Shift to circular economy requires to rethink our business models

Shift to circular economy requires to rethink our business models

Circular economy plan adopted by EU earlier this year requires redesigning of existing business models in order to make economy more sustainable.

The way to do it is to shift from product-based models to service-based. “The real question here what is really needed – a drill or just a hole in a wall”, said Douwe Jan Joustra in his presentation during webinar “Circular Design – Gain Business Resilience After Covid-19” held on August 18 (Hosted by Embassy of the Netherlands in Ukraine and ReThink Ukraine).

There are many examples already of successful service-oriented business in the world, selling services like lighting, working environment, mobility, etc. For example, Xerox company one or the first switched from selling machines to selling a service of photocopying charging customers per copy and taking full care for the product maintenance.
For older generation paying monthly fee for a service is unthinkable as in 2-3 years you can spend the same amount as the product initial cost. However, in service oriented model consumer does not need to worry about maintenance or repairs as it all included in the fees, which makes it very popular among young generation.

Such business model provides incentives to produce longer lasting and more efficient products that can serve the customer at cheaper price long-term, as it puts responsibility for the life-cycle of the product on the producer, not the customer.

But more importantly, global shift to the service-based business models will facilitate greater diversity making the economy more resilient in face of future crises (like the present COVID 19 crisis) and turning business more socially and environmentally responsible.

Olga Ignatenko,
Information Center “Green Dossier” 

Webinar video recording