Mastering the Circular Economy

A Practical Approach to the Circular Business Model Transformation

Ed Weenk, Rozanne Henzen

• Publisher: Kogan Page
• Year: 2021
• ISBN:
  9781398602762
• Edition: 1
• Topic: Business
• Subtopic: Sustainability in Business
• Index: Business

Global consumption of raw materials currently goes beyond the earth's regenerative capacity, but the circular economy offers a more sustainable model which also provides new business opportunities. Mastering the Circular Economy is an introduction to circularity from a business and value chain management perspective. With many reflections and exercises throughout, the book draws a direct link between relevant recent theory and practice and offers students and practitioners a deeper understanding of the topic. It looks at both the macro and micro context of the circular economy, from the government and societal view to the impact of new business models in an individual company. Starting from the corporate imperative of moving from linear to circular business models, Mastering the Circular Economy covers the associated opportunities and challenges for organizations, from regulation and risk to value chain collaboration, reverse logistics and product quality. Part two of the book helps students to pull together everything they've learned and see how the concepts play out in the real world by guiding them through application in the online business simulation game The Blue Connection (free basic access is included with the book). Readers are continuously asked to reflect on the choices they would make in different roles to demonstrate a full understanding of the strategic and operational implications of the circular economy.

Preface: The corporate circular imperative: narrative and numbers (1)

Many students learn best when they are actively doing things and not only studying ideas in the abstract: when their curiosity is aroused, when they are asking questions, discovering new ideas, and feeling for themselves the excitement of these disciplines.

KEN ROBINSON AND LOU ARONICA, 2015

Circularity is not just about recycling. Circularity is not just about fighting climate change. Circularity is also not just the latest hype in sustainable business. In fact, circularity isn’t even new.

Check out any major city in Africa, India or South America to find large clusters of car repair shops, household appliance repair shops, clothing repair shops and so on. In Europe or the United States, for most people circularity arguably was quite a normal element of daily life until at least the 1950s. A world in which things which were broken, from household appliances to tools to clothing, would be repaired, mainly out of economic necessity – there simply was no money to buy something new.

In Europe and the United States, with the economies booming from the 1960s onwards, consumerism has entered over time as the modus vivendi and people have gotten used to throwing things away to be replaced by newer or more fashionable things. At best these items are replaced at the end of their physical lifecycle, but in many cases it is long before, and all too often even before using them at all. If other countries that are trailing in the development curve follow similar development patterns, possibly similar behaviour will be observed there in the future.¹ As much research demonstrates, we are already moving fast towards hitting resource boundaries on the planet. Thus, the economic necessity is maybe no longer the main issue; rather, resource necessity (read: scarcity) may become the issue.

As the saying goes, necessity is the mother of invention and it can be observed that more and more people, governmental institutions and companies are beginning to see that action is required and that new ways of looking and acting are needed. In short, circularity is gaining relevance, and fast.

Circularity is a highly complex, multi-faceted subject, ranging from product design to reverse logistics to fiscal regulations to international governmental policies to company ecosystems, and more. In addition, the field of circularity is developing rapidly, in terms of academic research as well as new legislation and the proliferation of circular startups.

At the same time, the topic is approached from very different angles. Many people involved in circularity have a strong ecological or even ideological drive, emphasizing that action is needed in order to save the planet from disaster and even our species from extinction. Others approach circularity from a much more technical point of view, not necessarily driven by sustainability motives at all, looking for example at how new materials or new technologies can be used. We believe that somehow, when speaking about circularity, all of these dimensions, angles and voices need to be heard in order to get a complete picture.

Having said that, however, what does this mean for individual companies? Why should a company at their micro level be involved in helping to solve macro issues like climate change? Or invest heavily in more durable product designs and/or materials, at the risk of becoming more expensive than their competitors? In other words, what’s the Corporate Circular Imperative? Why should a company care? That’s one of the central questions we raise in this book, with narrative and numbers as recurring key themes.²

And we want to do that in the spirit of the quote at the beginning of this Preface: to create a textbook with a clear and strong focus on practical application by learners. Albert Einstein allegedly used to say that instead of focusing on teaching and explaining theories and concepts, he preferred to put emphasis on providing the conditions in which students could practise and learn. In allusion to Einstein, this book wants to provide a solid basis for learners to practise and learn how to master circularity from a company perspective.

Mastering the Circular Economy is written for people studying such diverse topics as Business, Sustainability, Supply Chain Management and so on. It can be used as part of courses in schools and universities within specialized circularity or sustainability programmes, but also links well to courses within programmes of a more generalist nature, from Bachelor level up to (Executive) MBA. In addition, the book is written in such a way that it is also suitable for use by professionals, either for individual self-study or for in-company trainings.

Integrated learning approach

In the same spirit as the previous textbook, Mastering the Supply Chain, from the same series, this book is proposing an integrated learning approach.

Figure 0.1 Integrated learning approach

Figure 0.1 details

The details of the textbox are as follows:

• Meaningful and relevant: Needs to appeal to learner’s perspective: business, society, citizenship
• For now and the future: Not only the basics, but link to future changes & challenges
• 'Feel' the complexity!: Everything looks simple, until you’re in the driving seat
• Knowledge & skills: Not only 'know the concepts', but also 'able to decide' (trade-offs)
• Individual and team activities: Individual view versus team & cross-functional alignment
• Engaging and fun: Motivate: through the content, but also through the methodology (‘gamification’).

Specifically, there are three main desires behind the topics chosen for the book and the strong emphasis on practical application:

1. The desire to put the increasing need for developing 21st-century skills such as critical thinking, complex problem solving and coordinating with others into the practical context of circularity.
2. The desire to actively address the recurring theme of simple but not easy, i.e. to provide a way to make learners feel first-hand the many complexities of actually applying the often relatively straightforward concepts and frameworks at play in circularity.
3. The desire to combine the multiple perspectives on circularity into one coherent and holistic view on the topic, focusing in particular on the company perspective, the leadership perspective and perspective beyond the company frontiers.

One element related to those, however, deserves specific attention here. Since we’re dealing with practical skills, experiential learning seems to be a very appropriate way of developing and training such skills. We’d like to particularly reference the work of David Kolb, whose book Experiential Learning is a classic on the topic. Among other important contributions, such as for example the concept of individual learning styles, Kolb is well known for what is called the learning cycle.

Figure 0.2 The learning cycle

SOURCE after McLeod (2017), based on Kolb (2015)

Figure 0.2 details

The details of the learning cycle are as follows:

• Concrete experience: feel; undergo the experience
• Reflective Observation: watch; observe what happened
• Abstract Conceptualization: think; which are the cause-effect relationships?
• Active Experimentation: do; incorporate findings in new decisions.

The main idea behind the learning cycle is that ‘knowledge results from the combination of grasping and transforming experience. Grasping experience refers to the process of taking in information, and transforming experience is how individuals interpret and act on that information. […] This process is portrayed as an idealized learning cycle or spiral where the learner “touches all the bases”.’³

In experiential learning, the focus is on going through a first-hand experience, which allows for reflection on what happened and why, leading to forming a conceptual view on the situation, potentially reinforced by existing theories and/or frameworks. This combination will then be the basis for an improved view on the situation, which can then be applied in the next experience, either in class or other study environment, or directly in a real-world situation. In the book we will use a business simulation game called The Blue Connection as an important tool for facilitating this experiential learning.

The multiple perspectives on circularity

Circularity has many faces and covers a wide array of activities as far as scope is concerned. But it also has very distinct dimensions, which are very different in nature. Even if we want to focus on what circularity can mean at the (micro) company level, there are still many aspects to be addressed.

First, we need to define what circularity means from the ‘company perspective’. Why would a company engage in becoming more circular, i.e. how does it match with concepts like strategy and purpose? And what does becoming circular mean at the company level? What are the alternatives and what are their implications for the goods flows that ...