Capitalising on Invisible Value - User-driven Business Models in the Emerging Circular Economy.

1. VTT TECHNICAL RESEARCH CENTRE OF FINLAND LTD
Capitalising on Invisible Value - User-driven
Business Models in the Emerging Circular Economy
(AARRE project)
Circular economy in Finland 2030 – scenario
analysis
H. Sundqvist-Andberg, J. Kohl, VTT
28.9.2017

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Summary
Participatory scenario development process was used in
studying the multi-faceted nature of emerging Circular
Economy (CE) in Finland and in engaging the
stakeholders in the complex CE change process. The aim
was to develop plausible and reachable futures that
interpret the future by focusing on different dimensions
and elements of circular economy.
The scenario development methodology is based on
qualitative scenario building and leans strongly on
plausibility-based intuitive logics approach. The approach
is explorative and aims at building future scenario spaces
or images rather than creating narratives that describe
the unfolding chains of causation.
The scenario generation focused on the user-centric side
of circular economy by interpreting the future through
different scalable lenses which focus on different
dimensions and elements of transformation. The target
year for scenarios was set to 2030.
The participatory scenario development resulted three
complementary scenarios;
 Factory of the future scenario, focusing on resource
efficient production and consumption with clear
conscious,
 Experiential service economy scenario which
depicts service oriented CE where access over
ownership is mainstream and easy-access services
facilitate consumers’ / users’ daily lives, and
 New tribes scenario, which emphasices sharing
economy side of CE.
The scenarios were images of the complex reality of
environmental and socio-techno-economic systems
highlighting different aspects of potential futures. CE
kaleidoscope tool was produced to open the complexity
but also the potentials of CE for new sustainable
business ideas.
The work was carried out within Tekes funded AARRE
project: Capitalising on Invisible Value - User-driven
Business Models in the Emerging Circular Economy
(AARRE)

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Scenario building process
The participatory scenario development included
five phases:
1. Scoping phase for setting the initial scope
and a timeframe,
2. Identification and analysis trends, drivers,
and barriers
3. Framing and developing scenarios
4. Validation of the scenarios, and
5. Further development of scenarios.
Phases 1, 2 and 4 involved stakeholder
participation:
 Scenario workshop
 26 participants from key stakeholder
organizations; NGOs, government, industry
and research organizations, and focused on
identification of potential drivers, barriers and
factors of change.
 Consumer discussions
 42 consumers and focused on
understanding the future customers and
users of circular economy.
 Online stakeholder discussions
 within an online space called OpenWeb Lab
(Owela) for the validation of the scenarios
 Validation workshop
 11 participants from research organisations
and AARRE project partner companies

4. Scenario images of circular
economy enabled by
digitalisation

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Key assumptions
Scenario 1.
Efficient service experience
Scenario 2.
New Tribes
Scenario 3.
Factory of the future
KEY TRENDS • Service economy,
• Changing consumer habits (lower need for
ownership)
• Urbanization
• Resource efficiency
• Fair sharing economy
• Sustainability
• Urbanisation
• Changing consumer habits (e.g. sharing /
post-consumption)
• Bioeconomy
• Resource efficiency
• Sustainability (incl. social)
ENABLERS • Platforms
• Digitalisation
• Lower taxation of work
• Trust / ”design for trust”
• Digitalisation
• Platforms
• Need to belong to something
• Digitalisation
• Eco-design
• Collaboration
• Certificates
DRIVING ACTORS • Companies, users • Citizens/prosumers, NGOs, SMEs.
• Bottom-up approach.
• Companies (producer-led CE) and
governments
• Top down approach
ROLE OF CITIZENS • Citizens as users • Citizens as users and prosumers • Citizens as consumers
LEVEL OF
COLLABORATION
• Significant for companies
• Collaboration and co-creation with users
• Significant for citizens; co-creation and
crowdsourcing
• Low for consumers
• Significant for companies;
collaboration and coopetition
• Circular supply chains
SCIENCE
APPROACH
• Focus on digital service innovation,
understanding consumer & user
experience, behavioural, cognitive and
social sciences. Multidisciplinary approach
to innovation.
• Citizen science and open innovation
approach
• Strong emphasis on technological,
material and design innovations by
(formal) organizations. Semi-open
innovation.

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Orientation towards future value creation
Scenario 1.
Efficient service experience
Scenario 2.
New Tribes
Scenario 3.
Factory of the future
ORIENTATION • Services orientation • “Collaborative” and social orientation • Product orientation
TANGIBLE VALUE Cost savings and revenue from
• efficient use of materials and products
• Improved performance
• eco-design / long lasting products
• less waste, pollution and Improved land
utilization
Cost savings and revenues from
• better utilization of idle resources (cars,
ride, housing, gear, etc.)
Cost savings and revenue from
• closing and slowing the loops,
• product life extension,
• re-use of components and cascading
use of raw materials and utilization of
side-and waste streams,
• material efficiency,
• design for sustainability / eco-design
• long lasting products,
• less waste and pollution, improved land
utilization
INTANGIBLE
VALUE
• Services approach
• Better customer/ user understanding
• Fast access over long-lasting ownership
• New inspiring experiences
• Increasing social equality
• Increased community spirit and social
capital
• Increasing trust and social equality
• Eco-labels and certificates allow
consumption with clear conscience, and
ease of recycling
• Improved collaboration and supplier-
buyer understanding
• Improved company / brand image
BUSINESS
MODELS
• Product as a service
• Performance as a service
• Renting, leasing, dematerialisation
• Reuse, recycling
• Sharing, lending
• DIY -> DIT (Do it together)
• Cascading use, industrial symbioses
and circular supply
• Light weighting
• Lifetime extension; repair,
remanufacturing, refurbishing
• Recycling and reuse
• Also service models

7. SCENARIO:
EFFICIENCT SERVICE EXPERIENCE
• User culture
• Access over ownership
• From buying physical products to buying services and
performance
• Making everyday life easier and more comfortable
• Easy access via services
• Lower risks
• Experiencing become more important to consumers than
owning
• For companies performance, efficiency and timeliness are valued
TRENDS
Service economy
Changing consumer habits
Urbanization
Resource efficiency
ENABLERS
Platforms
Digitalisation
Lower taxation of work
OBSTACLES
Attitudes
(the desire to ownship)
Profitability
Lack of expertise

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Efficient service experience
The scenario gives us a circular economy in which consumption habits favour access
over ownership. Ease and sustainability are key themes in the everyday lives of both
consumers and businesses. Together with the Internet of Things (IoT), digital
platforms enable the provision, management and use of comprehensive service
packages.
New kinds of integrated service platforms serve as multi-purpose service maps,
bringing services and needs together. ”The drop off and take away” service concept
combines resource flows (services and materials) in and out of homes. ”A pocket-
sized circular economy” concept, consumers can purchase most everyday services
via a single online platform. One of these could be an Optimisation service, using a
single application to monitor well-being and health (food-vending machine, safety
bracelet), household energy consumption and air quality.

9. SCENARIO:
NEW TRIBES
• Sharing culture
• In production, consumption and use
• New level of community spirit and crowdsourcing, co-operative
2.0, peer to peer activities
• Local ”tribes” or as part of a virtual groups
• Agile, rapid, experimental, and visible activities and
entrepreneurship
TRENDS
Changing consumer habits
Fair sharing economy
Sustainability
Urbanisation
ENABLERS
Trust / ”design for trust”
Platforms
Need to belong to
something
OBSTACLES
Attitudes
(e.g. desire to ownership,
forced communality)
Legislation
Social unsustainability

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New tribes
In the scenario, the cooperative economy has become a supportive element of the
circular economy. The key issues in this scenario are respect for social capital and
neo-communality belonging to peer, sharing and consumer-producer communities.
Communities can be physical or virtual tribes which bring people together to interact,
while promoting the sharing and exchange of various types of ownership, resources,
skills and knowledge. The basis of such activity is trust between citizens.
The economy is being spurred on by renewed cooperative activities, so-called platform
cooperatives, the sharing economy between consumers, and the firms and small
businesses that provide such services. Business is agile, experimental, visual and
audible, being based on the re-use, recycling, sharing and exchange of materials and
products, in particular, and the supporting services. Business could be generated by
Cooperative home-based factories, which incentivise social activities and focus on
small-scale, fair peer production (such as urban farming), services (care,
transportation and repair services) and use.

11. SCENARIO:
FACTORY OF THE FUTURE
• Consumer culture
• Consumption with clear conscience; certificates and transparent
material flows
• Extended producer responsibility: producer is responsible during
the whole life cycle of the product
• Durable products
• Recycling, reuse and repair are made easy to consumers
• Symbiotic, narrowed and closed loops -> zero waste production and
use
TRENDS
Resource efficiency
Bioeconomy
Sustainability
ENABLERS
Digitalisation
Eco-design
Collaboration
Certificates
OBSTACLES
Profitability
Availability of recycled
materials
Lack of expertise
(e.g. in product design,
innovative public
procurements)

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The factory of future
In the scenario, production processes are resource-efficient and symbiotic within or
between different sectors. Processes are designed to ensure that the resulting
material flows are used efficiently and very little or no waste occurs. New kinds of
logistics services could be the key to a resource-efficient circular economy. Products
are designed on the terms of the smart circular economy from the outset and the
product lifecycle has markedly lengthened.
To function sustainably in the global economy, private-sector strategic management
must commit to the principles of a responsible circular economy. A strong focus has
been placed on the social sustainability of business. However, more-sustainable
consumption has become commonplace, led by major consumer product brands.
Shifting to the circular economy has been made easy for consumers, with
manufacturers ensuring the easy recycling, re-use, refurbishment and repair of
products. The consumer can continue consuming with a clear conscience – circular
economy certificates guarantee that products are produced, recycled and renewed
sustainably, and increasingly contain renewable and recyclable materials.

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CE kaleidoscope tool for new sustainable
business ideas
• Circular economy kaleidoscope is a
simple tool for business ideation and it
can also be used in the scenario
development process
• The tool consist of three rotating discs;
1. key drivers,
2. circular economy business
models and
3. economic, environmental, and
social sustainability
• The tool allows versatile combinations of
different driving forces, CE business
models and potential impacts
• The tool aims at promoting
transformation in niche scale by
changing prevailing mindsets through
realization of alternative options and
their impacts to sustainability within
different scenarios.

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Conclusions
The scenarios presented here are images of the complex reality of
environmental and socio-techno-economic systems highlighting aspects of
potential futures.
Even small insights could make the circular economy smoother and more
efficient on an everyday level and put change into motion. The scenarios
describe such changes. The circular economy should not be viewed solely
from the economic perspective. It is a multi-faceted diamond, which
combines economic, social and environmental aspects.
After a qualitative review of the scenarios, a more detailed review of the
circular economy’s macroeconomic impact on employment, regional policy
and taxation would be required, alongside a deeper understanding of its
social impacts.