The Value Circle: Assessing Value Creation in Circular Business Models

University essay from Lunds universitet/Internationella miljöinstitutet

Abstract: This thesis aims to create a simple evaluation tool suited for assessment of value creation in Circular Business Models (CBMs). Transitioning from a linear business model to adapting the Circular Economy principles, brings in a range of new challenges, for both a company and its consumers. However, it is also important to note the different opportunities of value creation that arise due to such a shift. A strong agreement is found in the existing business model literature, in favour of understanding relevance of value creation within organisations. An extensive literature analysis unveils a relative abundance of frameworks available for business model development, planning and visualisation, pointing out a relative dearth of tools available to evaluate value generation, especially in CBMs. The intent of this research is to first identify a range of possible metrics to assess value generated in CBMs. Five different dimensions (economic environmental, customer, network and information) of value generation and suitable metrics are identified by the researcher through analysis of literature. The value metric checklist is tested for its applicability on selected case companies which are operating a CBM. Three companies which enable reuse of waste material as primary input are taken as cases for the empirical study. Finally, the evaluation tool “Value- Circle” is developed, consisting of ‘value metric checklist’ and ‘pie chart based visual representation’. The thesis provides an insight into need for evaluation of value in CBMs and identifies future opportunities for creating evaluation tools customised to CBMs.

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