RISE ICT stories: Business Sustainability

Massive efficiency improvements are urgently required in the industrialized world to meet the demands of developing economies if we also want to improve sustainability. Simultaneously, Swedish industry needs to be more competitive. A circular business model addresses both these issues.

RISE Viktoria, together with Chalmers and Swedish bicycle manufacturer Unicykel, has come up with a circular business model with a remanufacturing service that lowers environmental impact whilst remaining profitable.

The Electric Bicycle Subscription is the result of a one-year project that involved the development of an electric bicycle and a circular business model. The business model was later validated by potential customers and dealers, which led to financial evaluation and, finally, a pilot test with paying customers.

New perspectives

One of the two owners of Unicykel stated that, “For us at Unicykel, this was completely new and has been very instructive. We would not have carried this out on our own accord.”

The underlying study was based on a longitudinal interventionist research project that gave RISE Viktoria the unique opportunity to observe the transition to a circular business model. Researchers from RISE Viktoria and Chalmers ran the project as a form of customer development procedure initiated by serial entrepreneur Steve Blank.

The Electric Bicycle Subscription reduces the need for further manufacturing and reduces consumption of raw materials and energy by up to 80 percent. Moving from a traditional business model of product sale, to one in which the sale of the product’s main functions (i.e. personal transportation) is combined with remanufacturing. This also improves the manufacturer’s profitability and competitiveness. Lowering the product’s cost through value retention in remanufacturing attains profitability.

Sustainability gives an edge

Competitiveness as a service (i.e. the sale of the product’s function) can be made to fit the needs of individual customers more easily than a product can. The success of the circular business model shows that manufacturers need to move away from the red ocean of price competition, redundancies and production relocation to lower-cost countries, to an arena where the service a product provides is what counts.

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