“You don’t lead by pointing and telling people some place to go. You lead by going to that place and making a case.” Ken Kesey
Mastering circular initiatives is about bringing the Circular Economy to life in your organisation. It is about building the momentum and finding the community to collaborate on the challenges that we are facing. How to do this in practice is often the question. With this article series we are sharing what works, what we have seen in practice and what we have learned from research.
One of the central elements of your role in initiating and in successfully running circular initiatives is to identify and to present the “right” circular business case. Presenting the proper reasons for a circular action and showing the compelling goal are important in order to get people on board and in order to get support for the initiative in the long run.
But why exactly do we need a business case? And what is the best case? What is the advisable way to introduce and to present the case to management, to employees and to external stakeholders? These are the questions we want to answer in this article.
Finding the “right case” means breaking down the “big agenda” of the circular economy and creating opportunities for colleagues to see what they get out of it.
The need for a business case
In the public debate we find many convincing arguments for the circular economy. The close link to environmental protection and to fighting climate change currently make the Circular Economy an attractive agenda directly linked to high level global challenges.
On first sight this connection looks favorable for introducing the circular economy in organisations. However, the reasoning deriving from global challenges is by far not sufficient. And stressing the urgent need to act for the environment could even be counter-productive. And this is mainly for three reasons:
First, the high level goals of fighting climate change and protecting our planet’s resources are too abstract for employees, workers and decision-makers. They are too disconnected with the goals and aspirations of managers and employees in organisations. Even if they are supporting these goals, these ambitions are not tangible enough and thus not relevant in their daily work life. Consequently, they are not very likely to fully engage in an initiative that is based on these goals.
More urgent concerns with direct benefits are dominating in the daily decision-making and planning of managers and employees. Thus, CSR managers who are stressing the importance of fighting climate change can be perceived as not understanding the day-to-day realities of their colleagues. If you are perceived as out of touch with the realities of your colleagues, your message or case is not likely to stick. Trust in the message is closely linked to trust in the messenger. Thus, the environmental agenda could be the wrong entry point for engaging colleagues in circular action.
Second, every collective body and every institution is driven by its purpose, its deeper reason for existing. The collective will not invest in an agenda that is not directly contributing to the main objective of its existence. Regardless of its attractiveness or urgency. In the case of a company its main mission is commonly to make business. This is why the introduction of the Circular Economy will not work if it is not related to a convincing business case linked to the company’s core mission.
Finally, we still find many managers and employees who are not yet convinced that a change in the way of doing business and using our planet’s resources is needed. Various reasons and conflicting priorities are stated for not becoming active to address climate change at scale. Sometimes we are seeing a generational gap, with younger people being more open to change and with a stronger willingness to shape the future of their workplace.
The right business case
Now the question is how to identify and how to present “the right business case”. What we see is that “reducing waste”, “avoiding landfill”, or similar are good reasons for a circular economy but not necessarily the “right” business case for your organisation.
In your role you need to match the benefits from a circular initiative to the company objectives. Furthermore, you need to fit the initiative to the objectives of the departments concerned by the initiative and also to the objectives of the people who are expected to work hard for it. Research shows that the ability to establish a common understanding around the business case is a crucial enabling factor in the transformation process (e.g. Bechtel et al. 2013, page 38).
It is the role of the initiator and communicator to break down the “big agenda” of circular economy into smaller, tangible, concrete actions. Ideally, colleagues find out about the benefits of the Circular Economy themselves. Then they come up with ideas and solutions applicable in their own workplace. This is hard to do for somebody who is not deeply involved with the day-to-day challenges and tasks.
So rather than investing a lot of time and effort into finding the right case yourself, it is recommended to create the opportunities and the conditions for your colleagues to come up with ideas. Rather than thinking about solutions right away, it is worth sharing the vision, inspiring and creating opportunities with colleagues to come up with concrete fields of intervention.
?We will list a number of ways to create such opportunities and will name supporting formats for achieving this in practice in one of our future articles of this series.
Best selling business cases
Many companies already embarked successfully on the journey towards a more circular way of doing business. Analysing their early stage initiatives helps in identifying business cases that work. We see patterns of choices for strategic action. Let us call them our “best sellers” of strategic case options.
- Circular packaging – use of single or standard format material, reusable packaging or eliminating packaging altogether
- Circular procurement – work with suppliers in order to reduce the amount of material used, use recycled materials, procure locally, etc.
- Circular operations: Switch to renewable energy provider, eliminate plastic cups in the cafeteria, introduction of company bikes, switch to electric company cars, sharing models among colleagues, etc.
- Increase efficiency for cost-reduction: energy efficiency, avoiding waste, reducing packaging
What becomes clear from this list is that companies commonly do not right away aim at introducing a circular business model such as product lease as a service for example.
?Look out for the next article, which will focus on “product as a service”!
An innovative product has the potential to put the company ahead of competition and is good for PR and might attract new talents to the company. Still, developing such a product is complex and takes time. Switching to such a model requires a very strong commitment from all parties involved as well as the willingness to invest and to take risks. Focussing on simpler options with more direct benefits for the company are thus preferred.
“But what is in it for me?”
Circularity initiators and leaders define challenging ambitions and translate Circular Economy objectives for their organisation. They set clear guidelines for people to work with and involve them in circular practices. Above all, they help in answering one central question, that they will hear either explicitly or indirectly from their colleagues and partners likewise: What is in it for me?
“The key to inspiring employees to work differently is to clearly show them what’s in it for them” says Kim Wylie, an expert in organisational change and business transformation at Google.
When engaging co-workers and the management in circular initiatives, they want to see what they get out of the initiative:
1) They want to see the benefits. They need the understanding of what is planned and what will happen.
2) They need to judge what the initiative means for their own work. They want to know what is expected of them (roadmap and targets) and what risks the initiative might incur.
In order for your co-workers to properly judge whether your initiative is part of the solution to their current challenges or rather presents itself as a problem, they need to get the case presented in their own language, from their own perspective. This is why the business case should be presented in a compelling narrative and depending on the audience.
For example, developing an innovative and circular product, is a good business case for the sales department, when the case includes solid data about the sales perspective. For the R&D department this argument alone is not strong enough so one needs to find good arguments for the R&D department. Such an argument could be the fact that the new development will build on previous achievements of the department, thus maximising the work of the unit.
For the management the costs of investment need to be well justified and backed with business prospects.
“A business case to realize circular opportunities may be one in which the financial case is clear and aligns with traditional rules for financial investment.” (Circular Value Creation – Lessons from the Capital Equipment Coalition, PACE, 2019)
Often circular initiatives require investments that pay off only a few years later. Thus unfortunately, the argument of cost reduction often does not work. Different arguments are needed and they exist. These could for example be safer supply and reduced risk for your company in the case of circular procurement. Innovative circular products can help in attracting new talents and they are good for PR.
Further potential case arguments:
- Reduction of carbon emissions
- Increased resilience
- Customer retention and eventually increased sales
- Compliance with increasing regulatory requirements
- Access to new markets
- Be ahead of competition
An essential part of your role
The advantage with the circular economy is that you have many people who are intrinsically motivated to contribute to a circular initiative. However, just relying on the motivation to contribute to a better world is not sufficient.
As every new initiative in the business context, the circular initiative needs a strong business case. One of the central elements of your role in initiating and in successfully running circular initiatives is to identify and to well present the “right” circular business case.
The right case is in line with the company objectives and matches the advantages of the circular economy with the objectives of the stakeholders concerned. If your colleagues can see what is in it for them, the case is well presented and will more likely be supported.
?Read the next article on March 10th on the business case of “product as a service”