How incumbents realize disruptive circular innovation ‐ Overcoming the innovator's dilemma for a circular economy

Abstract

Despite the promises of the circular economy to become an attractive source of innovation, many firms have so far hesitated to pursue circular innovations. Incumbents are facing a dilemma: While circular innovations may be potentially disruptive to the current profitable linear business, standing still may be dangerous, as traditional businesses may be rendered obsolete in the current changing environment.Yet, the literature has so far provided only a few insights into how firms can approach circular innovations strategically. By using the lens of disruptive innovation, we offer a strategic analysis of circular innovation challenges and potential ways to overcome them. Based on two in-depth cases, we show how a separate organizational structure can help to implement potentially disruptive circular innovation, but some caveats exist. In addition, this structural separation should be linked with a clear innovation strategy, and the partnerships, organizational culture, and competencies needed for implementation should also be considered.

The impact of internal company dynamics on sustainable circular business development: Insights from circular startups

“…First, the complexity of the managers' decision‐making for circularity is stressed during the interviews, which is supported by Antikainen and Valkokari (2016) as well. In addition, Kuhlmann et al (2022) find that deliberate decision‐making is required from the managers to support circular innovations. In the literature, it was found that managers can face trade‐off decisions between economic profitability and circular structures in the business, at least in the short term, which can hinder the implementation of a CBM (Ünal et al, 2019).…”

Circular disruption: Concepts, enablers and ways ahead

“…Both of these works focus on incumbent firms. Arekrans et al (2022) explore three empirical cases of large incumbent firms that engage with radical circular business model innovation, while Kuhlmann et al (2022) present two cases, with the latter authors particularly engaging with the thinking of Christensen (1997) around disruption and innovation in large incumbent firms. Both papers highlight that disruptive circular business model innovation and thus circular disruption is feasible for incumbent firms, albeit a lot of efforts must be undertaken.…”

“…Both papers highlight that disruptive circular business model innovation and thus circular disruption is feasible for incumbent firms, albeit a lot of efforts must be undertaken. Arekrans et al (2022) find that leadership commitment and sustainability targets can drive radical circular business model innovation, Meanwhile, Kuhlmann et al (2022) highlight how creating separated organizational structures by the incumbent such as a start‐up outside of the existing company can also act as a catalyst for change. Furthermore, elements such as an innovation strategy and partnerships matter.…”

Circular Disruption: Concepts, Enablers and Ways Ahead

“…Both of these works focus on incumbent firms. Arekrans et al (2022) explore three empirical cases of large incumbent firms that engage with radical circular business model innovation, while Kuhlmann et al (2022) present two cases, with the latter authors particularly engaging with the thinking of Christensen (1997) around disruption and innovation in large incumbent firms. Both papers highlight that disruptive circular business model innovation and thus circular disruption is feasible for incumbent firms, albeit a lot of efforts must be undertaken.…”

“…Both papers highlight that disruptive circular business model innovation and thus circular disruption is feasible for incumbent firms, albeit a lot of efforts must be undertaken. Arekrans et al (2022) find that leadership commitment and sustainability targets can drive radical circular business model innovation, Meanwhile, Kuhlmann et al (2022) highlight how creating separated organizational structures by the incumbent such as a start-up outside of the existing company can also act as a catalyst for change. Furthermore, elements such as an innovation strategy and parternships matter.…”