How do you make circular innovation a strategic part of your operations?

Legislation as a driver of circular transitions

New regulations are forcing companies to look beyond traditional production models. Examples of laws and regulations that have a significant impact on business operations include:

• The European Green Deal: This ambitious plan aims to make the European economy climate neutral by 2050. The Circular Economy Action Plan, which is part of it, encourages companies to extend the life of products, reduce waste and implement reusable materials.
• The Packaging Directive: This directive requires packaging to be more recyclable and to promote reuse, with the aim of encouraging sustainable use of raw materials.
• Extended producer responsibility (EPR): Under EPR, producers are held responsible for the entire life cycle of their products, from production to disposal. This encourages companies to develop products that are easier to repair, reuse or recycle.

Such legislation encourages companies to adapt their strategies and proactively engage in circular innovation. It is essential that organisations anticipate these changes and develop circular propositions that not only comply with regulations, but also create value for the organisation.

Creating strategic space for innovation

To successfully integrate circular innovation into business operations, it is important that companies free up strategic space for development. This means not only allocating financial resources to innovation, but also providing time and organisational structure for experimentation and development of new propositions. This involves more than adapting existing products; companies need to think strategically about new business models, such as product-as-a-service, that enable reuse and longer lifespans.

A circular strategy requires a focus on the higher steps of the R-ladder (refuse, reduce, reuse, recycle). Companies need to move away from a linear economic model and towards models aimed at maximising product life cycles and minimising resource use. This can be achieved by revising product designs, entering into new partnerships and optimising processes.

Forward-thinking companies in the circular economy

A number of companies have already made the strategic choice to put circular innovations at the heart of their operations and have made pioneering steps in this regard:

• Philips: Philips has changed its business model by moving to a circular approach in healthcare. By offering medical equipment as a service rather than a product, Philips extends the life of equipment and remains responsible for maintenance and recycling.
• Fairphone: Fairphone is known for its modular phones designed to last longer. By making parts easily replaceable, the company encourages customers to make repairs instead of buying a completely new product.
• IKEA: IKEA is working to transition to a circular economy by buying back used furniture and recycling old products. The company has set a goal of being fully circular by 2030, demonstrating how circular innovation can be strategically embedded within large companies.

These companies demonstrate that circular strategies not only contribute to sustainability, but also lead to new market opportunities and enhanced competitiveness.

Integrating circular strategy into business operations

Integrating circular innovation into business strategy requires a fundamental review of current business operations. It is not a task that can be done alongside the regular business model; it must be embedded in the core of the organisation. This requires companies to actively invest in research and development, establish strategic partnerships and reshape supply chains.

By driving these changes at a strategic level, companies can take advantage of the benefits offered by the circular economy. This is not only about environmental gains, but also about increasing customer loyalty, strengthening brand image and achieving economic benefits through more efficient use of raw materials and extending product life cycles.

Conclusion: strategic steps towards circularity

The need to make circular innovation part of business strategy is becoming increasingly urgent. Legislation and societal expectations are forcing companies to rethink their models and invest in innovative propositions. By creating space for these innovations and integrating them strategically, companies can not only meet changing demands, but also discover new opportunities that lead to sustainable growth and value creation.

Does your organisation want to explore how circular strategies can contribute to your success? Then get in touch with us. We would love to help you take the next step in this important transition.