How can you adopt a circular business model?

Remember the 3R we studied at school... this is what circular economy is based on. By reducing our consumption (unnecessary ones) and reusing the product until it's in shape or having the value... we can help maximize the life of the product. We can further give the product another life by recycling it... hence saving the life making ingredients (air, water and soil) from getting dumped with toxic wastes. In terms of business, companies with a circular economy model can gain profits as it helps them cut their production costs and also by creating a brand image that is loyal towards our planet. Companies can recover the used products with lesser value and give it a new life with the same or different purpose and can create larger value.

Business models that tend to bring circularity, focus on innovative ways of production and consumption of goods and services. They plan to improve the resource efficiency and creative reuse of by-products. Such businesses also significantly reduce the environmental pressure resulting from economic activity. Start-ups or new businesses that bring new opportunities to create a greater value are promoted in a Circular Economy. Such business models are, sometimes, incentivized by the government. These businesses work as a bridge between product and services. Circular business models serve to reduce the extraction and use of natural resources and the generation of industrial and consumer wastes.

It's much more than Reduce, Reuse and Recycle. There is: 0: Refuse 1: Rethink 2: Reuse 3: Repair 4: Refurbish 5: Remanufacture 6: Repurpose 7: Recycle 8: Research 9: Re-skill 10: Re-design 11: Re-vision 12: Re-cover

A circular business model focuses on creating a closed-loop system, aiming to reduce waste and maximize resource efficiency. This aligns well with the circular economy's principles of reusing, sharing, and recycling. Blockchain technology can add a layer of transparency and efficiency to this model. In the renewable energy sector, for example, blockchain can track the lifecycle of each energy unit, from generation to consumption. Smart contracts can automate energy trading, ensuring resources are used most efficiently. This innovative blend of circular business practices and blockchain creates a transparent, accountable, and sustainable system, pushing us closer to a truly circular economy.

In a world of diminishing resources this sounds wonderful. So how do you measure the success of the circular model e.g. impact or outputs? Particularly vis a vis the traditional growth curve/model where success equals output, revenue and profit?

Adopting a circular business model is like tuning into the rhythm of our planet; it’s about aligning our economic activities with the natural cycles of resources. It’s not merely about reducing waste or reusing materials, it’s a comprehensive review of how resources flow through our operations – tapping into unused potentials, maximising value, and promoting a regenerative approach. A circular model also helps businesses stay ahead of the curve, adapting to regulatory shifts and consumer trends that are increasingly leaning towards sustainability."

Investing in a circular business model can result in a higher return on investment (ROI). When a product reach the end of its life cycle, the materials are collected, remanufactured and sent back into the circular economic process. So essentially, businesses make more with less and the economy becomes a regenerative ecosystem. By investing in a CBM, companies can reuse products. As the products circulate within their life cycles, so do the profits, resulting in recovered financial value and reduced company costs. A CBM allows companies to reuse materials, lesser dependency on raw saves money by reducing freight costs and lower emissions.

Rethinking linear business models is also a key element of a circular business model. For example by adopting Product as a service (PAAS) business model, a company can extend the life of products through services , minimise the need for constant production and reduce resource consumption. This model fosters innovation in product design and encourages collaboration across the value chain to enhance product durability and sustainability.

Minimize the systemic risks to your business. You can transition to a service-oriented business model that will reduce the use of materials and, thereby the emissions making it possible to reach our goals.

Why choose a circular business model? Firstly, it's an excellent way to reduce our reliance on raw materials and cut costs, creating a win-win scenario. It also demonstrates our commitment to sustainability and social responsibility, going beyond profit to make a positive impact for future generations, enhancing our brand and reputation. Moreover, this model encourages innovation. We can develop new products and services that meet our customers' and stakeholders' needs, constantly improving and adapting. Adopting a circular business model isn't just a smart move, it's a step towards a more sustainable, innovative, and responsible future.

Currently the awareness on the circular economy is lacking among companies. There should be more education and training for companies to increase awareness on the potential and skills for the circular economy. Companies have to rethink their business models, adopt systems thinking, redesign their products and processes, and explore reuse, remanufacturing and recycling. There is also a need to build skills and capabilities. Tertiary institutions with courses on product design should be exposed to circular economy concepts such as Cradle to Cradle, Biomimicry, and Design for Durability and Disassembly. There should be more courses and workshops for product designers to learn about circular economy concepts and case studies.

Probably the key to adopt a circular business model is to look at your business from a whole life cycle perspective and plan for obsolescence. It could be useful to design a flexible but as close as possible to a closed loop system, where the raw materiales come from another′s business waste and the products generated by your activity can have a second life, and retroaliment you business.

In order to adopt a circular business model, one must also concentrate on Circular Procurement. What this means essentially is that businesses must look at opportunities to source input materials from suppliers who adopt Circular Business models, be it in designing, scope for reuse, ease in recycling and last but not the least resulting in minimal waste.

Adopting a CBM involves rethinking design, production, and end-of-life processes to minimize waste and maximize resource use Start with a resource audit to identify inefficiencies, then align our strategy to prioritize circularity Innovate in product design to create durable, modular, and recyclable items Collaborate with our supply chain to integrate sustainable sourcing. Utilize technology like blockchain to transparently track product lifecycles. Adapt operational processes for remanufacturing and recycling. Engage customers with incentives for product returns and education about circular benefits Measure success through KPIs like waste reduction and customer engagement. It's a continuous process requiring regular review and iteration

Adopting circular business models requires involvement of multiple stakeholders along the whole supply chain of businesses. It begins with assessing the current sustainability performance of organizations at various levels and making decisions at the R&D stage of product designs. While this is done, transparency and systemic thinking needs to be inculcated in the upstream and downstream while gaps in the whole puzzle is filled by innovative circular startups contributing to material and waste management. Currently this requires upskilling and capacity building at various leadership levels of organizations and also the next generation to develop circularity mindsets.

Apart from the above examples, we can also talk about the upcoming challenges and opportunities. As the EV industry is growing, it also comes with a challenge... battery waste. Hence, a circular economy model can help the whole EV industry here. The EVs can be crushed and used as a recycled metal or other material that can be given a life. The degraded batteries can be recovered and given another life by extracting the valuable metals. I think governments all around the world should start thinking about a battery recycling industry or a recycling industry in general to pace up the progress towards sustainability.

Some examples: 1. ??????????????-????-??-??????????????: Philips offers lighting as a service, managing fixtures' lifecycle. 2. ??????????????????????????: Apple's program restores and resells used devices. 3. ????????????: ThredUP promotes used fashion resale, prolonging item usage. 4. ?????????????????? & ??????????????????: TerraCycle recycles non-traditional waste into new products. 5. ????????-???????? ??????????????: Nespresso's program recycles used coffee capsules. 6. ?????????????? ????????????: Fairphone's smartphones have replaceable parts. 7. ???????????????? ????????????????: Businesses extract metals from e-waste. 8. ?????????????? ??????????????????: Spotify reduces need for physical CDs.

Recomiendo estudiar el caso de IKEA, líder en inmobiliaria. Transformaron su producción a una circular donde ya no se trata solo de reciclaje sino de todo un andamiaje que va desde el dise?o hasta la remanufactura de sus modelos.

Flyrobe is India's largest fashion rental company that offers thousands of options from high-end designers. It is a luxury fashion rental firm that rent out ethnic, western designer outfits and accessories for a reasonable price. It offers a wide range of products for men and women, including ethnic wear, premium apparel, and accessories. It rents high-end clothing and accessories and arranges garments from brands like Ritu Kumar, Sabyasachi Anamika Khanna and Masaba Gupta. It has a presence in ten of India's most populous cities. Flyrobe serves approximately 12 cities through e-commerce means such as an online portal and iOS and android mobile apps. They offer on-demand rentals and even an unlimited subscription plan.

Circular business models aim to reduce waste and promote sustainability by extending the lifespan of products, materials, and resources. Here are some examples of circular business models: Product as a Service (PaaS): Instead of selling products, companies offer them as a service. Sharing and Collaborative Economy: Businesses like Airbnb and Uber facilitate sharing resources, like homes and cars, reducing the need for excessive production and consumption. Remanufacturing and Refurbishing and so on

In my understanding, adopting a full scale circular economy business model by pivoting the current business model is very idealistic and bordering on wishful thinking for any business enterprise that is looking to maximise their ROI. But in time and with effort it can be adopted slowly in a systematic manner or a new vertical that is driven by the circular economy-esque can be birthed. To start with one can look at the waste that is been generated by your business and to identify opportunities for innovation and engaging essential suppliers to create a sort of mini-experimental verticals to understand viability before scaling up.

The biggest challenge is the need for a systems-thinking approach with involvement of various stakeholders due to lack of incentive and a gap in technical knowledge and expertise. Work happening in silos with a major dependency on the informal sector for material recovery, standardization requirements, quality control, lack of regulatory frameworks and the current funding/investment structure are all challenges but can be made opportunities for the adoption of business models. The narrative of Business for Profitability alone needs to change to Business for Sustainability!!

My two cents are on customer behaviour…think about a brand that really cares about the environment in everything it makes. They want to make clothes that are good for the planet and last a long time. But here's the problem: many of us are used to buying cheap clothes that we can throw away after a few uses. Getting people to pick the long-lasting, planet-friendly clothes and to recycle their old ones can be tricky. Some habits are so stuck, like shopping for quick and throwaway fashion, that it's tough to change to a more circular way of doing things, even if the brand is making eco-friendly stuff and setting up the right systems.

Organizations may face additional challenges when trying to adopt a circular approach: 1- Initial Costs and Investment-involves upfront investment in research, new tech development, process standardization, and required infrastructure. 2- Complex supply chains- Finding partners sharing the same sustainability goals is a humongous task! 3- Regulatory and Policy Barriers- Existing regulations can be revisited to fit the circular business models. 4- Limited access to Recycled Materials- insufficient quality standard of recycled material 5- Technological Limitations- hinders scalability and replicability The least discussed challenges are cultural & and behavioral shifts, and complex metrics, and impact measurement!

The adoption needs to be commercially viable to have any kind of longevity. We can't expect feel good economics to bring about change a scale. We're fortunate that resistance to existing linear models is primarily economic, everything else about it makes sense already so aligning the economics is the last big piece of the jigsaw. There are huge challenges throughout the process but these can be overcome with passion, ambition and creative collaborations.

The circular economy is rapidly emerging as a strategic imperative in the world of business, positioned to drive sustainability at an accelerated pace. It offers a dual advantage: a reduction in environmental liabilities and a new avenue for value creation. As businesses pivot from linear to circular models, they not only decrease environmental degradation but also unlock opportunities for innovation, efficiency, and market differentiation. The transition is not merely operational—it necessitates an ambitious shift in mindset. To truly capitalize on the circular economy, companies must understand it as more than just a sustainability tactic; it's a comprehensive business strategy that requires integration across all organizational levels.