How can companies get started?
What are the first steps to take if your goal is a more circular business? A successful circularity in business builds on strong partnerships, collaboration, and a good understanding of the environment. Finally, the transformation from linear to circular requires a clear vision and a stable financial situation.
But how to get there in practice? Here are a few tips that can help:
Define what circular means to your company and communicate the vision
Start with circular economy as early as possible in the project or process. It’s much harder to relearn than to learn the good practice from the beginning. It also takes vision and leadership to be able to articulate a desired direction for the rest of the organization. Especially in the early part of the shift towards circularity, it is important to educate, inform and train your employees to change their mindset from thinking in value chains to thinking in value cycles. It’s also worthwhile to bring circularity at the forefront of your whole business strategy and even employee recruitment. In addition to relevant training, you should encourage the employees and different business units to collaborate, and create a corporate culture where your employers find it easy to learn more about circular economy, and not feel afraid to speak up and suggest specific circular activities or initiatives.
Before you engage in a circular strategy, get informed and figure out where the implementation of circular economy principles could start in your business, and build it up from there.
Proactively identify opportunities in your business model where a circular economy approach could lead to added value:
- circular design (developing products and materials with the aim of long-term value retention)
- optimal use (supporting prolonged usage and product productivity. Establish a minimum design life: design for durability and include in the possibility of an easy upgrade)
- value recovery (capturing value after the product reaches the end-of-life stage),
- network organization (organizing and coordinating a community that enables circular business models)
You can, and probably also should consider aiming to become a combination of these categories. Our next article will tell you more about this and highlight the importance of having a company-wide Circular Economy Strategy. Another approach to thinking where and how you can incorporate circularity in your business is to think of how circularity can be implemented in process innovation, product innovation, and business model innovation. Again, different approaches to CE might be useful depending on your company and it’s size, industry and organizational maturity.
Consider circularity in process innovation, in product innovation, and business model innovation
Is your business a start-up, a small or medium-sized enterprise, or are you in charge of a large corporation in a conservative industry? There is no one-size-fits-all approach in circularity, but these few steps will help you in your way.
Open mindset and awareness of your market are prerequisites for successful innovation. In addition, innovation and piloting might require opening your business to ecosystem collaboration and improved communication.
Engage with stakeholders and involve your supply chain when choosing a circular strategy.
Embracing the circular business model requires an internal and external review of your activities. To identify opportunities, you must:
1. recognize trends and drivers at the ecosystem level
2. understand the value to partners and stakeholders within a business
3. and evaluate the impact of sustainability and circularity.
It is much more likely that the circular mindset is considered in every business decision and every business unit if circularity is backed by strong top-level management support. A strong C-level understanding of circularity is also helping the company to integrate relevant objectives and metrics so that both internal and external collaboration can work smoothly. On top of that, having strong top management support for circular initiatives guarantees the company is one step closer to effectively deploying the financial and human capital to solve pressing problems resourcefully. This way, there is more time to focus on dynamic and innovative shift to a more circular business.
Most importantly, when interacting with stakeholders, be transparent about the value proposition. Communicate the rationale and benefits of circularity and be clear about why going circular is favorable to a traditional linear approach. If the costs and benefits remain unclear, people will be afraid to make the change. Many circular projects are funded internally, so strong top management is also a pathway to a more secure funding.
Quantify you ambitions
Finally, to learn from the process towards circularity, you should quantify specific ambitions to your business case. The promised value proposition of circular economy activities must be measured and monitored. For that, use data and carefully chosen KPIs to improve both business and environmental performance. Start small and scale up. Pilot innovative programs that could become long-term strategies. Engage with your stakeholders and collect relevant data, so you can use them as reference-points and evaluate your failures and successes; learn from them. Some things you can do:
- Measure the impact of circular activities on financial performance -> if you can visualize and quantify the benefits of circularity, your CE initiatives gain credibility and you have a clear incentive to keep going to the circular direction
- Ask for a performance specification rather than get stuck on descriptive specifications: you can tell your design and procurement team what you want your asset to do (be specific about the required performance, such as minimum use-life, or the possibility for an easy repair/reuse/recycling/upgrade) rather than being prescriptive about the design, specification, and materials they must use. This fosters environmentally-friendly innovation.
Defining what circularity means to your business and communicating that vision to all employees and stakeholders is the crucial first step. Educating, informing and training your employees to learn to think in value cycles is equally important; collaborative and open-minded corporate culture matters.
Then, to identify circular economy opportunities, you must:
- recognize trends and drivers at the ecosystem level
- understand the value to partners and stakeholders within a business
- and evaluate the impact of sustainability and circularity.
You will realize you need to encourage much more partnership work and to be prepared to use new products and systems and procure in new ways, while actively nurturing an innovation culture to constantly challenge your own business model and test the alternatives. This will be key in identifying new revenue streams in the post-linear economy era. To do all that successfully, while learning from the process of change, you need to quantify your ambitions, use available data, and be clear about your value-proposition. Finally, you need to emphasize and educate why the shift from linear to circular business model is so topical!
In our next article, we will be telling you why CE should be considered holistically across the whole value chain, and why you would benefit from a company-wide circular economy strategy!