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Editor's Note: Take a look at our featured best practice, Corporate Social Responsibility (CSR): Circular Economy (24-slide PowerPoint presentation). The global economy is currently producing nearly 300MM tons of plastic every year. Half of these are for single use. With population growing at a fast rate, we are requiring more resources than ever before. Yet, our finite resources are diminishing Our economy has been built on the concept of a [read more]
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Circular Economy has become Strategy. The goal is not higher recycling rates. The goal is redesign of value creation and value capture across the full lifecycle of products and materials.
Circular Strategy replaces take make dispose with loops that design out waste, keep materials in play, and regenerate systems. Organizations that embed circular design and recovery unlock growth, reduce cost, and strengthen resilience. Organizations that treat circularity as end of pipe waste management burn cash and stall momentum.
Meaningful progress requires redesign of both the Operating Model and the Business Model, with partners, data, and governance aligned across Reduce, Slow, Cycle, and Regenerate flows, guided by a long horizon vision and back casting to current choices.
Many circular efforts start strong and stall before scale. Gaps appear when initiatives rely on narrow pilots without the enabling systems and governance required to hold economics at volume. Value delivery lags expectations when data, reverse logistics, standards, and partner contracts are missing. Leaders close the gap by pairing operating and commercial model changes and by enforcing stage gates tied to unit economics and recapture rates with clear Decision Rights and incentives.
Right to Repair and product as a service models are gaining share in electronics. Circular Strategy supplies the operating and commercial blueprint. Operating teams select materials and product architectures that can be repaired, upgraded, remanufactured, and recovered, and stand up reverse flows supported by identity, provenance, and condition traceability. Commercial teams move beyond single sale transactions and monetize uptime, access, and recirculation through outcome based services, enablement offerings such as financing and certifications, and marketplaces that keep assets in use.
The Circular Strategy framework converts circular principles into enterprise performance through three phases with clear stage gates. Scan Opportunities builds a shared fact base and produces a ranked, defensible set of options. Select Target Segments translates priority options into funded bets with charters, budgets, route to market, and measurable outcomes. Scale Execution industrializes proven pilots with traceability, reverse logistics, standards, partner SLAs, and governance, holding unit economics at enterprise thresholds while capacity and recovery rates grow.
As defined in this framework, three elements anchor execution:
Leaders can use this framework as a design checklist and execution tracker. Identify where to act today. Define the next operating moves that keep materials in play. Select pricing and contract forms that benefit from durability, utilization, and take back. Profitability improves when the Business Model pays for use and the operations enable reuse. Track the current phase, required outputs to pass the gate, and align investments to signposts in technology, regulation, and profit pools.
Executives need Strategic Planning that links ambition to unit economics. This framework forces paired choices across the Operating Model and Business Model so value is designed and monetized, not stranded. Operating choices include architectures for repair, upgrade, remanufacture, and recovery, supported by reverse flows and data for end to end identity and condition traceability. Commercial choices include outcome based services and access models that monetize uptime and recirculation, reinforced by enablement offerings and secondary marketplaces that keep assets in use.
Governance brings discipline. A single enterprise rubric with weighted criteria for impact, feasibility, and time to value avoids fractured prioritization. Leadership runs stage gated reviews on a fixed cadence and assigns a portfolio owner to convert decisions into a sequenced roadmap with budgets, capacity reservations, and partner commitments. Without one rubric and one owner, functions rank initiatives differently, funding scatters, and capacity strands. With both, choices translate into execution at pace.
Risk Management is handled upfront. Signposts and numeric thresholds link to preapproved playbooks with clear trigger logic. Quarterly scenarios quantify ranges for revenue, cost, capacity, and recapture rates. Decision Rights and emergency huddle protocols include SLAs for response speed. Success shows up as early signals firing timely actions within SLAs and variance to unit economics staying in thresholds during shocks.
Funding follows new value pools. Linear KPIs starve circular plays. Value Creation increasingly sits in services, data, reverse flows, and recovery. Leaders map profit and control points across the lifecycle, pilot models such as uptime guarantees, access subscriptions, and take back programs, and update KPIs and incentives to reward utilization, recovery, and lifetime margin. Secondary marketplaces and service lines capture value otherwise stranded in post use assets, shifting the portfolio to recurring value tied to recovery.
1. Scan Opportunities
This phase creates the shared fact base. Teams map value leakage and recovery potential across Reduce, Slow, Cycle, and Regenerate flows. They frame alternatives side by side and quantify value and feasibility. They write one page briefs covering economics, capability gaps, partner needs, and legal implications. Inputs include demand signals, cost to serve, lifecycle and recapture data, supplier capacity, and regulatory outlook. Outputs are a ranked opportunity list, approved screening criteria, learning plans with owners, and initial resource asks. Guardrails are explicit with fixed time boxes, weighted scoring with thresholds, independent challenge reviews, and limits on concurrent work .
2. Select Target Segments
This phase converts options into funded bets for specific customers, use cases, and geographies. Teams define route to market, commercial model, and success metrics so execution can move with clarity. They build Business Cases with unit economics, sensitivity ranges, and proof points. They select pricing that monetizes uptime, access, and take back. They plan pilots and the path to scale including partner SLAs and legal obligations. Risks include thin spreading, capacity blind spots, and cross functional incentives pulling in opposite directions. Guardrails include hurdle rates and capacity checks, strict limits on concurrent bets, pre mortems, and signed accountabilities across teams.
An industrial equipment organization aims to pivot from one time sales to access. Phase 1 identifies value leakage in idle time, unscheduled downtime, and end of life disposal. The team prioritizes a refurb and redeploy loop with predictive maintenance, certified take back, and parts harvesting.
Phase 2 narrows to two segments with variable utilization and appetite for outcome commitments. The offer combines uptime guarantees, access pricing, and trade in credits. Business Cases meet hurdle rates at target recovery and recapture thresholds.
Phase 3 industrializes the model with traceability, reverse logistics, refurbishment standards, and partner SLAs. Governance codifies playbooks, roles, incentives, and metrics. Expansion proceeds when platforms are live, partners meet SLAs, and unit economics remain within thresholds, all tracked on a single performance dashboard with stage gate evidence for each step.
How does Circular Strategy differ from Sustainability programs?
Circular Strategy is Strategy. It rethinks value creation and value capture through loops that keep materials in use. It is not a recycling program and not an end of pipe initiative.
What signals tell me a pilot is ready to scale?
Unit economics, quality, and recovery rates remain within thresholds as volumes increase. Partner SLAs meet targets, capacity ramps on plan, and expansion decisions follow evidence based stage gates with transparent risk management.
What Operating Model choices matter most?
Architectures for repair, upgrade, remanufacture, and recovery supported by reverse flows and data for end to end identity, provenance, and condition traceability.
What commercial models should be tested first?
Outcome based services, access subscriptions, and take back constructs. Marketplaces and enablement offerings such as financing and certifications can reinforce recirculation and monetization of uptime and recovery.
What portfolio governance prevents scattered effort?
One rubric with weighted criteria and a fixed cadence. One portfolio owner who sequences budgets, capacity, and partner commitments into a forward plan. Without this, functions rank options differently and funding fragments.
Strategic Planning for Circular Economy works when economics and operating reality show up in the same conversation. Leaders that rely on aspiration without thresholds drift into pilot purgatory. Leaders that insist on thresholds, owners, and contracts convert pilots into performance. The framework is not a thought piece. It is an execution system that ties Decision Rights, measurement, and budgets to real loops that run at cost and at scale.
Performance Management must evolve to where value now resides. Legacy metrics tied to first sale revenue will underfund the plays that actually generate durable value. The organization should adopt metrics for utilization, recovery, recapture, and lifetime margin, and align incentives to those outcomes. Treat services, data, and recovery flows with the same pricing rigor and governance used for core product lines. The shift then becomes self reinforcing as portfolio mix moves to recurring value and resilience improves under real world volatility.
Risk Management should never be an afterthought. Volatility is a design parameter in Circular Strategy. Preapproved playbooks, numeric thresholds, and clear triggers turn surprise into choreographed action. Quarterly scenarios and emergency huddles with explicit SLAs create muscle memory. The target is simple to state. Early signals trigger the right actions on time and unit economics stay inside thresholds even when conditions change fast.
Interested in learning more about the steps of the approach to Circular Strategy? You can download an editable PowerPoint presentation on Circular Strategy on the Flevy documents marketplace.
You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.
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