HEAD 2 HEAD

As we spend more and more time talking about the benefits of the circular economy, we lose sight of the fundamental ideas that drive it. The circular economy is such a powerful idea because it works within our existing system. It uses our current economic motivations for growth and free markets to provide a competitive advantage in times of resource constraints. If looked at through that lens, it seems obvious that the circular economy is going to happen whether or not consumers want it — business will embrace it because it makes economic sense.

But there is a problem with that logic - we work in a free market where people make choices based on their perceived needs and values. These people who choose aren’t just the ones reading this note or leading companies, they are the ones who make decisions every day about what to purchase and how to get to work. They are the ones who look at you cluelessly when you mention the circular economy. They are the people who populate the world and fundamentally drive our consumption-based economy.

Companies invest hundreds of millions of dollars to create products and services they think these people will want. Many of those products fail, some spectacularly (see the Ford Edsel, Apple Newton, or Webvan). Often these failures are because customers simply don’t want or understand what the companies are offering.

The disruptive nature of circular-economy-based products makes them even more difficult to understand. Matt Bulley of Caterpillar remanufacturing points out “it’s a challenge to convince and educate the consumer that they’re getting the same performance at 50-60% of the cost of new.” [1] Consumers don’t want what they don’t understand. And if consumers don’t want a product, it won’t sell, and companies will try something else in order to survive.

Even in companies that are successfully selling products, nobody can predict what consumers will want next. Tablets were around for 20 years before the iPad and they never took off because consumers didn’t want them. [2] Companies kept making them and discontinuing them shortly thereafter due to tepid sales. [3] All that changed with the iPad because finally, consumers were ready to choose another screen. And since the iPad, tablets sales have absolutely taken off. [4]

The rise of the tablets didn’t happen until consumers understood and desired them, and the same can be said about the circular economy. So while companies and business leaders can push for and introduce circular products and services, the circular economy won’t take off until consumers choose to buy those circular products and services.

AGREE

ABOUT THE AUTHOR

Joe Kendall is a Stanford-trained designer and engineer who has developed sustainable products for everyone from Fortune 500 companies to early-stage startups. He specializes in inventing solutions that integrate technology, sustainability, and design into systems which benefit people’s daily lives.

“The circular economy won’t take off until consumers desire it.”

For this ‘Head 2 Head’ series, we approached a number of people from a variety of backgrounds to write an opinion piece around a contentious statement, asking them to take either an ‘agree’ or ‘disagree’ stance. In some cases the authors have been deliberately provocative, and their goal is to contribute to a conversation around some chosen themes.

The views expressed here are the authors’ alone.

What do YOU think? Join in the conversation in the Cafe Area.

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References:

[1] http://www.ellenmacarthurfoundation.org/case_studies/caterpillar

[2] http://www.zdnet.com/the-history-of-tablet-computers-a-timeline-7000026555/

[3] http://www.wired.com/2013/11/one-ipad-to-rule-them-all-all-those-who-dream-big-are-not-lost/

[4] http://www.theguardian.com/technology/2014/jan/30/tablet-market-grows-slowly-apple-regains-share

What are your thoughts? Do you agree or disagree with that article? Join the debate in the Cafe

DISRUPTIVE INNOVATION FESTIVAL 2014 ~ HEAD 2 HEAD

“The circular economy won’t take off until consumers desire it.”

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References:

[1] http://www.ellenmacarthurfoundation.org/case_studies/caterpillar

[2] http://www.zdnet.com/the-history-of-tablet-computers-a-timeline-7000026555/

[3] http://www.wired.com/2013/11/one-ipad-to-rule-them-all-all-those-who-dream-big-are-not-lost/

[4] http://www.theguardian.com/technology/2014/jan/30/tablet-market-grows-slowly-apple-regains-share

Once upon a time companies hosted regular focus groups in pursuit of the magical recipe for “consumer desire” as if profit depended on one fleeting moment - the point of purchase. However, in today’s connected society I would argue that enduring relationships are far more important. Too many companies are still chasing customers with flashy brands and fast fashion, whilst cheap materials, poor quality and software obsolescence are rife. Goods today can become waste faster than the time it took to create them, but even obsolete chickens come home to roost. Business is built on the efforts of many people: not just consumers, but employees, suppliers, manufacturers, retailers and service providers. We all work together to create a healthy economy for society as a whole. Integrity and enduring value should be the goal as social media affords the curious with a clear and current view of any brand’s behaviour.

There is no doubt that our future circular economy will involve many stakeholders: this new value equation needs buyers just as much as suppliers and makers, but notions of consumption and desire will mately change as we move through the next decade. Dramatic increases in material demand have put an end to the steady decline of commodity prices seen in the last century1. As Sir Ian Cheshire recently stated to the House of Commons Environmental Audit Committee2, in his opinion “Resource prices are only going one way”. So why would any clever business see its customers as “consumers”? Why encourage buyers to temporarily use and throw away a resource when there is still plenty of money to be made from maintaining, redistributing and reusing materials or products which have already had significant amounts invested in their development? We need to rethink that word “consumer” and look instead for what people will value and continue to use. Then companies can begin redesigning business models to account for all the new value reappraised from objects we used to call obsolete.

Local economies stand to benefit greatly from this new approach. The circular economy is all about finding new uses for materials, energy and resources which are already here, within our borders. The companies who are leaving these resources as waste simply can’t figure out a way to make them pay, so it will take our creative entrepreneurs to build new companies which challenge the old guard’s lack of imagination. Now is the perfect time for action as funding for SME’s rests on the table awaiting a good business plan3.

So no, the circular economy won’t take off when consumers desire it, it will take off when business gets creative, when business starts reappraising untapped resources and looking beyond the consumer to define value for all stakeholders. It will take off when new entrepreneurs see the opportunity of business models built on quality, by brands that care about consequence and aim for enduring value.

ABOUT THE AUTHOR

Barry Waddilove is a design consultant based in Hertfordshire.

His career in product development has involved work with brands and factories across 22 different countries.

Following postgraduate study at Cranfield University he became a Schmidt- MacArthur Fellow. His research is currently focused on whole system design and business model innovation for the circular economy.

DISAGREE