circular strategy is not an add-on; it is built carefully and holistically on the three pillars of the Circular Design Framework.

Interview excerpts are from the book Circular Strategies for Success.