Within the special content series on circular design, today we are writing a very basic article to understand what exactly circular business models are.

When we think of circularity, we may immediately think of sustainable products, but what exactly does it mean to have a circular business model?

In this article, through a simple analysis, we explain what a circular business really is, providing a clear idea of what transforming a linear model into a circular one would entail.

About Circular Economy and Circular Business Models

To understand what a circular business is, it is first important to understand what circular economy means.

The main goal of this model is to reduce both the acquisition of virgin material resources from our planet and their waste. In other words, it seeks an ethical and sustainable way to obtain resources and find a way to reuse them, extending their life cycle:

So, what characteristics define a circular business model?

At Lúcid, we have created a visual representation to show what circular businesses look like, along with key points that help deepen the understanding of how to transform a business in each of its phases.

As seen in the infographic, circular models are based on transforming the traditional linear model, which follows the take - make - use - dispose approach, into a circular process.

And how can this be achieved? Essentially, by finding ways to recycle, repair, reuse, or return the resources involved in the process.

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Fast Fashion: An Example of a Non-Circular Model

To better understand this infographic, looking at the fast fashion industry is quite useful. Recently, it seems that fast fashion brands are making efforts toward sustainability. But have they really transformed their business models?

It’s common to see sustainability labels on fast fashion products, referencing sustainable material sourcing, but to be considered truly circular, they should answer the following questions:

• Are all resources used by these brands sourced from recycled or natural materials?
• What happens to their products once they are no longer in use? Is there an incentive to return them?
• Where and under what conditions are these products manufactured?
• Do they encourage the reuse and repair of their products?

If these questions cannot be answered, we are not looking at a circular model. Creating a circular business model requires an in-depth analysis of the current business to achieve a total transformation, in which design plays a crucial role.

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At Lúcid, we love these kinds of challenges, and we would love to be part of your journey in transforming your business into a circular model. Do you want our help? Don't hesitate to contact us to explore solutions for a better world.

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