**3. Why should companies seek out growth based on disruption?**

Today's world lives beyond large changes compelled by socio-environmental drivers and influences all activity sectors, especially people's everyday lives. In this exploratory essay, we seek to address why businesses can seek outgrowth based on the disruption of their business model, exploring the design of circular systems.

To initiate the process of companies becoming available to transform their business models considerably, it would be advisable for manufacturers to formalize several strategic partnerships and diversify the existing supply chain.

Independently of the stakeholder activity with whom the manufacturer establishes the partnership, the nature of the partnership can profoundly influence the design strategy (and vice-versa).

Today's world lives beyond large changes compelled by socio-environmental drivers and influences all activity sectors, especially people's everyday lives. In this introductory work, we seek to address how businesses can seek outgrowth based on the disruption of their business model, exploring circular systems design and strategies.

Circular thinking in an early stage of the design process produces business model recommendations that can encourage innovation. Nevertheless, to initiate the transition process from a linear to a circular economy, it is required to ensure that the companies become available to transform their business models considerably, it would be advisable to formalize several strategic partnerships and diversify the existing supply chain.

Independently of the stakeholder activity with whom the company establishes the partnership, the nature of the partnership can profoundly influence the design strategy (and vice-versa).

According to Professor Clayton Christensen, from Harvard Business School, [9] the strategy to follow is disruptive innovation. Companies can become more competitive with disruptive innovations that either create opportunities in new markets or take over the worst customers from a well-established player. Christensen's [10] research overwhelmingly suggests that companies should seek outgrowth based on disruption (**Figure 2**).

**Figure 2.** *Seeking growth based on disruption. Source: adapted from Kylliäinen [11].*

### **3.1 Implement disruptive innovation**

Large companies stay focused on more profitable customers and overserve adding marketing arguments and features that push the market and do not necessarily answer to a need manifested by the user. The disruptive design improves the products and services to answer the requirements of more stockholders. According to Christensen [9], disruptive innovation takes a share of the market and promotes other companies to react by launching their own disruptive innovation (e.g. CREST 3d whitestrips from P&G which is a cheap, DIY alternative to an expensive dental service).

#### *3.1.1 Develop new value networks: Participative users change social behavior*

In the *linear economy*, sustaining innovation, instead of creating new value networks, improves and extends existing ones, satisfying users' needs or generating needs for the user. The circular system's designers, at the beginning of the design process, ask "What is the end user's need?" And by the users, they are referring to all the stakeholders of the value chain.

Design performance of sustaining innovation creates value on existing products, which is typically what currently companies are doing: narrowing loops — reducing the amount of materials needed per product or service; resource efficiency; or doing more with less, which is also an opportunity to save costs. In the best-case scenario, companies perform a life cycle assessment (LCA) to understand the impacts of the materials their products have on the environment and economically (usually associated with recycling fees) — the *recycling economy*.

In the circular economy, disruptive innovation, circular systems designers must ask "How can the stakeholders be engaged and encouraged to participate from an early stage of the design process?". This change in the approach to the design process will promote different dynamics, synergies between sectors and a shift of power in the marketplaces. These happened due to the design approach being based on exploring experimentation in user behavior, stakeholders' requirements, and policy constraints.

Design for a circular economy considers what happens with the product after it has been used and before it goes for recycling (closing the loop). "Can the product be reused or remanufactured, or at least some of its parts?", "Can any of the functions

#### *Circular Systems Design: Seeking Outgrowth Based on Disruption DOI: http://dx.doi.org/10.5772/intechopen.111439*

offered by the product be converted into services?" — The answer to this questions depends immensely on the user's willingness and availability to participate as an active actor in the value chain. Although the current design recommendation refers to the creation of value networks at several levels of the product chain, such as at a technological level (e.g. IoT, big data, AI), logistics, R&D, and among others, the user involvement is crucial to; on the one hand, guarantee sales volumes but mainly for slowing and closing loops of material or resources.

In the circular economy, the design effort focuses on retaining the value of products and materials for as long as possible, as opposed to the current linear and recycling economy, where many efficiently manufactured products are thrown away after only being used once or at least its life span could be extended several times.

#### *3.1.2 Narrowing loops combining design and innovation strategies*

According to Donald Norman's definition [12], the main ambition of emotional design is to provoke emotions through products and services, improving the user experience. Designers focus on the emotions that can arise from the interaction of a product, and he classifies it into three categories: visceral (related to appearances), behavioral (pleasure and effectiveness of use), and reflective (rationalization and intellectualization of a product).

Narrowing loops means that circular systems designers are requested to develop concepts that consider changing users' behavior and are requested to develop products that increase the desire to keep them for longer. Today's emotional design suggestions are extended to induce users to repair, maintain, upgrade/restyle, refurbish, and remanufacture, in order to extend the use cycle of the products, thereby narrowing loops combining design and innovation strategies.

When using incremental and sustaining innovation strategies, the designed products aim to perform better than the previous generation or competition, for example, by reducing weaknesses, optimizing manufacturing processes, or transportoptimized stacking.

Using a disruptive innovation design strategy, the new product can have improved functionalities and be more profitable than the previous solutions or it targets more high-profit customers. However, it might lead to lower volumes and thus higher absolute profits. Circular systems design can make that happen if it uses a systematic approach from an early stage in the design process: Planning surrounding services and reuse, remanufacturing loops, and creating maintenance or data managing services attached to the product itself - design for dematerialization and resource reduction/ substitution.

### *3.1.3 Build design concept on volumes and profits arguments*

As is the case in the adoption of other innovative processes, it is likely that designers will face some difficulties persuading customers or partners to implement circular and disruptive innovations. It is required to build the design concepts in a way that reduces the uncertainty inherent to any innovation. Arguments, such as volumes and profits, are critical to drive circular design or to attract new partners for a new value chain when all the stakeholders expect slow growth, but with fast profitability.

Nevertheless, volumes and profits should be considered as engagement arguments to assess risk and resistance to innovation. The three key elements that any circular

business model should ideally have, and that consequently shape the design process are oriented toward value creation: i) *circular value creation*, ii) to make use of *value propositions that enable circularity*, iii) and to be *surrounded by circular value network*. We will discuss this in more detail in the next section.

Any manager of a new and growing company seeks a rapid increase in sales volumes, and circular systems designers are sure to be persuaded to make this happen. Nevertheless, it is unlikely that disruptive business achieves growth very fast. But well-established markets and circular systems design customers (manufacturers and other supply chain stakeholders) are not interested in the strengths of disruptive innovation.

The majority of the stakeholders resists innovative design solutions and will mostly focus on the weaknesses, which can drive the circular design to fail. It is important to point out that keeping the core business of the company growing healthily will make it easier for the management to wait for the (disruptive) circular business to build commercial mass slowly. In other words, the business model transition will probably be delayed and ideally planned in several stages of 3, 7, and 10 (or more) years pilot phases. Circular systems designers will share the role of facilitator with key representatives of each stakeholder, discussing innovative and sustainable matters at both technology and management levels, to orchestrate systemic change in a flexible and adaptable innovative way. And, therefore, influence information flow and risk assessment metrics throughout project development by considering alternatives and thinking beyond obvious solutions associated with the linear and/or recycling mindset.

This will also be reflected in the placement of the circular system design interventions, within the planning and project management of the transition process, which again differentiates the design thinking and the circular systems design approach.

Design thinking (eg: "double diamond" process model) and exploring experimentation are often treated as the starting point (or seed) of the design process, and innovation, for desirable societal or economical transformations. While a circular system design approach may become more demanding since it implies a mindset shift that necessarily depends on top-down recommendations from a strategic level and the involvement of internal team members responsible for the training, facilitating the unblocking along the transition period.
