Overview: Manufacturers moving to service-based business models are generally advised to provide total-care solutions to their customers in order to boost profits and strengthen customer relationships. To reduce the risks associated with such services, service providers often rely on remote monitoring technologies to access data on their products’ health and usage. Our study reveals a tension between the technical development of complex products capable of remote monitoring and the business logic required to commercialize this potential. Specifically, we show that the collaborative value co-creation context within which these products are typically developed requires managers to seek alignment in technical specifications and value co-creation logics simultaneously. However, technical alignment is contingent on factors that can lead to business logic misalignments. 

Sverige har en stark möbelindustri och en stolt tradition av att tillverka tidlösa och högkvalitativa möbler, ofta av naturmaterial. 2016 producerade Sverige möbler för 22,8 miljarder SEK, varav kontorsmöbler stod för nästan en fjärdedel1. Det saknas idag statistik över vad som händer med dessa möbler när de inte längre används, men det står klart att många av dem slängs i förtid när verksamheter flyttar eller när deras behov ändras. Samtidigt syns en tydlig utveckling mot att kunder mer och mer efterfrågar återbrukade eller renoverade möbler som en del i sitt hållbarhetsarbete. Denna utveckling var startpunkten för projektet ”Affärsmodell-innovation för cirkulära möbelflöden”.

Affärsmodellinnovation för cirkulära möbelflöden är ett Vinnovafinansierat projekt som under åren 2015-2017 arbetat med att utveckla och testa koncept för cirkulära affärsmodeller för i första hand offentliga möbler. I projektet har tjugo aktörer från hela värdekedjan, från underleverantörer, möbelproducenter, återförsäljare och användare till forskare och branschorgan, samarbetat kring affärsutveckling, kundincitament, produktdesign, logistik, hållbarhets- och certifieringsfrågor.

Den här skriften belyser hur nya affärsmodeller för mer cirkulära möbelflöden kan bidra till en mer hållbar utveckling och ger smakprov på slutsatser från projektet. Skriften riktar sig framför allt till producenter och återförsäljare av möbler för offentliga miljöer, men även kunder och inköpare tror vi kan ha stor nytta av skriften. Vi hoppas att den även kan fungera som inspiration för andra industrier och branscher som funderar på en övergång till mer cirkulära affärsekosystem.

Circular Economy Outlook är en undersökning och analys av företagens cirkulära omställning i Sverige och Norden. Eftersom de flesta materialflöden går genom företagen behöver vi förstå med vilken omfattning och intensitet bolagen arbetar för cirkularitet: från mål och val av cirkulära strategier till mätbara resultat. Problemet. Ungefär hälften (av de globala klimatutsläppen kan elimineras genom minimering av utvinning och maximering av användning, återanvändning och återvinning av material. De nordiska länderna presterar dåligt: vi ligger alla under det globala genomsnittet för cirkularitet på 7,2%4 – som tyvärr stadigt sjunker. Möjligheten. Cirkulär ekonomi är en förutsättning för klimatomställning och ett hållbart samhälle. Vi ser en växande medvetenhet och engagemang hos näringslivet. Att skapa förutsättningar för företagens omställning bör därför vara en prioritet för samhället. Syfte. Det finns utmärkta studier på nationella materialflöden uppifrån-ner. Men det finns (tills nu) ingen storskalig datadriven undersökning av företagens cirkulära aktiviteter nerifrån–upp. De frågor vi försöker besvara i denna studie tror vi behövs för att möjliggöra en saklig diskussion om och acceleration av näringslivets omställning och utformning av effektiva styrmedel. Metod. Analysen i denna rapport omfattar en kvantitativ studie av samtliga bolag som är noterade på LargeCap-, MidCap- och SmallCap-listorna samt ett mindre urval onoterade småföretag (10–49 anställda). I studien ingår även kvalitativa intervjuer med ett representativt urval bolag och samtal med en lång rad experter och intressenter. Vi redovisar analys och resultat i två publikationer: 1. en svensk delrapport (denna publikation) och 2. en nordisk rapport på engelska (publiceras under hösten). Koncept. I den kvalitativa enkäten har vi utvecklat och tillämpat en frågematris där vi för varje cirkulär strategi ställt nio frågor om prevalens, viktighet, mål, genomförande, mätning, pengar, drivkrafter, konkurrenter och hinder. Svaren har genererat högupplöst data som möjliggör en mängd olika typer av analyser. Svarsfrekvens. I denna delrapport ingår 196 enkätsvar från och 28 intervjuer med svenska företag. Svarsfrekvensen för enkäten är hög: 38% av de noterade bolagen på Stockholmsbörsens tre huvudlistor har svarat (137 av 363). Resultat. Detta är den första breda undersökningen av hur svenska företag arbetar med cirkulär ekonomi. Studien ger oss inblick i aktivitet, motiv och behov. Den vanligaste drivkraften för cirkulära strategier är affärsmöjligheter. Det vanligaste hindret är bristande efterfrågan eller att bolagen fastnat i en linjär affärsmodell. Samtidigt är det få bolag som själva ställer cirkulära krav på sina leverantörer. En femtedel uppger att de gör det enbart när de tvingas av kunder eller myndigheter. En majoritet förväntar sig att deras konkurrenter kommer att utveckla signifikanta cirkulära förmågor de närmaste åren. 90% uppger att de i någon mån arbetar med minst en cirkulär strategi, men bara hälften av dessa jobbar med genomförande. De bolag som har mål och mäter måluppfyllnad indikerar att de jobbar med genomförande i fyra gånger högre utsträckning än bolag utan mål. Det som mäts blir alltså gjort. Eller: de som formulerar mål ser till att genomföra dem.

Prior research on environmental innovation has highlighted the importance for the firm of a shared environmental vision but has not empirically explored why or what are its effects. The purpose of this paper is to analyze the effect of an environmental sustainability vision for the development and commercialization of environmental innovations. We conduct an in-depth, multilevel investigation of the development of green product lines in a multinational manufacturing firm, based primarily on interview data collected over five years. By analyzing the interaction between environmental vision and the product development process as an interaction between problem formulation and the search for problem solutions, we explain how and why a shared environmental vision can accelerate environmental innovation. Specifically, we show that a shared environmental vision can lead to an increase in the number of application areas, and increased sales of previously customized solutions but that the efficacy of the shared vision is dependent on a good match between the environmental problems being focused on, and the core competencies of the firm.

While existing research has probed consumer responses to products of different recirculation pathways (recycling, reuse, refurbishment, etc), little work has examined consumer responses to an explicit “circular economy” product label or how willingness to pay is influenced by a continuum of circularity levels. This paper reports on the results of an online survey experiment that tests whether customers are willing to pay more for products with a theoretical multi-level Circular Economy score. Conjoint analysis was used on 800 respondents in the United Kingdom to test their willingness to pay for mobile phones and robot vacuum cleaners at different levels of circularity alongside other product attribute combinations. Results indicate that the average customer almost always prefers a more “circular” product when compared to products with otherwise identical attributes, and that customers are consistently willing to pay more for products with low or moderate levels of circular content. However, analysis suggests that willingness to pay more for products disappears, and in some cases declines, as the proportion of recirculated content increases. Results offer evidence that applying a numerical circular economy label at low levels of recirculated content could be a profitable strategy for producers of mobile phones and robot vacuum cleaners. Such a strategy is less certain for heavily refurbished products, fully reused products, or other product types. © 2020 The Authors

Abstract Understanding product circularity as ?three-dimensional? could anchor the Circular Economy to common principles while affording its followers flexibility about how to measure it in their specific sectors and disciplines and within their organization's means. Inspired by a heuristic developed for the urban planning profession to cope with the inherent conflicts of Sustainable Development, this article argues that measuring product-level circularity should consider ways to achieve (1) high material recirculation, (2) high utilization, and (3) high endurance in products and service offerings. Achieving all three dimensions ensures that material flowing through the economy is recovered from prior use phases, that it is used intensely, and that it retains its value in spite of exogenous changes. The article argues further that these three dimensions ought to be measured and reported separately rather than as a composite metric and that certain applications will have opportunities to improve circularity through certain dimensions better than others. The article also explains how researchers at RISE (Research Institutes of Sweden AB) are working with industry and government partners to measure the three dimensions and how diverse actors interested in the Circular Economy can use the three dimensions to take the first steps in their transition to circularity.

This report describes the results and the learnings of a project that had the aim to develop a protocol for measuring circularity for products. The project was centered around an assessment of the real-world example of a lubrication cleaning and recirculation system by SKF RecondOil. The process of assessment required that the team match circularity in principle (how circularity can be measured in theory) with circularity in practice (how circularity can be measured in a real system). In the process, the team identified different ways to measure circularity based on drafted circularity principles (from ongoing ISO work on circularity). In the end, these alternatives were to be practically verifiable and certifiable. Learnings are to be fed into ongoing work on developing international standards (ISO) for assessing circularity. In the progress of the work, a framework for understanding and measuring circularity for the system at hand was developed including: a heuristic (diagram) describing a system of interest and a list of chosen circular economy principles see Figure 3. It is thought that the heuristic and list of principles could be used to guide an entity in the process of first, creating their system model, and then, making sense of and applying principles.

We investigate determinants of consumer demand for circular (reused and remanufactured) products. Based on exploratory choice-based conjoint experiments with a sample of 800 adults in the United Kingdom, we examine two types of premium segment electronic appliances: a mobile phone and a robot vacuum cleaner. We find that consumers prefer partly circulated products over fully or not at all circulated products and that circular products can likely successfully enter the existing market at the retail price of a new product. Interestingly, circular products compete for market share primarily with new products, leaving the market share of second-hand options less affected. The results show a promising path for firms considering a transition to circular business models. © 2020 The Authors.

The paper examines the association between offer differentiation based on environmental orientation and economic performance. The analysis consists of an ordinary least-squares regression based on accounting data and a survey of the leaders of small environmental technology-based firms in Sweden. The results indicate that eco-efficiency creating a low total cost of ownership is more strongly associated with offer performance than is regulatory support, eco-branding, eco-quality differentiation and provision of strategic environmental information. This suggests that environmental differentiation of offers is the most successful when it is associated with a low total cost of ownership for customers.

Circular Economy scholarship has developed multiple metrics for assessing product-level circularity. To date, however, many product-level indicators either conflate circularity and environmental impact, or have been validated using a very limited sample of products. This study applies a single metric, “C”, to a sample of 18 products in the Swedish marketplace, and compares their C-scores with scores for lifecycle assessment (LCA). LCA scores for sample products are normalized by LCA scores of very similar reference products, allowing for comparison of LCAs across different product varieties. A test for correlation between products’ C-scores and LCA ratios reveals a strong, significant, and inverse association between levels of circularity and products’ relative environmental impact. The results offer evidence that products whose economic value is composed of relatively more recirculated material have a relatively low impact on the environment. Future research will benefit from applying similar tests to a broader variety of products and developing tools to expedite the accurate measurement of circularity and lifecycle impacts.

Product-as-a-service (PaaS) circular business models are at a disadvantage in terms of bank financing compared to many linear business models. Such business models generally face significant challenges both in the case of collateral-based and business case-based credit security assessments. The challenges are due to both difficulties in assessing and realising the residual value of the collateral and due to the timeframe of the risk assessment of the business case. Furthermore, the complex services that are the source of competitive advantage for PaaS firms often disqualify customer contracts as collateral. Two of the challenges (low inventory valuation and forced depreciation losses) are traced to accounting and credit regulations. Another five challenges are traced to long-term industry practice. The empirical evidence consists of quotes and summarised data from 38 interviews and 24 survey responses with banks and product firms exploring circular economy financing.

Circularity metrics are useful for empirically assessing the effects of a circular economy in terms of profitability, job creation, and environmental impacts. At present, however, there is no standardized method for measuring the circularity of products. We start by reviewing existing product-level metrics in terms of validity and reliability, taking note of theoretically justified principles for aggregating different types of material flows and cycles into a single value. We then argue that the economic value of product parts may constitute a useful basis for such aggregation; describe a set of principles for using economic value as a basis for measuring product circularity; and outline a metric that utilizes this approach. Our recommendation is to use the ratio of recirculated economic value to total product value as a circularity metric, using value chain costs as an estimator. In order to protect value chain actors’ sensitive financial data and facilitate neutrality regarding outsourcing or insourcing, we suggest a means to calculate product-level circularity based on sequential approximations of adding one product part and activity at a time. We conclude by suggesting potential avenues for further research, including ways in which the proposed metric can be used in wider assessments of the circular economy, and ways in which it may be further refined.

Circular business models based on remanufacturing and reuse promise significant cost savings as well as radical reductions in environmental impact. Variants of such business models have been suggested for decades, and there are notable success stories such as the Xerox product–service offering based on photocopiers that are remanufactured. Still, we are not seeing widespread adoption in industry. This paper examines causes for reluctance. Drawing on a hypothesis‐testing framework of business model innovation, we show that circular business models imply significant challenges to proactive uncertainty reduction for the entrepreneur. Moreover, we show that many product–service system variants that facilitate return flow control in circular business models further aggravate the potential negative effects of failed uncertainty reduction because of increased capital commitments. Through a longitudinal action research study we also provide a counterexample to many of the challenges identified in previous studies, which could be overcome in the studied case.

Business model innovation is increasingly seen as a means to promote sustainable forms of production and consumption, having been linked to technological innovations in electric vehicles and the circular economy. Business models are an organisational phenomenon that concern focal firms and their networks. However, there is no theory of the firm in transition theory, such that the role of business model innovation in wider transformative processes is unclear. This paper aims to redress this issue by combining a business model perspective with core concepts and constructs from transition theory. We elucidate sources of change and inertia that issue from new and existing business models, illustrating our arguments by focusing on mobility services, which have the potential to radically transform road transportation via new business models. We derive new lines of inquiry that can be used to examine the dynamics of business model innovation in the context of sustainability transitions.

Electrified roads have the potential to reduce carbon dioxide emissions from the transport sector. Where long-distance heavy traffic is concerned, there is actually no cheaper alternative which is equally energy-efficient, has such low carbon dioxide emissions and for which the energy supply is assured in Sweden and the rest of Europe. Many questions nevertheless remain.

In this preliminary study we have focussed on the business ecosystem likely to be built up alongside an electrified road. This has been done by means of interviewing interested parties and a thorough review of previous publications. On the basis of this background information, a computation model has been developed to be able to analyse the influence of various parameters. The stretch of 120 kilometre long road between Gävle and Borlänge has been used as a case study but an attempt to find other applicable stretches has also been undertaken. The model has a solid footing with the parties involved in the project and with people who have good insight into financial computations previously undertaken in relation to electrified roads.

The computation model that has been developed is primarily thought of as a model for overall surpluses or deficits for all stakeholders in the business ecosystem. It is not, therefore, a complete socio-economic model, which would include considerably more consequences for society at large, such as the influence on local and national businesses, increased employment and so forth. The model has been developed on the assumption that all prices and values are given for a point in time when the solution is in an ’early commercialisation phase’.

In comparison with diesel routes, it generally applies for electrified roads that every kilometre of road and every vehicle adds extra costs and that every kilometre driven creates savings. Thus for an electrified road system to be profitable, the stretch of electrified road must comprise a significant percentage of the overall distance driven by a truck. Nor must the stretch of road be too short, for then too much time is spent loading/unloading and too few kilometres (where the savings occur) are driven. Following familiarisation with various scenarios, a coherent, highly qualitative judgment, based on the electrified road computation model, would suggest that the suitable characteristics for such roads would be:

• A distance of at least twenty kilometres
• Annual average daily traffic (AADT) for electrified road trucks should be around two times as many as the number of electrified kilometres
• The electrified stretch should comprise 60% percent or more of the trucks’ overall distance driven each year.

For the case of Gävle-Borlänge (120 km), it appears that the stretch will be able to pay for itself, for example, when 190 electrified trucks complete the stretch an average of 4 times per day throughout the year (back and forth twice a day 365 days a year), amounting to 92% of the vehicles’ overall distance being driven on electrified road.

Elvägar har potential att minska koldioxidutsläppen från transportsektorn. För långväga tungtrafik finns egentligen inga rimliga alternativ som både är energieffektiva, har lågtkoldioxidutsläpp och där energiförsörjningen är säkrad såväl i Sverige som i övriga Europa,men det återstår ännu många frågor.I denna förstudie har vi fokuserat på det affärsekosystem som kommer att byggas upp kringen elväg. Detta har gjorts genom intressentintervjuer och en grundlig genomgång av tidigarepublikationer. Utifrån denna bakgrundsinformation har en kalkyl skapats för att kunnaanalysera olika parametrars påverkan. Sträckan Gävle-Borlänge har använts som fallstudie,men ett första försök att finna andra lämpliga sträckor har även genomförts. Kalkylen harförankrats med projektets parter och personer med god insikt i tidigare genomfördaekonomiska kalkyler av elvägar.För att undersöka förutsättningar för ett framtida samarbete har projektet fört dialog medEU projektet FABRIC, organisationerna CEDR och ERTRAC, samt även amerikanskaintressenter. I de fall då det inneburit deltagande på konferenser så har kunskapen från dessaförmedlats genom nyhetsbrevet OMEV.Den kalkyl som skapats är i första hand tänkt som en kalkyl över totalt över- eller underskottför alla inblandade aktörer i affärsekosystemet. Det är alltså inte en komplettsamhällsekonomisk kalkyl som skulle inkludera betydligt fler konsekvenser för samhället istort, såsom påverkan på lokalt och nationellt näringsliv, ökad sysselsättning etc. Kalkylen ärgjord med antagandet att alla priser och värden anges för en punkt i tiden då lösningenbefinner sig i en ”tidig kommersialiseringsfas”.För elvägar i jämförelse med dieselvägar gäller generellt att varje vägkilometer och varjefordon skapar extra kostnader, och varje körd kilometer skapar besparingar. Därför vill manför lönsamma elvägssystem att sträckan på elväg utgör en avsevärd andel av lastbilarnastotala körda distans. Dock får sträckan inte vara för kort för då ägnas för mycket tid åtlastning och för få kilometrar (där besparingen sker) blir körda. En samlad och i hög gradkvalitativ bedömning efter att ha bekantat sig med olika scenarier, baserade påelvägskalkylen, är att lämpliga egenskaper för öppna vägsträckor är:• Minst ett par mils distans,• Årsdygnstrafik (ÅDT) för elvägslastbilar bör, i bägge riktningarna, vara ungefärdubbelt så många som sträckans antal kilometer i en riktning.• Elsträckan utgör en avsevärd andel av lastbilarnas totala körda distans varje år,åtminstone 40 %, och gärna en bit över 60 %.Ingående värden i kalkylen baseras på en kartläggning av tidigare genomfördakostnadsanalyser. Med hjälp av experter har vi sedan valt en sannolik nivå. Andelen (60 %)av den totala sträckan som elektrifieras baseras på preliminära resultat av en analys avsträckan Gävle-Borlänge från forskningsprojektet ERSET.Slutna elvägsystem har en del fördelar i termer av att de har förmodat färrediffusionsbarriärer. Det krävs dock stora volymer för att nå lönsamhet. För områden som har stora volymer kan det dock fungera enligt den här modellen. Tänkbara fall skulle kunna varahamnar, gruvor och andra typer av storskaliga industriskyttlar.I ett slutet system längs en 30 km lång sträcka med 50 lastbilar behöver varje lastbil körafram och tillbaka 8 gånger per dag 365 dagar om året för att nå break-even. Vidmedelhastigheten 50 km/h blir det 9,6 timmar – exklusive på och avlastning. Om vi antar attvarje på- respektive avlastning tar 15 minuter tillkommer 4 timmar. En framtida fråga är dåvilka produktionsanläggningar som kan sysselsätta 50 lastbilar 13,5 timmar om dagen 365dagar om året.För fallet Gävle-Borlänge framgår det att sträckan kan betala sig exempelvis då 190elvägslastbilar passerar sträckan i snitt 4 gånger varje dag hela året (t.ex. två gånger fram ochtillbaka 365 gånger per år), vilket utgör 92 % elvägsandel av fordonets totala distans.Sträckan Göteborg – Stockholm har diskuterats i flertalet rapporter och analysen visar attden kan bli lönsam. Det krävs dock en avsevärd investering, men en storskalig utbyggnad ärsamtidigt det scenario som kräver lägst andel elvägsfordon. ÅDT för tunga lastbilar påsträckan varierar längs sträckan mellan 1000 och 2000. Analysen visar att elvägssystemetskulle betala av sig om 700 elvägslastbilar trafikerade sträckan en gång varje dag året omvilket ger en elvägslastbils-ÅDT på 854, d.v.s. mellan 43 % och 86 % av totala flödet.

The LinCS research project aimed to generate knowledge and understanding on the environmental and financial implications of circular products and circular economy at micro and macro level. It also sought to consider and review potential rebound effects. While circular economy is promoted as a promising solution that will decouple economic growth from environmental degradation, empirical evidence and academic research on the sustainability of circular economy and circular business models is in an embryonic form. Hence, the following research questions were posed: What factors/variables impact the environmental performance of circular products/circular business models?  Under what circumstances/conditions are circular products/circular business models environmentally and economically preferred compared to linear ones?  How can circular business models be improved in order to be sustainable?  What are suitable indicators to monitor the environmental effects of CE at the micro and macro level?  Which policies need to be introduced/altered that prevent/reduce the proliferation of unsustainable CE and support sustainable CE products? The research started with an extensive systematic literature review that mapped current knowledge and knowledge gaps on the environmental impact of circular products and circular business models. Despite the large interest of researchers on circular economy, the review only identified 54 papers that quantified the environmental impact of a circular versus linear product or system. Many of these papers focused on the environmental impact of the reuse or remanufacturing process but did not include key aspects of circular economy such as product design specific to the circular economy, or circular business models. Hence, there is a clear need for more research on the environmental impact. Based on the review, several product characteristics can be distilled that have a strong role in determining whether a product is suitable for the circular economy. In other words, these characteristics help to determine whether the increased circularity of a product is likely to lead to reduced environmental impact compared to the production of new products. These characteristics include 1) the extension of the product life, 2) the contribution of the manufacturing stage to the total life cycle environmental impact compared to other stages, 3) innovation frequency, 4) deterioration impacts during the life cycle including wear, 5) usage intensity, and 6) obsolescence. In particular, white goods were highlighted in the literature as being less suitable, due to their large share of environmental impacts in the use phase and because there has historically been a high degree of energy-efficiency innovation. For other groups of products, such as consumer electronics, the results are more ambiguous as it depends on the usage intensity and speed of innovation. Given the clear lack of studies assessing the environmental impact of circular products including the key aspects of circular product design and circular business models, ten case studies were conducted as part of the LinCS project in which the environmental, economic, and circularity performance of a product in a linear and circular business model were quantified. The majority of the case studies included circular product design and circular business models. The case studies show that the circular offer reduced the greenhouse gas impacts significantly in all but one case (where the rental business model led to increased emissions from transport for the customer and was highly dependent on rental location). Most cases resulted in a 50 to 60 % reduction. Based on the results we conclude that the recovery process or business model that enables life extension is usually less material- and energy-intensive. We further argue that with the expected transition towards renewable energy sources, the focus will likely shift away from greenhouse gas emissions to other environmental impacts. Material intensity will become more central, with the associated impacts of extraction and mining processes, as well as impacts on biodiversity. As a consequence, it is likely that the superior performance of circular products will become even more apparent in the future. The case studies further showed that profitability is an issue for some, but not all, manufacturers. In many cases, the costs of the circular model were estimated to be lower than in the linear case, mainly because less items need to be manufactured to fulfil the same level of demand, reducing manufacturing costs significantly. However, the revenue that can be generated in the circular model compared to the linear model is also lower, meaning that in some cases the profitability became lower. In many cases, the price customers pay for the circular product was set significantly lower than the linear product. More knowledge is needed to help companies set the correct price that can make their circular offer profitable and economical attractive. Macro-economic modelling was then performed to assess potential secondary effects and explore the benefit for Sweden when transitioning towards a circular economy. Multi-Regional Input Output (MRIO) modelling was used to understand the link between product level changes and macro level impacts. To model potential rebound effects, three alternative spending scenarios were modelled for the estimated financial savings from using more circular products. None of these resulted in higher impacts than the current situation, however, the impact of the scenarios was highly variable and almost as high in one case. This highlights a potential rebound effect depending on how savings are spent and the importance of considering (e.g. in policy and research) future levels of disposable income of consumers. The results also suggest that there is a limit to what can be achieved with circularity and that more traditional reductions in energy and improvements in resource efficiency are still required. For policy makers we note that, in order to accelerate the transition to circular economy, one aspect can be to utilise a societal functions framework to track, monitor and develop targeted policy instruments. We utilized and developed a societal functions framework consisting of: housing and infrastructure; nutrition, mobility, consumables, services, healthcare, and communication. Indicators can be developed to track each societal function and each system level (from product level, to product group and the societal function it provides) so that the impact to deliver each societal function within a country can be tracked and mitigation measures applied. Monitoring of this would allow increased knowledge and remediation action on the possible emergence of rebound effects, such as where a product has increased macro impacts (e.g. through increased consumption) despite product level efficiency improvements (or where one functions impact decreases but leads to an increase in another, e.g. increasing impact of online videos). Similarly, knowledge on the use phase, including statistics on the use and associated impact of repair facilities, spare parts, and second-hand reuse, can be improved. For researchers we note that more research is needed on how innovation is affected in the circular economy and what its role can be for sustainable circular products. We further note that knowledge is lacking on consumer behaviour in the circular economy, both in terms of how people behave and react towards circular product design (e.g. modularity and upgradability) and circular business models as well as the impact of circular products and business models on consumption levels. Many of these challenges align with similar issues highlighted in research on product service systems for which there are many parallels, but where further research is also required. Finally, many of the challenges and potential pitfalls of circular products are because they currently need to operate within a linear market and a system that is currently based on cheap fossil fuels, where the cost and impact of raw material extraction is undervalued and underestimated. As we have noted above, the overwhelming evidence is that circular products have enormous potential to reduce impacts, but their fostering requires careful management and monitoring to avoid potential rebound effects.

AThe circular economy, it is hoped, is one possible way to radically improveenvironmental sustainability. One suggested path towards a more environmentallysustainable industry that is part of the circular economy concept is for firms to movefrom product offerings to product-service offerings. Such offerings requiresubstantially different business models, such that business model innovation isneeded. In such situations of innovation and change, core capabilities can becomecore rigidities in incumbent firms.Lean startup methodologies are claimed to rapidly and cost effectively developvalidated business models for startup companies. This set of methods is designed forstartup companies but may be useful also for incumbent firms. A collaborative andinterventionist research project together with a company with a long business historytested whether one of these methods, Customer Development, could be of use, thechallenges of using it, and if and how these challenges could be addressed. At thisfirm, it was found that the Customer Development process can be very useful andpotentially work as intended, but requires a conscious setup of the project team. Itseems reasonable to expect that core competencies for the business model in currentuse would become core rigidities that would have jeopardized both the CustomerDevelopment process and its business model outcome without external help to reflectupon important but organizationally embedded presumptions