IIM Lucknow Maps Strategy for Circular Startups in Industry 4.0

Indian Institute of Management Lucknow faculty research identifies the most critical factors that help circular startups succeed. Circular startups are businesses designed from the start to reduce waste, reuse materials, and make efficient use of natural resources, rather than the traditional “take-make-dispose” model.

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.

With rising global temperatures and fast-depleting natural resources, this study offers insights at a time when the 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.

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 companies must adopt sustainability at the very beginning of their processes.

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.

To identify the factors that influence the success of circular startups, the research team combined a 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 critical 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

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.

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.

The findings of this research have been published in the prestigious Business Strategy and the Environment journal.