Innovation strategy for circular transformation

Many people think circular transformation for a company is difficult when the company has worked with a certain business model for many, many years. However, many make it unnecessarily difficult by trying to transform the organization in a way that goes against the built-in way of innovating.

There are different ways in which companies innovate:

1. Product-driven innovation

Product-driven innovation can be found in companies that put the product and technical development first. These are companies that like to show off products, talk about “features” and strive to have the latest and market-leading technology.

When these companies have to switch to circularity, it is often beneficial to focus on different aspects of design. By introducing new circular requirements on the product, you use the organization’s regulary innovation capacity to develop circularly. The requirements can for example be that the product must not consume new resources, that it must be able to be manufactured with recycled material, that it must be easy to repair and that the parts in the product must be able to be used for other purposes.

If you want to strengthen such a transition, you can organize workshops and hackathons around service design or simply spending more time letting everyone discuss circularity and sustainability for the products.

2. Customer-driven innovation

Customer-driven innovation exists in companies that will do anything for the customer. There are often good systems for listening to what the customer wants and often clear customer segments whose needs the organization does everything to meet. Because customers are not used to expressing their needs for circular solutions and the company uses questions that often do not involve circularity, the company sometimes does not receive the signals that the customers expect more sustainable solutions.

By identifying clear customer groups with demands for circularity and using tools such as the empathy map and customer journey for the circular customer, circular needs can be discovered and then the company’s inherent innovative power can be utilized for the circular changeover.

If you want to start such a circular journey, you can invite people who “live circularly” and are passionate about sustainability and ask them to present how they think, what they see and do with regard to the product or service that the organization offers.

3. Efficiency-driven innovation

Efficiency-driven innovation is found in the companies that innovate “inwards”. That is, it is not that important what products or services they offer and it is not that important who the customer is. They want to offer the best quality at the lowest price. By doing what the competitors do, only better and at a lower price, they create market advantages. Internal systems and warehouses are built with high automation to provide the greatest customer value.

These companies can receive mixed signals from the circular customer as the circular customer often values ​​quality and repairability higher than low price, while other customers who do not care as much about sustainability still also wants a low price. The company risk getting stuck in the familiar price rut and then, later on, discovering that only focus on price for development is counter productive to circular transition.

These companies can work with circular change based on regular strategy work amongst management. By thinking about the circular vision and strategy, the circular values ​​and communicating them internally, it will affect the product range and processes.

If you want to start a circular transformation in an efficient-driven organization, you can train the own staff in sustainability, circularity and focus especially on the purchasing routines so that they include a circular focus. Another good way to start the circular work is to enable customers to sell back used products to learn how such handling can be automated and which products last a long time and have good circular design. Product range will then develop based on that instead of pushing prices in the supply chain.

4. Sustainability-driven innovation

We can find sustainability-driven innovation in companies that were started with sustainability as a core or fundamental value. It is therefore more common that sustainability-driven companies are younger organizations or startups. In these organizations, it is easy for sustainability to take over and you end up getting stuck with low profitability because it is difficult to be 100 percent circular in a linear world. There are  almost always some unsustainable things that have to be dealt with and that customers and journalists can crack down on, causing frustration among the employees.

One way to innovate in these organizations is to find good frameworks for the business modelling that consider circularity and business development. For example a Circular Business Model Canvas can form a basis for achieving a balance between sustainability and business to make the company successful.

If you want to start circular transition in a sustainability-driven organization, you can make use of business developer consultants with circular skills or to contact business incubators. It can also be a good thing to use tools such as empathy maps to express the offer the company has in a simpler way for the customers who do not have the same deep understanding of sustainability as the people in these organizations.


In summary, circular changeover can be facilitated by first finding out which inherent type of innovation exists in the organization and then choosing suitable development methods.

So, firstly, realize that circular changeover requires a transformation of the organization, but make the journey easier by working in line with the organization’s own innovation type.

Start by thinking about the type of innovation within your organization and choose tools and methods based on that.

Good luck with your organization’s development towards a better world.