The Circular Economy model provides a new level of opportunity to holistically, innovate new business models and extract value from our products like never before.
While the Circular Economy is often discussed in abstract terms, illustrated often with real examples. It begs the question:
How do we actually transform our processes and engineer our products and services to become Circular?
In a series of articles, I’ll be exploring the business models that can be used to drive the circular economy, along with the core engineering, operational, and business principles needed to underpin innovation for Circularity.
It sounds so simple: “Make — Use — Return”
The circular lifecycle depicted in simple terms is great to introduce the concept:
Many organisations are passionate about sustainability and Circularity, though it seems it can sometimes be difficult to move beyond a conceptual understanding of Circularity.
Circularity is as a completely new approach, especially when trying to envisage a complete Circular Economy ecosystem.
Full circularity requires a complete rethink around usage, engineering, product, and service. The move to Circularity, however, doesn’t need to be seen as so binary. I believe an organisation should not simply consider itself either Linear or Circular.
The move to Circularity can combine step-change transformation and continuous improvement innovation. Indeed, many organisations would benefit from testing and demonstrating the benefits and opportunities of applying Circular principles. It will be easier then to rally the business around the idea of scaling the concept up!
Engineering the Lifecycle for Circularity
Engineering the lifecycle for circularity means building on established engineering concepts (shown below in blue) and establishing new engineering concepts and approaches (shown below in dark blue).
This diagram differs from the typical illustration as it captures additional engineering complexity associated with certifying and maintaining a product as safe for use when its life is extended.
Moving towards a Circular Approach raises a range of engineering challenges not previously faced in many industries.
My expertise is in Aviation, but let’s simplify the example a little. Take for example an e-bike:
It’s easy looking at the product how circular principles of maintenance and overhaul may be applied to extend the life of a bicycle — the sections which could be resprayed and reused, how the fabric and cushioning on the seat or handlebars could be replaced for example.
All vehicles conform to testing and quality standards before sale. There are clear instructions, for example, that certain bike parts made from composite materials should be scrapped after only a few years. To issue e-bikes or bikes as a circular product, as a service or central shared group of community shared items, a new focus needs to be established on some of those core engineering questions:
How can it be overhauled? — When should it be checked and repaired? — Who is qualified to repair it? — How is it recertified as safe?— How can it be tested non-destructivly? — Could it have had major damage? — Who is responsible for ensuring it is safe?
While there are clearly established principles for maintenance, circularity presents new opportunities for manufacturers to maintain asset ownership, reducing new build costs by increasing the level of overhaul activity and reducing the production of new materials.
In aviation these questions are a core part of our certification and standards, there are dedicated engineering disciplines and assessments that are used to establish these principles. Over-engineering, adding unnecessary complexity and cost, is not the answer.
The innovation comes in understanding where and how to focus, in understanding your product and its usage and how to understand, see, and test for damage. Focusing on the safety case beyond a potential issue and reacting proportionally.
Production has been driven for years to a new level of cheap efficiency, Circularity needs to drive the same level of automation on test, refurbish and recertification. Driving system thinking efficiency throughout the value stream and lifecycle provides the opportunity to deliver value at a holistic level. Innovatively and collaboratively using this new approach to benefit everyone, from user to commodity supplier, incentivises everyone to commit and engage, in turn maximising the benefit for everyone.
Do you know how to find The Circular Opportunity?
It’s crucial though that we’re not put off by the additional complexity. There are so many opportunities to grow into new circular markets, for products and services that don’t yet exist, for those companies who think innovatively and seize the Circular Opportunity.
Innovating and transforming for sustainability provides us a fresh opportunity to think holistically. Considering the entire value stream to innovate and find new opportunities:
- Sustainability Market reducing impact, improving reputation and meeting regulations
- Market growth for new applications and customer segments
- Customer engagement to inspire market and product loyalty
- Product usage visibility to inform product improvement and market growth
- Operational efficiencies to reduce costs overheads
- Product performance and functionality innovate and differentiate your offering
Circular Services Innovation: Where to Start
When innovating around the Circular Opportunity organisations we can think as we would for any innovation. Start with the key innovation areas and decide where you would like to innovate first.
Circular Innovation: How and where to start?
Rather than thinking about simply Linear to Circular as shown in Figure 1, I would suggest thinking about circularity in terms of your strategic goals. What are you looking for, a new disruptive Radical Rethink or how you can Drive Circularity into Existing Operations?
Whether you want to redefine business or improve existing operations, figure 5 has starting questions.
The classic Radical Rethink is the move from DVD rental to home streaming services. Rather than improving the DVD rental model, the fundamental question was asked — “What is the true need we are fulfilling?”
Netflix, seeing that they were delivering entertainment in the home moved digital streaming, making an entire market obsolete. In the process removing the need for the production or rental DVDs, all the logistics and emissions associated with delivering, collecting, and returning DVDs, plus the saving of all the obsolete DVDs no longer going to landfill. Netflix also created a brand new market and model, with significantly lower overheads and costs, allowing much higher margins than would have been achieved by companies like Blockbuster. Also with the subscription model, a much more solid recurring and predictable business model and review stream.
It’s a classic example of disruptive innovation, it also really captures the essence of the Circular Economy for me. A disruptive rethink that is more sustainable, but crucially, it’s also new technological advances allowing incredible steps forward from a business innovation perspective.
The appetite of your organisation for a move to a circular approach is key to your starting point. For organisations not sure, I would suggest looking at where you want to reduce waste and drive efficiency. Start there and demonstrate the business value, once the basic principles are proven, look towards extrapolating out from there.
When it comes to rapid innovation, regardless of the scale of the challenge, I love the Design Sprint approach created by Jake Knapp of Google Ventures. It’s amazing rapid innovation, aligns the team behind a common mission, improves quality of output and on top of that is even fun!
Design Sprints are rapid innovation workshops that combine:
Innovation | Business Strategy | Design Thinking
Contact me here if you would like to get started on Circular Innovation for your business, product or organisation — I’d love to get involved and support your passion and journey!