Zwart, Tamara2019-11-202021-11-192018http://hdl.handle.net/10347/20253R2π – Transition from Linear to Circular is a European Union Horizon 2020 project focused on enabling organisations and their value chains to transition towards a more viable, sustainable and competitive economic model in order to support the European Union’s strategy on sustainability and competitiveness. A core part of this project is to work with organisations who are on the journey towards developing circular economy business models, therefore the project has conducted case studies of 18 selected organisations. This report is about the ‘Elevator as a Service’ (M-Use®) business model, as implemented by Delta Development Group at Park 20|20 (Hoofddorp, the Netherlands). Park 2020 is the first full-service Cradle to Cradle® office park in the world. The R2π project choose to conduct this case study because this shows building circular is already possible. In the autumn of 2015, the CEO of Delta Development Group (developer of Park 2020) came to the conclusion that in fact, buildings do not require elevators: the real need is vertical transport available at all times. Mitsubishi, in collaboration with Delta Development Group and the building owner, developed the ‘Elevator as a Service’-model, called M-Use®. In this new circular business model, the elevator is leased (full service operational lease) instead of sold/bought, hence leaving the ownership of the product with Mitsubishi during the contract term. Consequently, suppliers are incentivized to minimize maintenance needs, to build products for long-term durability, and to reuse and recycle components. The value proposition of the M-Use® business model is to offer high quality vertical transport with a high level of availability and complete maintenance in exchange for a monthly fee. This monthly fee is based on full service operational lease in which the ownership of the elevator lies with Mitsubishi. The M-Use® increased the quality level of the elevator, while decreasing the Total Cost of Usage. This is because the remote monitoring of the M-Use® enables Mitsubishi to plan the maintenance based on actual use. Hence, this drives the circularity of the elevator since this optimizes material usage and increases the lifespan. This study analysed categories of contextual dimensions and factors characterising the M-Use® business model, e.g. rules and regulations, economy, and customer needs. Rules and regulations can be enablers as well as barriers for the CEBM. On the one hand, if take-back were to become mandatory by law, this would very likely increase the number of ‘product as a service’ contracts closed, since Mitsubishi supports and offers take-back already. On the other hand, the current law regarding ownership in The Netherlands poses a risk to Mitsubishi since the elevator is permanently attached to a building, which is owned by a third party. Fortunately, Mitsubishi is avoiding this risk by establishing a so-called “building right”. The most important current financial barrier for ‘product as a service’ is the financing of this new business model. With M-Use®, Mitsubishi no longer sells the products but receives a monthly fee from the users of their elevators. Hence, a new financing need arises. Most bankers currently do not want to finance that because their current calculation methods can hardly evaluate the risk of M-Use® and the residual value the elevator has. Therefore, funding opportunities are important in order to drive the scale up phase of the M-Use®. Currently, customer needs regarding elevators are not based on circularity. Explaining the M-Use® model in a way that potential customers understand and agree with implementing the elevator as a service is a challenge. Their consideration regarding elevators is still mostly cost driven and their evaluation is based on principles of the linear economy (e.g. investment costs), while the M-Use® model offers more than a reduction in the cost over time (see True Value analyses made by KPMG) and should be valued based on the principles of the circular economy (e.g. Total Cost of Usage and reuse of components). A few key learnings derive from conducting this case study. Firstly, the intrinsic motivation of stakeholders helps to develop a new CEBM. Secondly, limitations of traditional business models can enable new ways of thinking and doing business. Thirdly, collaboration within the supply chain is key. Fourthly, creating a safe environment in which the stakeholders can try to develop a new CEBM without any risk supports the development of a CEBM. Finally, it takes time to explain the new CEBM to all stakeholders in such a way they understand and accept this new model. To finalize, looking at the discussed strengths, weaknesses, drivers and barriers of M-Use®, it is interesting to replicate this ‘product-as-a-service’ to other industries and products. In the Netherlands, there already exist some other ‘products-as-a-service’ CEBM’s.engCircular economyBusiness modelConstructionCradle to Cradlereportopen access