Thursday, April 1, 2021

g-f(2)189 THE BIG PICTURE OF THE DIGITAL AGE (4/1/2021), MIT SMR, The Four Fatal Mistakes Holding Back Circular Business Models.




Extra-condensed knowledge


Manufacturing companies must avoid key missteps as they shift to more environmentally sustainable approaches.
  • Pursuing Value With a Circular Business Model
    • Making the transition from a linear to a circular business model is an ambitious undertaking that involves rethinking how the organization creates, captures, and delivers value.
  • Circular business models hold promise for renewing the vitality of manufacturing companies — by enabling them to work in new ways with business-ecosystem partners to minimize environmental harms while maintaining profitability. 


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Condensed knowledge


  • CONTEXT
  • The Research
    • From 2015 through 2020, the authors studied how companies collaborated with ecosystem partners in designing, developing, and implementing circular business models.
    • They conducted more than 100 interviews and 12 workshops with executives, senior managers, and engineers from 15 large European manufacturing companies that sought to adopt circular business models.
    • The following industries were represented: mining, construction, construction equipment, medical technology, appliances, aviation, automotive, heavy trucks, pulp and paper, and forestry.
    • The authors examined why successes and failures occurred during each phase of the transition and identified practical lessons for other manufacturing companies seeking to adopt circular business models. 
  • The urgency of the climate crisis is driving some of Europe’s leading manufacturers to pursue new strategic approaches intended to mitigate the environmental impacts of their products and processes. 
    • One such innovation is to adopt a circular business model, whereby a focal company collaborates with its ecosystem partners to create, capture, and deliver sustainable value.
    • The goal: to improve resource efficiency — by extending the life spans of products and parts, for example — to achieve environmental benefits while still meeting profit targets.
  • Circular business models hold promise for renewing the vitality of manufacturing companies — by enabling them to work in new ways with business-ecosystem partners to minimize environmental harms while maintaining profitability. 
    • In short, circular business models can allow companies to simultaneously target all pillar objectives of the so-called triple bottom line: financial, social, and environmental.
    • “Going circular” is a gradual process for revamping a company’s approach to achieving all three of those elements.
    • But a company’s leaders and managers need to remain vigilant about their biases and their resistance to cultural change as they confront the challenges of moving from a company-centric mindset to an ecosystem-centric mindset.
    • A broader, more long-term orientation to designing and developing products, collaborating with new and existing ecosystem partners in novel ways, and moving away from a transaction-based interaction will make manufacturers more likely to achieve long-term sustainability, both as companies and as stewards of a changing planet.


Category 2: The Big Picture of the Digital Age

[genioux fact deduced or extracted from MIT SMR]

Type of essential knowledge of this “genioux fact”: Essential Deduced and Extracted Knowledge (EDEK).

Type of validity of the "genioux fact". 

  • Inherited from sources + Supported by the knowledge of one or more experts + Supported by research.


Authors of the genioux fact

Fernando Machuca


References




ABOUT THE AUTHORS


Johan Frishammar is a professor of entrepreneurship and innovation at Luleå University of Technology and a research fellow at the Stockholm School of Economics’ House of Innovation in Sweden. Vinit Parida is a professor of entrepreneurship and innovation at Luleå University of Technology and at the University of Vaasa in Finland.


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