So, how can businesses today take bigger, bolder, more impactful steps towards the circular economy? We found that true impact and scale will only occur when companies deploy circular business models and disruptive Fourth Industrial Revolution technologies in a holistic manner across industry value chains to capture new growth and innovation opportunities, while also strengthening their core business. We refer to this as a “wise pivot.”
If industries embrace the wise pivot for circularity, it can yield astounding results. For example, analysis by Accenture has found that the fast-moving consumer goods industry can capture up to $110 billion by 2030 by optimizing its packaging for circularity. Investing in cheaper and newer ways to produce, manage and transmit renewable sources of electricity, meanwhile, could help the electricity industry capture up to $250 billion by 2030.
Individual companies can also achieve substantial results by embracing the pivot. Our experience has proven that utilizing circular business models as a framework for success is a good place to start. For instance, one avenue by which Dutch multinational Philips has generated significant value for their business is through embracing the Product as a Service model. One example is Lumify, a subscription service which provides customers access to ultrasound transducers, apps and an online ecosystem. The revenue generated from such green and circular initiatives constituted 64% and 12% of the company’s sales respectively in 2016, demonstrating the value of moving towards circularity.
Moreover, when you couple the business models with disruptive Fourth Industrial Revolution technologies – across the digital, physical and biological realms – the impact is accelerated, especially when these technologies are used in combination.
Digital + Digital: Winnow, a technology company in the hospitality sector, is helping its customers tackle the massive issue of food waste by deploying a combination of Fourth Industrial Revolution technologies. Utilizing artificial intelligence tools and accurate analytics, Winnow claims it can help chefs cut food waste in half, reduce food costs by 3%-8%, and achieve an increase in return on investment (ROI) of up to 10 times in year one
Digital + Biological: Indoor farming leader AeroFarms’ use of aeroponics and predictive analytics reduces resource consumption and waste generation, while increasing quality output. Co-founder and CEO David Rosenberg cites his firm’s combined focus on circularity and innovative technology as one of the key attractions for top talent – as a company of less than 100 employees, they receive over 2,000 job applications every month.
Digital + Physical + Biological: In tire company Goodyear’s new concept tire, Oxygene, moss grows within the sidewall of the tire by absorbing moisture from the road; the moss improves traction while helping to remove carbon dioxide from the air. For a city about the size of Paris, with 2.5 million vehicles, these tires could potentially extract 40,000 tons of carbon dioxide every year. Moreover, the energy harvested from the moss’ photosynthesis could then power electronic sensors in the tire that, through internet of things (IoT) technology, would be able to exchange data with other vehicles as well as with the transportation infrastructure, thus enabling applications for smart mobility. The disruptive 4IR technologies enabling the circular economy The disruptive 4IR technologies enabling the circular economy