CircularEssentials
DouweJanJoustra,directorICE(ImplementCircularEconomy)
“Circulareconomyisbooming,thoughnotyettoomuchasaboomingbusiness”.
Sincetheintroductionoftheconcept‘circulareconomy’bytheEllenMacArthurFoundation
around2010,onemightsaythattheconceptbecameahypeinpolitics,business,research
andeducation.The‘why’isquiteclearandveryrelevant:createaneconomythatfacilitates
ourneedsandbuildsqualityoflifefornatureandhumanculture.‘Theeconomyforlife’
mightbetheshortestwaytosaythis.Onthe‘how’and‘what’Iseealotofconfusion.Of
course,everybodyhashis/herownwaytodescribetheirpotentialroleinthecircular
economy,whichisgoodasphenomena,sinceitisanopenconcept:notregulatednorthe
useofcertification.Itisatransformationonalllevels,aswellontechnologyasonprocesses
andsystems.Oneachlevel,someone(oragroupofpeople)isresponsibleforthefulfilment
ofthenextstepanditneedsredesignoftheexistingproducts,servicesandbusinessmodels.
ThoughCircularEconomyisdiscussedinmanyconferences,workshopsandmeetings,there
isabroadreluctancetodirectimplementation.So,letus‘facilitatethetalkingandmakeit
startthewalking!’
UnderstandingtheessentialsiskeyandImissthemveryoftenindiscussionsoncircular
economy.
CEEssential1:provideservice(s)
Circulareconomyisabouteconomy,morespecific:changesintheeconomicsystem.These
changesareaimedatanewsystemorganizationthatembodiesresponsibilities,upgrading
formsofcontracting,renewalofrelationswithco-producersandredesignofmanagement
strategies.Theimpactisobvious:morecontinuityforthecompany,betteruseofall
resources(humanandmaterials)andgrowthofquality.Thedevelopmentofmarketsis
nowadaysbasedondeliveryofservices.Ofcourse,theexamplesofAirbnb(stayatagrand
diversityoflocations)andUber(transporttowhereeveryouwant)arewidelyknown.They
delivertheservicesanddonotevenowntheassets(rooms,cars)thataresupportivetothe
service.InCircularEconomy,weseethesamedevelopment:lightasaservice(payperlux),
wearingjeans(leaseajeans),paypercopy(Xerox)e.g.So,whatweaddressas
‘performance-basedcontracting’isnomorethanfindinganddeliveringgoodservices!Based
onagoodservice-levelagreement!
Thekeyquestions:whatistherealservicethatyouofferasaproduct?Whichassetsare
neededtosupplytheservices?Howdoyouorganizeyourassetmanagement?
CEEssential2:sharing
Intheagriculturalbusiness,itisquitecommonlyacceptedthatinvestmentsandmachinery
canbeshared:cooperativeownershipisthepractice.Notsincethisyearbutalreadyfora
centuryorlonger.Ithasbeenprofessionalized,sothemachinesareoperatedbyspecialized
personnelandthefarmerspayperdayfortheuseof‘manandmachine’.
Ontheotherhand,weareallfamiliarwiththe‘neighbor-services’whereweaskfora
lawnmower,drillorasupportinghandincare.Noproblem,everybodyseemstobewillingto
helpaneighborinneed.
So,sharingisanormalthingtodo.Companiesdoitinveryfewcases.Inanindustrialpark,
allcompanieshavetheirownmachinery,theirownspecialists,theirownmeetingroomsand
sharingisnottheruleoftheday.InCircularEconomy,thisisarealoptionforafirststep,itis
‘lowhangingfruit’.Evennewinitiativeshavebeenstartedtofacilitatethisdevelopment,like
www.floow2.comisthenewUber.Daretoshare,share,share!
Thekeyquestions:whichassetsofyourcompanycanbeshared?Didyouidentifytheincome
thatmightbepartofthesharing?
CEEssential3:assetmanagement
Assetmanagementis,ofcourse,theartofmanagementofassetsofacompany.Assetsare
thephysicalassetsbutcanalsoimplypeopleandinformationordata.Assetsareneededto
performtheservicesthatarethebaseofthecontractwithyourclients.Thoughinformation
andpeoplearekey,wemostlyspeakinthiscontextaboutthephysicalassets.Theseassets
canbeofallkindsofscale:adrillisoneandanoilrigalso.Assetmanagementiskeyto
creatingtherightandhighvalueperformances.Assetmanagementandmaintenanceare
oftenconsideredthesame.Inacircularperspectiveassetmanagementgoesastepfurther.
Theobjectionistoutilizethemostoptimumperformancefromtheassetswithinacceptable
risksandcostsmeasuredoveritsfulllifetime,toprovidetherightservicestotheclients.
Assetsarethecapitalofthecompanyandwillbepartoftheresourcesthatcanbeusedfor
productionovertimeandquality!
Thekeyquestions:Howisyourassetmanagementorganized?DoyouneedanISO55000
certificate?Isyourmaintenanceorganizedasserviceonlocation?
CEEssential4:energy
Energyisvalue,andisthebasicelementofthinking/actinginCircularEconomy.Allaspects
ofproductionarebasedonsupplyofenergy:mining,part-production,productdevelopment
andmaintenance.Thisisrealenergy,preferablybasedonenergyfromthesun(atleast
cleanandsustainable)andlabourasaspecificformofenergy.Itisthe‘embodiedenergy’(or
‘embeddedenergy’)thatgivesaproductvalueandpreservingthisembeddedenergyis
essentialforguardingthevalueofproducts.ForCircularbusinessmodels,basedonservices,
embodiedenergyanalysisgivesinsightinwhatenergygoestosupportingaconsumer,and
soallenergydepreciationisassignedtothefinaldemandofconsumer.Different
methodologiescanbeusedondifferentscalesofdatatocalculateenergyembodiedin
productsandservicesofnatureandhumancivilization.Internationalconsensusonthe
appropriatenessofdatascalesandmethodologiesispending.Thisdifficultycangiveawide
rangeinembodiedenergyvaluesforanygivenmaterial.Intheabsenceofacomprehensive
globalembodiedenergypublicdynamicdatabase,embodiedenergycalculationsmayomit
importantdataon,forexample,theruralroad/highwayconstructionandmaintenance
neededtomoveaproduct,humanmarketing,advertising,cateringservices,non-human
servicesandthelike.Suchomissionsmakeitdifficulttocalibratetherealvalueofproducts
andservices.Nevertheless,itisknownthatthepreservationofembodiedenergyiskeyto
circulareconomy.
Thekeyquestions:areyouawareoftheenergycomponentofyourproductsandservices?
Howdoyouorganizeyourmanagementofembodiedenergy?
CEEssential5:ecologyofthings
Couplingtheconceptsofsmartandlivingsystems,makesanewwayofthinkingabout
productsdawning:TheEcologyofThings.Designisthekeytorealization.Inlivingsystems
allmaterials,allelements,allmineralsarebeingusedandre-usedbecausetheystayinthe
loop.Thatisthemetabolismoflife.IntheEcologyofThings,weacknowledgethepowerof
‘wasteisfood’alsoonahighervalue-level:productsarefeedstockfornewproductseven
beforetheybecomewaste.Thanitisaboutremanufacturingorrefurbishment.Itcanbe
foreseenthatproductswillhaveamaterials-passportandareconnectedthroughthe
InternetofThings(IoT).Inecologyoneessentialelementisaroundeverywhere:
communication,interdependencyandinteractionsbetweenorganisms.Resourcesbecome
manageableevenwhenpartofaproduct.Insightsintheneedof
maintenanceofproductsbecomesobvious.
IntheEcologyofThings,theconnectedness,theinterconnections
(symbiosis)andtheabilitytotrackresourcesisbecomingreality.
Aswesayaboutecology:everythingisinterconnectedto
everything.Fromasystemsperspective,theinterdependencies
willappearandthegrandchallengeistounderstand,manageand
operatetheEcologyofThings.
Thekeyquestion:createinsightinthewayproductscanbeconnectedbasedondata,
information,resourcesanddesign.
CEEssential6:companycontinuity
Theelementarychangeintheneweconomyisthechangefromaproduct-focustowardsa
focusonservicesandperformancescombinedwithhighlevelmaintenance.Servicebased
contractingwillbethenewwaytoconnectbusinesstobusinessorbusinesstoconsumers.
Thisimplieslongtermcontractsthatregulatetheservicelevels.SLA,ServiceLevel
Agreements,becomethecapitalofthecompany.WorkingwithSLA’sbringscontinuityin
temporalsense:whenyouneedit,yougetit:servicesinallforms.Thisistheessentialpartof
theservicethatthecompanyprovides.Thesecontractswillbelongtermoriented,the
servicewillbeperformedoverarangeofyears.Thatresultsinlongtermrelationsbetween
theprovideroftheservicesandtheusers.Goodfortherelationshipandcontinuityofthe
company.
Thekeyquestions:Didyouorganizeyourclient-orientedservices?DoyouhavegoodService
LevelAgreementstogettherightcontractswithyourclients?
CEEssential7:thepowerofdesign
Designofyourproducts,servicesandbusinessmodelsiskeytoperformances.Itforcesyou
tothinkaboutthewayyourproductsprovideaservice,canbemaintainedonahighperformancelevel,canbepartofthedifferentgenerationsofservicelevelagreements,will
provideyoumaterialsandspareelementsofyourproductsandintheendhoweachproduct
canbefeedstockfornewproducts.Servicedesignissomethingthatwillhelpyoutoidentify
therightwaytoconnecttoyourclientsoveralongerperiod.Investmentinservicedesignis
agoodthingtodo.Ofcourse,theelementarysteptowardsnewbusinessmodelsispartof
thedesignprocess.
Thekeyquestions:isyourproduct-,serviceandbusinessdesignuptodate?Aretherenew
waysofconnectingwithyourclients?
CEEssential8:needsandhiddenneeds
Qualitythatfitstotheclient’sneedsandhiddenneeds,iskeyforcircular,servicebased,
business.Eachclienthasasocialperspectiveandposition,heorshewantstoconsolidate
thispositionorevenseegrowthinit.Whatevertheclientwantsinconnectiontoitsservices,
theproviderwillprovideit!Thisimpliesastrongservicebasedorganization:noisnotan
answer,theanswerisalreadythereortheentrepreneurwillcreatetheneededanswer(s).
Withinbusinesssenseofcourse.Theunderstandingoftheneedsandhidden-needsofthe
customerisakeycompetenceofastrong,circularbased,business.Forinstance:doesthe
clientwanttodoshopping,cookingandeatingasadailyroutineordotheyjustwantto
havefoodoftherightqualityattherightmoment?And,ifyouareafood-provider,doyou
knowwhatqualitytheclientreallywants?Orhowdiversyouroffershouldbethroughout
theweek?Knowledgeoftheneedsandhidden-needsofyourclientsiskeytogainaposition
inthemarket.Hiddenneeds,alsoknownaslatentneeds,areissuesandproblemsthat
customersfacebuthavenotyetrealized.Whenhiddenneedsareaddressedbyproductor
servicedesign,customersarebothsurprisedanddelighted.“Companiesthataresuccessful
atidentifyingcustomers’hiddenneedsareabletodevelopbreakthroughproductsor
services.Suchproductshaveuniquefeaturesthatexcitecustomersbecausetheysolveissues
orproblemsthatcustomersface.”(citationFinancialTimesLexicon)
Thekeyquestions:Doyoureallyknowyourclients’needsandhidden-needs?Howcanyou
diversifyyourservicesforindividualneeds?Doyouhavetrainedpersonneltoprovide
services?
TheKANO-model,basedontheworkofDr.NoriakiKano
CEEssential9:effectiveandefficient
Createaneffectivebusinessmodelwitheffectiveservice-product-maintenance
combinationsisthefirststeptomakeinyourchangetowardsamorecircularbusiness
model.Effectiveintheuseofassets,energyandlabourispartoftherealmanagementof
yourcompanyaseveryentrepreneurknows.Thismeansalsothatyoushouldtakecareof
efficiencyandoptimization.Usinglessenergyandmaterialstoprovideyourservicesmakes
thebusinessmodelworthwhile.Butdonotfocusonjustefficiency,thatmakesthingsworka
bitbetterbutisnotalwaysthewaytogainrealeffectivesolutions.Thefocuson
optimizationmeansafocusontheexisting.Somethingnewmightbebetter!
Thekeyquestion:didyoualreadyworkonefficiency?Didyouquestionyoureffectiveness?
CEEssential10:cooperativeservices
Whatcanbeseenincirculareconomyisthevalueofcooperation.Notalwaysyoucaneasily
providetherightservicessuchasmaintenance,installationoroptimization.Thatwhereyou
mightneedlocalprovidersofsupportingservicesorlogistics.Also,servicesmightbe
strongerifcombined.Yourmarketpositionhasthepotentialofgrowingmarketswhen
combinedwithothers.Thiscanalsobepartofthewholevalue-chainyouarepartof:making
itacommonchallengemightbringnewinsights,newservicesandnewservicelevel
agreements.Donothesitatetosharetheaddedvalues:beapartnerthatisopentosharing
andyouwillseethatcompetitionchangestowardscooperation!
Thekeyquestions:didyoudiscussthechangesinthemarketwithyourvalue-chainpartners?
Didyouanalysethequalityofnewserviceswhencombiningwithotherproviders?Doyou
reallydaretoshare?Isthispartofyourcompanies’profile?
DouweJanJoustraismanagingdirectorofICE(ImplementCircularEconomy)andawellknownspeakeroncirculareconomyinpracticeofcompanies,governmentsandinstitutes.
Heidentifiestrendingtopicsinsocietyconnectedtothedevelopmentofcircularpoliciesand
businesses.Asahigh-levelconsultantJoustrasupportslocalandnationalgovernmentsin
creatingastrong,empowering,policyandsupportscompaniesintheircircularbusiness
development.IntheNetherlands,heisalsooneofthepartnersindevelopmentofthe
NationalScientificAgendaonCircularEconomy.