Innovation to impact: IIM Lucknow study identifies 23 key success factors for circular economy startups
MUMBAI: IIM Lucknow researchers have identified crucial success factors for circular startups, which focus on waste reduction, material reuse and efficient resource utilisation, diverging from conventional linear business models.
The research, undertaken by Professors Suresh Jakhar and Krishna Chandra Balodi, alongside Research Scholar Sagnika Datta, provides valuable insights for sustainable business development whilst promoting environmental stewardship.
The study arrives at a critical juncture, as environmental concerns intensify due to rising global temperatures and resource depletion. Forecasts indicate natural resource consumption will double by 2050, presenting substantial environmental and economic challenges.
Prof. Jakhar emphasised, "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. 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.
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The circular economy presents a viable alternative through resource recovery and waste minimisation. However, its current 7.2% share of the global economy underscores the necessity for businesses to incorporate sustainability from inception.
The research team analysed Industry 4.0 startups that incorporate advanced technologies, including smart sensors, automation and real-time data processing, to enhance circular practices.
Through comprehensive literature analysis, expert consultation and structured decision-making approaches, the team identified 23 critical success factors, creating a practical framework for stakeholders to support these ventures.
Key success factors for startup growth and profitability include: · Having a clear circular business model, building the right technical skills, keeping supply chain data secure and transparent, working with other businesses.
Ms. Datta explained, "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.
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External factors influencing long-term success include: · Access to funding, good training and mentoring facilities, helpful government policies, demand for circular products.
Government and industry support in strengthening these conditions can foster circular innovation in India.
The researchers prioritised success factors and analysed their interconnections, identifying finance and infrastructure as fundamental enablers for advancement in skills, collaboration and innovation.
Prof. Balodi noted, "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). 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 categorisation 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.
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