Theorizing of Circular Ecosystems — The Initial Seed

In previous posts, we have explored a variety of aspects of ecosystems such as their types, growth, value creation and the transition to a circular ecosystem. Regarding this last aspect, approaches such as where we are and where we can go and servitization of products were also made. Reading these texts can bring a direct insight into the transition to the circular economy: its disruptive nature. However, the adoption or transformation to a circular ecosystem must be strategically conceived (or theorized) according to its typification. In this text, we will advance in relation to theorization.

Source: CIO

The disruptive nature of the transition to a circular economy disrupts the status quo and directly affects the dynamics of collaboration and competition between actors, in terms of technology, innovation, government and industry. The adoption of circular economy principles is, therefore, socio-technical as it involves actors from different segments of the economy and other domains. The transformation to the new logic of production and consumption (circular) seeks resource efficiency and environmental sustainability in markets and society. However, to achieve such efficiency, we need changes in the flows of materials, energy and value at a systematic level. After all, one swallow does not make a summer.

Thus, to reach the systemic level, we need the interaction of different types of actors, including organizations, the government and consumers. It is this need to reach so many different actors that increases the importance of understanding the logic of business ecosystems as they contribute to greater efficiency of resources and material flows through feedback loops and different interdependencies between different types of actors. The cases of Michelin, Moura, Trocafone and Enjoei illustrate this idea well.

However, circular configuration in ecosystems may not appear spontaneously. Its managers play an active role in creating ideas about how a specific ecosystem can be converted into circularity or even how an ecosystem can be born with the characteristic of circularity. This process of creation and transformation can be called theorizing. Therefore, this theorization of ecosystems takes place through a chain of thoughts that involves different types of actors and roles within an ecosystem, highlighting flows of value creation, value delivery and value capture.

The cases previously cited and published here are good examples of ecosystem theorizing. In the case of Michelin, it, as a focal company, planned to create a tire capable of safely fulfilling its role after puncturing for another 250 km, at a speed of up to 100 km/h, before interrupting the journey so that maintenance is carried out (value creation). In order for this tire to work for the final consumer, the focal company had to plan partnerships with auto repair shops to acquire specific equipment for the maintenance of this new type of tire (delivery of value). In addition, it needed to coordinate with vehicle manufacturers to create wheels compatible with the new tire and so that the new system (wheel and tire) could be sold together with the new vehicles (value capture). All of this must be theorized and anticipated by the focal company long before putting the new product on the market.

The cases of Moura, Trocafone and Enjoei have to do with the increase in the useful life of products that were previously directly discarded by the final consumer. Greater resource efficiency and environmental sustainability did not come spontaneously either. Moura’s ecosystem managers had to challenge themselves intellectually and creatively with a change in the law that required environmentally sound management of exhausted batteries, in terms of collection, reuse, recycling, treatment or final disposal. The theory of the developed ecosystem involved the organization of efforts involving different actors such as recyclers, used battery collectors and franchise stores, in addition to the battery manufacturer itself (Moura). Theorizing included schematizing the flows of value creation, value delivery, and value capture. For this, the evolution of collaboration with its business partners was essential, as well as the new interactions with organizations that the company had no relations before. Trocafone and Enjoei also theorized their ecosystems based on the return of used products and the articulation of different actors with different roles.

Also, different circumstances lead to different logics of theorization of circular ecosystems that do not arise spontaneously. They are purposely designed and architected so that it is possible to establish circular ecosystems with carefully planned and defined flows of value creation, value delivery and value capture.

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