How the Circular Economy can kickstart your innovation strategy
Capturing value with every loop
The transition to a Circular economy means moving away from a linear model of “Take-Make-Waste” to reach a more closed-loop, regenerative business model - ultimately one in which organisations minimise waste leakage, capture value at each stage of the product journey, nurture partnerships, and build resilience to shocks.
Based on three key principles: Design out waste and pollution; Keep products and materials in use, and; Regenerate natural systems, the Circular economy framework looks at the real customer value being provided and asks if there is a better, more durable, effective way to deliver it?
Circular Economy Framework
The Circular Economy concept is based on the eternal flow of renewable and non-renewable resources or materials through manufacturers, users and back in continuous cycles. Value is attributed to every resource, reducing material waste to landfill - ultimately leading to a utopic Zero Waste World.
Through a mixture of careful life-cycle analysis of products and operations, design thinking to disrupt existing business models, careful planning with partners, and major changes to archaic systems, The Circular Economy holds potential as a true catalyst for innovation with impact.
If we break the circle in half we can look at two flows:
Renewable, biological materials, which biodegrade over time, returning nutrients to the environment Eg. food, natural fibres, bio-based materials such as wood. “Waste” is seen as food to nurture the environment.
Technical materials which continuously cycle through the system recapturing value at each stage and avoid going to waste Eg. metals, plastics, synthetic chemicals, often changing form to provide a new use.
The renewable material flow involves continuous looping of natural, biological resources back into the environment, instead of continuously ploughing them from the earth- ultimately improving the Biosphere (Life on Earth).
Farming provides the raw materials in the biological circular economy - the goal is to ensure it’s done in a sustainable way and that the nutrients come back into the soil after use.
Cascades allow biological products to get multiple uses from different applications from one energy stock (instead of one sole use) before going back to the soil. This is possible by pre-defining the loops, time of use, recovery of materials, audit of water/energy use and ensuring no problematic chemicals are added.
Eg. Wooden furniture → converted to toy furniture → wooden hairbrushes → wood pellets → saw dust → burn for energy → returning ash to the forest the wood was harvested from.
Eg. Pair of cotton jeans → furniture stuffing→ composting
Extraction of biochemical feedstock instead of going to landfill, organic waste will be collected, from which valuable biological components can be extracted in bio-refineries.
Eg. Orange peel, can yield limonene, suitable in cosmetic products.
Composting captures valuable nutrients from organic materials invested into composting sites for biodegradation into nutrient-rich soil, or converted to Biogas.
Eg Aerobic Composting programmes, organised for communities or on individual levels like MakeSoil.org encouraging soil-makers to create nutrient-rich soil.
Eg. Anaerobic Composting programmes - closed-off to prevent methane leaking - takes longer, but can break down meat and other material not possible in aerobic processing.
Soil restoration is the ultimate goal where nutrients are returned to the earth and biosphere, enhancing the soil as a valuable asset without spending billions on chemical fertilisers.
The non-renewable or technical material flow looks at waste as a resource, and the challenge is how to keep materials in active use for as long as possible even in different forms. Circular Business Models and Circular Design allow us to move away from a consumption or model of ownership, to a more service-based subscription model where we are only using the materials for as long as they serve us.
Effective Maintenance of products will keep the cycles short and as close to the user as possible, allowing users to keep the materials in their present form for longer and companies will benefit from informational data of how products are used.
Eg. Repair shops; washing machine rental including repairs.
Reuse or Redistribute occurs once a user doesn’t need a product anymore. The same product might undergo some maintenance or repair, but it will go back into the cycle and return to another, new user.
Eg. Rent The Runway clothes rental platform: subscribers send back items for “new” clothes.
Refurbish or Remanufacturing occurs when used products are improved to “as-new” quality or broken down and reconstructed as another product entirely - serving a different purpose to what it was originally intended.
Eg. Philips’ refurbished MRI scanners are sold as an affordable solution for new markets.
Eg. Canon recaptures products from the market and remanufactures components for new products using 80% original parts - optimising resource efficiency.
Mechanical and Chemical Recycling returns the material back to its original form for use as virgin material for a new product. While better than landfill, it’s still the last resort with the prior steps more favourable regarding energy consumption.
Eg. Pepsico, CocaCola & Dr Pepper’s plastic bottle recycling ‘Every Bottle Back’ campaign.
Business Value
As mentioned previously, closed-loop systems deliver excellent business value:
=> Customer Value: Increased customer loyalty, satisfaction and superior brand protection - be a leader in the circular economy transition and get rewarded with retention and new markets.
=> Environmental Value: Sourcing fewer raw materials and using greener suppliers will get you closer to zero-waste goals, will make compliance easier in preparation for increased regulation.
=> Sourcing Value: Cost reduction opportunities by reacquiring materials and remanufacturing products, and reduced dependence on limited resources.
=> Informational Value: Usage data from retrieving goods from users: which parts break first, failure rates, product & process design improvements, invent new technologies with IPs…
=> Employee Value: Employees will understand the value chain, identify efficiencies, and work in collaboration with colleagues. Increased employee engagement, satisfaction, talent attraction.
NEXT STEPS
Assessment
An important first step is to truly understand the material flow within your organisation. These tools can help determine the circularity of your operations and will need input from your partners and suppliers (you’ll likely be working much closer with them on your path to circularity!):
A complete life-cycle analysis is a good start and there are plenty of tools to choose from.
Circulytics - V2.0 recently launched - is the most directly related analytics tool to the Circular economy asking questions about the company readiness and specifically related to closed-loop operations and material flows.
B-Impact assessment is another interesting tool to understand and analyse the environmental and social impact of a company operations.
Cradle to Cradle Design Sprints
Post-assessment, you’d be best-served with a series of design sprints to explore where the opportunities lie in a Circular Economy for your industry. A Circular Design Sprint helps to understand the gaps, identify opportunities for circularity, and test ideas on real users. If the assessment isn’t possible before a sprint, we can still work with existing knowledge and assumptions.
How it works
After having a clearer understanding of the potential for circularity you’ll need to gather a stellar cross-departmental team plus supply-chain partners to:
Map and Analyse your current processes to identify key areas for change: often starting with design and operations - material recovery may play a big role. Understand customers and supply partner systems through expert interviews to Define the key areas of priority.
Explore opportunities through lightning demos, drawing on existing inspiration. The Board of Innovation has some excellent resources on Circular Economy Business models and The Ellen Macarthur Foundation’s Case Studies are well worth reading in the meantime.
Ideate solutions to your specific priorities, decide together, and create as Prototypes. The deliverables can be defined during the kick-off to answer if you should focus on the process mapping alone, also finding product-market fit with a new offering?
Experiment with high-impact solutions through testing: the process with partners, or new products to potential users. Design Sprints will help you test quickly prior to large investments.
If validated, refine the offering and roll it out/launch the MVP to a small segment!
If not, go back and test other solutions.
There are so many opportunities in the transition to a Circular Economy that at ripe for the taking for organisations of any size. I’d be very keen to help your organisation through a Circular Design Sprint - in-person or remote options are completely viable. Feel free to get in touch, or find out more here.
