3rd PLATE Conference
September 18 – 20, 2019
Berlin, Germany
Nils F. Nissen
Melanie Jaeger-Erben (eds.)
Universitätsverlag der TU Berlin
Hofmann, Florian : Framing organizational dynamics towards value
creation systems to slow down resource fl ows. In: Nissen, Nils F.;
Jaeger-Erben, Melanie (Eds.): PLATE – Product Lifetimes And The Envi-
ronment : Proceedings, 3rd PLATE CONFERENCE, BERLIN, GERMANY,
18 – 20 September 2019. Berlin: Universitätsverlag der TU Berlin, 2021.
pp. 361 – 367. ISBN 978-3-7983-3125-9 (online). https://doi.org/10.14279/
depositonce-9253.
This article – except for quotes, fi gures and where otherwise noted – is
licensed under a CC BY 4.0 License (Creative Commons Attribution 4.0).
https://creativecommons.org/licenses/by/4.0/.
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Framing Organizational Dynamics towards Circular-sufficiency
Value Creation Systems
Hofmann, Florian(a,b)
a) Fraunhofer-Institute for Reliability and Microintegration, Department Environmental and Reliability Engineering,
Berlin, Germany
b) Technische Universität Berlin, Faculty of Economics and Management, Department Strategic Leadership and
Global Management, Berlin, Germany
Keywords: Circular Economy; Organizational Change; Circular Business Model; Sustainable
Business Model; Sustainability Transitions.
Abstract: Practitioners from politics, economics, and the civil society, but also scholars increasingly
recognize that business contributions to a circular oriented transition of the society are founded in new
business models. However, most research in this field remains theoretically conceptual and offers a
rather static view of a complex and constantly changing reality. This study strives to contribute to the
shift in the circular business model debate from its definitional and motivational aspects to the
understanding of organizational dynamics connected to the efforts of firms that experimenting with
circular oriented business configurations. Based on eight problem-centered expert interviews with
business consultants, the study provides a set of propositions on how they are framing corporate
transitions towards circular-sufficiency value creation systems. It reveals starting points for
understanding patterns of circular change in firms, which may simultaneously serve as impulses for
future research investigations.
Introduction
In light of climate change, massive biodiversity
loss rates, or growing natural resource scarcity,
just to highlight a few ecological persistent
problems, a fundamental reorganization of our
social structures seems inevitable in order to
move towards sustainability. In particular, the
production and consumption patterns of the
Global North, which have been expanding in
other parts of the world over the past few
decades, put tremendous pressure on nature. It
is evident that business-as-usual cannot be
sustained (IPCC, 2014; Schubert et al., 2011;
Steffen et al., 2015). A profound shift in the
purpose of corporations and almost every
perspective on how they are conceived and
arranged is necessary to shape the conditions
for a livable future (Bocken et al., 2018).
One possible economic transition corridor that
gained growing popularity among corporate
representatives, politicians and scientists is the
idea of a circular economy (CE). In the CE
discourse, innovative business models (BMs)
play an outstanding role by perceiving them as
a catalyst for a sustainability transition of the
contemporary unidirectional (linear) industrial
economic logic (Hofmann, 2019). Under certain
circumstances, novel BMs have the ability to
trigger a “process of industrial mutation”
(Schumpeter, 1976: 83), as they couple
multiple social actors, and link the production
and consumption spheres (Bidmon and Knab,
2018).
Nevertheless, the following paper adopts the
concept of value creation system (VCS; Rüegg-
Stürm & Grand, 2016) as an analytical unit in
order to approach corporate renewal in the
context of a CE. It must be emphasized that a
VCS goes beyond the usual notion of a BM.
Current BM thinking largely assumes a
mechanistic approach in which a firm can be
understood by analyzing the core components,
in this case BM elements (such as value
proposition, value creation & delivery, value
capture; Foss & Saebi, 2015). The notion of
system, in contrast, accentuates “that the whole
is greater than the sum of its parts and that the
behavior of the whole thus cannot be
understood from the properties of its parts”
(O’Connor, 2008: 315). It is precisely this
interdependent interaction that gives a system
a certain structure, which in turn enables
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Framing organizational dynamics towards circular-sufficiency value creation
systems
specific functions (Kieser & Ebers, 2019). The
function and central characteristic of firms as
organizations is a unique kind of value creation
that can be understood both as a result
(products and services that can appear as
vehicles of values) and as a process (dynamics
of activities, resources, networks) that leads to
this result. In other words, firms are at heart
sequences of organizing that constitute and
stabilize themselves as VCSs (Rüegg-Stürm &
Grand, 2016; Weick, 1979). Hence, there are
three conceptual conditions of VCSs that differ
from the BM perspective: (1) VCSs assume a
plurality of values, while the connotation of
“business” models imply the focus on financial
rationalities solely. This distinction is important
because it highlights the complexity of the
challenge involved in integrating principles of
circularity and sustainability in corporations
(such as new performance measurement
indicators). (2) Enterprises as VCSs are
steadily evolving: they are in a constant state of
flux. The dynamic related perspective of VCSs
emphasizes the importance of the time
dimension and therefore the associated
process of transition (Weick, 1979). (3) The
ability of the firm to change their BMs is
influenced by communication structures,
decision patters, roles, power constellations,
belief reference frames, dynamic capabilities,
etc. The rotational searching, experimenting,
and learning sequences to stimulate BM
renewal can only be explored by incorporating
the organizational dimension. In a nutshell,
VCSs combine the BM perspective with the
process of organizing.
A circular-sufficiency based VCS connects
firstly, circular business configurations
focusing on result- and performance-oriented
product-service-systems; manufacturing and
offering durable, reliable, modular, and
repairable products; practicing conscious sales
(slow fashion, slow travelling etc.); and adopts
an economic long-term view of operating
(based on Bocken & Short, 2016; Bocken et
al., 2016; Dyllick & Hockerts, 2002; Young &
Tilley, 2006). And secondly, the consumption
side of business, which includes responsible
(non-)consume activities, such as repairing
instead of buying new products; second hand
purchasing; sharing; or buying locally and
regionally manufactured products that can be
summarized as “sufficiency”. Therefore,
circular-sufficiency-driven VCSs attempt to
reduce the absolute overall natural resource
consumption by moderating demand through
education and consumer engagement, making
products that last, extending product lifetimes
to slow down disposal and replacement rates
through changes in sales and marketing
practices (Bocken & Short, 2016).
Research in the CE field at the corporate level
has primarily developed in two main tracks
addressing two sets of questions: why should
or should not companies adopt circular value
creation architectures, and what makes a
corporation more circular? Answering “why”- or
“why not”-questions accentuates motivational
aspects (such as decoupling growth from
natural resource consumption or to become
more autonomy and independence from
international commodity markets) or studies of
drivers, challenges and barriers of integrating
CE core principles into daily business routines
(e.g. Linder & Williander, 2017; Nußholz, 2017;
Rizos et al., 2016; Sousa-Zomer et al., 2017;
Tura et al., 2019). Research on “what”-
questions focusing on the constitution of
circular BMs, the description of properties and
features of individual circular BM elements or
circular BM design strategies that can be
summarized as conceptual debates (e.g.
Bocken et al, 2016; Bressanelli et al., 2018;
Lewandowski, 2016; Lüdeke-Freund et al.,
2018; Manninen et al., 2018; Planing, 2018;
Urbinati et al., 2017). Despite, and in part
because of, the discourses on the definitional
(“what”), motivational (“why”), and risks (“why-
not”) issues, there is still missing a significant
investment in scientific knowledge production,
apart from a few exceptions (e.g. Antikainen et
al., 2017; Bocken et al., 2018; Heyes et al.,
2018), on questions according to the dynamics
through how incumbents trying to navigate a
circular transition of their VCS. In other words,
the CE research field benefits from directions
in exploring corporate practices of
organizational discovering, experimenting, and
learning to stimulate circular change.
This study follows the few tentative
investigations that have been conducted so far
addressing the “how”-questions. It provides a
set of propositions on how consultancies as
direct advisory agencies of firms framing
organizational transitions to circular-sufficiency
VCSs. This allows outlining starting points to
(1) reveal patterns of circular renovation of
incumbents, (2) identify contradictions and
shortcomings of CE narrations in real-life
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Framing organizational dynamics towards circular-sufficiency value creation
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contexts, and (3) highlight future research
directions.
Research approach
The research approach of the study is both
qualitative and explorative, examining on how
business consultancies narrate, frame, and
draft transition processes towards circular-
sufficiency value creation logics at corporate
level. The data was collected through eight
semi-structured, problem-centered expert
interviews. The interviewed persons hold
different positions (two junior consultants, one
senior consultant, one department head, one
chief operating officer, two chief executing
officers, one managing partner) in six
international operating business consultancies
that offer consulting services for circular
organizational change. They were detected
through extensive web searches and personal
expert recommendations. The selected
individuals were assessed as particularly
knowledgeable and experienced about the topic
of interest. The duration of the interviews varied
between 55 and 89 minutes, which were
conducted in German between March 2019 and
May 2019. All interviews were recorded and
transcribed word by word.
The obtained data in the form of written
communication was processed and interpreted
with the use of both open and axial coding
according to Straus (1978). The objective of the
data analysis was the rotational deconstruction
of the transcripts to firstly, open up new
dimensions of meaning behind the obviously
perceived surface of the text, or in other words
to break up the manuscript into sub-textual
interpretation categories. And secondly, based
on this, to formulate a preliminary set of
propositions on the object of research to
approach the observed phenomenon.
There are several reasons why business
consultants were chosen as experts. They are
advisory bodies that use their expertise,
experiences, networks and abilities to influence
corporations and therefore contribute to certain
developments and arrangements of markets
and industrial sectors. Consequently, they are
relevant to social negotiation processes as
economic authorities and should thus be able to
indirectly or directly affect the thinking and
actions of corporations. As they have a certain
degree of interpretive sovereignty on socio-
economic developments, it seems sensible to
examine their ideas and deliberations on
circular business development in order to draw
conclusions about contemporary and potential
future VCS formations. In addition, there is still
no research on circular change at the corporate
level that specifically uses experiences and
narrations of business consultancies as source
of knowledge.
Framing organizational dynamics
towards circular-sufficiency VCSs
Framing comprises the process of embedding
occurrences and phenomena in interpretative
schemes. This allows intricate information to
be selected, structured, and complemented in
a meaningful way to handle the complex
reality. “To frame is to select some aspects of
a perceived reality and make them more
salient in communicating text, in such way as
to promote a particular problem definition,
causal interpretation, moral evaluation, and/or
treatment recommendation for the item
described” (Entman, 1993: 52).
Circular-sufficiency reinventions are determined
as substantial, architectural, and complex
organizational changes of incumbents as
already existing VCSs that are embedded in
their own past, in different social spheres, and
in interrelated ecosystems. To be capable of
acting and not to be paralyzed from the faint of
complexity and uncertainty of the future,
selecting and prioritizing specific constructed
realities is necessary to absorb uncertainty
(March & Simon, 1958). Consequently,
selecting and prioritizing certain issues of
corporate transition processes opens up
spaces for action. Due to interpretative
schemes the diffuse openness of evolution
pathways can be reduced to make
recommendations and decisions about future
operations (Luhmann, 2002). The following
subsections introduce a set of four propositions
how the individuals interviewed embedding
organizational dynamics towards circular-
sufficiency VCSs into their interpretative
schemes.
Proposition I: Circular-sufficiency
reinventions as organizational black boxes
that lead to perplexity
The management of circular-sufficiency based
VCS reinventions and its dynamics is
ambiguous and opaque. In this context,
corporate management appears in many ways
to be a black box, and this despite of the
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Hofmann F.
Framing organizational dynamics towards circular-sufficiency value creation
systems
tremendous importance of navigating and
evolving today’s firms against the backdrop of
the anthropocene. Black boxes are simplified
representations of complex systems, which
processing specific stimuli to possible
responses, without knowing how the inner
structures and spaces are designed and
organized. It is a construct consisting of both
entrance and exit, but its inner architecture is
opaque and declared as irrelevant. Hence, a
black box ensures a specific functionality, but
its manner of functioning is unknown (Baecker,
1999).
The core principles to integrate circular-
sufficiency VCSs into daily practices or, in the
language of the black box metaphor, the input
factors to stimulate implementation are known
and discussed widely. Applying new
technologies, especially of digital ones,
involving relevant stakeholders in the VCS
design process, collaborating within value
creation networks; and reorganizing producer-
consumer-relationships are frequently
mentioned premises for the development and
successful realization of circular-sufficiency
VCSs both in the conducted interviews and in
the scientific literature. The expected
behaviour patterns of circular-sufficiency VCSs
(black box output) can be aggregated in the
modes of value creation and offerings to slow
resource loops (e.g. Lüdeke-Freund, 2018;
Hofmann 2019). These include, for example,
repairing, maintaining, refurbishing of products
and components, managing reverse logistic
systems (modes of value creation) or providing
product functions and performing services
(modes of offerings). But so far there are no
answers or concrete solutions on how to
orchestrate the core principles of integration.
What does this mean for the organizational
dimension of incumbents? How do
communication structures, decision-making
patterns, hierarchies, power constellations,
and key performance indicator matrices
change in order to generate the imagined
output? The lack of knowledge and the
resulting uncertainty find their expression in
the perplexity and paralysis of corporate
decision-makers. This kind of faint may leads
to inertia and stall substantial firm transitions,
which seem necessary to identify and figure
out potential pathways for overcoming
persistent problems, such as climate change
or resource scarcity. “There is a great
helplessness on how to implement this (CE)
and, in particular, how to implement it in
companies” (interviewer A).
Proposition II: Circular transition as a
reactive concept for heteronomous VCSs
The narratives about circular corporate
transitions start predominantly by emphasizing
on key external competitive and social
compulsions. “In my opinion, there are two or
three main pressure points that lead
companies to think about the topic (circular
reinventions) at all” (interviewer B). Enterprises
are driven and determined by price volatility on
raw material markets, climate change,
legislative modifications, customer needs,
shareholders, price fights, digitalization, the
own chief financial officer, concentration of
power and monopolies, etc. In other words,
they can contribute solely to socio-economic
developments if stakeholders provoke them.
This is in line with the stakeholder approach,
which implies causality thinking based on
unidirectional power of the environment that
affects the architecture and logics of VCSs.
Thus, firms are constructed as externally
controlled administrative organizations: as
passive and reactive social agents that merely
adapt to the environment (Schumpeter, 1976).
They are triggered, driven and chased by
foreignness, and fight with their backs to the
wall trying to pursue economic, social, and
ecological trends with elaborated strategic
plans. From this point of view, circular
corporate reinvention is articulated as a
reactive concept for heteronomous VCSs.
Proposition III: The need for provocateurs
and troublemakers
Where does circular-sufficiency change arise at
corporate level? How does dynamism emerge
in seemingly stable systems? Taking into
account the axiom that VCSs as social systems
cannot exist without humans (human
“resources” as strategic importance of
corporations), it can be inferred that employees
are essential origins of irritation and inspiration
who scrutinize the existing VCS. The data
indicate that intrinsically motivated, usually
influential persons initiate circular-sufficiency
reinventions, who encounter resistance with
intrepidity and courage. They become role
models of renewal through their attitudes and
behavior. Other employees perceive them as
idealized paragons of progression, as the
personification and leading figure of change.
They reinterpret the rules of the game, even try
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Framing organizational dynamics towards circular-sufficiency value creation
systems
to reformulate them, and critically reflect
routines and thus the logic of the contemporary
VCS. They irritate existing communication
structures and make non-conform decisions.
Thus they confront the “establishment”; act
against power and hierarchy pyramids, or use
them for their ideas.
Nevertheless, it must be considered that
individuals are not able to directly control and
deterministically influence organizational
dynamics (Luhmann, 2002). Corporations as
VCSs are not just representations of visionary
ideas of self-confident and sovereignly
performing top managers. The interfering
impact of individuals depends on situational
occurrences, on the interaction of a multitude
of experiences, identities, expectations, and is
determined by communication processes.
Proposition IV: Circular-sufficiency VCS
reinventions begins in the minds of flexible
and versatile employees
Circular-sufficiency transitions of VCSs are
radical and highly uncertain projects of
incumbents that gradually begin to emerge in
the minds of creative and unconventional
thinking individuals, whose ideas must
stabilize in organizational communication and
decision-making processes. The accumulation
of new and situation-specific knowledge is
needed amongst the employees that they
attain through practical and experiential
activities. Unidirectional (take-make-dispose)
and unidimensional (merely in monetary
terms) economic thinking and acting are
deeply anchored in current value creation
logics, so that circular-sufficiency VCSs cannot
even be imagined. It is argued that CE-based
VCS transitions start at the optimization of
product functionalities or due to the
modifications of product materials, e.g.
recycled materials substitute the use of
primary natural resources. These incremental
variations may elicit a new efficiency
revolution, but they do not automatically
provoke the prevailing business rationales that
cause the persistent problems we face. Even if
changes of product configurations and value
creation patterns like recycling waste into new
forms of value are important for restructuring
consumption and production systems, greater
efforts are needed to design VCSs that flourish
within planetary boundaries. But how can
incumbents radically rethink their actual VCS
and explore new appropriated approaches?
One possible option is safe and autonomous
physical “playgrounds” where there are no
bans of thinking. Open spaces to imagine
entirely new corporate objective dimensions.
Arenas of freedom decoupled from everyday
settings to test, negotiate, reflect and evaluate
new game rules and course of actions in order
to build up transformative knowledge assets
and expertise.
Discussion and Conclusion
Through qualitative and explorative research,
eight business consultants were interviewed
focusing on how direct advisory agencies of
enterprises narrate, frame, and draft transition
processes towards circular-sufficiency value
creation logics at corporate level. The
introduced set of propositions proposes
tentative insights for understanding patterns of
circular-sufficiency reinventions; identify
contradictions and shortcomings of CE
narrations in real-life contexts; and highlight
future research directions.
VCS conceptions must go beyond efficiency
and consistency strategies to address the
challenges of the anthropocene. No question,
“what is truly required to reduce environmental
impact is less production and less
consumption” (Zink & Geyer, 2017: 600). But
how does this insight influence enterprises in
their everyday routines, in their assumptions of
economic activities? Obviously, circular-
sufficiency transitions of VCSs are radical and
highly uncertain projects representing a black
box, not only for incumbents and business
consultancies, but also for the scientific
community. The resulting state of faint shows
us that there is an enormous lack of theoretical
and practical knowledge about such immense
processes of renovation. This nebulous
uncertainty is reinforced by narrations that
conceptualize and articulate CE transitions as
a reactive response to stakeholder strains. We
should rather emphasize the ability of
corporations to proactively contribute to
solutions for climate change, biodiversity loss,
etc. Among other aspects, this also means
further conceptual development of the
stakeholder approach. A key insight from the
data is that circular-sufficiency VCS transitions
begin with unorthodoxly thinking and behaving
employees, and not with novel product designs
and business models as often highlighted in
scientific literature (e.g. Moreno et al., 2016;
Planing, 2018; Urbinati et al., 2017).
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Framing organizational dynamics towards circular-sufficiency value creation
systems
Among other issues, future research should
focus the intra-corporate experimentation
process, e.g. through case studies,
ethnography and longitudinal studies, to obtain
knowledge about organizational learning topics
and how the above-mentioned thought and
action “playgrounds” of freedom must be
constructed for creating compatible and fruitful
outcomes.
Acknowledgments
This research is supported and funded by
Heinrich Böll Stiftung – The Green Political
Foundation, Germany. I am a participant of the
interdisciplinary researcher group
“Obsolescence as a challenge for sustainability”
which is funded from July 2016 to June 2021 by
the German Federal Ministry of Education and
Research in the frame of the Research for
Sustainability program. Special thanks to the
group members for the inspiring exchange of
ideas, as well as to the interviewed persons for
their time, openness and thoughts.
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