You can teach a man to fish, but if there are no fish left, then what? In Overfished Ocean Strategy (Berrett-Koehler Publishers, 2014), Nadya Zhexemayeva points out that with resources being depleted and the cost of raw materials rising, businesses need to make resource scarcity—the overfished ocean—their primary strategic consideration, and not just a concern in order to be seen as“green.” Overfished Ocean Strategy offers five essential principles for creating this new business reality. The following excerpt is from Chapter 3, outlining the first principle, which advocates a shift from a linear, throwaway economy to a circular economy that flows full circle.
You can buy this book from the MOTHER EARTH NEWS store: Overfished Ocean Strategy.
We are running out of things to mine and places to trash. Why not
connect the two ends of the global economy and turn the line into a
circle? Useless waste becomes a valuable resource that we can circulate
indefinitely. Abundance follows. From line to circle is the first of five key principles that make the Overfished Ocean Strategy work. It is a fundamental shift in the way you do business—the most important shift needed to survive and thrive in the resource-deprived world.
Principle One: Line to Circle
“We are allowed to be creative. And in being creative, it allows you to do things differently and find ways you haven’t even thought of before. And that type of environment makes it very rewarding, very exciting, to come to work every day.” Surrounded by neatly ordered machinery and glassware that could have come straight out of a high school chemistry class, Jeff Wright, senior chemist at Shaw Industries, looks nothing like the messy creative type. With $4 billion in annual sales and 25,000 employees, his company has nothing in common with the infamous start-up garages known for creative vibes. And the product he is talking about can hardly be called sexy: carpet tile.
For decades, old carpeting ended up at landfills. Approximately four billion tons of it gets wasted each year in the United States alone. Like many of the products we use every day, carpet is heavily petroleum dependent: up to 90 percent of the carpet today is made from synthetic materials, primarily nylon, polypropylene, and polyester.
So from the perspective of the disappearing linear economy, the four billion tons wasted each year are pure gold. Well, pure oil, actually. How can we possibly take that gold and use it again—turning a linear economy into a circular one? How do we move from line to circle?
If you take a conventional synthetic carpet—like the one you probably have under your feet right now—and slice a knife through it, you will notice that it is built in layers. On top are the soft, plush fibers, made in most cases of nylon, and on the bottom is backing, much of which is made of PVC (polyvinyl chloride). PVC, a product widely used in construction and other industries, has been linked to many controversies. For our purposes, however, only one controversy matters: in the production of carpeting, layers attached to PVC cannot be reused again, making such carpet automatically a one-time-use, throwaway product. But behind the scenes of the carpet mainstream, Shaw Industries developed a groundbreaking carpet backing that would change the company history and push the entire industry toward product infinity. And that happened over a decade ago!
The completely recyclable EcoWorx product hit the market in 1999, premiering at NeoCon, the largest interior design show in the United States. The birth of EcoWorx was a collaboration between divisions at Shaw and partnerships with outside companies, such as Dow Chemical.
“In the mid-1980s, when we first entered the carpet tile business, one of the things we wanted to do was to be able to differentiate ourselves, and we saw an opportunity to do so with a backing system.” In our interview video, James Jarrett, director of manufacturing for Commercial Broadloom at Shaw Industries, oozes confidence and firmness through his soft southern accent.
We went into PVC in the early ‘90s, and indeed, within five or six years, we’ve established ourselves as a significant player, and so at that point we were ready to really bring back out some of the ideas around doing something differently, in particular with a thermoplastic type of backing system. We were able to cannibalize parts of some other lines to piece together the EcoWorx line to do the development. And from that point forward, we had the ability to rapidly go through the iterative process of design, trial, and redesign. We spent some long, long months trying to find the right combination of chemistry to make it successful.
The time spent in development was long indeed, but well justified. You see, the traditional PVC products are quite flexible and therefore conform well to the floor. A lot of the products Shaw looked at to replace PVC were very rigid and thus would require a compromise of product quality and performance—a compromise this company was not ready to make. Recyclability and performance were necessary. The result of innovation endurance was the EcoWorx backing system, which is lighter and more flexible than traditional high-performance backing, for easier installation and more efficient shipping—all while being 100 percent recyclable. “From 1999, the initial launch, to 2002, so really three years later, the production of both of those backing systems—PVC and EcoWorx—was identical,” says Jeff Galloway, director of carpet tile operations. “While I thought it would be 10 or 15 percent of my business, it quickly became 50 percent and growing rapidly. In that time period, we had to retrain our workforce; we had to retool a lot of equipment; we spent around $30 million in this facility phasing out old technology and phasing in the new. We see today it was well worth that investment.” Indeed, as of 2013, two-thirds of Fortune 100 companies have EcoWorx products on their floors—among them, Bank of America, Home Depot, Microsoft, and Time Warner.
Steve Bradfield, corporate director for environmental affairs at Eco-Worx, explains the reason for such commercial success: “This was sort of the old-felt need, the holy grail of the carpet tile industry to create a backing that was as good as PVC, and even better than PVC. We did some projections and had a very strong feeling that we could forward-price this at the current market price and take a hit on our profitability during that time, and yet, with an idea that we would swing it the other way very quickly. And that is in fact what happened.”
But the riveting revenues are only one side of the story. On the other side is the costs—where once-wasted carpet tile has now become an infinite raw material. The EcoWorx “circular” economy is as simple as it can get. The old carpet tile is taken in, it’s ground up, and it goes into the air separator, whereby heavy components fall out as backing and light components get separated out as fiber. Aside from recycled carpet tiles, EcoWorx’s backing platform can take in recycled plastic grocery bags and many other similar materials, making this a very robust product.
Naturally, such a simple technology can work only if the collection of used tile is streamlined as well. Jeff Galloway explains:
Our customers are literally begging for sustainable solutions. They are looking for suppliers like Shaw Industries to come up with technology that is mainstream, that is simple to use. So when we sell every single square yard of carpet at this facility, it comes with an environmental guarantee, which is: when you are through with it, no matter where, no matter who, call that number—we’ll come and pick it up at our expense. For most customers, that is a pretty good deal: I don’t have to pay to get it to the landfill; all I have to do is call this number. It is a pretty simple process. From the engineering point of view, it is really exciting to see that process, really neat to think that just within few days of getting a phone call, that old carpet can be made into a new carpet.
Steve Bradfield’s words drive the story home:
It’s a philosophy of abundance and growth. It’s about not being guilty about consumption—if you can create the materials that can stay in perpetual loops. And so, for a businessperson, that is pretty attractive, because it doesn’t talk about all the negative aspects of resource scarcity and depletion; it talks about taking technical nutrients made of oil and keeping them in circulation so that we don’t deplete all of our resources.
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Don’t worry about failure; you only have to be right once. —Drew Houston, Founder and CEO of DropBox
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The concept of the circular economy is not new. Throughout the world, companies similar to Shaw are experimenting with solutions similar to EcoWorx in an effort to develop competencies and frameworks necessary to move from line to circle. Simply put, the circular economy is “generative by design,” as the Ellen MacArthur Foundation puts it: nothing is wasted; everything is going around in a circle.
The foundation, which counts major corporations such as Renault, BT, and Cisco among its founding partners, suggests that this simple idea is worth more than $2 trillion to the global economy—no wonder that executives, designers, and consultants alike are jumping on it. Paul Polman, CEO, Unilever, is among them:
An economy that extracts resources at increasing rates… without consideration for our natural planetary boundaries cannot continue indefinitely. In a world of soon to be nine billion consumers…, this approach will hamper companies and undermine economies. We need a new way of doing business. The concept of a circular economy promises a way out. Here, products do not quickly become waste, but are reused to extract their maximum value before safely and productively returning to the biosphere. Most importantly for business leaders, such an economy can deliver growth.
And it is all built on a solid, well-tested set of ideas.
The Brief History of the Circle
By any account, moving from line to circle is an idea that developed in collaboration spanning decades. As far back as 1966, Kenneth Boulding, one of the most remarkable economists of the 20th century, introduced the idea of circular material flows as a model for the economy in his paper imaginatively titled The Economics of the Coming Spaceship Earth. Two unorthodox architects entered into conversation in the late 1970s working independently but thinking very much alike.
In California, John Lyle, a landscape architecture professor, challenged his graduate students at California State Polytechnic University in Pomona to imagine and design a community that ran all of its daily activities within the limits of available renewable resources without any resource repletion or environmental degradation. This simple challenge grew into the concept of regenerative design, whereby products and services have infinity built in from the blueprint on. Thirty years of Lyle’s work found their home in his 1994 book RegenerativeDesign for Sustainable Development, which went largely unnoticed by the business community.
Meanwhile, on the other side of the planet, at around the same time, Swiss architect Walter Stahel offered a vision of a closed-loop economy and its impact on job creation, economic competitiveness, resource savings, and waste prevention. Stahel referred to this “closed loop” approach as “Cradle to Cradle” (as opposed to the “cradle to grave” reality of the linear economy)—an expression that stuck. Twenty years later, Stahel built upon his idea further with a rather novel idea: what if we were to sell all goods as services? What if we were not selling shoes but rather renting them? That would ensure control over precious resources put into each shoe, as at the end of the rental agreement the worn shoes would come back ready to be reused. Insisting that this was the most efficient strategy of the circular economy, Stahel described the approach in his 2006 book The Performance Economy, illustrating it with hundreds of business examples, but the book didn’t make much of a splash within the business community.
Building on Lyle’s and Stahel’s ideas, German chemist Michael Braungart and American architect William McDonough continued to develop the Cradle to Cradle idea. The result of this collaboration—the 2002 book Cradle to Cradle: Remaking the Way We Make Things—put forth a crucial point: considering the way we make things, one circle is simply not enough. In fact, to transform the line productively, we need two of them.
Imagine the entire flow of products and services we call “industry” as one giant metabolism—where every resource serves as an important nutrient. Some of these nutrients can be processed and recycled (literally!) by nature itself—where nature would take waste at the end of the use and process it into new resources. We call these types of nutrients biodegradable—a term I am sure you are familiar with. Yet human ingenuity produced a number of “nutrients” that nature has a hard time swallowing—it simply does not know what to do with them, requiring hundreds, if not thousands, of years to process them into valuable resources again. For these types of nutrients (remember Shaw’s EcoWorx?), humans need to take care of the circulation—processing products at the end of their life into new products. Braungart and McDonough called these two types of nutrients “biological” and “technical,” whereby Cradle to Cradle design takes the safe and productive processes of nature’s “biological metabolism” as a model for developing a “technical metabolism” flow of industrial materials.
The book—which itself was an example of a “technical” nutrient, as it was made using Durabook technology, whereby the pages are not paper but rather synthetics created from durable, waterproof, and upcyclable plastic resins and inorganic fillers—created quite a stir in industry and academia alike.
And this is when things got interesting.
Ford’s $18 Million Roof
The year was 1917, and Ford Motor Company was flying high. Its groundbreaking Model T was in the ninth year of production, delivering affordable travel to the middle class worldwide. It was time to build a new plant. Eleven years later, the completed Ford River Rouge Complex in Dearborn, Michigan, had become the largest integrated factory in the world.
Nearly a century after, William McDonough signed an agreement with Ford Motor Company to redesign this famous 1,212-acre (490 hectare) Rouge River facility. Among many details of the 1999 proposal, one caused the most hesitation. McDonough proposed to cover the roof of the 1.1-million-square-foot (100,000 square meters) Dearborn truck assembly plant with nothing other than… moss. Well, some trees were involved, too.
Met with resistance and dismissal for being such an unusual decoration, the roof was anything but. McDonough explains:
After lots of discussion and several visits to buildings with green roofs, [Ford’s] Jay Richardson’s skepticism began to give way. The US Environmental Protection Agency was developing new storm water regulations, and Ford had estimated that the conventional technical controls required to comply with the new rules could cost almost $50 million. The natural storm water management system was estimated to cost only $15 million. The math was simple and compelling: the living roof offered millions of dollars in savings, with the landscape thrown in for free. Kind of gets your attention.
The result? With a final price tag of $18 million, the installed lightweight roof delivered savings of approximately $30 million, compared with the cost of conventional storm water management systems. Over one million square feet of roof got covered with sedum—a low-growing plant—enough to clean up to 20 billion gallons (or about 75 billion liters) of rainwater annually with zero energy, compared with a heavy system requiring its own power supply. Improved biodiversity and landscape in a heavily degraded industrial environment was a welcome bonus, and the roof became a disruptive idea demonstrating the line-to-circle principle at work: feeding a healthy nutrient (clean water) back to the soil in the most natural way possible, while at the same time preventing flooding by playing a retention role. No wonder the New York Times called it an economic necessity, echoing the words of Bill Ford, then Ford’s chief, spoken at the completion of the roof in 2002: “This is not environmental philanthropy. It is sound business.”
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Waste equals food, whether it’s food for the earth or for a closed industrial cycle We manufacture products that go from cradle to grave We want to manufacture them from cradle to cradle. —William McDonough, architect and author
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Give Me More
Throughout the world, disruptions like EcoWorx’s carpet tile backing and Ford’s River Rouge living roof make the transition from line to circle a bit smoother for the rest of us. Paving the way for a whole new reality, the innovations emerge by the hundreds, solving emergent problems and ironing out strategic wrinkles. The 2010 book The Blue Economy: 10 Years, 100 Innovations, 100 Million Jobs, by Gunter Pauli, offers 100 such solutions to choose from. The second edition of The Performance Economy, by Walter Stahel, offers a collection of 300 solutions. The Circular Economy 100 and other efforts of the Ellen MacArthur Foundation bring together companies, innovators, and regions to accelerate the transition to a circular economy. The foundation shares a growing list of innovations via its 2012 and 2013 Towards the Circular Economy reports, collection of online cases, and other publications. GameStop, the world’s largest multichannel video game retailer, is among them.
“If you want to understand GameStop, you must understand refurbishment.” This take on corporate identity by the GameStop CEO, Paul Raines, can hardly be called inspirational, but a 182,000-square-foot (around 16,900 square meters) facility filled with workers polishing discs; putting together video game consoles; and scrupulously testing pre-owned iPads, iPhones, iPods, and Android tablets, speaks louder than any words. A 20-employee operation in 2000, 12 years later the Refurbishment Operations Center is a $7 million facility with more than 1,100 professionals working in various functions, such as the giant testing unit, where iPads, iPods, and iPhones are checked for basic functionality of the buttons, the screen, the microphone, the headphone jack, the charging port, and software features. One such station rolls out one tested product every 42 seconds.
Originally a “normal” software and video game retailer, GameStop quickly saw an opportunity in recircling the products that were at the end of their life. As the customers began to move to new electronics more and more quickly, abandoning fully functional products before the end of their life, few companies provided an easy, attractive process for turning wasted electronics into value for consumers. Remember all those old cell phones no longer in use? GameStop took them on, along with a growing list of products in a wide range of electronics. Take Android tablets, for example—the company now accepts 42 different ones for trade-in credit and plans to refurbish and sell all of them before long, as it already sells new Android devices at 1,600 stores. “Why would a retailer have a factory? This was a big bet on the future,” says Raines. This bet brought along significant know-how challenges: for every product accepted into the refurbishing cycle, GameStop had to figure out how to reverse-engineer it in the most cost-effective way, without any guidance from the manufacturing companies. The result: a growing set of competencies for a new world. Today, GameStop has a strong skill set around buying, selling and trading. “We could trade shoes if we wanted to,” says Raines.
And the refurbishing experiment seemed to pass its 2011 experimental stage: in 2012, sales of rebuilt mobile devices alone were projected at $200 million. Products that are hopeless and cannot be refurbished are either dismantled for parts or destroyed and then recycled. More than three million pounds of electronic waste got recycled in 2011. But the plant also does double duty as a manufacturing center and an idea incubator, where the new history is being developed. And the industry seems to agree. In his 2012 article for the Verge, Sean Hollister put it best: “Somewhere in here, amidst the shattered screens and broken drive trays, lies the future of retail.”
The recent (and never-ending) economic crisis left many companies struggling with overcapacity. Business equipment, skills and knowledge of employees, and real estate all stood still as sales plummeted and the flow of goods and services stalled. Four years after Lehman Brothers’ bankruptcy, volumes have been recovering slowly, but the overcapacity remains. FLOOW2 looked at this omnipresent challenge as a glowing business opportunity and became the first business-to-business marketplace to enable companies and institutions to share equipment and personnel skills that are currently underutilized. The platform was launched in early 2012, and one year later it was offering over 4,500 types of equipment and services.
The company’s business model is based on the concept of collaborative consumption, where participants share access to products or services, rather than pursue individual ownership. FLOOW2 took a well-tested peer-to-peer and end-consumer model (after all, it has been successful in such areas as peer-to-peer accommodation [Airbnb], peer-to-peer task assignments [TaskRabbit], and car sharing [Zipcar])—and applied it to a business-to-business sector. The natural starting point for the company was the heavy-equipment market, but they went out of the comfort zone, detecting a number of other, less obvious markets in which the platform could trade overcapacity, among them health care, knowledge and skills, transport and logistics, and theater and events.
No question, user-friendliness is the key to the success of FLOOW2. For customers, the process starts with easy and free registration—if you have some capacity to share, you have simple ways of posting what is available and when; and different forms of insurance and assurances exist to protect all parties. The company developed the customer interface of their platform to include a free online planning tool for managing equipment requirements and availability. They also provide additional services, such as online payment services, credit checks, tracking and trace service on assets, and insurance through partnerships with other businesses. And the revenue is generated through fees that participants pay to advertise their equipment on the platform, at a cost of EUR €1 (approximately $1.30 US) per day as well as by subscription.
While they were disturbed and disrupted at first, “FLOOW2 is noticing that professional renting companies, OEMs [original equipment manufacturers], and leasing companies accept that collaborative use is here to stay,” note Will Robben, company founder, and Geraldine Brennan, doctoral researcher, Imperial College London.
Trendwatching.com called this phenomenon “owner-less,” adding it to its “11 Crucial Consumer Trends for 2011.” The reasons seem rather clear:
• Traditional ownership implies a certain level of responsibility, cost, and commitment. Consumers looking for convenience and collecting as many experiences as possible want none of these things.
• Fractional ownership and leasing lifestyle businesses offer the possibility of perpetual upgrades to the latest and greatest, the ability to maximize the number and variety of experiences, and allow consumers to access otherwise out-of-reach luxuries.
• Owning bulky, irregularly used items is both expensive and unsustainable, especially in dense urban environments where space is at a premium. With more consumers having mobile access to online systems, it becomes easier to book items whenever and wherever they are needed.
No wonder Time magazine named collaborative consumption among its 2010 “10 Ideas That Will Change the World.”
CNBC estimates that companies that provide access—rather than ownership—could generate $3.5 billion in 2013. Among them are Uber and Airbnb—numbers 6 and 12, respectively, on the Fast Company list of the World’s 50 Most Innovative Companies in 2013.
Uber, a geo-tracking app that makes private cars and drivers available at any time to registered users in a matter of minutes, has grown its operations to 21 cities worldwide as of 2013. The value proposition for the consumer is rather obvious: get a clean car, a professional driver, and automatic billing (no cash necessary)—all at your fingertips. In 2012, the company reported growing more than 20 percent month over month. “The company’s CEO and founder, Travis Kalanick, said the straightforward consumer experience of pushing a button so ‘a Mercedes pulls up’ provides better ways for urban dwellers to navigate transportation,” said CNBC.
Airbnb, the poster child of the sharing economy, grew out of the same idea: you have a spare room in your apartment or a tree house suitable for adventurous traveler—we will let you rent it out! Founded in 2008, the company now offers stays in over 34,000 cities in 192 countries, with over 10 million nights booked by the end of 2012. As expected, the company battles a number of problems associated with an innovative business model—including the issue of paying taxes on the money paid to the individuals or meeting the housing code requirements. Yet the venture seems to push through all of them in stride. “This year, Airbnb is moving beyond rentals to partner with local communities and enhance the entire travel experience,” says Lindsay Harrison of Fast Company. “Our product isn’t just our website; it’s also our hosts, listings, users, photographers, and employees. Our product is the entire community,” echoes Brian Chesky, company CEO. I am sold.
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No matter the phrasing—sharing economy, connected economy, collaborative consumption—20- and 30-something entrepreneurs expanding consumers’ access and experienced veterans agree that offering a new path to consumer purchases means lasting or possibly revolutionary change to the way we experience commerce, increasing the importance of both trust in transactions and easy technology.—Katie Kramer, producer of “On the Money,” CNBC
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From Line to Circle: The Practicalities
Making the transition from line to circle is a daunting task, but the elephant does not need to be eaten in one bite. The good news is that the past decade offered ample opportunities for experimentation, and thousands of companies went through a trial-and-error process to figure out how to make it happen. Three simple and well-known options are available for consideration:
• Reuse
• Refurbish
• Recycle
Reuse has been around for a long time. The key to reusing your waste with a real financial bang is to explore opportunities beyond the obvious. Collaborative consumption tales of FLOOW2, Uber, and Airbnb are examples of such creative sharing, but there is another way of looking it. A recent McKinsey & Company report, for example, suggests betting on the power of “cascaded use”—whereby reuse is spread across many different industries in the value chain, such as “when cotton clothing is reused first as second-hand apparel, then crosses to the furniture industry as fiber-fill in upholstery, and the fiber-fill is later reused in stone wool insulation for construction—in each case substituting for an inflow of virgin materials into the economy—before the cotton fibers are safely returned to the biosphere.”
Another way of taking the reuse idea to the next level is through what is known as the model of industrial symbiosis, in which byproducts of one industrial process can become a valuable raw material for another. In manufacturing, for example, steam produced in one factory can be sold to another plant nearby. The best-known example of industrial symbiosis is located in Kalundborg, Denmark, where seven companies reuse each other’s by-products or residuals from production on a commercial basis, including energy cooperation, water cooperation, and by-product cooperation. Here is one example: More than 98 percent of the sulfur in the flue gas from the Asnæs Power Station is removed before it leaves the plant, and then it gets reused by the plasterboard manufacturer Gyproc as a substitute for imported gypsum. The symbiosis reduced CO2 emissions by 265,000 tons annually, which would be equivalent to annual emissions from electricity use of about 80,000 single-family houses. The symbiosis reduces water use by 30 percent, while 100,000 tons of gypsum are salvaged from the flue gas desulphurization each year.
But it is the service industry where the innovation has boomed recently. (This one is for all of you working in services and having trouble discovering your Overfished Ocean Strategy!) And one service industry powers up all the others: IT. “Cloud computing is hot, literally. Electricity consumed by computers and other IT equipment has been skyrocketing in recent years, and has become a substantial part of the global energy market. In 2006, the IT industry used 61 billion kWh electricity (or 3% of total energy consumption in the United States), and is the fastest growing industrial sector”—that was a starting point for a group of Microsoft researchers backed by the Computer Science Department of the University of Virginia. The remarkable thing is that all the millions spent on electricity used to power up data servers gets converted into heat—so IT professionals have to spend millions on electricity to power up the air conditioning systems needed to cool them off! That is one wasteful process. The solution to the growing resource trouble? Use the data servers as furnaces to heat homes.
Physically, a computer server is a metal box that converts electricity into heat. The temperature of the exhaust air (usually around 40°– 50°C) is too low to regenerate electricity efficiently, but is perfect for heating purposes, including home/building space heating, clothes dryers, water heaters, and agriculture. We propose to replace electric resistive heating elements with silicon heating elements, thereby reducing the societal energy footprint by using electricity for heating to also perform computation…. Home heating alone constitutes about 6% of the US energy usage. By piggy-backing on only half of this energy, the IT industry could double in size without increasing its carbon footprint or its load on the power grid and generation systems.
While Microsoft’s efforts are still in the research stage, the direction of their thinking is groundbreaking, perhaps even disorienting. The invitation to all of us is loud and clear: it’s time to take reuse to another level!
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Refurbishing (replacing one or a few parts of a used or broken product) and remanufacturing (completely overhauling the used product, restoring it to a new condition) offer another opportunity for value creation—by restoring the product to nearly its original state. The key to refurbishing and remanufacturing success is finding a cost-effective and consumer-friendly process for collecting the product you wish to work with. GameStop collects its wide range of electronics to be refurbished at a handful of collection centers, but its own retail chain makes this easy. Shaw provides a toll-free number for customers to call, and they pick up anything more than 500 yards of carpet. TerraCycle, the worm-poop fertilizer company we visited in chapter 1, has come up with an even more innovative collection system, as it creates a significant value for the collectors well beyond a traditional financial return.
The company uses soda bottles, juice pouches, and hundreds of other nonrecyclable or hard-to-recycle waste items and turns them into backpacks, picture frames, clipboards, and a wide range of other products that are sold at Walmart, Target, and many other outlets. To collect the magnificent diversity of raw material, TerraCycle created a unique fundraising opportunity, whereby schools, churches, and other organizations earn money for valuable social causes, all while keeping tons of waste out of the landfill. As of mid-2013, more than 36,041,000 people had collected more than 2,508,577,000 units of waste (yes, that is in billions!), generating more than $5,685,000 for charitable causes.
HP, which transformed refurbishing into a wide-ranging global offering called Renew that provides “nearly twice the hardware for the price,” uses a trade-in program for the collection of its “raw material.” Customers follow a simple online process to get a free quote for the product they would like to sell back. If the quote is attractive, the participant can get new HP products in return and receive cash back for what is left over. Collect and prosper!
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Recycling requires a completely different level of complexity, whereby the product is broken down into incomprehensibly small parts and the resulting raw material is sold into an often-different industry. In the world of overfished oceans, recycling seems to be the hottest business idea around. Just a second ago, my simple Google search for “start recycling business” produced 59,700,000 results, offering in-depth why and how manuals on starting your own recycling company. The reason for this is clear: it’s an opportunity for strong growth. Frost and Sullivan, a consulting company specializing in growth, estimates that recycling services alone will more than double in market size from $158 billion in 2011 to $322 billion in 2017.
Recycling is the best-known way of turning trash into cash. However, most innovative companies find a way to generate additional value through their recycling activities, aside from the financial benefit of the raw-material recovery. In 2007, Coca-Cola took on one of its many reputational risks—plastic bottles—and recycled them into $15 million in sales. Drink2Wear T-shirts were made from recycled plastic bottles (much like fleece and other apparel you own that already contains recycled bottles) blended with cotton and featured slogans such as “Make Your Plastic Fantastic” and “Rehash Your Trash.”22 The T-shirts became so popular that in 2008, Coke expanded its product portfolio to include totes, loungewear, and caps. The products appeared in more than 1,500 stores throughout the United States—promoting recycling to the customers, fostering a positive brand image for the company, and creating value from previously trashed raw material, all at the same time. As of 2012, Coca-Cola had sold more than one million Drink2Wear units, bringing in more than $15 million in retail sales. Recycle, please.
Building Your Tool Kit
Moving from line to circle is the foundational, cornerstone principle for all businesses pursuing the Overfished Ocean Strategy. Yet it is understandable that such fundamental transformation does not happen overnight. As a metaphor, I often compare this tenacious process to the complexity of transforming a working, plugged-in TV set into a working, plugged-in vacuum cleaner—without any disturbance to the service. Oh my!
Here are a few line-to-circle resources that you might consider for your emerging Overfished Ocean Strategy tool kit:
• Cradle to Cradle: Remaking the Way We Make Things, by William McDonough and Michael Braungart (New York: North Point Press, 2002), has a loyal following by business, academia, and public leaders alike—an easy and potent read. Since its release, the ideas grew into a full-blown movement, and you should be able to find a community of Cradle to Cradle practitioners nearby. One place to start exploring the resources is the website of the Cradle to Cradle Products Innovation Institute.
• The Ellen MacArthur Foundation, which I refer to constantly, is not your ordinary charity but rather a new community of business leaders all dedicated to the idea of the circular economy. On its site, you will find excellent reports managed and analyzed by McKinsey & Company, case studies, courses, visuals, and more. The videos and visuals can be valuable as conversation starters at management meetings: they are precise, business focused, and to the point.
• Blue Economy (or Green Economy 2.0, as they often call themselves) is another excellent resource working within the line-to-circle philosophy. The site will challenge you with completely new ideas (such as gravity as an alternative energy source) and give you access to success stories of businesses making it work.
• Biomimicry: Innovation Inspired by Nature, by Janine M. Benyus (New York: William Morrow, 1997; Kindle ed., 2009), became the loud voice of the biomimicry movement. The idea is simple: Nature has already figured out how to solve many of our most complex problems, so why don’t we mimic biology to make it all work? Spiders have developed a weaving technology of amazing strength (compare the web’s net weight with that of the captured fly!), so why not apply that to textiles? How about calcium buildup, which plumbers have fought for generations? Marine creatures that live in shells figured out that problem as well, so why not borrow their solutions? Considering the fact that the circular economy itself mimics nature, you might find this school of thought refreshing. The Biomimicry 3.8 website is a good place to start.
• The resilience movement is another source of good tools and ideas. One hub within this movement is the Center for Resilience at Ohio State University. The center developed a number of cool tools, among them software that allows you to map out by-product synergies and thus turn your waste into profits.
Reprinted with permission from Overfished Ocean Strategy: Powering Up Innovation for a Resource-Deprived World by Nadya Zhexembayeva and published by Berrett-Koehler Publishers, 2014. You can buy this book from the MOTHER EARTH NEWS store: Overfished Ocean Strategy.
