S. Vishnu Sharma
IIM Lucknow faculty research identifies the most important factors that help circular startups succeed.
Circular startups are businesses that are designed from the start to reduce waste, reuse materials, and make efficient use of natural resources, rather than the traditional “take-make-dispose” model.
IIM Lucknow research team
Conducted by Prof. Suresh Jakhar, Professor, Operations and Supply Chain Management, and Prof. Krishna Chandra Balodi, Professor, Strategic Management, along with Ms. Sagnika Datta, Research Scholar, IIM Lucknow.
The research offers insights into the key factors that help such startups succeed while also being responsible advocates of the planet.
IIM Lucknow study insights
With rising global temperatures and fast-depleting natural resources, this study offers insights at a time when transition to circular models has become critically important.
Projections show that global usage of natural resources is expected to double by the year 2050, posing serious environmental and economic risks, say sources from IIM Lucknow.
Need for research
Prof. Suresh Jakhar highlighted the need for this research.
The Circular Economy (CE) and Industry 4.0 (I4.0) have emerged as highly pertinent topics for both academic research and industrial practice in recent years, said Prof Suresh of IIM Lucknow.
‘Given that many CE start-ups leverage I4.0 technologies, understanding their success factors is crucial.’
The findings of this research offer a roadmap for entrepreneurs, managers, and policymakers, facilitating the development of successful I4.0-powered CE start-ups, he said.
Circular economy
The circular economy emerges as a viable solution through its focus on reuse, recovery of resources and reduction in waste.
However, only 7.2% of the global economy follows this model which indicates that it is imperative for companies to adopt sustainability at the very beginning of their processes, say IIM Lucknow researchers.
Industry 4.0 startups
With a particular focus on these kinds of startups, the IIM Lucknow research team studied Industry 4.0 startups which integrated cutting-edge technologies like smart sensors automation, real-time data processing and interconnection into their operations for enhanced circularity.
Success of circular startups
To identify the factors that influence success of circular startups, the research team combined literature review, expert insights, and structured decision-making methods. The team identified 23 critical success factors and organised them into a practical framework that can help entrepreneurs, business leaders, and policymakers support the growth of these ventures.
As per the findings, some of the most important factors that founders can focus on to help their startups grow and be profitable include:
· Having a clear circular business model
· Building the right technical skills
· Keeping supply chain data secure and transparent
· Working with other businesses
Key findings
Ms. Sagnika Datta spoke about the key findings in the research taken by the team.
“This study reveals the Critical Success Factors (CSFs) for Circular Economy (CE) startups powered by Industry 4.0 (I4.0) technologies, offering a clear roadmap for success.
After identifying 23 key factors, we ranked them by priority and found the top five to be: Innovative Circular Business Models, I4.0-Related Technological Competency, Information Security, Privacy and Transparency, Inter-Supply Chain and Inter-Sector Eco-Friendly Partnerships, and Collaboration Across Various Functions, she said.
External drivers
Additionally, the study also points to several external drivers that influence a startup’s chances of long-term success. These include:
·Access to funding
·Good training and mentoring facilities
·Helpful government policies
·Demand for circular products
By strengthening these external conditions, governments and industry leaders can create a more supportive environment for circular innovation in India, say sources from IIM Lucknow.
Stakeholders
To help stakeholders prioritise their actions, the researchers ranked the success factors in order of importance and examined how different factors influence one another.
For instance, access to finance and physical infrastructure emerged as foundational drivers that enable progress in many other areas, such as skill development, collaboration, and innovation.
Uniqueness
Prof. Krishna Chandra Balodi spoke about the uniqueness of the research.
This study is unique because it is among the first to provide a comprehensive list of success factors specifically for Circular Economy (CE) startups powered by Industry 4.0 (I4.0), he said.
‘Furthermore, it goes beyond just listing these factors by: Prioritising them in order of importance, identifying their causal relationships, distinguishing between “cause” and “effect” drivers.’
This innovative categorization creates a practical decision-making framework that is highly relevant for the field and represents a significant advancement in CE research, offering a clear, strategic roadmap for both academics and practitioners, he said.
Publishing
The findings of this research have been published in the prestigious Business Strategy and the Environment journal.
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