Circular Economy & The Power of Networked Collaboration

The following article was written using excerpts from The Selling Circular Podcast 's interview with Jon Smieja of Trellis Group (formerly GreenBiz). Subscribe to our podcast page and on your favorite podcast app for more sustainability and circular economy content!

Circular economic innovation is the greatest hedge against supply chain insecurities, rising commodity prices and inefficient business practices of late stage capitalism. However, this innovative approach to production and consumption will take an unprecedented amount of collaboration as we aim to eliminate waste, keep materials in use, and regenerate natural systems. Here, we’ll explore the future of the circular economy, its challenges and opportunities, and why collaboration is crucial for sustainable innovation.

The Current State of the Circular Economy

Even in the last five years, circular economy attention has gained significant traction with businesses, governments, and individuals recognizing its potential to address climate change, resource scarcity, and waste management issues. This momentum is evident across various sectors, from fashion to electronics to the built environment. However, the transition to a fully circular economy is still in its early stages with the innovators working within pilots as small company while many industries struggling to implement circular practices at scale.

Challenges on the Path to Circularity

1. Infrastructure and Scale

One of the primary challenges in implementing circular economy principles is the lack of necessary infrastructure. As Jon Smieja of Trellis Group points out, "If we create products that can be sent back and reused or recycled or refurbished or remanufactured, we still have to build that whole infrastructure to do it." This infrastructure gap often leads to long payback periods for investments, which can be a deterrent for many companies.

2. Incumbent Business Models

Another significant challenge is overcoming the inertia of existing business models. Smieja explains, "There's just like the structural sort of incumbency bias, right? If I come out with a new material or a new product or a new method, it's got to be better, cheaper, faster, more convenient than the old one, or everybody's going to say, well, why would I change?"

3. Lack of Familiarity

Perhaps one of the most fundamental challenges is that the circular economy is still a relatively new concept for many. As Smieja notes, "Nobody working in industry right now has ever lived in a circular economy. We don't know what it looks like, right?" This unfamiliarity can make it difficult for businesses to envision and implement circular strategies.

Opportunities in the Circular Economy

Despite these challenges, the circular economy presents numerous opportunities for innovation, cost savings, and environmental impact reduction.

1. New Business Models

The transition to a circular economy opens up possibilities for innovative business models, such as product-as-a-service, sharing platforms, and reverse logistics services. Smieja highlights the automotive industry as a model example: "They've got the business model down, right? Not only will they sell you a new car, they will also lease you one, or they'll sell you a used one, or in some cases, they'll lease you a used one."

2. Resource Efficiency

By keeping materials in use for longer, businesses can reduce their reliance on raw materials, potentially leading to significant cost savings and reduced environmental impact. This is particularly relevant in industries facing resource scarcity or price volatility.

3. Innovation Catalyst

The challenges presented by the circular economy are driving innovation across industries. From new materials and product designs to innovative recycling technologies, the circular economy is spurring creativity and technological advancement.

The Importance of Collaboration for Sustainable Innovation

One of the key themes that emerges when discussing the future of the circular economy is the critical role of collaboration. As Smieja emphasizes, "There's noone, even if you're Amazon or one of these giant companies, you can't do this alone. Right? So you need partners. You need supply chain partners, both up and downstream from you to sort of help you figure this out."

Collaboration is essential for several reasons:

1. Knowledge Sharing: The circular economy requires a systems-level approach, which often extends beyond the expertise of any single organization. By collaborating, companies can share knowledge, best practices, and lessons learned.
2. Infrastructure Development: Building the necessary infrastructure for a circular economy often requires cooperation between multiple stakeholders, including businesses, governments, and NGOs.
3. Innovation Acceleration: Collaboration can accelerate innovation by bringing together diverse perspectives and expertise. Smieja notes, "When I worked in the built environment, I didn't learn that much from other people in the built environment. I learned things from people in other sectors because you'd get that they'd have a creative idea that might work for their sector and you'd say, huh, I wonder if I can apply that to windows and doors or furniture where I used to work."
4. Scale and Impact: Many circular economy initiatives require a certain scale to be economically viable. Collaboration can help achieve this scale more quickly and efficiently.

Looking Ahead

As we move forward, the future of the circular economy looks promising, albeit challenging. Smieja expresses optimism, stating, "I think there's an opportunity there and that this could scale really quickly." However, he also acknowledges that progress may be slower than many in the field would like.

To accelerate the transition to a circular economy, we need continued investment in infrastructure, supportive policy frameworks, and a commitment to collaboration across industries and sectors. As Smieja puts it, "We need to continue to find ways for innovators that support circular economy business models to succeed, whether that's reverse logistics companies, re-commerce companies, cleaning, repair, remanufacturing companies. All of those industries have a place in this system."

While the path to a fully circular economy may be challenging, the potential benefits for businesses, society, and the environment are immense. By embracing collaboration and innovation, we can overcome the obstacles and create a more sustainable, circular future for all.