The role of radical innovation in circular strategy deployment

Abstract

Circular economy (CE) is gaining interest among industrial firms in light of sustainability concerns, and several incumbent firms are integrating it into their strategy. In this study, we scrutinize learnings from three large established industrial firms with a clear CE agenda and that are front-runners in CE strategy deployment. We analyze exploitation and exploration approaches to CE and problematize how these approaches relate to radical innovation, which we argue is critical for achieving CE. Semi-structured interviews (n = 30) were used to collect data. We found several issues referring to (1) challenges and approaches to normative management, (2) how the innovation ecosystem is engaged, (3) how goals and metrics relate to CE, and (4) resources and coordination regarding the CE initiative. Overall, current exploitative approaches are favored over explorative, mirroring an undesired imbalance between the two. We suggest several ways to counteract this. For example, (1) addressing existing norms so that they align with the ambitions in CE, (2) actively managing collaboration in the innovation ecosystem, including radically new setups of different actors, and (3) that managers need to carefully consider when and how to use goals and measurements in a circular strategy deployment, to foster both radical and incremental innovation.