Comparing industrial cluster cases to define upgrade business models for a circular economy

Abstract

Upgrading is often seen as a means to strengthen customer loyalty between investments in new equipment, but there is more to it. It is a means to introduce innovation in small, but continuous steps keeping both OEMs and their customers at the innovative forefront of technical and business development. Upgrading also improves sustainability and it is a driver in the development of the circular economy. Basically upgrading means transformation of a used piece of capital-intensive equipment to meet the new conditions in the user's business environment, but in practice it can take on a variety of forms depending on what type of added value is provided to the customer. In this article, we define four generic types of upgrade business models based on the industrial cluster cases in the UIW-project. Using a modified business canvas approach, we define the four Upgrade business models and compare how they create value for the customers, how they organise their main activities and how they earn money. A central means of achieving profitable upgrade business is to develop efficient business processes through digitalisation and through the use of modern information technology. Here we identify four areas where technologies such as AR and VR help to create an efficient environment for information management and communication in the upgrade value network.