Advocates envisage turning waste into wealth — by addressing the huge underutilization of natural resources. Such economic transformation could give companies the chance to create a competitive advantage, say analysts.
With businesses from consumer goods group Unilever, to Philips, the Dutch conglomerate, and carmaker Renault, embracing the concept of the circular economy, it is little wonder the idea is being floated by the world’s future business leaders.
The circular economy was the key theme of an event hosted by the One Planet MBA, of University of Exeter Business School, in London last month.
“The circular economy is one of the most disruptive forces we will see,” said Peter Lacy, global managing director of Accenture Strategy, adding that it’s a $4 trillion-plus market opportunity for business: “It will define business in the next generation.”
Peter was the keynote speaker of the event, Business Challenges and Developing the Talent to Solve Them, featuring One Planet MBA graduates and representatives, who toasted wine glasses from the 27th floor of 20 Fenchurch Street, known as the “walkie-talkie” building.
He believes MBAs, who may lead organizations, should shift their companies from linear value chains to circular ones. According to the UK’s Carbon Trust, which campaigns for a low-carbon economy, one of the most common approaches is a shift from buying and owning products to leasing or renting the services that the products can provide. Examples include the “lighting as a service” deal struck by Philips with an airport in Amsterdam, but sees the conglomerate retain ownership of all fixtures.
“Business models are key to the success of the circular economy,” Peter said. “....The circular economy is a way to re-orient how we do business, globally.”
It’ all powered by advances in digital technology, which Peter calls the “fourth wave of the industrial revolution”: “The real story is disruptive business models,” he said. One of the most obvious examples is Airbnb, the house-sharing site that has more rooms listed than the world’s top hotel groups but owns none. Airbnb has upended its industry — and has secured a $25 billion valuation.
Such disruptive models are explored in-depth in the One Planet MBA, which has been revamped to focus on how social, environmental and technological disruptors are reshaping the role of the professional manager.
“There’s a recognition that with the digital revolution, things are more fast-moving and dynamic,” said Adam Lusby, leader of a new module that explores emerging business models, adding: “We do touch on disruptive innovation.”
While emerging business models have many executives scrambling to respond for commercial reasons, the One Planet MBA is also promoting “change for good”. Emerging business models should consider more than just profit; their impact on society and the environment is also important.
“We’re very keen to look at business models that can do good, or that can create a better outcome for society and the environment,” said Adam. “...That underpins the whole ethos of the MBA.”
Speaking to BusinessBecause on the fringes of the One Planet MBA’s event, Accenture’s Peter added: “What I like about the One Planet MBA is the transition away from sustainability.”
He believes the circular economy is a “hugely misunderstood concept”: “It’s not about sustainability!”