From linear to circular: Business model shift no.6
- Business Model Shifts
We’re down to our final article in the series shining our Business Model light on leading companies, revealing the driving forces behind the global gurus. What do companies like Nike, Signify, Patagonia, and Fairphone have in common? Well, grab a sturdy cup of coffee and cozy yourself in your chair, because you’re just about to find out…
What goes around comes around. Five words you snicker to yourself when you see karmic justice served. It’s true; closing a loop can be satisfaction in its purest form. And for businesses who genuinely aim to combat the ever-increasing environmental problems of the world, closing the loop is indeed a satisfactory pursuit.
It isn’t karma we’re talking about here, though, but instead closing the loop of precious resources. The Circular Shift is about using products to their full capacity, recycling, and reusing materials to breathe life into new products, with minimal waste and negative environmental impact. Hopefully, what we see here is the business model of the future.
Why is this shift happening?
A perplexed seahorse is wrapping its tail around a cotton swab; disposable facemasks washed up on an otherwise pristine beach. We’ve all seen these images of pollution. But these are crimes we’re all complicit in.
Humans rely on many disposable consumable goods and low-grade material products to get by day-to-day. And someone has to produce them – which in many cases end up being shortsighted companies that are using a linear business model.
Many of the items are so commonplace that people don’t even bat an eye towards the possible environmental impact. Companies take resources, create, and sell us what we so desperately need.
As the majority of the company revenues are generated from the number of products sold, linear model businesses do everything in their power to effectively improve margins.
Very often, this involves moving production to developing countries – where the labor’s a lot cheaper and rules and regulations aren’t always as stringent as in the West.
Circular shift story: Patagonia
With the widespread environmental problems due to reckless production, Patagonia, the famous American clothing company that markets and sells outdoor clothing, works tirelessly to close the resource loop to promote sustainability and circularity.
Besides crafting apparel built-to-last to an audience that opposes extravagant shopping, their repair and recycling spurs ensure that customers can use clothes for longer.
If the included self-repair tools and knowledge bank isn’t enough to fix your trusty Patagonia sweater’s big tear, then ship it to (the Patagonia brand-owned) North America’s largest repair plant to make life a little easier.
Don’t want it sent back? Patagonia can collect clothes to be sold again as WornWear. Cleaned and as good as new, of course. Items beyond repair are broken down and made anew, part of the Patagonia ReCrafted collection.
Is Patagonia aware of the negative impact major clothing companies have on the environment? Absolutely. Their whole business model revolves around combatting this, knowing that scale is the ultimate power for long-lasting positive change. And they’re taking decisive steps to get there.
A new mindset
More and more companies are moving towards circularity. Other excellent examples (which we include in-depth in our book) include:
- Nike, on a mission to realize a business model producing zero carbon and waste.
- Signify, bringing circularity into lighting as a service.
- Interface, realizing their environmental flaws and working tirelessly in bringing environmental impact to zero.
The Circular Shift closes the resource loop by reducing waste and lower environmental footprints. Rather than the “use and throw away” model of products, the circular business model wants product longevity, a concept forged into even the earliest development stages.
Customers also care about how their ways impact climate change and the environment – and want to support businesses sharing the same goal. By following along and helping on the journey to drive real change, customers feel empowered. They feel a part of something bigger, which has the power to influence massive industries and, ultimately, the world.
While this marks the end of this series of articles. But luckily, this is only a lip-smacking appetizer of what we’re unveiling in our new book, Business Model Shifts. Want to know all details about the six world-changing business models shifts? Click here to order the book.
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