Two years ago Above published an article that took off with the below statement:
“Contrary to the loud media buzz, circular practices are still not driving the mainstream economy. The buying-using-discarding cycle is still the dominating business model for most things we buy“
What has happened since? Well, not as much as we hoped for. The 2019 circularity gap report reveals that only 9% of the world economy is circular. That means that only 9% of the 92.8 billion tonnes of minerals, fossil fuels, metals and biomass that enter the economy are re-used annually. Furthermore, the trend is moving in the wrong direction- resource extraction and the resulting greenhouse gas emissions are increasing. So, how do we break this negative spiral?
At Above we have been experimenting with ways to approach circular economy and sustainability. We believe in making things tangible and actionable. Organisational goals for sustainability and circularity need to aim high. But that’s not enough. These goals need to be translated into action plans and individual opportunities. What does it mean for me as a designer, engineer or business strategist if the company goal is to reduce our impact by 50%? And what does it mean for the products we are developing? There is not one circular strategy there are many, and they should be part of the overall business strategy. To be successful though, they need to be derived from actual needs, users and insights. Sustainable strategy and personal empowerment need to be in an effective interplay.
From there we zoom out again. How are the changes we make as individuals related to company goals and strategy, and furthermore, to the bigger picture of a healthy planet? We need to be able to move between macro and micro scales and systems to approach complex issues like sustainability. But the starting point always needs to be an incentive coming from steering groups and leadership.
Are you a decision maker? Please read on as this one is directed a little bit extra to you. The circular economy is more relevant than ever.
This is a repost of “A beginners guide to making circular products”. The original article can be found here. Most of the content is the same, but some examples and parts have been updated and re-written.
We’ve all heard of several services that let you share products that you already own or lend your time to others via peer-to-peer services. But how about all those new products that are being built every day?
Let’s be clear, even with the enormous success of the sharing economy, the AirBnBs and Ubers, the premise is still to make money by sharing something that people already own. None of them are addressing the millions of new products hitting the shelves every day.
On the other hand, Xerox, Rolls-Royce, Philips are all companies that challenged the limits of the classical product cycle. They all introduced pay-as-you-go products as services that transformed their respective industries. As an example, Rolls-Royce charges airlines only for the operating hours of the engines and airlines are therefore no longer obliged to buy the turbine engines. Philips will change all the lightbulbs in your office for free and only charge a flat fee. Typically, all these companies offer these services mainly within a Business-to-Business setting. When it comes to consumer-facing businesses, the examples of creating new products and offering them as innovative services or sharing systems, are much more rare and elusive.
One of those rare specimens is a tyre company that aims to reduce the carbon footprint and waste of tyres by offering a subscription service for €4.99 a month. Instead of the buying-using and discarding tradition, Z Tyre is introducing a new model where you pay as you go. This monthly fee includes all tyre-related costs including installation, rotation, maintenance, etc. The result is a hassle-free transaction that leaves a steady stream of income to the dealer and brings peace-of-mind to the customer.
Other examples are mostly pilots or are found in the start-up world. The dutch headphone company Gerrard Street are offering music as a service. Through a subscription model customers get affordable high quality headphones that are upgradeable and repairable and Gerrard Street can reuse 85% of components from old headphones that get returned.
These rare examples go beyond a typical car leasing system where the value of a product is hijacked by the need to maintain a pristine condition. Car leasing does not necessarily lead to fewer cars getting produced or that less waste is created. The main objective is higher revenue and profit for the company. What the above examples are showing is that it’s possible to get both- less waste and higher revenue and profit for the company at the same time.
But the models are tricky when it comes to smaller, faster-evolving products. For lower-cost products that are mostly destined to die in landfills or toxic waste dumps, we need to be creative. And we need to speed up the transformation.
Dear CEO. Please measure success in more than just sales. Now!
The first step in this transformation is to push the leaders of product companies to change their Key Performance Indicators (KPIs). Traditionally, a company produces a good using valuable natural resources, sells the goods, collects the money and goes on it’s merry way. But every product has an extended lifecycle where it is used, abused, misused, discarded, resold, repaired, returned, dismantled or recycled. No corporation or startup can ignore their responsibility in this extended lifecycle anymore. But what not to forget, there is also a lot of untapped value in this that will have the additional benefit of future-proofing your business. When new legislation comes into place, you are already in shape. When resource scarcity becomes reality, you are already owning your own material loops. Expand your KPI’s beyond product sales.
One man’s trash is another’s treasure.
This saying implies that said trash can find its way to another person’s possession to be used again. We can only wish that it were true. Electronic products spend a very good chunk of their golden years in drawers, waiting to be used again, only to be discovered as useless waste during a move and thrown away.
Thankfully, there are a few ways to avoid generating heaps of waste when it comes to products, and at the same time help your business thrive by embracing sustainable solutions.
Start Your Second-Hand Shop
The most simple is to start your own second-hand shop. If you are a company that is aware of the waste it creates due to poor product utilization, make sure that you have an online marketplace where your customers can resell their goods. A good entry-level example of this is IKEA in Sweden that offers free ads for anyone willing to sell an IKEA product on Blocket, a very popular second-hand marketplace.
Refurbish Your Products
The next level is to own your own second life cycle and offer refurbished products at a reduced cost to new customers. Every time you lose a product to a landfill you are also losing the energy, natural resources, and labor that made it happen. Or even worse, you risk the product being dismantled by unqualified people and exposing them to hazardous waste. Refurbishing will also give your company a unique insight into the way you make your products. As a bonus, you get to connect with your customers on a whole new level.
Lease Your Products
If you would like to get serious, you can start with subscription services like Z Tyre. A lot of traditional CEOs will reject this model outright claiming the sales numbers will suffer since everyone will get exactly what they need and nothing more. The advantage of a steady revenue stream will quickly overcome any worry. And the idea of getting “exactly what you need and nothing more” lies in the heart of circular practices anyway.
Make Your Products Work Better as Services
Going all-in is the natural next step. Turn your products into real services by making them connected. By making them repairable and longer-lasting. By making them upgradeable and streamlining your value chain to deliver your best product anywhere. Without the unnecessary overhead and complicated logistics.
Can you imagine how much we can save by utilizing all products fully — from start to finish? The gains will be incredible — both for humanity and for the environment. It is never too late to start.
Based on the article “A Beginners guide to making circular products (Hint: It’s not that hard”)” written by Bilgi Karan and Johanna Tunlid, first published October 25th, 2017
Illustrations and Motion Graphics by Thuy Nguyen & Zhi Wang