Introducing Circular Economy version 2

by Janus Boye

Going electric isn’t enough - one of the memorable one-liners from Nick Gonios, who joined our conversation from Sydney, Australia

Material extraction and the subsequent production of those materials into products is one of the leading causes of climate change, and product manufacturers are under increasing pressure to reduce this impact and close the loop on product manufacturing.

At circulist, founder & CEO Nick Gonios, is leading a mission driven venture and building a tomorrow where products are made to be used rather than thrown away. Where circular design and intelligent ecosystems will enable us to reuse and recycle natural resources, and where products can be good for people and the planet.

Nick is based in Sydney, Australia and focused on the current wicked problem of overconsumption and growing e-waste and systemic challenges. In a recent member call, Nick introduced us to Circular Economy version 2 which better drives positive impact.

Below are my notes from the call and towards the end, you can find the slides and the recording.

From agricultural, to industrial and onwards to sustainable

A new paradigm is forming, but before you think that this is just another post embracing cliches with added tech hype, please do give it another shot. As you know, that’s not the kind of conversations we have.

Before we really kicked off with Nick, he mentioned that Sydney has seen unprecedented rain in the recent weeks. Flooding and evacuations haven’t received as much coverage around the world due to other global events. It reminded me how the Australian bushfires in early 2020 were seen as a defining event for both climate crisis and the year, only for something else to distract us.

Let’s just say: The climate crisis is having a big impact and that’s really what’s driving Nick.

Nick opened his slides with 3 facts to get us going:

  • By 2050, humanity will need 3 times the earth’s ecologic resources to continue to consume as we currently do. That’s not sustainable.

  • By 2050, to mitigate earth’s climate crisis, 50% would be achieved by electrifying 100% of the world’s energy needs with renewables. In other words: Going electric isn’t enough

  • Shifting to a subscription based business model has proven to be 6 times more valuable for tech companies than traditional models. Might this offer some of the solution?

He then showed the slide below on how the industrial paradigm is declining and a new one is forming.

Outlining different key ecosystem elements in the different eras: Agricultural, industrial and sustainable

We are running out of resources, yet we continue to create more waste

Nick then turned to productivity. A key topic in recent years with remote working, but as he said productivity has been declining for a while:

GDP is slowing around the world because productivity has been declining for the last 25 years.

Even with increased automation, there’s still plenty of bullshit jobs around as he said. Are we on the right path to deliver a healthy planet with happy and harmonious people?

He then pointed to increased consumerism and the thriving advertising industry (think: Mad Men) as main drivers for the current oversupply of products, which subsequently harms the people and our environment.

The reality is that convenience wins. As Nick phrased it, the enemy is:

Convenience of buying products for the best price

What we instead need to realise - as Nick called the promised land

All people want is to have a reliable product to complete a task that is not harmful to the planet.

To complete a task, people shouldn’t have to buy, use, and dispose products.

Circular economy version 1 has some improvements

What’s holding us back? A big problem at the moment is in manufacturing, where products are produced and sold. Or to be blunt: Polluting the world for financial short term profits only.

Circular economy in version 1 focuses on solving for waste, recycling, right to repair and extended product life.

To illustrate how that works, Nick brought the example of the iPhone journey as shown on the slide below:

The iPhone is famously designed in Cupertino, manufactured at Foxconn in China, then shipped around the world to be sold in stores and online. They even have a disassemply robot, but at the end of the day, the several parts can’t be re-used or at least only used in this same circle. It’s a black box.

It's a famous closed loop: A manufacturing process that reuses material waste generated from a production process as part of another production process, as well as reusing recycled finished products in the production of new ones.

The case study is quite interesting and Apple has made bold new promises to reach a “net-zero” carbon emission by 2030. You can find it further documented on the circulist blog: How Apple Is Transforming Into a Closed Loop Product-As-A-Service Provider.

Another example: Nike has been a leader in the usage of recycled polyester in many of its products, reducing the amount of waste that ends in landfills by approximately 51 million pounds or 10-Olympic style pools worth of discarded materials.

Circular economy version 2 reimagines the operating model

To quote Nick:

“We are at the beginning of a long circular economy-transition.”

For circular economy v2 more action is required to design and build a future economy and society where products are designed differently. For use, as-a-service offering, recycled, remaded, re-used and eliminating waste via 100% sustainable energy.

Momentum is growing with new scaleup players arriving. Fairphone, makers of the world’s most sustainable smartphone is just one example. As they call it: The phone that cares for people and planet. Fairphone actually dates back to 2013 and as of February 2022, Fairphone has sold around 400,000 devices.

Besides start-ups, large incumbents are transforming their business to reimagine their operating model.

At circulist they have developed a model with 5 levels of circulist advancement, which is illustrated with the model below:

Before we get to 100% circular systems eliminating waste and pollution, manufacturing will have to progress through five levels of technological advancement, organisation, product dematerialisation and build world advancements.

It will take decades, not years to get there according to Nick, but as with any journey: It starts with the first step.

Learn more about circular economy and sustainability

To learn more about the approach from circulist, you can download the circulist Imperative White Paper.

There are also some great podcasts already on the circulist Quest podcast and you can also browse the slides (PDF) from the call.

This call was targeted to our product management community, but relevant for a broader audience. If you are interested in continuing the conversation, do consider joining our peer groups.

We’ve also written more about sustainability. Here’s just a few posts:

Finally, you can also lean back and enjoy the entire 32-minute video from the call.