Circular business models won’t revive urban manufacturing

Presented to the Knowledge Transfer Network 'Head to Head Live’ event, London, November 2015
Associated Categories Manufacturing Tags: , ,
Circular economy

In design, one needn’t always accept the problem as given. So why are we talking business models anyway?

Low ambitions

In December 2014 the Harvard Business Review recommended that firms weak in innovation build a ‘Minimum Viable Innovation System’ in 90 days. (1) That, it argued,

“will not require years of work, fundamental changes to the way the organization runs, or a significant reallocation of resources…”

For all the speed recommended, this concept of innovation has really low ambitions. And this weak-willed programme explains why business models are today so prominent. Business models form a fundamentally financial approach to innovation, which seeks new ways to charge customers.

Of course, they’ve been going a long time: (2)

However today’s euphoria about firms such as Uber and AirBnB shows an unprecedented willingness of capitalism to pass up tech opportunities and instead invest in new financial structures and processes. Here business models join cash hoards, share buybacks, mergers and acquisitions, corporate bonds (think Volkswagen) and leasing (think Volkswagen again).

With circular business models, we have an ethical twist on a familiar formula.

Large-scale, automated recycling vs circularity

Humans aren’t just needy consumers – they’re ingenious boosters of the productivity of labour. The whole ascent from the low-carbon cave of prehistoric times has been based on a rising productivity of labour. Therefore recycling materials is fine, but only if it’s done so that it lightens the work humans have to do.

In electronics, surface-mounted devices on Printed Circuit Boards can now be recycled automatically. (3) Similarly, to sort waste, the Norwegian company Tomra uses near infrared techniques, X-ray transmission, visual spectrometers, colour-line cameras and metal sensors. (4)

Circularity rejects such high-tech methods. As Walter Stahel, one its founders, has written, circularity boasts

“local low-carbon and low-resource solutions, which are  inherently more labour-intensive than manufacturing, as economies of scale limited…” (5)

That’s right. Circular methods mean toil. They want to economise on materials, not on labour.

Why should manufacturing be local and urban?

To make circular business models local narrows horizons still further. (6) Of course, locate labs design and 3D printing facilities in cities; but let’s please realise that manufacturing should evoke national policy, not mayoral dabblings. Why? Because modern manufacturing is a profoundly inter-national enterprise. Because a global division of labour is more efficient than a local one.

Visions of low-transport, low-energy, low-pollution and compact cities form the background to urban circularity. (7) But they are more than 40 years old. (8) Anyway, in most cities commercial property rents bar alone bar the way to manufacturing at any kind economic scale.

It’s very innovative to try to shorten supply chains to the length of a tenement block and to prefer local markets to exports. But the future belongs to the world economy – urban, suburban, rural and high-tech, not eco-tech.

References and Footnotes

  1. Scott Anthony, David Duncan and Pontus MA Siren,  ‘Build an innovation engine in 90 days’, Harvard Business Review, December 2014.
  2. James Woudhuysen and Joe Kaplinsky, Energise! A future for energy innovation, Beautiful Books, 2009.
  3. Wei Lei and others, ‘SMD segmentation for automated PCB recycling’, paper to the 11th IEEE International Conference on Industrial Informatics, 2013; abstract on http://www.researchgate.net/publication/261096861_SMD_segmentation_for_automated_PCB_recycling
  4. https://www.tomra.com/en/solutions-and-products/sorting-solutions/recycling/
  5. Walter Stahel, ‘Policy for material efficiency – sustainable taxation as a departure from the throwaway society’, Philosophical Transactions of the Royal Society, 2011/3, my emphasis; on http://rsta.royalsocietypublishing.org/content/371/1986/20110567
  6. For the regional approach, see Technopolis Group, Regional Innovation Monitor Plus: Thematic paper – Regions in transition towards a circular economy, 9 December 2014, on https://ec.europa.eu/growth/tools-databases/regional-innovation-monitor/sites/default/files/report/RIM%20Plus_Circular%20Economy_Thematic_Paper%204.pdf
  7. See for example High Speed Sustainable Manufacturing Institute, ‘Resource efficient strategies for urban manufacturing’, on http://hssmi.org/research-themes/resource-efficient-strategies-urban-manufacturing/
  8. On hopes that IT could make for more compact cities, see James Woudhuysen, ‘Transport: breaking through the impasse’, 29 October 2014, on http://www.woudhuysen.com/transport-breaking-the-impasse/
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