Unlocking circularity: A Livework quick-read

Unlocking circularity A Livework quick-read

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London Rotterdam SaoLondon Paulo |Rotterdam Livework Studio Sao Paulo © 2023

Livework Studio © 2020 1

Contents 1.

Intro: The case for circularity

Is this quick-read for me?

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You work for a manufacturer

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You work in a innovation/design team or as a sustainability professional

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Circularity is a growing priority

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2.

The Circularity Challenge How to move at different levels at once?

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The 4 circularity strategies out there

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And corresponding challenges

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Unlocking circularity at scale

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Start with the customer, translate to organisation & value chain

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Examples from practice

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6.

Get in touch

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About Livework We are a company founded to change the world, filled with people whose passion it is to make life better for everyone. The clue is in the name: Livework. We improve the way people live and work. We do this by designing services that are better for the people who use and deliver them.

A Livework quick-read

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Scaling Circularity — Introduction

What can enable business to go circular at scale?

Reimagining the way we live, work and do business There is an enormous desire to change our economy to stop polluting our planet. Circular business models are widely recognized as the right direction of travel and will be mandated by fast approaching legislation.

So why isn’t it happening on the scale required?

What is preventing businesses from rolling this out beyond small-scale initiatives?

This quick-read provides a simple overview of the challenges of going circular and a strategy to overcome them, helping consumer product manufacturers pursue their circular ambitions.

Future proof business models are circular

Linear business models

Waste

e

Us

Resources

urpose Rep

..an Take

Make

Dispose

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Scaling Circularity

The challenge

A circular ecosystem

Circular principles must be considered across four levels of business.

A circular business

Unlike other innovations, new circular solutions don’t automatically fit into the fabric of our value chains, organisations, economy or even our lives, as these are tightly knit to fit a linear system that benefitted decades of adoption and optimisation.

The only road to success is thinking through circular needs at each level.

Organising and partnering to reduce the impact of value chain and operationalise reverse logistics.

Mapping the route to a desired circular business model addressing customer, financial and operational needs in various probable futures. Grow capabilities to operationalise a production process that has circular principles applied across and a (digital) infrastructure for circularity — tracking, reverse logistics, new ownership models and financial + legal implications.

Circular services & experiences Creating services and experiences to engage customers to participate — maintain, repair, upgrade, share, return.

Circular products Applying circular principles to products and packaging design with entire product lifecycle in mind — production, logistics, (re)use, return and regeneration.

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Scaling Circularity

The four circularity strategies And corresponding challenges

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Talking to manufacturers across industries we see organisations approach their transition in 4 different ways, each with its own challenges

Reverse logistics first

Circular product first

Circular service first

All-round effort

Particular challenges

Particular challenges

Particular challenges

Particular challenges

Find ecosystem partners for setting up the reversed value chain or built and set up the internal capabilities.

Re-imagine & design product, production and product use

(Re-)imagine & design a circular service — the desired customer experience, delivery and business model.

Manage multiple changes at the same time maintain momentum and manage interdependencies whilst some parts move faster than others

Set up to manage large variety of linearly produced products coming back Built decision-making capabilities to make impact trade offs: are refurbished/ updated old products better/worse than producing new product?

Partner to set up the infrastructure for product tracking, reverse logistics and redistribution and underlying infrastructure (digital/legal/ accounting)

Redesign the financial model and the way a business captures value, changing from a one-off sales transaction to recurring revenue (requires adapted accounting procedures and financial instruments)

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Scaling Circularity

Strategy agnostic challenges (1/2) Shared challenges ..an for every business trying to scale circularity

Bring customers along Understand what customers need to buy into circular offers and make the behavioural change attached to that. Using product, operations and business model design to facilitating customers to take care of products and help closing the loop.

Imagine and test circular offers

Internal or external set-up

Understand which (small) steps from linear to circular can be made given the path dependencies of customer expectations, the organisational-, and value chain set-up. Test circular concepts' desirability, feasibility, viability and sustainability to understand the minimal viable set-up for circular success and de-risk roll-out.

Trade off: organise circular operation internally or outsource it (temporarily)?

Depending on: ● Internal availability of capabilities ● Strength and availability of local partners ● Local legal requirements for repairing, refurbishing or recycling

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Scaling Circularity

Strategy agnostic challenges (2/2)

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Scale circularity

Embed circularity in org

Measure impact

Scale the circular processes (e.g. circular accounting and distribution) and business models across: ● Product lines ● Geographies ● (legal) contexts

Embed circularity in organisation across:

Built capabilities and setup for continuous measurement of environmental and social impact

● Business functions; Translating to reality of finance, R&D production, marketing, digital technology etc. ● Structures & set-up; e.g. new (carbon) accounting structures, information flows, KPI’s ● Activities & routines; ● Mindsets; Shifting from sales- to a life cycle focus and from pure delivery to co-creation and experimentation

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Scaling Circularity

Unlocking circularity at scale Don’t lose your customers — Start with them, design great circular experiences, and and use this to inform the other levels.

We need to engage customers to be part of the journey to circular as we are still (and will remain for a while) in a consumption based economy. What does a circular proposition look like? What will the customer buy into and how does that fit into their lives?

A service perspective is needed. Services are the connective tissue between the full circular offer to the customer and what is needed to deliver it operationally.

By understanding customer barriers, motivations, needs and triggers to maintain, repair, upgrade, reuse or return we can imagine and create service concepts that make sense.

Prototyping these —testing both desirability and feasibility across product, operation and value chain— uncovers the requirements to enable circularity and de-risks roll out.

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Scaling Circularity

Examples from practice A global leader in household appliances Design for repair | Gucci wanted to improve the longevity of its products by improving its repair services. Together we set out to reinvent them to live up to the expectations of a high-quality luxury brand.

We did in-depth customer research and a series of internal co-creation workshops involving teams across the organisation. This allowed us to map out the customer's and the product's repair journey and create an overview of the underlying operational infrastructures (logistics, digital, customer service, legal considerations, etc.).

Together we designed a series of interventions in the repair services. We de-risked these by prototyping and piloting them across markets before international roll-out.

Design for maintenance | The secret to the elevator industry’s whopping margins is maintenance. People hate getting stuck in lifts. So they pay $2,000 - 5,000 a year to keep each one running smoothly. Kone saw that margins on maintenance services were 25-35%, compared with 10% for new equipment and decided to get properly set up for a business model based on repair and maintenance rather than machine sales.

We helped kone redesign their offer (to include these services), streamline the back office, and provided agents with the tools to have quality conversations with customers. This enabled them to create flexible, personalised offers, delivered at higher efficiency. A increase in sales followed.

Design for circular customer behaviour | A global leader in household appliances boldly decided to embrace a circularity but soon realized users play a key role in prolonging product life and closing product/material loops. We partnered to find opportunities to stimulate circular behaviour.

We observed and spoke at length with people across markets and captured the insights in two models: a relationship lifecycle and a loop model. These allowed us to profoundly understand the human-product relationship from start to end and get insight into what drives or prevents people to maintain, repair, share or recycle their products.

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are deeply rooted in a linear set-up. That set-up needs reconfiguration to close A holistic approach We loops and connect value streams. Service design embraces systems thinking to how material, people, communication and activities are coordinated Some key tools & reimagine across infrastructure or value chain. That provides the creative confidence to methods redesign an organisation and the world around it. Some key tools used:

System map

Circular behaviour model

Target state blueprinting

Transitioning industries, value chains or complex stakeholder collaborations to a new circular pathway requires a deep understanding of how different ecosystem parts interact. System mapping is a deep-diving exercise into the actors involved to understand how they relate, interact and what value they exchange.

If customers don’t buy into or participate in circular propositions they will fail. The circular behaviour model is a framework to understand the motivations, abilities, triggers and barriers influencing circular behaviour. This framework situates customer insights from research on each loop to facilitates an understanding of what needs to be (re)designed to close them.

Circular offers require the coordination of activities spanning infrastructure, communication, people, and material components. A target state blueprint provides a holistic view that connects the circular offer to the customer to what is needed to deliver it operationally - from roles and behaviors to touchpoints, tools and processes.

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“Unlocking circularity: A multilevel approach to scaling circularity” presents Livework’s understanding of the challenges of transitioning to a circular economy to inform discussions on the approach for steps forward. The document is intended to develop a vocabulary and framework to help us identify the often intangible barriers to change and find approaches to address them.

Get in touch Anna van der Togt

Ben Reason

Lead Design & Sustainability

Founder & Managing Director

anna@liveworkstudio.com

ben@liveworkstudio.com

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