Twice in the last week or so, I've heard people conflate two quite distinct concepts – the circular economy and servicisation/product-service system. This has riled my inner pedant no end, so I feel obliged to set out the difference between the two:
Circular economy – all materials flow in closed loops just like the closed loops in nature.
Servicisation – provide your customers with the service they desire (eg the ability to copy documents) rather than the standard product (eg a photocopier).
The confusion arises as there is some overlap between the two concepts (see my nifty Venn diagram). Eg in chemical management systems (CMS), solvent services typically recover and recycle those solvents. However in other CMSs, materials are not recovered, eg when companies provide a coating service, the coating stays with the product and is not necessarily recovered. This is why I've placed the double headed arrow above – whether a service is also part of the circular economy depends on the design of the service.
But my main point is that if you artificially narrow the two concepts down to the overlap in our Venn diagram, you're missing out on the majority of both. Schoolboy error.
The launch of the Riversimple's Rasa electric two seater car is remarkable for two reasons. First, it could bring hydrogen vehicles onto the market at the scale of their electric cousins, and secondly Riversimple is planning to provide the vehicles as a service rather than an outright purchase.
The Product-Service System (PSS) concept has been around for a long time, but it is generally successful in business to business (B2B) niche markets such as fleet vehicles, photocopiers (buy the copies not the copier) and chemical management systems. Some high profile attempts at B2B servitisation have failed: Interface tried to sell a floor-covering service, but customers couldn't get out of the 'carpet as capital purchase' mindset, and compressed air services have struggled in the UK when popular in France. More recently Rolls-Royce have made a success of a jet engine service, bringing PSS back to the top of the agenda.
From a sustainability point of view PSS makes a lot of sense – you break the link between the needs of the customer and the amount of stuff they are given to meet those needs. So if I buy a photocopy service from Xerox, they are incentivised to not try and sell me a new copier every year, but maintain and upgrade the one I have.
Where the Rasa will be interesting is whether it can break into the consumer (B2C) market. To date, only digital consumer services have usurped their physical counterparts (eg Netflix replacing DVDs), but with personal car leasing starting to rise in popularity, maybe Riversimple are on to something. I'll be keeping a close eye!
For a newspaper from the Guardian stable that prides itself on its approach to sustainability, I winced when I read this in a Observer article on fashion yesterday:
The ability to recycle favourite dresses is being curtailed by sites such as Facebook and Instagram.
When the journalist said 'recycling', she didn't mean passing it on to a mate, selling it second hand or using the fabric for something else. No, she meant "wearing the same dress twice" - claiming women are afraid to do so as their friends will see this cardinal sin on social media. To a man who still wears dozens of garments over a decade old, this is an alien concept.
But it illustrates a much bigger point. Our modern design and manufacturing supply chains are capable of delivering us very high quality, low price products exceptionally quickly. But it is not quality or design that consigns those products to the bin - it's fashion. And by fashion I don't just mean clothes - Douglas Coupland nailed the phenomenon in his 1991 novel 'Generation X' when he referred to 'semi-disposable Swedish furniture'. Even a ship will be scrapped when the value of its steel is thought to be higher than keeping the ship in use, rather than when it 'wears out'.
Our problem is that the 'make do and mend' concept is unlikely to storm mainstream consumer culture. There are other models which can help:
The service economy: despite the slip on 'recycling', the Observer article did reference services where you can rent high fashion items for one night only, so each dress will be worn dozens of times. You can do this with everything from a luxury yacht to industrial solvents.
The circular economy: designing products to be recycled continuously means short product lives doesn't have to be dependent on extracting more raw materials and creating more waste.
The sharing economy: purchasing a product and then sharing it with others. When my parents moved into their house 40 years ago, they found it came with half a hedge trimmer!
The retro economy: many well designed products have as much value when they are old as when they are brand-spanking new.
In the meantime, I will be recycling - in the true sense of the word - my favourite pair of cords as I have worn them threadbare. Don't think I'll be gracing the fashion pages of the newspapers anytime soon!
Yesterday I was at Kyocera's CSR day in their brand new Manchester offices, featuring some great guest speakers from Green Alliance and Forum for the Future amongst others as well as Tracey Rawlings Church, the company's own CSR guru. There was plenty of red meat for the sustainability practitioner here, these are the points that resonated with me:
The twentieth century was one of resources getting cheaper - those days have gone;
The long trumpeted product-service system is coming of age. For example, Rolls Royce now provide propulsion services by the hour rather than selling jet engines;
There is massive scope to add services (and value) to a product to produce a product service system e.g. building a document management system around a print/copier;
However there is a need to educate buyers in such business models as tenders are often written with buying a particular technology as a capital item in mind;
One solution for this is 'outcomes based procurement' where the buyer specifies what they need (eg holes) rather than how to get it (eg drills);
Some technological solutions are very simple. Kyocera has pioneered triangular solar panels so an array can be installed to cover an entire face of a hip roof neatly - more efficient and more aesthetically pleasing than using rectangular panels only;
Likewise, the company's copiers/printers can be disassembled with just 17 screws - all the same size so you only need one screwdriver;
But to make the circular economy work, we need better recovery technologies - many rare earth metals are very difficult to recover;
There is an important role for pro-sustainability lobbying/awareness raising in other organisations to enable sustainable business models;
Transparency is a great ethical driver.
I had kind of given up on 'expert presentation' events, but I've been to some really excellent ones such as this recently, so I'm starting to reconsider my rather grouchy position and getting out a bit more.
One of the issues we explored in our recent Corporate Sustainability Mastermind Group meeting on supply chains was who in the organisation has the power to drive or constrain the greening of the supply chain. I've been developing that line of thinking since for an exciting new project (watch this space), and I've come up with a hierarchy of constraints that you can see above.
Trying to green the supply chain by simply choosing the greenest option available is the easiest place to start, but it will only ever lead to incremental improvements.
By setting a procurement policy which, say excludes certain substances or certain suppliers, you will have more influence, but you are still constrained by the way the rest of the organisation operates as that is where demand comes from.
The design of operations - whether that's manufacturing, logistics or even office processes - will determine which materials you need and in what quantities.
Above that, the actual design of your product and service will drive operations and the levels below. Will this product be designed to be made out of recycled materials? Does it require rare earth metals?
The business model is the next influential - are you going to produce a physical product at all or a digital product or a product service system where you lease rather than sell?
And overarching everything else is your corporate philosophy - are you prepared to invest in the supply chain you need? Do you want to be a pioneer of the circular economy? Or collaborative consumption? Are you going to use your buying power to effect change on a transformational level?
Of course in practice, the boundaries blur and they may not all apply to all organisations. But the overall principle is that the higher in the hierarchy you effect change, the bigger the impact on your supply chain footprint.
I had to make a 'repair or upgrade?' decision on my 4 year old MacBook Pro a couple of months ago. The latest model had only marginally better performance stats, so I went for the repair. I can't imagine that happening 10 years ago.
My dad asked me how old my car was. Ten years I answered. Blimey, he said, think what a typical 10 year old car would have looked like 20 years ago - it would have been a bucket of rust.
There was a story in the press that PC sales are down, particularly bulk purchases. As tablets tend to be bought in addition to desktops or laptops, this was puzzling the journalist - maybe the economic downturn was to blame. My reaction was unlikely - did companies ever upgrade their IT on a whim?
Product life cycles are interesting things. Most products are disposed of long before they physically wear out, but rather when they fall out of fashion. This is the (in)famous "planned obsolescence" - a term coined in 1954 by Brooks Stevens and defined as "instilling in the buyer the desire to own something a little newer, a little better, a little sooner than is necessary." It could be argued that planned obsolescence is at the heart of modern consumer driven society.
But is this changing? With smartphones now able to handle video conferencing and bog standard PCs able to do what used to be thought of as heavy lifting like video editing, what would you upgrade to do? My 10 year old car doesn't look very old fashioned the way a 70's car would have looked in the 80's. In the last few years Governments around the world have had to resort to stimulating new car purchases through scrappage schemes - effectively bribing people to buy a new car. Even in the building trade, old buildings are being 'repurposed' and classic facades are being retained in new developments.
I've done a bit of Googling, but can't find any hard and fast data on product life trends. But if they are lengthening then it is (usually*) a good thing for the environment, but it will require a different approach to business models. The real money could be found in maintenance, added functionality (eg Apps) and support rather than hoping your customer base will fall out of love with the stuff they have and buy something new.
* The only downside is that you stay wedded to with current technology - eg petrol cars when you may want a shift to zero emission vehicles.
Yesterday I was a panelist at the "Chasing the Green Pound" event hosted by Grayling's Future Planet team. It was a strong line-up with Ramon Arratia from Interface, Per Bogstad of Rainforest Alliance, Esther Maughan McLachlan of Sony Europe and yours truly, all chaired by Jo Cofino who heads up Guardian Sustainable Business.
Here are some of the points I took away with me:
The archetypal green consumer who will compromise on price and/or performance to 'save the planet' remains in a minority;
Retailers are doing the heavy lifting on behalf of the consumer by demanding good quality greener mainstream products from suppliers;
They do this for overall brand enhancement rather than to target green consumers per se;
Green product producers love legislation that penalises their less enlightened competition;
Product labels like the EU energy label can drive consumer buying patterns, but they need rapid updating to keep ahead of technology;
Long life products require new business models - Sony are actively investigating the concept of a 'multi-functional digital device for life' and what business model might support it;
In terms of changing how consumers use products, we have limited bandwidth to communicate with them and should use it wisely;
Nudge techniques may help - making greener behaviour the easier path eg a washing machine that defaults to a cooler wash cycle rather than sticking with the temperature of the previous wash;
Consumer resistance may provide business opportunities - the example was given of a company that empties lofts for free (and makes cash out of selling the contents) - this is one of the barriers to improving domestic insulation.
At the end, Jo asked us to look forward and predict future trends in consumer behaviour. I suggested that the shift from owning huge amounts of media (books, CDs, DVDs) to accessing the data directly (ebooks, MP3s, movies on demand) was eroding the 'status of stuff' - our bizarre pride in the wall of books/CDs/DVDs in the living room - and this may open all sorts of opportunities for mainstreaming lightweight and/or collaborative consumption such as Spotify, ZipCar, Airbnb etc. On a grand scale, this would free us to enjoy the experiences we are used to with a fraction of the ecological footprint of the physical product-based economy.
No, not living in the sky like that city at the end of The Empire Strikes Back where Harrison Ford gets immobilised in chocolate. Have you ever:
Rented a CD or DVD?
Borrowed a book from a Library?
Used a car club?
Watched a movie on demand?
Shared garden tools with your neighbours?
If 'yes' then you've done a bit of "cloud living" according to this month's Wired magazine (article not available online). This is a snappy new term for a business strategy I've been promoting for years - product-service systems - delivering the service required by consumers without giving them ownership of a tangible product. This has significant environmental benefits - downloading an album on MP3 saves 40-80% of the carbon of buying a CD. The cloud analogy has been borrowed from 'cloud computing' - where all software and storage is on-line and your computer is simply a portal to the cloud (eg Google Docs). 'Cloud living' is a more attractive term than 'product-service system' and it also has the perspective of the consumer rather than the producer which propel it into the public arena.
Only one problem - if you google the term itself, it also means people who make money off the internet (selling ebooks etc) without any fixed base - allowing them to pursue the lifestyle they want (surfing, snow boarding and other cool things). Of course these are two are different sides (production/consumption) of the same coin, but as always it will take time to determine whether the consumption element of cloud living sticks.
I started my professional sustainability career in eco-design - making the world greener from the drawing board. This remains the greatest opportunity for a business to go green as the designer has a huge amount of control over the whole lifecycle of the product from materials extraction right through to disposal.
During my two and a bit year investigation into eco-design techniques, I became fascinated by the Russian Theory of Inventive Problem Solving, or TRIZ to give it its Russian acronym. The concept behind TRIZ is that innovation does not come from sudden flashes of genius, but through the application of a number of fundamental principles. These can either be stumbled upon, or, by following TRIZ, worked through methodically until one generic solution fits the particular case. But what got me really excited about TRIZ was the concept of the ideal final result:
The ideal final result delivers the required function while consuming no resources.
Which would, by definition be the ultimate green product, as the product has been reduced to pure wieghtless function. Obviously this is impossible - even telling a joke requires some resources - but to me it is one of those intellectual concepts that provokes ambition and step changes. It is certainly behind the whole idea of servicisation - delivering the required function (eg travel via public transport and/or a car club) rather than a product (owning a car) and the whole digitisation movement (eg replacing travel with teleconferencing, or replacing CDs with MP3 downloads).
Unfortunately I never did secure the funding to develop a 'Green TRIZ' research project, but it would have been fascinating to either filter or generate a set of fundamental green design principles to be applied to get as close as possible to that ideal final result.
This is the latest of a series of tips extracted from the forthcoming Green Business Bible e-book:
Slightly obscure title, but it refers to the fact that when you buy a drill, what you are actually after is the holes it will produce, not the drill itself.
So, for example, instead of buying solvent, you can buy solvent services: provision, monitoring and disposal/recycling. The environmental difference is that the provider and you have the same interest: more service, less material, less waste, compared to the straight 'buy a product' scenario where the more you waste, the more profit they get. You can do this with anything from transport to carpets.
The technical term for this is a 'product service system'.