Well this is quite hard; not in a ‘It’s not you, it’s me’ kind of a way but more because knowing what to avoid when trying to set up a circular business model means we’ve been involved in a few which have not worked out; which is a bit galling given QSA’s raison d’être is to implement SUCCESSFUL business models. When they fail we take it personally and it’s a kick in the teeth. The reasons they fail usually fall into a few main categories.
Well… here goes:
Who to partner with?
Do you need to partner? When do you need to partner? It is important to carry out a capabilities gap assessment on what you currently have in your armoury and what you need for a circular business model; for some companies this will be very little, for others big chunks will need to be outsourced. If you are outsourcing – remember it is not just a transactional relationship, it is a partnership – they will be engaging with your customers on your behalf: the relationship has to be tip top!
Qualifying the partner’s capabilities is vital. We’ve seen some businesses opt for a favourite or incumbent supplier only to discover too late that this supplier doesn’t have the right capabilities at the right scale to deliver their promises.
Too slow to make a decision or lack of inertia
Traditional manufacturing based companies may find it really difficult to transition to a circular model: they are linear by their very nature. Having said that, the ability to make a decision is also centered around the mindset of the company. As part of our process in developing circular models we always ensure people across the business are involved in the process (although decision by committee is also an issue, see below) – getting buy in and enabling people to take ownership and understand the benefits from their point of view are key.
There’s great value in taking decisions rapidly, trialling a range of options and learning from them. We see too many businesses trying to focus on “the right trial” and being disappointed when it doesn’t work as they expected: the whole point of a trial is to gather data to inform better decisions. So more trials are beneficial. You need to be able to adapt and improve as a result of the new information you receive.
Loss of a champion
Having a champion for any change project is really important and they need to be of requisite seniority. Having Board level commitment to the project is essential to its success and ability to be embedded into the business offering. It is also important to have a deputy champion earmarked or explicitly waiting in the wings…
We once had a meeting where the champion for the project was escorted off the premises during one of our progress meetings. I hasten to add it had nothing to do with our project!
Decision by committee
If no one is willing to put their head above the parapet and make a decision, then you don’t have a champion. Decisions need to be made, and tough ones at that. You need good leaders – and we don’t mean that’s just in senior management roles: across the whole project.
Cultural barriers within a business
Specifically, being risk averse is a major problem. For a linear business, the risk can seem daunting, but we often say innovate or die. A little brutal maybe, but change is required (you don’t see anyone standing still in the middle of a 100m sprint, so why should a business stand still in a dynamic and constantly changing market?).
Your first circular model can be quite basic to start with – there are entry points for all industries (for example repair in the fashion/retail industry) but this builds confidence and then more circular opportunities will become clearer. It’s also important to test – test on a small geographical area/group of customers – test and refine (and test again) and then go live – it can and should be refined and honed as learning is gathered. You do not need to launch with the most perfect circular model ever to have been launched.
The changing face of business
Do you need to pivot? 2020 & 2021 is testament to this – I am not sure I need to say much more on this one.
Many of these pitfalls are interlinked; for me the level of ambition and culture are clear driving forces that dictate other issues or mask tremors in a faltering business.
BUT don’t feel despondent! Learn from the pitfalls above; understand that implementing a circular model will require patience and perseverance and you will need to get buy-in from all parts of your organisation. We have developed an online platform to guide you through the steps to implement a successful business model.
And there is light at the end of the tunnel, companies tend to overcome many of these issues and know that circular business models are the future to the success of their business and we have reengaged with many of the companies when a model was halted for one of the reasons listed above.
Phew, it’s not me or you!