Ensuring that Circular Economy is designed for all.
Amazing concept, wrong foundations
The concept of Circular Economy in itself is mind-blowing as it imitates natural cycles through feedback loops at several levels of our current extraction, production and consumption chains. Mind-blowing in the multidimensional benefits that could lies under, creating abundance instead of scarcity. The main objective of such a framework being the decoupling of our resource intakes versus our needs for economic growth. Through carefully designing our products and services, through focusing on nurturing and caring for all the elements that we invented for the right functioning of our economy, and with the understanding that all these elements and sub-parts thereof have a specific role to play within it, this set of principles and concepts intend to regenerate our economy by a sound comprehension and alignment with environmental patterns - and not to limit ourselves to them, i.e. if we align ourselves well with these configurations, there is barely no limit to endless innovation! -.
According to Accenture - under an advanced scenario - we can close the expected resource gap of 40 billion tons (optimist forecast), which are needed by our economies to keep flourishing, by 2050. What does it really tells us? Well, it means that we have the opportunity to cautiously design the upcoming decade in such a way that, instead of diminishing the value of the assets which we depend on - with short-termism decisions - we could prepare for abundance of food, non-food nutrients and technical goods, to fulfill all our needs. This also means that, in the current economic framework, growing economies will not have enough resource access - or at a cheap enough costs - to expand as stagnating economies previously did. And we are talking here about the biggest part of the world population...
Aligning our economic world with natural cycles seems to be the right (and wise) thing to do, isn't it? But are we ready to implement such new framework? Do we understand well-enough the in-depth changes that we will have to provoke? Do we have the proper mindset to set this up? Is climate change and our consumption patterns just about changing business models or would we need to change other structural dimensions? Are we aiming in the same direction, i.e. a better life for all, or do we transpose our current model into a more circular one without genuine systemic changes? And, do we want it, this better life for all? Let's assume we do.
If so, to achieve this vision, we might have to think beyond just a circular economy as it is designed today: with the same corporate powerful actors, in the same financial paradigm, replicating current human interactions and power relation. In a sea of challenges, building a circular economy with "profit maximization" as - again - the same narrow-minded corporate objective and, without putting the people at its core first, might not deliver the intended gigantesque intentions that we say it will have on our planet.
The missing two dimensions
When looking at natural cycles we see the optimization in the way elements interact between one another and how energies are used. We also see how flows are expanding and moving in a distributed manner. When we talk circularity today, we do not see much of a plan for transparent distributed power, and we are still in this three month decision-based short-termism with the same "how much is enough" monetary goals that has driven us into the 02008 crisis.
Yet again we are missing the bigger picture. Yet again we believe we will be financially successful without laying down a plan for potential social risks of such "maximization" search. Have we transported us deep enough within the system thinking approach of this model? It is complex, it is multi-layered, but it could be worth to pause and lay the ground for the right foundations.
The question we ask today is whether a Circular Economy is 'bold' enough in its current form and content? Will it deliver on the vision without ensuring well-being for all of us, notwithstanding of cultures, geographies, ethnicities or standard of living? Can we carry on with the current paradigm, i.e. money-as-our-reference-for-success-only, without agreeing that decisions should be taken based on a much wider concept, in a system-based economy?
We currently see two missing dimensions in the way circular economy is designed today:
• optimization of all resources, including us humans, i.e. integrating the end of inequality, unemployment and financial exclusion as part of this next collaborative capitalism model to ensure that we see poverty-as-externality of our current linear model ;
• distributed powers, i.e. ensuring that 'success' encompasses all values that are created in a world of abundance where each decision has multiple ripple effects, thus, if rewarded well, that could be benefiting us all in symbiosis.
How about aiming at a Circular Economy 2.0 that also includes these two additional dimensions?
In 2013 The Economist magazine asked the question of poverty as being our common challenge as the "world's next great leap forward", i.e. ending it. And why not? But is the current linear economy helping us achieving this ambition? Aren't we reaching the limits of a model that finds it hard to absorb the last 1 billion people living on $1.25 a day or less because it was not designed to do so? Where will the next growth engine be to improve people's well-being?
According to the United Nations Millennium Development Goals there have been many positive improvements on reducing extreme poverty, and improving education, access to basic needs as well as with the mortality ratio. Yet, one should not foul ourselves, as with a growing population, these issues are permanently challenged and the work to be done to close these gaps is huge. The United Nations just launched the Sustainability Development Goals with new promising goals, and for the first time, taking our planetary boundaries into considerations, i.e. linking social & societal goals with environmental and economic ones. It is time to move on from the triple-bottom line thinking as we keep trying to separate these three notions from one another, while they are fully embedded. It's the bottom-line, full stop.
In the past three years, the concept of a Circular Economy, made visible by The Ellen MacArthur Foundation, helped us realize that waste should not and/or does not really exist. Due to our misunderstanding of system complexity, we did not set-up our industrial economy accurately. By designing waste out, we intend to fix our current patterns.
We are now seeing waste-as-unused-resources which is our recent "great leap forward". But how about taking this opportunity to also see poverty as the result of a wrongly designed system? How about claiming that - like waste - poverty is an externality of our current model? Like waste, shouldn't it be designed out too?
In our linear system the waste cycle is based on the take-make-dispose model that has created environmental externalities such as air pollution, waste, toxicity, and overall climate change disruption. But these externalities also exist at societal levels in our unequal-unable-inaccessible model: inequality, unemployment, fictitious capital (debt) creating poverty so that wealth could be built for others, people living with disability seen as less 'performing', and so on.
The unequal-unable-inaccessible model is where most causes of poverty lies:
• Inequality of access in an economy where barriers to entry are very high: ownership, obsolescence, price-as-sole-reference, scarcity, and so on, instead of seeing customers everywhere ;
• Inability of fostering in an economy where our financial system has been developed by the very few for the very few without seeing the bigger picture of the market potential and abundance thereof ;
• Inaccessibility to performance in an economy that reduced the notion of work as financing challenges that have been created by that very same economy, where, as an alternative, performance could be translated into replenishment ;
You also might have asked yourself what is the true cost of a waste economy. How about also asking yourself, what is the true cost of an unequal one? Or is it that you don't want to know: too complex, too inextricable, "not my problem, let the United Nations and governments sort this out". Well, no. Not good enough. Should you claim to be this amazing innovative Chief Executive Officer (CEO), this is part of your Bottom-Line!
When you first heard of waste being non-existent in nature, it might have taken you some time to understand what this really means. The same reasoning should apply with poverty: why should it exist when there is no such concept elsewhere?
Today, we have understood that waste is in fact endlessly reusable nutrients. Where waste are now nutrients, so-called poor people could be seen as decent humans and appealing customers, why not?
While a 'waste economy' is no longer affordable, poverty is the highest social license risk many companies face across the globe in a world of seven billion inhabitants. Investing in people's issues might also lead sound business decisions securing resilience over the long-term.
To break the cycle, we should use the same circular logic as we do for waste eradication: by turning upside-down our current take-make-dispose model, we are now innovating around the "don't take anymore, re-make, and won't dispose of", so to say. So how about moving from the current poverty cycle of the three "in's": inequality, inability, and inaccessibility into a virtuous circle that would seek to include the rest of our customers with the aim of also lowering the barriers to entry?
• How about claiming that "equality makes business sense"?
• How about saying that "developing financial ability is a priority"?
• How about ensuring that "granting access to work is innovative"?
Addressing the issue of poverty is no longer the matter of public and international organisations. It is everybody's business!
Poverty has to be embedded when re-designing products and services, in such a way that we accelerate its disappearance. The late C.K. Prahalad told us very clearly that businesses have so far missed the largest market of all: the Base Of the Pyramid (BOP) where four billion potential customers, with a purchasing power parity (PPP) of $1 to $1.5 trillion dollars, have not been targeted yet. Prahalad's thinking was in a product-based linear economy of lowering production costs to grant access. Imagine the same potential in a versatile service-based model? If you compare the BOP market potential to the other two, the 80 million living with a PPP above $20,000, and the other group of 1.5 billion people living with a PPP in-between the precedent two groups, the BOP market could become, by far, the most attractive one in an ecosystem thinking approach...
Collaborating to survive, as businesses, as individuals
There is a last factor to consider when talking about poverty in a linear economy. At a macro level, we live in cyclical periods where changes occur over centuries and more. We are currently moving into the so-called "Conservation Phase" where resources are more difficult to access, being locked-up, and where things will change slowly. Humans will either fight for them, or develop an advanced collaborative way of accessing them. This new form of "Collaborativism" might be preferred for our survival. It also means that we might become more careful of one another, not so much out of care, but rather in our common interest of maintaining a very interdependent survival system balanced. It will no longer be a question of "the haves" versus "the have not's" but rather, about creating an economy of the 'being' away from ownership & individualism.
People at its core is Critical for Impact
If we want a Circular Economy designed to address the needs of all of us, we should ensure that services are accessible, affordable and generating bottom-line benefits. Hence the people need to be at its circular core, not at its periphery.
Additional principles to the current model might be added to ensure a genuine impact of this promising model:
1. "Equality makes business sense" - where services would be designed to address the needs of all (and not corporate needs that are pushed to consumers). Corporate and/or government added-value would be measured in number of integrated years, i.e. ensuring that customers and citizens be kept the longest time possible in our economic system. This new definition of loyalty or satisfaction would really be based on the customers', not corporate satisfaction as it is the case today. This new paradigm would make sense in a service economy where profits are made over the long-term. A service economy would also be much more versatile with the aim of nurturing to fulfil needs. This is clearly a new business approach that could benefit us all since it will be made to reduce life shocks. A customer- and citizen-driven model will have a positive impact on designing inequality out;
2. "Developing financial ability is a priority" - where one can access more with less as even with a low income, a descent life can still be possible. In a service-based world where systems externalities are embedded keeping people in the economy becomes a priority. Diversified accesses to means of exchanges are preferred and would unleash huge self-potential for financial abundance: finance-as-you-access, bartering-as-you-need or alternative means of exchange that will flourish away from a standardised monetary format. The higher the diversity of exchange options the better for multiplying opportunities. This would create less dependency on financial credit since we would access-as-we-need. In "need" we understand benefits as in not putting a customer at risk of being trapped in a debt cycle. Corporate and governmental value creation should be measured financial "ability-to-benefit" people to flourish - instead of the current linear "inability-to-pay" mind-set. By designing services according from people's needs, this could help us designing financial exclusion out;
3. "Granting access to work is innovative"- where "career success" is translated into measuring one's "activity-for-purpose" according to its regenerative level. An era where new forms of collaboration become the norm, interdependencies our mantra, gratifications would be recognised by our abilities to create abundance of regenerative activities. Work would be redefined as its main function would be to rebuild our capital and replenish our stocks. Maintaining value of our manufactured capital, caring for our soils, internalising what is no longer desired, centralising manpower as an unlimited access to energy for maintenance of our system's stocks. Work for a purpose could become the norm since we would value replenishment over consume-and-throw.
People's issues cannot be decoupled from environmental issues that cannot be decoupled from economic ones that needs fit customers to ensure a comprehensive return on all investments. Today we have the opportunity to re-design our economy addressing all layers of our social and societal needs. Services are versatile and can address all of them in endless ways.
Let us be bold and truly innovate into a Circular Economy 2.0 that is designed for all of us with forward thinking benefiting ideas!