EDIE has already shown itself to be of value in the circular economy. For instance, the sharing economy, one of the most successful branches of the circular economy, has roots in EDIE. Airbnb, the tech company that created a marketplace for short-term housing space in people’s homes and properties, was able to begin scaling its business through the San Francisco-based incubator YCombinator, a member of the Silicon Valley-area EDIE. YCombinator helped provide Airbnb with seed money as well as make introductions within the EDIE and teach the founders how to pitch to investors in the area. Similarly, the car-sharing company Uber started out with RocketSpace, another startup accelerator in the Silicon Valley EDIE. Car-sharing, which has enabled us to go from car-as-commodity to car-as-transportation-service, keeps congestion down and makes it possible to spend fewer resources on making more cars through offering excess capacity of existing cars.

So what should any party interested in the circular economy do when it comes to participating in an EDIE?

For startups and established businesses: Partner with the Ellen MacArthur Foundation. 

One of the leading organizations on circular economy thinking, the Ellen MacArthur Foundation, functions as the nucleus of an EDIE by providing easy channels for business organizations to connect and collaborate. By approaching the foundation as a partner, businesses can get the right introduction with potential business collaborators. For example, as a partner with the foundation, the Dutch company Philips was able to pilot a new model in which Philips managed the lighting for RAU Architects. Rather than RAU Architects buying light bulbs and hiring maintenance men, the firm had Philips manage lighting, or what they called selling light as a service. Founder Thomas Rau said at the time, “I told Philips, ‘Listen, I need so many hours of light in my premises every year. If you think you need a lamp, or electricity, or whatever – that’s fine. But I want nothing to do with it. I’m not interested in the product, just the performance. I want to buy light, and nothing else.”[1] The end result was that Philips helped the firm reduce energy usage by 55% through motion detectors and remote systems management, LED lights and leveraging sunlight. RAU Architects pays for the service and maintenance, while Philips maintains ownership and control over its parts, which enables the company to repair and retrofit its products as necessary.

For individuals and managers: Leverage technology.

Reusing, recycling, repurposing and regenerating means that no single nation can do it on its own; at the same time, it’s not possible to always be in the same room. Not only that but the circular economy concept is still in the process of spreading; hence, participants must utilize all that technology has to offer—modern communication that allows for real-time contact—to find potential partners and collaborators, wherever they may be. The Ellen MacArthur Foundation has capitalized on this notion by hosting the annual Disruption Innovation Festival. Much of the three-week-long event takes place via the Internet through live streams, webinars, Google Hangouts, and digital archiving to discuss relevant topics and bring like-minded entrepreneurs and business leaders together. The most recent festival featured more than 500 speakers across 270 sessions and 20,000 participants from 181 countries.

For policymakers and government officials: Support and nurture growing circular economy EDIE. Forming government-sponsored networks, think tanks, and forums targeted at inventors, entrepreneurs, intrapreneurs, investors, researchers and academic will promote confidence and trust in a national commitment toward fostering innovation and circular economic principles. Creating interactive tools will also encourage parties to explore the networks, seek out new partners and ideas, and offer ideas to others.

With the right support, bringing circular economy entrepreneurs and intrapreneurs together with EDIE, a demonstrated model for promoting innovation and economic growth, is a path toward creating a realistic and sustainable tomorrow.

About the author:

Mark Esposito is Professor of Business & Economics at Grenoble School of Management & Harvard University’s Division of Continuing Education

[1] Ellen MacArthur Foundation. “Selling Light as Service.” https://www.ellenmacarthurfoundation.org/case-studies/selling-light-as-a-service.

The EU needs to invest in an entrepreneur-driven innovation ecosystem to foster recovery and new prosperity. It must shift its core understanding of entrepreneurship away from a profit-driven model and the industrial conglomerates, toward a model driven by value-seeking disruptive entrepreneurs, which are able to generate new products and markets and naturally new jobs. They’re different from small business entrepreneurs because they have different modus operandi: rather than merely seeking profit or accounting balances, they seek out market failures, overturn existing networks and structures, and create value and new markets. They innovate to break open and redefine entire spaces in the economy, and then existing blue chip corporations follow into these new and enlarged markets with greater growth expectations. The innovation driven entrepreneurs define a new gravitational pool of innovators, incubators, business angels and crowd-funders. It is an ecosystem in the way these actors interact, exchange and create jointly.

One classic example is of Henry Ford and his Model T. It was the lower cost, mass-produced version of the automobile, not the invention of the automobile, that upturned the standard mode of transportation of the time, the horse-drawn carriage. Europe needs this special breed of entrepreneurs because they help create disruptive innovation and economic resilience by offering new growth potential where old growth has slowed.

Building an entrepreneurial ecosystem requires action from multiple stakeholders, including governments, corporations, start-ups, private equity, research labs, and universities. We find that the following steps may be necessary for policymakers to initiate and foster the facilitation of such an environment:

• Remove bureaucratic obstacles that block their flows, like high taxes and rigid labor laws in order to achieve serendipitous collisions of ideas, IP, capital, and talent. This would help reduce the financial risk for entrepreneurs and investors to enter into new ventures that have the potential to flourish and lift up the economy.
• Establish links between public servants with research labs, startups, and corporations, in order to create dedicated think tanks, designed to serve the ongoing dialogue among entrepreneurs and the territories.
• Test ideas for government intervention and implement large-scale initiatives to jumpstart entrepreneurial activity through beta version, prototypes and pilots, capable of raising the learning cycle and the opportunities arising from a more systemic integration of ideas.

One clear example of the above recommendations can be found, for instance, in Denmark’s innovation lab, MindLab, is one example of this kind of innovation think tank which nicely gels stakeholders of the same system. MindLab worked with highly skilled professionals in Denmark to develop a social network that would create the right incentives for highly skilled workers to stay in Denmark instead of leaving the country. This is achieved though a collaborative model among parties.

The next step would be to develop a tool that measures and connects entrepreneurial activity. For instance, in the U.S., innovation labs like MIT’s Media Lab created a visual network called Macro Connections to connect communities with research data and methods. The tool allows actors to seek out others with similar research in order to facilitate innovation, share information, and pursue collaborations.

Through more accommodating laws, collaboration, and technology, policymakers can bring researchers, entrepreneurs, and public servants together to identify opportunities for disruptive economic change to better Europe. Innovation ecosystems, when generated by the interface of policy, innovation and institutions for collaboration help economies withstand drastic economic shocks and financial bubbles.

About the authors:

*Mark Esposito is Professor of Business & Economics at Grenoble School of Management & Harvard University’s Division of Continuing Education

Terence Tse is Associate Professor of Finance at ESCP Europe Business School

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