Circular economic models will disrupt linear business models

Railroads outpaced ships as the primary means of moving cargo in the 19th Century, electricity supplanted steam engines in the early 20th Century, and Internet-based companies like Amazon and Uber have transformed retail and transportation today.

Now a new disruption is sweeping through business sectors around the world: the circular economy. Companies that ignore this trend will perish, argued Henrik Hvid Jensen, chief technology strategist at Ashburn, Virginia-based DXC Technology, in an October 2 post for the Geneva-based World Economic Forum. 

“The circular economy is a transformative approach that goes beyond incremental changes in waste reduction and recycling,” wrote Jensen. “It represents a seismic shift in the way we conceptualize the entire life cycle of a product, designed to benefit businesses, society, and the environment.”

Traditional linear economies “take, make, [and] dispose” model, extracting raw materials to make products that are later discarded. This model, however, is unsustainable.

Circular economies will engender new models that challenge this linear approach. They will leverage designs that aim to extend the longevity of products, extend the uses of products beyond their initial functions through sharing or refurbishing, and recycle and regenerate materials to make new products once the old ones are disused.

The question facing legacy businesses that were established with linear models is whether they can adapt to a new circular economic approach or whether new companies forming today with the circular economy in mind will supplant their less advanced competitors.

“Born-circular companies aren’t just adapting to new rules; they are the architects of this burgeoning economic model,” wrote Jensen. ce/jd