Navi Radjou's point of view: will the circular economy be the future growth model?

Sky Reflector-Net, the futuristic roof of Fulton Street metro station designed by James Carpenter, New York © Seefromthesky

By decoupling “growth and environment”, the circular economy imposes a new economic, social and cultural model. To discuss about it, SUEZ opens the pages of open_resource magazine to two international experts: Peter Lacy, Managing Director for Growth, Strategy and Sustainability at Accenture and Navi Radjou, theoretician of frugal innovation.

Navi Radjou, Theoretician of frugal innovation  © Navi Radjou

Breaking free of linear logic

The circular economy is gaining strength, first and foremost because the limits of the conventional linear model are becoming more apparent every day. I have seen two types of limits in the United States, where I live. First, a social failure, as inequalities grow and, of course, an environmental failure. If everyone on the planet lived like an American, even four planets would not be sufficient to meet our needs.

So it has become essential to build a more inclusive model that is more egalitarian and consumes fewer resources. But which model? No-one advocates negative growth. I prefer to look towards another way—frugal innovation— that also creates value. This concept is inspired by the Indian “Jugaad” movement, which literally means “do it yourself” in Hindi, and consists, in simple terms, of doing better with less. This approach fits in perfectly with the circular economy. So the question remains: how can we produce better with less? In other words, how can we produce goods, from which 7 billion individuals can benefit, in a world with limited natural resources? One of the answers consists of placing eco-design at the heart of innovation in businesses and of transforming our waste into new resources, so that the impact of the consumption of raw materials is reduced.

The threats to the development of the circular economy

There are two main threats. The first is its very name. I think there is a danger in limiting circularity to its economic dimension, because the concept could be swallowed up and distorted by the capitalist model. Let’s draw a parallel with the sharing economy. Many of us have adopted this philosophy and believe in its relevance. But we have to admit that this model has already fallen into line, as businesses like Uber adopt this approach and “capitalise” on it to build a genuine business model. Similarly, I do not think that the Western populations, used to thinking “I consume, therefore I am”, will radically change their lifestyle on the strength of a promise that says “I consume better, therefore I am”. Introducing a hint of circularity into our usual practices will probably not be enough, if we really want individuals to change the way they consume in the long term. There is a danger that circularity creates an artificial feeling of fullness and therefore provokes the same social and environmental consequences as those that are criticised today.

The second risk is related to the first one. Philosophically, circularity is in opposition to the mental structures in the West. In America and Europe, we relate to the passing of time and linear development. But in the East, this relationship is cyclical, as testified by the belief in reincarnation. These philosophical differences are fundamental to our understanding of progress. In the West, we tend to yearn for “more and more”. Can you imagine an iPhone 8 with less functionality than the iPhone 7?

Example of a Jugaad innovation: improved customised motocycles in India  © Smriti Sharma

Impose a complete shift of paradigm to hasten the advent of the circular economy

We live in ecosystems where everything is connected, exactly like in nature. So we simply have to draw inspiration from the way nature works to understand the extent to which our old and self-centred economic models have become inoperative. Let’s consider a tree in a forest, its natural ecosystem. Every day, the tree makes more than 20 positive external products for use by the species that live around it. Much like 20 services, completely for free!

Let’s now apply this reasoning to the business world and ask ourselves a question. “What are the 20 services that my company will deliver today, free of charge, to the other companies, individuals and the nature that surround it?” While it may seem utopian, this is the project adopted by Interface, an American floor coverings manufacturer. The company is exploring new processes that enable its factories to operate like natural ecosystems. The company’s pilot project “Factory as a Forest” not only reduces the negative impacts of its activity on the environment, but it also aims to have a positive impact on its ecosystem and stakeholders.
Finally, it is not simply a matter of knowing whether we produce these or those consumer goods in a more resource-sober way. We also need to consider the societal impact of the ways we produce and consume. We need to think about a “spiral” economy, where every project aims to be inclusive and to generate positive interactions.

Extending the scope of the circular economy to the immaterial

The breakaway from linear models obviously applies to tangible resources, but it must also include intangible resources, such as knowledge. This is one of the conclusions of a recent study ordered by the European Commission, entitled “Study of frugal innovation and reengineering of traditional techniques”. Here again, our Western mental structures, which I qualify as linear, lead us to prefer the “more and more approach”. In the knowledge- based economy, this results in filing for patents, which are often perceived as one of the company’s performance indicators. But to progress, we must also make better use of the knowledge we gather. We can create value from the synergies between different activities and between different economic sectors that are currently partitioned, and even between States.

This was the thinking behind decision taken by GE Healthcare — the division of the GE Group that supplies advanced medical technologies and services — to reuse radiotherapy technologies to inspect and monitor gas and oil pipelines for leaks. Completely circular companies need to know how to use and reuse their intangible assets as drivers of growth and progress.
States and companies must also capitalise on these flows on a worldwide scale. This is possible through knowledge transfers or reverse innovation, which consists of calling on emerging economies to design products and services, before deploying them in industrialised countries.

Dishoom Chowpatty Beach bar: almost exclusively designed from recycled materials, London, UK  © Hunt Haggarty

While circularity is often developed through local actions, the stakes are global

Increased scarcity of natural resources, environmental and economic migration, social inclusion, the sharing of skills and knowledge… The “circular revolution” can only be global and applied on a worldwide scale. It is essential to overcome the North-South divide and, above all, to avoid thinking that countries in the South will spontaneously opt to grow according to a virtuous and circular model. While they may adopt circular practices in the form of resourcefulness, their populations still aspire to development based on the reference framework set forth by industrialised countries. But we all live on the same planet, with its limited resources. So it is in our own vital interest to make sure that economies all over the world grow together according to more environmentally sober and more socially inclusive models. With the United States withdrawing from Paris climate Agreement and them progressively phasing-out on the international stage, I believe that Europe’s States, institutions and businesses must play a central role in the co-construction of circular models with the countries in the South. Europe must accept a leading role in order to be in the forefront of this much-awaited  breakthrough.

This article was published in the fourth issue of open_resource magazine: “The circular economy era

Discover the point of view of Peter Lacy, managing director for growth, strategy and sustainbility at Accenture.


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