The linear economic model characterised by the path of “take, produce, throw away” is now outdated, and the most enlightened companies are now looking towards a new paradigm: the circular economy.

Like the word says, this type of approach does not require any distinct departure or arrival point, as it is a circular movement, and returns to the departure point when it reaches the end, and then starts the cycle again.
To be clear, the circular economy aims to eliminate consumption of virgin raw materials, or at least drastically reduce it, and encourage use of recyclable, regenerated and renewable materials. In this way, an environmental challenge is faced and overcome, and benefits are generated both inside and outside the company.

The circular economy is based on 5 principles that define fields and application procedures:

  • Sustainable inputs: materials used are renewable or previously recycled in view of reducing environmental impact.
  • Extension of the product’s life cycle: this can be achieved in two different ways. The first occurs before it is made: a product can be designed in a modular way so that it is simpler to repair and consequently reuse. The second occurs after it has been used: to repair a product, new skills are necessary that can and should grow in this context.
  • Sharing: sharing has always been a good way to lower costs and save money, and is also a meeting point, a way to create social interaction and cohesion.
  • A product treated as a service: companies must not just aim to sell a product, but rather the service revolving around it, so as to have a more concrete, and long-lasting, opportunity of interaction with the customer.
  • End of life: the circular economy is based on recycling, but not only in its simplest form. In fact, it also presents two other just as functional solutions: upcycling, meaning transformation of an asset at the end of its life, and regenerating, meaning repair of an asset upon reaching its limit, so as to put it back into the marketplace.

The goal of companies of the future is to reach “circular maturity”, which brings about benefits in several areas:

  • Competitiveness: a study conducted by the European Union on this issue talks about reducing consumption of resources by 17% to 24% by 2030 and saving 630 billion euros per year.
  • Innovation: rethinking your business models leads to inevitable innovation, which in turn could lead to new growth opportunities and possibilities.
  • Environment: circular maturity means making a difference in environmental terms, by reducing the production of waste, and consequently limiting pollution and global warming.
  • Employment: shifting one’s attention from the product to a service will lead to a greater need for the human component and to employment growth.

The role played by technology should not be underestimated. It is an ever-present ally for achieving satisfying goals on a large scale in less time. “The Sharing Platform business model, like the Product Life Extension model, are not new concepts, but while information costs, labour requirements and obstacles to collaboration traditionally created barriers to large-scale application, today technology is knocking them down.” (Peter Lacy, Jacob Rutqvist, Betrice Lamonica, “Waste to Wealth: The Circular Economy Advantage”, EGEA, 2016).

The time has come, the available instruments are suitable: it is the right time to change the “form” of your company.

SHARE!