Since the earliest flickers of the industrial revolution, business has been perfecting the linear economy model. At its extreme, this model is built on the idea there will be an infinite number of customers, wanting to own an infinite number of new, innovative objects — and there will be infinite resources to support this growth. In practice, we know it’s not that simple, nor is it true.
There are strong signals this ‘take, make, dispose and repeat’ model is under quiet attack. Industry growth rates are declining, material supply is constraining and substantial market shifts are taking place. More and more, organizations and consumers are choosing convenience, customization and performance over ownership and disposal.
A growing contingent of entrepreneurial start-ups and established, global companies, alike, are seeking to drive growth and innovate their value propositions through circular economic models.
What if we could deliver both the growth and the social and environmental good we’ve been seeking?
Early estimates developed by Ellen MacArthur Foundation and partner McKinsey & Company indicate adopting circular economy principles could generate a net economic benefit of 1.8 trillion euros for Europe by 2030 – doubling the benefits offered by the current linear model. Likewise, many companies and industries are predicting potential revenue benefits of circular economic models ranging from 2x to 6x.
But what is the Circular Economy, really? The Circular Economy (CE) is often described as restorative and regenerative by design – a way to decouple economic growth from resource consumption. CE business models are most often product-service hybrids where products are designed to optimize service offerings. Transportation services versus cars and paying for light as a service versus owning lighting systems are a couple of examples.
The role of products in these new business models changes. Instead of products being designed for disassembly to avoid the landfill, for instance, they might be designed for disassembly, reassembly and parts harvesting. Products become the engines of circular models. Their embedded attributes create recurring opportunities to generate value, revenue and good.
By Angela Nahikian, Steelcase Director of Global Sustainability