How do you create a successful product that’s good for people, good for business, and good for the world? That’s the crux of the philosophy behind the circular economy, a new way of thinking about value creation being advocated by the Chairman of Nornorm and serial entrepreneur Jonas Kjellberg.
Before becoming Chairman of Nornorm (a subscription-based furnishing company), Jonas was the co-creator of Skype, working as Managing Director (equivalent to a CEO in the U.S.), and helped generate 90 percent of their revenue stream. In this new talk, he’s looking at ways to help make business circular so that businesses can be profitable and create a better world by 2030.
The Old Model of Business
In the old model of business that most companies have been using, the successful organization creates a product that’s both good for people and for business. That is, if you make a better product at a lower price, it will help people, so they will buy it. Then if people buy the product, it will create profits for the company and increase shareholder prices, helping the business.
However, this business model does not account for all the impacts of creating and using a product in the world. It doesn’t take into account the cost of waste, pollution, carbon emissions, and the social impact on people when we buy new things and constantly throw them away. For example, fast fashion creates products that aren’t meant to last, people throw them away, and now they fill our landfills. This isn’t good for anyone in the long term.
The Circular Business Model
On the other hand, the new circular business model takes into account the total costs of true value creation. In this new model of value creation, the idea is not to own things but to rent things.
For example, instead of buying new furniture, you rent furniture. Therefore, if you don’t own the furniture, then you can replace the items, which means you can circulate the furniture to others, making the furniture more affordable over time for more people. Likewise, since the furniture is reused, it doesn’t create more waste, having less impact on the environment. Ultimately, since the cost of manufacturing is done, it will cost the company less to create and rent furniture.
The New Circular Economy
So how can companies profit in this new type of circular economy? In order to have a successful circular business, companies need to rethink the way they create value. Instead of making products that don’t last and with many choices for the consumer, companies need to focus on making iconic products that are more durable, with fewer choices, so they can be rented and recirculated to people.
Companies will need to do reverse logistics to keep track of products so they can recirculate and keep earning income. It will take time to implement, but in the end, there will be fewer products with less waste that create more value for people, businesses, and the world.
If you’re interested in new ways of looking at business, contact BigSpeak Speakers Bureau to book Jonas Kjellberg or another business speaker.
