It is 2019, we are all together destroying the planet but ironically also unanimously decided that it is time to turn things around. After all, it hurts to see the Amazon rainforest being burned down simply to fuel our chai lattes. This requires a radical change in the way we think, behave and consume. Ladies and gentlemen: it is time to live according to a circular economy. Sure, we have all heard of it and are no longer printing boarding passes nor using plastic bags when we go grocery shopping. However, the circular economy is about much more than reducing waste or recycling coffee cups. It is time to clear things up: what exactly is the circular economy? Here is an attempt to explain it so that you can actually understand.

The term “circular economy” has become one of those buzz words that people shout around along with “disruptive innovation” and “achieving co-alignment”. Essentially, the circular economy comprises various concepts that together mark a significant shift in the way we produce, utilize and get rid of goods. Where we are used to a linear economy known as the take – make – dispose model, we are now replacing that by a circular economy based on the reduce – reuse – recycle principle.

Wait, what?
Back in the days, in a linear economy, companies would:

  •  take raw materials
  •  make a product out of it
  •  which would be disposed after the consumer was sick and tired of it.

So Now?
Now, in a circular economy, companies will:

  • reduce the amount of raw materials needed
  • redesign their business models to facilitate reusing of the product and 
  • eliminate waste by promoting recycling.

Reduce
Instead of only using new, raw materials, the circular economy fosters eco design. This does not only imply that products are designed to last and be repaired, but also that they can be taken apart after they have been used so that they can serve as raw materials again. We happy, the planet happy.

Reuse
Careful here: reusing ≠ recycling. Rather, it is about extending the lifetime of a product through adaptation in companies’ business models. How? Well, all those platforms that let you lease a product instead of owning it are a great example. Think of Ikea renting out furniture, Swapfiets leasing Dutch bicycles, Blablacar promoting ridesharing. In that way, the product is used to its fullest potential and its value is maximized. In addition, this is where the link to the sharing economy can be found as the idea of ownership changes. After all, it is access to products that we need, not the actual product itself. Sharing is the new buying.

Recycle
In a circular economy, waste does not exist. Instead, waste is seen as a resource. Based on the eco design, biodegradable parts of waste return to the planet and the non biodegradable stuff will serve as a basis for the production of new products

Naturally, the steps described above make it all sound quite easy. In reality, it is all a little more complex. Going circular requires companies to drastically rethink their entire business models, from product design, to manufacturing processes, to their relationships with consumers. Since the idea of moving from a linear business model to a circular one is relatively new, it might be difficult for companies to identify where the opportunities lie exactly and how to prioritize those accordingly. In order to do that successfully, proper research and analysis will play a key role.  

Want to assess how circular your company is or potentially could  be? We would be happy to help.

About Amstel Lab
Amstel Lab partners with startups and scaleups to commercialize your business. On the back of our experience, we have developed the unique Amstel Lab method: a tailor-made approach to maximize success. We test your markets, refine your product, innovate your commercial approach and execute your strategies. Any good idea is worth seeing through. 

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