The Knot’s intro to the Circular Economy26 March 2015

The enigmatic employee-owned business of engineers, designers and consultants that make up Arup played host to another brain tingling Knot event last night which brought together the Ellen MacArthur Foundation, Product Health and Arup’s Global Resources and Waste team to present ideas on The Circular Economy.

I’m not quite sure who coined the phrase, no one was claiming any firsts – but the round the world sailor, MacArthur apparently had an epiphany about doing more with finite resources whilst on her extraordinary solo voyage. She launched the Foundation in 2010 to champion the movement. It has 100 members including Arup. Ella Jamsin from the Foundation explained how our linear relationship with products begins at the design stage where they are conceived to be disposable, which in turn leads to US$2.7 trillion of economic value being lost to landfill every year.

There are 4 building blocks of a circular economy;

1. Design and production (things that are designed to be reused)
2. New business models (that sell access to products rather than the products themselves
– for example Philips selling light, not lamps)
3. Reverse Cycling (when things are taken apart so that components can be redeployed)
4. Enablers and Favourable Systems (such as business collaborations and platforms that facilitate this)

Arup provided examples from its work in the built environment that included finding new uses for materials in building facades at the end of their useful lives (apparently it is a tough gig being the front of a building and 15 years is the average lifespan) and reusing steel without having to melt it down in a resource intensive way, just by paying attention to the way it is joined to other components in the original build.

Tamara Giltsoff, representing Product Health answered the question of why the Circular Economy will gain market traction with the example of a new business model that ensures ‘longer and healthier lives for powered products’ – in the first instance, batteries in remote places.

The trend towards the ‘internet of things’ heralds a near future where products will be able to continuously report in on their own useful state. In Product Health’s working example, batteries powering off grid solar energy in remote locations in Sub-Saharan Africa can send data on their performance and useful life. Being able to monitor individual battery performance enables significant resource savings as it will be possible to isolate and remove the one battery that has failed in an array of say, 10 batteries, where previously, if one failed, functionality was lost and all ten batteries would just have been replaced.

This remote relationship with products also enables companies to turn off the power if the customer doesn’t pay. Whilst this sounds draconian, the reality is that remote control to this degree means that people who can’t afford to buy kit outright can lease it, and the provider has a way to administer the defaults at very low cost, which makes the entire model commercially viable. An interesting take-out on the business model innovation is that it is the data and the connection that generate the long term commercial value, not the product.

Reflecting back on the last Knot event at Google that examined the future of retailing, the subject also turned to the internet of things and the importance of tailoring experiences using information on consumer behaviour and preferences. It seems that whenever we future gaze, more connectivity is the constant theme that comes through with implications for new service-driven business models. Now I wonder how to apply that to PR………………..?

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