Interesting Circular economy strategies ..

It was exciting to read of three common strategies for a Circular economy through an HBR article namely, in the aim to transition to a zero-waste economy. The three strategies are being deployed across the world. They are

1. Retain Product Ownership 
2. Product Life Extension
3. Design for Recycling

Most of the time we tend to throw away used items when the items are with us and after use, it has to be disposed of. To avoid facing a high disposal cost, we dispose of them in the nearest available public disposal system. Now it is public property and more often than not it gets mismanaged and mishandled, often getting spilt and litter getting spread. The above three strategies have been proposed by Atalay Atasu, Céline Dumas, Luk N. Van Wassenhove in their HBR article The Circular Business Model of July 2021. (click here).

 

Retain Product Ownership: Product manufacturers when they sell their product do not sell the product altogether, they give the user only the right to use the product. This often becomes manageable for the customer than owning the product. The product ownership is retained by the manufacturer and the user is only given the right to use it. The product disposal now becomes the lookout of the large manufacturer than the small customer.

 

Product Life Extension: Products usually are disposed of when the useful life gets over. Imagine we can extend this life by some basic maintenance or add ons. For example, the tyre once gets used are usually thrown away to the garbage sites. Imagine these tyres getting a lease of life after retreading.

 

Design for Recycling: If we design the product in such a way that after its useful life, the product components can be reused in other parts and components so that the individual parts can be recycled, we find that lot of wasteful products can be recycled. In environmentally sensitive families we find, the elder child dresses are used by the next child so on, till they get worn out. 

The author is proposing an addition to these 3 principles - Changing Operating System principles, which comes under product life extension.

 In the IT industry, a strategy often used is of changing the Operating system principles. Laptops that work on Windows are kept aside when newer microprocessor chips or Windows versions get released. Linux users take these older machines and load them with the different Linux OSes available which is very efficient on such old architecture. Even though this can be classified as under Product Life extension, the basic principles involved are change of Operating system. This requires new skills of the new OS to be mastered by the user.

Almost all circular economy initiatives can be classified under these 4 initiatives and can be a strong guiding factor for organisations to decide to rate their circularity coefficient. 

 

If only 2 of the 4 strategies are being adopted by the organisation, the circularity coefficient is 50%, while for an organisation deploying 3 of these 4 strategies, the circularity coefficient is almost 75%. This is on the premise that the higher the use of these five initiatives, the higher is the circularity element in the business operations. Alternatively, organisations deploying all four of these circular strategies is a 4 star CE company while one that deploys 2 of these 4 strategies is a 2 star CE company.

2 aspects are important while considering the circular economy, how easy it is to access the product (or get it back) and how easy it is to recover value from the product (the processing). Accordingly, these two aspects are plotted as two axes of the circularity matrix (shown on the right) Image courtesy HBR. The Y-axis representing how easy it is to access the product and the X-axis representing how easy it is to recover value from the product. 

 

Depending on the ease of access and ease of processing to regain value, the area is divided into four quadrants,

• The top right quadrant are items that are hard to get and at the same time hard to reprocess to get value, eg. tyres and wind turbine blades 
• The top left quadrant is for products that are tough to get while easy to process to get value, like biodegradable packaging, cardboard boxes etc. 
• The bottom left quadrant is for products that are easy to access or get and at the same time easy to process, clothing at homes is used for wiping dishes, swabbing the floor etc.
• The bottom right quadrant is for items that are easy to get but hard to process, like old shoes, mobile phones etc.
  

The Circularity matrix is an important tool to understand whether any product can be processed through the circular economy fast or not. 

 

George. (Picture courtesy HBR, July '21).