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Integrating Circular Economy in the Innovation Process for Startups

Written by M. L. Ayesa

Paper category

Master Thesis


Business Administration>Entrepreneurship




Master Thesis: Circular economy The linear flow of energy and material between nature and human economy is a problem in global sustainable development. The size and scale of global ecosystems are shrinking, populations are growing, deserts are expanding, and sea levels are rising. There are biodiversity loss, water, air, and soil pollution, resource depletion, and overuse of land (Geissdoerfer et al., 2016). At the same time, per capita consumption is also increasing (Korhonen et al., 2018). This causes our planet to be in trouble. According to the BP Statistical Review of World Energy (2018), about 85% of the world's total energy output in 2017 came from non-renewable fuels such as oil, coal, and natural gas. Circular economy utilizes ecosystem circulation by respecting the natural reproduction rate, and limits the throughput flow to the range that nature can tolerate. In a circular economy, resources are retained in the system for as long as possible, ideally indefinitely, rather than being discarded after one use like the current linear system (Rli, 2015). The concept of circular economy and these tools and strategies may change the way business is done, the way resources are used, and how to collaborate for a healthier and sustainable world. One definition of sustainability is “the situation where human activities are carried out in a way that protects the functions of the Earth's ecosystems” (Geissdoerfer et al., 2016). Environmentalists Ehrlich and Holdren (1971) used the equation "I=P×A×T" to explain the source of tension, where (I) represents environmental impact, which is a function of population (P), consumption or wealth (A) And technology (T). The Brundtland Commission (1987) another definition of sustainability is “the development of meeting the needs of the present without compromising the ability of future generations to meet their needs”. As early as 1966, Bolding described the earth as a closed circular system with limited assimilation ability. Our consumption patterns, use of raw materials, production and management should all be based on this law as the basis of design and habit. Sustainable companies express their vision, mission and purpose in terms of environmental, social and economic results (Stubbs & Cocklin, 2008). Companies that turn to sustainable development often conflict with existing values ​​and dilemmas. Companies need to turn these dilemmas into opportunities, so start-ups can more easily start directly with a sustainable way of thinking and foundation, and see opportunities there. Boken et al. (2013) believes that sustainability needs to be the core goal of the company and its stakeholder ecosystem in order to be able to simulate circular business models. One can start by imagining a colony of ants on the earth. 3.2 Startups Startups can be defined as: organizations established to find repeatable and scalable business models/.../They are not smaller versions of large companies: Startups are designed to find product/market fit and one In contrast, large companies are permanent organizations that have achieved product/market fit, aiming to implement well-defined, fully verified, fully tested, verified, verified, stable, clear, and unambiguous An organization, a repeatable and scalable business model. (Blank & Dorf, 2012, p. 12). In the European startup ecosystem, today (June 20, 2019) there are 828,982 startup companies with 4.52 million employees (Startup Hubs Europe, 2019). The city with the most startups in Europe (up to 330,000) is London, followed by Berlin with 170,000 startups. Although Stockholm has 8,000 start-ups and ranks 11th on this list, it is the second largest startup investment city after London (ibid.). Many companies that have turned to circular businesses, such as Auping, Interface, Patagonia, and Mosa, have used entrepreneurial innovation processes to make transition and experiment easier (Kraaijenhagen et al., 2016). It represents an "innovation culture" that can produce tangible output faster and promote attention from the outside in. The transition to a circular business means a major change in the established business (Bocken et al., 2018), so it may be wiser to start this transition from the beginning of the company. Start-ups often use the lean entrepreneurial process because it can accelerate the journey from idea to enterprise through efficient use of resources and minimal risk (Ries, 2011). 3.2.1 Lean Entrepreneurship "Entrepreneurship is management, but not the kind of management habit we think" (Ries, 2011). This is what Eric Reese, the founder of the Lean Startup Process, wrote in his book "Lean Startup" (2011), and it is one of the five principles of the methodology. Start-ups can use lean methods to allocate their resources better, shorten time to market, and test and learn faster than competitors (Ries, 2011). This is a way to help reduce failures through fast and cheap testing, and is essential for startups without initial capital. Lean entrepreneurship originated from lean manufacturing (developed by Toyota), agile development (developed by the Agile Manifesto), and customer development (developed by Steve Blank). After Eric Ries was active in several startups, some failed. He first Tried this method in a start-up company called IMVU. He was the co-founder of the company and became a very successful company. Has been in use-and later triggered the lean entrepreneurship revolution on a global scale (Ries, 2011). Read Less