Skip to main content Skip to Footer

LATEST THINKING


Gaining an edge: Growth, innovation and customer value from the circular economy

The circular economy is a departure from linear models, decoupling growth from natural resource consumption.

Overview

The circular economy is a departure from linear models, decoupling growth from natural resource consumption.

For decades, supply chains and products flowed in one direction: from manufacturing to consumption to landfill. In a world with limitless resources, this model worked and served as the foundation for competitiveness and growth.

But in a world with increasingly constrained resources and a host of environmental challenges, supply chains need to work in two directions.

It’s the point of the circular economy, to:

  • Reduce dependencies on scarce natural resources.

  • Allow companies to generate revenue from “waste”

The circular economy boosts competitiveness as companies go for new sources of revenue. How much? $4.5 trillion in the next 15 years.

Download PDFView Infographic[PDF, 954KB]

Key Findings

Circular economy approaches upend existing notions of competitiveness. Consider tire manufacturer Michelin.

The company offers its products as a service. A proposition that fundamentally questions the value and desirability of ownership. Then again, customers have leased cars for decades. Why not the car parts?

What’s more, keeping a product productive by extending its working life adds as much as 20 to 30 times more value than recycling does.

Circular economy business models are an opportunity for companies to fundamentally re-examine what they offer to new and existing customers, questioning long-held attitudes about what value means.

Millennials in particular welcome circular economy practices, and more than half reported being open to sharing models in particular. Circular models offer unprecedented transparency into customer preferences.

How? By extending beyond traditional value chain areas (design, production) into new spaces, getting much more involved in how customers actually use what’s on offer.

Recommendations

The first steps toward boosting competitiveness through circular practices are:

  1. Define your circular model. There a number of ways to cash in on the circular economy—from models that entail sharing resources, to extending products into services.

  2. Analytical edge. Understand precisely the full lifecycle and flow of resources from customer use to disposal.

  3. Put in place new capabilities. Gaining the perfect set-up for new business models will take time. Focus on growing new capabilities to support the transformation.

  4. Finding the right business model. Using analytics to drive insights. Gaining new capabilities. Each makes companies much more agile.

Author


Peter Lacy is the global managing director of Accenture Strategy's Sustainability practice. He has advised many of the world’s leading executives and companies on strategy and sustainability issues, as well as the United Nations, European Union and national governments.

Peter is a fellow at Oxford University. He contributes regularly to publications such as the FT, The Guardian and Fast Company, and he co-chairs the World Economic Forum Young Global Leaders Taskforce on Circular Economy.

He also co-founded the world’s first global Circular Economy Awards. Peter is based in London, UK.