4. FINDINGS
4.1. S TRATEGIC T RANSFORMATIONAL L EADERSHIP
While conducting the interviews, we found that talking to the interviewees gave us an
introduction to both the drivers and challenges, and to the tasks of leadership within the strategic transformation. We identified five different 2nd order themes that played into their journey of transformation, and that are closely linked to changes within the strategy and the leadership:
change in the organizational field, leadership as a catalyst, defining the circular approach, circularity as a strategy, and strategic circularity implementation. Changes within the
organizational field relate to the reasons the interviewees mentioned for why they initially decided to implement a circular business model. Leadership as a catalyst consists of the connection
between the role of the leader and the pace of starting the process of becoming circular. Defining the circular approach refers to the framework organizations use to plan the change. Circularity as a strategy comprises the interviewees’ accounts for the differing aspects of choosing circularity as the organizational strategy. Finally, strategic circularity implementation connects the strategy with the implementation process the leaders decide on.
Table 3 presents the number of interviewees who mentioned the 1st order concepts related to the aggregate dimension Strategic transformational leadership, following the same order as the Data Structure.
2nd order theme 1st order concept Number of
participants
Change in the organizational field
Motivation from increased resource scarcity 4 Green movement as market pressures 10
External ripple effects 9
Defining the circular approach
Differing and evolving definitions of
sustainability 6
Certification as verification 7
Circularity as a strategy
Circularity as a strategic goal 7
Circularity requires long-term orientation 8 Circularity requires a business case 12 Strategic circularity
implementation
Circularity implemented as top down 5
Implementation as top-down and bottom-up 5
Leadership as a catalyst
Leadership certainty 10
Leadership involvement necessary 9
Leadership as banner-carrier and role model 10 Visibility and feedback for employee 8
Table 3 Number of Participants Mentioning 1st Order Concepts of Strategic Transformational Leadership
51 Changes within the Organizational Field
As part of the changes within the organizational field, one third of the interviewees argued the motivation rose from an increased scarcity of resources and materials. This increased scarcity would eventually also result in increased prices, and it would become more challenging to
purchase the materials needed to produce the different products. The interviewees explained these reasons led them to rethink their business model. For instance, a manager of process management stated: “The basic motivation lies in the economic advantage of the remanufacturing, since less expensive new parts have to be used and, of course, in environmental protection. The resources are limited”.
Furthermore, almost all of the interviewees presented the green movement as a market pressure influencing their decision to become more circular and implement circular products in their product portfolio. One interviewee said, “Natural products are more trendy than they were 10 years ago. So, […] that played in our favor when we look at the external circumstances”, while a different interviewee added “[…] a lot what we respond to is what our customers ask for and a lot of our requests […] are people who are after [circular] certifications”. Thus, interviewees
discussed how they implemented a more circular business model due to the need to uphold their competitiveness within their organizational field. This could be both because of their buyers or customers requesting more circular products, because of the need to distinguish oneself from other competitors in the market or to be more aligned with the SDGs.
Another reason for becoming more circular, referred to by 9 out of 12 interviewees, pertained to external ripple effects. The interviews showed that the organization could be the creator of ripple effects through adaptations within their supply chain that led the supplier to change their business model and approach. One sustainability expert described this scenario: “[…] since we developed the first fabric, three other mills in the Pakistan region also started to certify. In a way, we started a sort of ripple effect.”. Conversely, some of the organizations were also subjected to external ripple effects themselves. One interviewee mentioned the following:
“[Sustainability] has always been a topic but it used to grow with the climate change conversation and the product transparency with the health product declaration and all those things kind of exploded and now it is kind of just snowballing and is getting a bigger and bigger conversation”
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As seen in the quotes above, different influences can result in ripple effects within the field that, congruently, might create ripple effects for the company itself.
Defining the Circular Approach
Defining the circular approach can be quite challenging for the leadership team. Half of the interviewees mentioned how there are both differing and evolving definitions of sustainability, and, by association, for circularity as well. One interviewee described this as the following: “From then to now, the whole sustainability movement has just completely changed”. Mentioning how circularity was not a common word when they started becoming circular, one CCO explained that the business model was not initially planned as being circular, as this was not even a term then.
They elaborated: “Climate and the environment were more talked about”.
Considering the different definitions of sustainability and approaches, 7 out of 12 interviewees mentioned using the C2C certification as a form of verification to both ensure a framework they can use internally, and to have a point of reference for their customers and employees. One CEO further explained: “Our next step was documentation, meaning a third-party verification on everything we say we will do. That means both the users, the architects, and consultants can be sure of no greenwashing or massaging the figures”, thus, emphasizing the need for verified documentation.
Circularity as a Strategy
When the interviewees talked about the process of going from linearity to circularity, about half of them would describe circularity as a strategic goal. This went above their decision to offer circular products and involved descriptions of the circular approach being completely ingrained in the overall organizational strategy. As a head of safety, health, environment, and quality put it:
“[The implementation] requires that it is part of the business strategy. It has to come from the board and from the C-level management. Now, we’re so fortunate that we have owners who want to do this. And that affects our board as well. So, our board has said that this is the goal”
Thus, these interviewees described the choice of circularity as a projected necessity, based on either a need to differentiate themselves or simply because they could not afford to diverge from the consumer demand for sustainability.
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Further, the majority of our interviewees mentioned circularity requiring a business case. More specifically, the interviewees stressed that it is essential to be able to outline why and how the business will profit from implementing circularity or using certifications, such as C2C. A CEO described this as: “The good initiatives are accompanied by a business case. If there is no good business case, the initiative will die [...], if there is no profit in it, in the short and in the long run”.
Another interviewee, describes what such a business case for circularity entails:
“[…] both internally and externally we just try to show that it’s really a waste of money to throw things away […] for any kind of loop, there’s a business model in making money on recycling, reusing, or repurposing materials or components [...] any kind of emissions are going to cost you money to throw things away. So, that’s going to help us in the future. In the end, especially with our suppliers, they need to see the business model, they need to see also the earnings that might be there”
The interviewee indicated that having a business case is both important internally to move circularity forward but also externally to educate and motivate the suppliers on the potential earnings that are missed out on by not employing circularity. As touched upon in this section, leadership involvement is perceived as important as they are involved in the decisions related to how the budgets are allocated and having a business case is crucial to influence this decision-making. A director of innovation and strategy specifies the need for a business case: “It’s a business case. […] So, you know in terms of time and cost and everything of that nature - what we’re hoping for is an increase in sales because our product is in the forefront of somebody’s decision-making”. The majority of the interviewees also mentioned the opportunities linked to using circularity or C2C for their branding and marketing, ideally resulting in higher sales.
Describing circularity as a strategy, two thirds of the interviewees stressed that circularity requires long-term orientation, asserting that due to the associated investment, infrastructure changes, product development processes, etc., it was impossible to implement quickly. Thus, opting for a circular strategy necessitated the leadership being on board and that they understood and accepted that it would be a long-term project. In this regard, many of the interviewees would highlight their family-ownership structure, stating that not having to cater to shareholders, who expected short-term dividends, allowed them to apply a long-term strategy that would not necessarily yield immediate returns. A director of marketing and communication summarized it:
“[The ownership structure] has afforded us peace to work with this in a different way than if we were owned by a private equity fund that only looks at the bottom line and the quarterly and yearly growth. You know, we’ve been allowed to initiate some ventures that don’t yield anything in the short-term”
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As the quote indicates, the interviewees were generally aware that the circular strategy required investments and was not likely to yield short-term profits. Hence, the circular transformation was only feasible if the organization accepted the long-term strategic orientation.
Strategic Circularity Implementation
When wanting to implement the circular business strategy, the different leadership teams adopted different approaches. Almost half of the interviewees explained how the leadership took, or is supposed to take, a top-down approach when implementing circularity and to initiate the process of becoming more circular. How top-down the strategy implementation actually is varies. One commercial director elaborated on how they implemented the circular approach: “We decided as a management team to do that and of course – yeah so we are not a big organization so if, in total, we say we are going to do it the rest of the production will just arrange it”. Another director of strategy and innovation further explained: “Talking mission and vision statements of the company and creating the right products for our customers it’s a top-down approach to spread that message and get the right products created […] people just need to follow our line”.
A combination of top-down and bottom-up approach was elaborated on by the other half of the interviewees. Sharing ideas on how to implement circularity with the employees, and letting the employees decide on how to best implement circularity within their line of work was part of this implementation approach. One sustainability expert elaborated: “We don’t have a CEO that tells us what to do, or the owner that tells us what to do, they just trust that people who are in place are self-motivated experts and will find the best solution”.
Leadership as a Catalyst
Going from the implementation of circularity to specific notions within the role of leadership, leadership acts as a form of catalyst. Almost all of the interviewees underlined the importance of leadership certainty, i.e., the need to be certain and confident that the circular approach is the right move and the right fit for the organization. One commercial director mentioned: “I think you kind of have to have trust that in the end it brings you benefit”, while a CCO added “It is essential that the leaders also believe in the strategy if someone tries to find the cracks because obviously there will be some [employees] that are of different opinions”.
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Apart from certainty, leadership involvement was also perceived as necessary, and it was
mentioned by almost all of the interviewees that leaders need to be a part of laying out the vision, verbalize the strategy, and partake in the implementation. Further, the influence leaders have through their decision-making is underlined by the interviewees. One head of safety, health, environment, and quality mentioned: “[Circularity] needs to be in the business strategy. It needs to come from the board and top management”. They continued: “It is because we are putting money into this” that leadership involvement is necessary.
According to 10 out of 12 interviewees, leaders act both as a banner-carrier and role model when it comes to implementing a circular business model. One CEO explained the importance of leaders being banner-carriers: “If you want to keep your credibility, it is important for the top leadership team to be a role model. People watch what you are doing and when I cut corners, it becomes okay for the employees too”. Part of the leaders acting as role models includes prioritizing the circular strategy above misaligned sales opportunities, thus reinforcing and strengthening the chosen circular strategy. The CEO continued: “It is extremely important not only in the beginning but within the whole process for the leadership team to be deeply involved”.
The continuous reminder of “the way we need to go” and “telling the story consistently” is further mentioned by other interviewees. Additionally, the importance of getting the employees to care is underlined, and one interviewee stressed that if the leader cares, the employees will come to care as well. They suggest that “The small things like making sure you put the things that’s recyclable in the recycle bin” are important.
Two thirds of the interviewees perceived both visibility and feedback for the employees as essential to effectively implement a circular business model. Different forms of storytelling were perceived as positive tools to inform the employees of what their actions are contributing to. The interviewees described various ways to achieve this; having an internal newsletter with “graspable examples” such as replacing coffee cups with reusable cups, banning single-use plastics,
eliminating drinking straws, or how the sustainability efforts of the organization were acknowledged externally. These examples, one CEO mentioned, are important to keep the employees motivated to continue with the circularity and sustainability efforts on a daily basis.
Some interviewees also referred to weekly/monthly gatherings or meetings to inform about and discuss circularity or C2C, to give employees feedback on the progress, and to maintain visible.
Furthermore, the very visible commitment is underlined many times by interviewees. One
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environmental expert described the visibility of sustainability and circularity efforts as the following:
“[It is important] to have a high-level support and a very visible commitment. […]
We recently had a new Chief Executive and she has been very visible in her support for sustainability and has really challenged people to quantify their contribution, their making to sustainability in their departments and in their roles”
This quote illustrates the interviewees’ perception of both the vast influence the leaders have on the change, as well as the commitment that is needed from the leaders, hence, how the different aspects of leadership as a catalyst are interconnected.