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Transition to a circular business model with design

The need to change the systems that perpetuate climate change has become obvious, and you don’t have to be an activist to see its urgency. Consumer movements to reduce air travel and meat consumption or follow “plastic diets” have become common; investors regularly ask questions about corporate carbon footprints and sustainability efforts that would have raised eyebrows just a few years ago. Government policy is also gradually changing, to encourage less wasteful business practices, not just in wealthy European countries, but around the world.

Additionally, the linear business model that has governed commerce since the industrial revolution has created fatal flaws, which limit the ability of design to improve processes and products to reduce environmental impacts. As a solution, more and more companies are opting for a circular business model, where products are thought of from use to reuse, including recovered values, where the outputs of production are also inputs for the next production cycle.

This is a huge opportunity where embedded design teams and departments within companies can create competitive advantage while contributing to sustainable solutions that require cross-industry collaboration.

The design of the process, the product and the structure of the teams is the most important. Sometimes that means designing products to be reused or to be disassembled and remanufactured. It can also mean shifting to new consumption models, such as embracing refills over disposables, or creating platforms that make used products as easy to buy as new ones. In some cases, this means getting rid of the whole notion of buy, use and dispose, and replacing it with a service-based model. Early adopters of this model – like car sharing and clothing rental services – figured out how to make it work for surplus products with pay-as-you-go and subscription models transforming the way we freshen up our homes, change our tires, wash our clothes and even produce products.

None of these changes would have been successful without significant design effort: to help users adopt these new experiences and to de-risk the model before implementing it at scale.

Changing your business model is not a simple task. The consequences of making a mistake can be serious, which is why a design-driven approach is so appealing. Here are five key dimensions of integrating design processes and thinking to drive results:

  • R&D and Design: Traditionally, design teams develop a product according to specifications or from a specification. In a circular model, they develop an ecosystem of which the product is part. A circular ecosystem includes production and distribution, purchase (or rental) and use, as well as everything that comes after: reuse, resale, refurbishment or disassembly and recovery. Design skills and tools like empathy, journey mapping, and iterative prototyping are still relevant, but teams need to apply them at the system level.
  • Sustainable Materials Sourcing: Choosing recycled or recyclable materials is an obvious step but far from being the only solution. If you’re looking to go circular, designers and materials experts might rethink the product itself, as well as how it’s packaged and shipped. This can be an alternative model (such as a sustainable container + GC refill), packaging integrated into the product itself (zero waste) or a product redesign that takes advantage of advances in technology materials.
  • Circular business models: How a product is designed partly dictates how it is produced. For example, when power switches to renewables and transportation goes electric, a vehicle’s main life cycle emissions shift from its use phase to its production. To further reduce emissions, designers can help by creating circular business models that reduce the need to manufacture new products with new materials. To achieve a circular business model, they must design for longevity, refurbishment or recovery. It will take engineers, materials experts and designers working together to make progress.
  • Distribution and provision of access: Smarter distribution models can reduce the carbon footprint of freight transportation, but it’s even more efficient to design and test new business models, as in some of the resale or service examples above. Designers have long known that “people don’t want lamps, they want light,” and this perspective has a role to play in rethinking the value that companies provide and customers are willing to pay.
  • Use and reuse: Reusing and repairing are user experiences, just as much as buying and using. For consumers to adopt these behaviors, they must be designed to be easy, accessible and rewarding. We already have a large toolbox to encourage users to adopt new behaviors. To move away from the disposable, we will also need to apply it to the final phase of a product’s use cycle.

Improvements in each of these dimensions can make a company’s offerings more sustainable. But, a truly circular business model depends on treating them holistically. Any design-focused change at any point in the process impacts the model as a whole, which will likely require new features to be developed in addition to incentivizing users to adopt a new offering. Therefore, leading designers see circularity as a whole system design challenge.

Organizations with integrated design teams are used to prototyping and refining products and services, as well as rethinking how teams and businesses are structured to meet new challenges and seize new opportunities. But you typically wouldn’t prototype a single component of a product or a single moment in a service journey – the insights you get are only useful if put into context. The same goes for new business models. The lack of holistic thinking is one of the reasons why industries have been stuck in linear business models so far; it is only by rethinking at the level of the system that we are likely to unblock ourselves. Which means that, to implement a more circular model, a company must apply design talent and design thinking to their entire system, from start to finish… or, for a circular model, from start to finish. the end to the beginning.