A Business Case For Circular Product Design


Can circular product design be profitable? Spoiler alert: yes. But, before we make our case, let's have a conversation about profitability.

"Business is not part of the community – business is the community" ~Tom Peters

Traditionally and broadly speaking, measuring whether a business is profitable comes down to the brass tacks. Profitability ratios, break-even analyses, and return on asset assessments delight MBAs and help accountants sleep at night. However, they can leave modern globalists restless since they fail to account for anybody or anything outside a business's bottom line. Not only a poor measure of actual success but decidedly unsustainable. In this sense, the statistic we rely on to assess a company's overall performance--revenue--is wrong. 

"While profits ensure a business can operate, without other ways to measure performance, there can be no business continuity in a disrupted world." ~Re_Set CEO, John Lunn

No doubt Milton Friedman would roll over in his grave if he read the quote above. However, the pre-globalized 1976 world he lived in, like his theory that "an entity's greatest responsibility lies in the satisfaction of the shareholders," are relics of the past--and should continue to live there. The century has turned. And it turned us right smack dab into a deeply connected world wrought with “connected world problems.” A global society: gobbling up more natural resources than it can hope to regenerate, courting extinction-level climate change, and losing swathes of its workforce to "quiet quitting."  

The Changing Face of Prosperity

While several factors contributed to many of these woes--a siloed understanding of profitability is common to them all. To meet a new day, the metrics for profitability and GDP must change or, at the very least, expand. They are backward-looking measures of income completely removed from things like equality, leisure, well-being, impact, and pollution. Siloed thinking like this is not just incorrect but deleterious, as we are starting to realize. Other ways to measure business success include happiness scores, carbon tracking, community development targets, and youth approval. More holistic economic health metrics, then, could include the Human Development Index (HDI), the Genuine Progress Indicator (GPI), and the Thriving Places Index (TPI). From a circular perspective, altruistic measurements like these perform best. But that certainly doesn't mean circular brands and developers can't make a buck and more.

Progress, Partnerships, and Profitability in the Circular Economy

Under a new heuristic that doesn't solely rely on money to measure success, the circular economy teems with the potential for success. The most obvious and pertinent to this article are its infinite returns to the environment. Depending on one's perspective, this could be anywhere from the primary mission to a happy benefit. But there are other potentially lucrative benefits to centering business goals around circular product design.

Progress for Progress Sake (but not like you think)

The term "progress for progress' sake" has negative connotations associated with it and probably should. It's the kind of linear, unintended-consequences-be-damned type of thinking that got us here in the first place. But, through the looking glass of egalitarian progress, an argument for “doing it for the sake of doing it” can be made. The very exercise of keeping materials in play longer, tackling emissions, reducing extraction, etc., creates economic value, even divorced from results. A circular economy framework spurs innovation, championing emerging small and mid-sized startups. It relies heavily on big data, adding to the deployment and accelerated development of artificial intelligence (AI) and machine learning technologies. Overall it is a comprehensive systems-based methodology that can be applied to almost any complex problem, environmental or otherwise. And within it lie countless pearls of innovation. It's amortization, of sorts, where the initial investment divided by progress across several vertices pays dividends across the board.

Partnerships and the Circular Economy

In product development, partnerships are everything. They cut costs and reduce timelines while opening up opportunities for developers and their clients to innovate. Cooperation, as we know, is a boat raiser, up and down the supply chain, in all aspects of manufacturing, and even among perceived competitors. The circular economy is excellent at forming these relationships between businesses, suppliers, manufacturers, clients, and competition. It creates powerful and capable networks of stakeholders for things like effective resource allocation and achievement of long-term sustainable and financial goals. This is especially true in a burgeoning circular economy poised to unlock more than $4.5 trillion by 2030. And, after that, an order of magnitude more. 

Opportunity is Profit in the Circular Economy

"Opportunity is dressed in overalls and looks like work." -Thomas Edison

Change is understandably hard, especially with the types of headwinds circular product design faces. The time investment upfront is large. It requires buy-in from skeptical stakeholders, and--let's face it--most clients want the most bang for their buck. But, the opportunities to “cash in” are there. They just may look like a little extra work and research. With these, any industrial design firm can act as a conduit from their clients to the circular economic opportunities that abound. Beyond the very real (but perhaps delayed) bottom dollars, products and brands will benefit through cost and tax reduction, energy savings, higher valuations, growth through new products, and favorable consumer and investor goodwill toward their brands. On the flip side, product developers who design products for a circular economy also stand to capture considerable market share and good sentiment. Also up for grabs: longer-term, higher value projects among the clients they persuade to make better circular business decisions. In other words, the circular economy is not driven by scarcity; in fact, the very opposite. Opportunities propel it forward--and plenty of them. And that may be the best business case of all. 

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