The circular economy is “generative by design,” as the Ellen MacArthur Foundation puts it: nothing is wasted; everything is going around in a circle. The foundation, which counts major corporations such as Renault, BT and Cisco among its founding partners, suggests that this simple idea is worth more than $2 trillion to the global economy.
The Circular Economy 100 and other efforts of the Ellen MacArthur Foundation bring together companies, innovators and regions to accelerate the transition to a circular economy. The foundation shares a growing list of innovations via its 2012 and 2013 Towards the Circular Economy reports, collection of online cases and other publications. GameStop, the world’s largest multi-channel video game retailer, is among them.
Originally a “normal” software and video game retailer, GameStop quickly saw an opportunity in recircling the products that were at the end of their life. As the customers began to move to new electronics more and more quickly, abandoning fully functional products before the end of their life, few companies provided an easy, attractive process for turning wasted electronics into value for consumers.
Take Android tablets, for example — the company now accepts 42 different ones for trade-in credit and plans to refurbish and sell all of them before long, as it already sells new Android devices at 1,600 stores. For every product accepted into the refurbishing cycle, GameStop had to figure out how to reverse-engineer it in the most cost-effective way, without any guidance from the manufacturing companies. The result: a growing set of competencies for a new world. Today, GameStop has a strong skill set around buying, selling and trading. In 2012, sales of rebuilt mobile devices alone were projected at $200 million.
From Line to Circle: The Practicalities
Making the transition from line to circle is a daunting task, but the elephant does not need to be eaten in one bite. Three simple and well-known options are available for consideration: reuse, refurbish and recycle.
- Reuse: Reuse has been around for a long time. The key to reusing your waste with a real financial bang is to explore opportunities beyond the obvious. A recent McKinsey & Company report, for example, suggests betting on the power of “cascaded use” — whereby reuse is spread across many different industries in the value chain, such as “when cotton clothing is reused first as second-hand apparel, then crosses to the furniture industry as fiber-fill in upholstery, and the fiber-fill is later reused in stone wool insulation for construction — in each case substituting for an inflow of virgin materials into the economy — before the cotton fibers are returned to the biosphere.”
- Refurbish: Refurbishing (replacing one or a few parts of a used or broken product) and remanufacturing (completely overhauling the used product, restoring it to a new condition) offer another opportunity for value creation — by restoring the product to nearly its original state. The key to refurbishing and remanufacturing success is finding a cost-effective and consumer-friendly process for collecting the product you wish to work with. GameStop collects its wide range of electronics to be refurbished at a handful of collection centers, but its own retail chain makes this easy.
- Recycle: Recycling requires a completely different level of complexity, whereby the product is broken down into incomprehensibly small parts, and the resulting raw material is sold into an often different industry. In the world of resource scarcity, recycling seems to be the hottest business idea around.
From line to circle is a fundamental shift in the way you do business — the most important shift needed to survive and thrive in the resource-deprived world. Yet it is not enough. You also need to go from vertical to horizontal.