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SITRA Report - Empowering sustainable business through service-based business models

SITRA, a Finnish fund that was commissioned to promote Finland’s economic growth, partnered with Circle Economy to research innovative service-based business models in the fashion and textile industry. Case studies were established to provide an in-depth analysis of industry’s best practises with a goal of developing a roadmap to successfully guide the business model transformation process for companies looking to explore service-based strategies. The final research findings were translated into a report that offers the business rationale for adopting sustainable business models, an overview of key drivers, barriers, and recommendations regarding the suitability of different types of business models for certain markets or products.

Key insights and conclusions obtained from the research conducted illustrated that:

  • Increased transparency and collaboration with existing suppliers, in addition to engaging new smart partnerships (i.e. logistics, repair, recycling, IT), is necessary for success
  • Most of the new business models require a broader consumer mind shift and change in industry practices, resulting in longer lead times towards profitability
  • Many of the models might be confronted with a limited market today, but are part of growing trends such as the circular, sharing, and performance based economy
  • Most business models applied by brands show no significant direct revenue generation, as costs are considered a marketing cost or a necessary company investment
  • A large part of the success of these models is determined by communication and how well a company can translate these activities into positive brand value

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