The Circular Economy represents a paradigm shift in how we approach resource use and waste management. Unlike the linear model, which follows a ‘take-make-dispose’-pattern, the Circular Economy aims to create closed-loop systems where products are designed to maintain their functionality and value for as long as possible. Embracing digitalization and technology plays a crucial role in realizing circularity, enabling innovative production methods, sustainable product management, and facilitating practices such as reuse, repair, and sharing.

Imagine a product’s life cycle as a continuous loop, from raw materials to consumer use and back again. This Cradle-to-Cradle approach forms the core of a circular economy, aiming to minimize waste and maximize resource efficiency. Within this loop, the key lies in prioritizing strategies that keep materials circulating closer to their original state. This can involve activities like repairing, upgrading, or refurbishing a used product for continued use, repairing minor damages to extend its lifespan, or recovering valuable parts for reintegration into new products. These “inner loops” hold the highest value. They not only reduce the demand for virgin materials but also retain the embodied value within the product itself.  As we move outward in this circular system, the focus shifts towards recycling. While crucial for recovering raw materials and preventing them from ending up in landfills, it requires additional processing and often results in downcycling, where the material quality degrades. Recycling plays a vital role, but it represents a secondary stage when compared to the value proposition of keeping the product or its components in use for as long as possible.

Repair Management is emerging as a crucial concept in the realm of the circular economy, which changes from context to core for many organizations. Beyond merely extending the lifespan of products, Repair Management embodies a holistic approach that fosters resource efficiency, minimizes waste generation, and cultivates a culture of reuse and repair. At its core, Repair Management encapsulates the ethos of circularity, emphasizing the restoration and rejuvenation of goods to their optimal functionality. The Repair Management process resembles a circular loop that symbolizes the repair cycle of a product. It begins when the product reaches the end of its lifespan and undergoes analysis and disassembly to identify issues. Some components may become unusable, while others are refurbished for future use or repurposed in other products. The cycle closes with the product returning to the user. A well-functioning repair system is central to a circular business model and must therefore be efficiently managed.

Furthermore, Repair Management serves as a catalyst for the exploration and adoption of innovative circular business models, notably Anything-as-a-Service (aaS) and outcome-based business models: Under the aaS business models, businesses shift from selling products to offering them as a service, thereby assuming responsibility for maintenance, repair, and eventual end-of-life disposal. This model incentivizes manufacturers to design products with longevity and repairability in mind, aligning with the principles of the circular economy. An example of an Anything-as-a-Service model is the Dutch bicycle-service company Swapfiets. They offer a subscription-based service providing access to fully equipped bicycles, including maintenance and repairs, for a monthly fee. Similarly, outcome-based business models prioritize the delivery of desired outcomes or functionalities over the mere sale of products. In this context, customers pay for the value or performance achieved, rather than the ownership of the product itself. By decoupling ownership from access, outcome-based models promote resource conservation and incentivize manufacturers to design durable, high-quality products that can be easily maintained and repaired. An example of an outcome-based business model is Philips’ lighting service to Schiphol Airport in Amsterdam. Schiphol pays for the light, while Phillips remains the owner of the fixtures and installations, and therefore is responsible for the performance and durability of the system and ultimately its re-use and recycling at the end of life.

Such approaches transcend traditional notions of product lifecycle management, offering a paradigm shift towards sustainable consumption and production. By embracing innovative circular business models, businesses can not only mitigate environmental impact but also unlock new avenues for value creation, resilience, and long-term prosperity in the circular economy.

With this in mind, Leaders should consider three recommendations to succeed in the circular economy:

• Focus on the Inner Circularity Loops – Embracing circularity offers numerous benefits for businesses seeking sustainable growth and long-term success. By adopting circular principles, companies can unlock greater value from their materials and resources, tapping into new markets and attracting a broader customer base. A circular approach also enables companies to surpass regulatory standards, mitigate risks, and enhance shareholder returns. Golden rule: The further inside the circle, the better.

• Consider Repair Mgmt. for Sustainable Business Success – Embracing innovative circular business models centered around repair and refurbishment not only aligns with a company’s commitment to sustainability but also presents significant opportunities for efficiency and cost savings. By prioritizing repair management, the company can minimize waste, extend product lifecycles and take a leading position in the circular economy.

• Embrace Innovative Circular Business Models – Prioritize the adoption of innovative circular business models into group strategies. By shifting towards Anything-as-a-Service and Outcome-based Models, businesses can foster a sustainable transformation while unlocking new avenues for value creation and long-term prosperity in the economy.

In conclusion, the Circular Economy redefines our approach to products and resources, challenging the conventional ‚take-make-dispose‘ model and instead envisioning a system where materials are kept in continuous, purposeful use. Through innovations in repair management processes and circular business models, businesses are not just reducing waste – they’re reshaping how value is created, shared, and sustained. By embracing circularity, leaders have the chance to drive sustainability and resilience, turning today’s challenges into tomorrow’s opportunities for a thriving, regenerative economy.

/ ABOUT THE AUTHORS

• Mara Garcia de Juan is Sustainability Transformation Associate at bluegain, helping companies transition to sustainable practices and promote long-term environmental and social responsibility. With experience in various sectors including fashion sustainability, sustainable logistics and the organic food industry, she specializes in regenerative business models, living systems thinking and natural resource management. She studied at the Alanus University of Arts and Social Sciences and earned several certificates, including Blockchain at the Frankfurt School of Finance & Management.
• Dr. Carsten Linz is the CEO of bluegain. Formerly Group Digital Officer at BASF and Business Development Officer at SAP, he is known for building €100 million businesses and leading large-scale transformations affecting 60,000+ employees. He is represented on boards including Shareability’s Technology & Innovation Committee and Social Impact. A member of the World Economic Forum’s Expert Network, Dr. Linz is also a published author who shares his expertise as an educator in executive programs at top business schools.