Why circular economy solutions fail to scale commercially?

Circular economy solutions are often seen as drivers of future growth. They promise more efficient resource use, new business models and sustainable competitive advantage. Yet research shows that the majority of circular economy business models never scale, even when the ideas are technically viable and sustainable.

Why circular economy doesn’t scale to profitable business?

Typicially, circual economy solutions don’t succeed commercially because of four reasons.

1. The target group is too broad

Often solutions attempt to solve the problems of too many customers at once. Without a clearly defined target group and a direct link to the customer’s business challenge, the value proposition remains generic, fails to resonate, and sales do not reach their targets.

Success starts with focus, not expansion.

2. The value proposition is not competitive

Often, circular economy solutions are justified by sustainability rather than customer value. However, the market still operates on the same fundamentals: the customer chooses the most cost-efficient, functional and easy-to-implement solution. 

A circular economy solution must be at least as good as existing market alternatives, and competitively priced. Only then does sustainability begin to create additional value.

3. Customer demand and how to buy must be created

In the circular economy, value is created in different ways:

• Through longer product lifecycles.
• Through services instead of ownership.
• Through material reuse.

If this value cannot be priced or linked to the customer’s decision-making early enough, it will not materialise. When the comparison logic differs from traditional solutions, new comparison criteria must be defined and communicated to customers. For example, lifecycle costs can be compared using a Total Cost of Ownership model.

4. Go-to-Market roles are unclear

It’s common for commercialisation to be left as “someone’s responsibility”, with key roles undefined. Typical challenges include unclear ownership, involving sales too late in the commercialisation process, ignoring market maturity, and viewing Go-to-Market as merely a communications issue.

In successful commercialisation, sales and marketing are involved from an early stage: creating demand, validating messages and building the market. This often also requires new types of sales roles.

Commercialising circular economy solutions with a customer-centric approach

An effective way to commercialise new circular economy solutions is to move from assumptions to facts and launch the product or service in a structured way.

The process is simple, yet quickly builds understanding and delivers impact:

1. We form internal hypotheses on what the organisation believes it knows and what it wants to learn.
2. We select key customers from the target group. 
3. We interview customers. We identify goals, pain points, opportunities and expectations.
4. We reflect the findings against the product or service to be commercialised.
5. We clarify the value proposition: target group, barriers to purchase, key messages.
6. We build the business case and set sales targets.
7. We develop the Go-to-Market plan.
8. We activate the organisation for launch.

We have written a Quick guide to commercialisation. Download the guide here.