The Loop

3 weeks ago, I was stressed out.

I just said yes to giving a keynote to 150 executives and Chief Sustainability Officers from Latour Group, one of Sweden’s biggest corporates.

A top crowd from ASSA ABLOY, SWECO, Securitas, Tomra, and many others, listening to me for 40 minutes.

The topic?

Circular Business Models.

AKA: all that talk about saving the planet is great, but where is the business case? How can businesses monetize on avoiding waste?

No pressure, right?

I’ve spent weeks thinking about how I communicate this complex thing, to such a high-level crowd, in a fun, inspirational, and educative way.

But then I found a perfect way to sum it up, and that’s what I want to talk to you about today.

Fast forward to this Tuesday – after my keynote, no kidding, but people were coming to me to shake hands, giving compliments I am proud of. Like for example Nicolai:

Today I want to talk about a powerful circular business model framework that helped me wrap it all up, and send a practical and inspiring message:

Enter the Value Hill, developed by my amazing colleagues at Circle Economy.

Here’s how it works today, in the linear economy:

Our materials are turned into products, via extraction, manufacturing, and assembly.

The value of the product goes up, as it climbs the hill.

Once the product reaches the customer, the value is at its top, the product is used and consumed.

After a pretty short and inefficient period, products are discarded, burned, or landfilled and the value goes down rapidly.

Think of plastic bottles – we use them for like 2 minutes, that’s it.

The Value Hill in the circular economy looks similar but works differently.

There is much less extraction of primary resources, but manufacturing and assembly continue until we get to the maximum value in the use phase.

But instead of trashing the product soon, the whole point is to stay on top of the hill.

Keep the products and value we‘ve carefully created in use, for as long as possible.

When it‘s finally time for products to go down the hill, it‘s done slowly, and first in short loops, that bump up the product back to the use phase as fast as possible. With for example repairs or maintenance.

If that can‘t be done, we can refurbish the products and sell them again, or even remanufacture or recycle them, and use the valuable materials to serve another life, over and over, as many times as possible.

The value hill is divided into 3 key stages:

  1. Design phase
  2. Use phase
  3. Recovery phase

Each phase has a different task.

The design phase is to make sure we use as few resources as possible. And that we design our products for longer life and cyclability.

The use phase is all about keeping products and resources in use for as long as possible.

The recovery phase is about looping our products and resources back on the value hill.

OK, let’s have a look at some profitable business strategies from the real world:

The Design Phase 

a) Product design
– design for modularity, or repair, like Fairphone

b) Circular Materials
– using biobased, recycled, and non-toxic materials, like BMW

c) Classic Long life
– sell and design products to last a lifetime like Fiskars

The Use Phase:

a) Product as a Service
– let airlines lease your engine, and pay only per hour of flying, like Rolls Royce

b) Life Extension
– IKEA’s repair and 2nd hand services are taking off.

c) Repair & Maintenance
– fix old batteries, put them back to life, and maintain ownership like Gouach

The Recovery Phase:

a) 2nd hand seller
– NudieJeans gives you a 20% discount on old jeans, fixes them, and resells them.


b) Refurbishers
– Volvo Group remanufactures 6500 engines every year.

c) Recyclers
– Infinitum recycles 95% of plastic bottles from all the Norway.

_____________


You don’t have to do it all, pick one or a few and get going.

If you are curious, here’s a super simple exercise to build a circular business strategy.

Step 1: Position your current business model on the Value Hill

The first step is to position your current business model and product design on the Value Hill: What categories does it belong? What activities are closest to your current business activities?

Step 2: Position your value chain partners on the Value Hill

The second step is to position your current value chain partners on the Value Hill: What relationships already exist?

Step 3: Identify gaps and opportunities in your circular value network

What relationships, collaborations or activities are needed to increase circularity in your value network?

Step 4: Formulate your future circular business strategy

What business model and partners are relevant for your future strategy? What is the impact of that?

To find out more, here’s a full report. 

I hope this helps someone today.

That’s it for this week, see ya next Saturday!

Vojta

20 April 2024

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