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 be hidden, where abundance could take the lead over scarcity of resources
such as water, food, fossil fuels and other precious metals that one needs in
our societies today. The
main objective of such a framework being the decoupling of our resource intakes
versus our thirst for constant economic growth - as returns always need to be
higher than the original investment -. 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 - such as changing our ways to
consume, to travel, to work, to earn a living to name a few - 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 (a zero placed before
the year helps us project longer-term according to John Elkington) 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 - such as
severe income disparity, chronic labour market imbalance, water supply crisis,
among many others - 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 - access to resources
to keep our standards of living in a low carbon economy - without ensuring
well-being for all of us, notwithstanding of cultures, geographies, ethnicity
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 at least two missing dimensions in the way circular economy is
designed today:
- optimization of all
resources, including us humans - considered as endless renewable
energy in an economy where we will have to maintain the value of goods*
(Walter R. Stahel: "The Performance Economy"*) 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.
Both are
seeing value in human-as-a-resource, where we could maintain the value of goods
and material at all-time high. While – on the other end – we would account for
the many other values we produce – not only the monetary services, but also any
activities considered as being regenerative of our economy, our environment or
our social/societal challenges. They should all be rewarded at the same level
as monetary transactions, in different shapes or forms (bartering, exchange of
services, new currencies, etc.). And this, as long as the golden rule applies:
the total value of our environment – i.e. the biosphere we depend on – is much
higher than the total value of all human beings, where the latter would play a
continuous role of growing the biosphere value so they can grow themselves. This
rule is the basis of our future definition of success.
How about
aiming at a Circular Economy 2.0* that also includes these two additional
dimensions?
Ending Poverty
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?
"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."
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
fool 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 realise 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.
"Designing Poverty out sounds less appealing that Waste. Yet,
within a ‘bottom-line’ thinking it could generate business values"
The unequal-unable-inaccessible model is where most
causes of poverty lies:
- Inequality of economic
access where current barriers to entry to our global
markets are very high: ownership of goods, obsolescence of products,
price-as-sole-reference for the "TruValue" of anything we
create, scarcity of prime resources, and so on, instead of seeing
customers everywhere;
- Inability of thriving 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
potentials and abundance of other regenerative values to be accounted for
;
- Inaccessibility to human performance in an economy that has reduced the notion of labor to a very narrow and non-system thinking approach, where, as an alternative, manpower as a whole could be seen as the foundation of future ways to replenish our model ;
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!
"If you think that tackling poverty is not an appealing
business priority, think again!"
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, all of us could be seen as decent humans and appealing customers
including the less fortunate, why not?
"The main objective being to design poverty out together with
waste by using the same circular logic!"
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 tailored financial capacity is a priority”?
- How about ensuring that
“granting access to new forms of manpower is innovative”?
Addressing
the issue of poverty is no longer the matter of public and international
organisations. It is everybody’s business!
The
eradication of 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
balancing 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 materialistic goals and individualistic
behavior.
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, we, 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 economic barriers to entry can be lowered thanks to services designed to
address the needs of all via a fairer and more equal access to market.
Corporate and/or government added-value would be measured according to the numbers
of years they have managed to integrate new customers into our economies, i.e.
ensuring that customers and citizens - who find it hard to enter our current
product-owned system - be kept the longest time possible in our economy and
grow with it over the long haul. 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 fulfill 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 to entry out;
2. “Developing tailored financial capacity is a priority” -
where one can access more with less as even with a low income, a decent life
can still be possible in a versatile pay-as-you-grow service model away from
the current pay-prior-to-own product-based one we have today. In a
collaborative- and service-based framework where systems externalities are
embedded attracting new breed of customers and keeping them the longest way
possible as loyal clients becomes a priority. Diversified 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 standardized 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 could therefore be measured as a financial ratio that would
calculate people's “ability-to-benefit-from-the-economy” i.e. ability to
financially access our economy, stay within it and grow in beneficial ways
within it – instead of the current linear approach of driving people into
a life at credit with an “inability-to-pay” mind-set. By designing services
according from people’s pecuniary affordability, this could help us designing financial exclusion out;
3. “Granting access to new forms of manpower (or re-manpower) is
innovative”- where today's work becomes tomorrow’s
“activity-for-purpose” i.e. new forms of manpower aiming at creating new types
of abundance (water, food replenished soil, CO2 integration, etc.) will appear
and be rewarded given their regenerative and beneficial nature. In an economy
where maintaining our many stocks of resources is of urgency, manpower -
according to Professor Walter R. Stahel - is considered a renewable energy and
therefore not be taxed since it becomes a desired resource. We, humans are now
an endless source of energy that will help us maintain our biological and
technical nutrients at their highest value at all times. Innovations would
therefore come from a number of diverse activities and new forms of work that
companies will create. Manpower could flourish exponentially (the re-manpower
effect) by decoupling itself since it would be tax-free and rewarded based on a
stock replenishment ratio. Rewarded purposeful activities could become the norm
since replenishment and value creation would be preferred over the current ones
that generate and externalize a number of environmental, social and economic
issues in an exponential way.
"An economy based on a human-instead-of-machine approach, on
caring-instead-of-having, and on-collaborating-instead-of-hiding could well
benefit poorer countries."
People’s
issues cannot be decoupled from environmental issues that cannot be decoupled
from economic ones. By looking at the bigger picture, one could generate a
highly beneficial return on all investments and choices we will make in the
coming years. 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!
*Also called a Valued Circular Economy where [Poverty=Waste] as
both poverty and waste are considered externalities of our linear economy, both
have to be eradicated by circular thinking.
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