One of the greatest advantages to being a startup is freedom from too many layers of management in order to test ideas and innovate. However, on the flipside, the lack of resources to scale a new opportunity can prevent a meaningful startup idea from taking root and creating more sustainability in the marketplace. This is a particular point of concern when it comes to the circular economy. The circular economy, broadly defined as a no-waste industrial chain that promotes economic growth using the least amount of non-renewable natural resources as possible, is increasingly regarded as a feasible and economic option for meeting the future demands of today’s society. It has been estimated by the Organization for Economic Co-operation and Development that the global middle class will more than double to nearly 5 billion by 2030. In order to meet the challenge presented, all environmentally sustainable innovations relevant to the circular economy should have at least a chance to be tested on the market. As with our natural resources, no invention or innovation of value should go to waste either. In this vein, it may be recognized that concepts for economic growth engines, in general, can be applied to circular economy innovation. Specifically, entrepreneur-driven innovation ecosystems (EDIE) are a proven scheme for cultivating more successful entrepreneurial and intrapreneurial ventures. EDIE can also be of use in cultivating circular economy entrepreneurial ventures.
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.