The growing challenges of climate change and resource depletion have exposed the limitations of the traditional 'take-make-dispose' production and consumption model. In response, the concept of the circular economy (CE) has gained prominence as an alternative approach that emphasizes reducing, reusing, recycling, and recovering materials. However, transitioning to a CE requires profound socio-technical changes, often disrupting linear business models and posing significant threats to established incumbent organizations. Incumbents, face difficulties in adapting to CE transitions due to misalignments between their existing competencies and the new demands of circularity. This paper examines the strategic challenges that incumbents encounter during these transitions, focusing on the tension between exploiting existing competencies and exploring new technological and business opportunities. Through a multiple-case study in the Swedish wood construction industry, the paper highlights the dual challenge of improving current practices while venturing into unknown territory. The empirical data is drawn from the Swedish wood construction industry, which has gained international attention for its development of innovative and sustainable building technologies and practices. The findings show how incumbents are responding to sustainability transitions through the process of creative accumulation, which integrate both new and existing knowledge to develop circular value propositions. The study argues that established players can be well-positioned to collaborate and capitalize on circular transitions if they adjust their business models to aligning around sustainable principles and balance between innovation and accumulated expertise.