Critical Success factors of Circular Economy

September 14th, 2018   •   News   •   no comments   
Critical Success factors of Circular Economy

Part I – A paradigm shift in Organizational Culture is the first step to a Circular Economy

 

Today, most stakeholders understand there is an urgent need to transition from a linear economy (take-make-dispose) to a Circular Economy. Even the general public has become familiar with the concept and has started to believe that a circular economy brings on major benefits for the environment and society.

Presumably, anyone with a stake in the industry has seen a Circular Economy infographic. The online world is full of them, one more beautiful and more explanatory than the other. But these infographics are only a technical representation of the circular economy concept.

How can we get there? How can we reach that Circular Economy? This is a different question.

The success criteria of a circular economy are defined and agreed among all stakeholders during each stage of the product life cycle. As success criteria require quantitative measures, the European Commission adopted the measures for 2025 – 2030 recently, through the Circular Economy Package (the most modern environment legislation worldwide).

A successful transition towards a circular economy needs critical success factors to be in place. These critical factors, that will underpin the transition and the likelihood of its success, unfortunately cannot be identified in the Circular Economy infographics. Based on comprehensive expertise and research carried out on various markets, in the next period of time we aim to describe briefly some of the circular economy critical success factors.

 

ORGANIZATIONAL CULTURE between EXECUTION and INNOVATION

A simplistic approach of achieving circular economy goals covers only a significant change of the actual business models. But Circular Economy requires first and foremost a fundamental change in the existing attitudes and mentality, requires a strong leadership, and an outstanding organization culture.

The successful transition to the circular economy depends on the company’s ability to develop that organizational culture which can strike a balance between exploiting the actual knowledge (continuous improvement of the actual business model) and exploringnew opportunities (business model innovation).

Definitely in a linear economy, companies can use exploitation capabilities to produce predictable results and improve the resource base. In fact, most of the companies will be always in favor of continuous improvement of the actual business models. Following a “continuous improvement” approach, companies can achieve some success on a short term and maintain a stable performance.

 

In a Circular Economy, however, “continuous improvement” is not enough.

Companies must integrate, build, and reconfigure internal and external competencies and capabilities to address the new environment dynamic. Circular Economy goals requires “business model innovation”, but innovation-related results are unpredictable and distant. Innovation can bring both considerable successes and failures.

Are the business leaders ready to take on these risks? What about the shareholders’ “willingness”?

Most of the companies are embracing the idea of “circular economy”, but in reality, many of them don’t want to go through the string of failed experiments necessary to get there. We have to admit that innovation is associated with high costs and risks, but on a long-term, if companies don’t take risks, they can miss opportunities to obtain a competitive advantage in a circular economy early on.

Today, the leaders’ business decisions are “trapped” between circular economy goals (which come at a “cost”) and the company expected financial results (“rewarded” business goals). The actual global situation makes their strategic decisions even more difficult. Except for the EU member states, most of the international markets are still oriented on a linear economy, having no regulations related to circular economy.

 

Exploitation and exploration capabilities compete for the company’s limited resources and the internal tensions are high.

Using the same resources (financial, human resources, infrastructure, etc.) for both innovation and continuous improvement is not an easy task. Without sufficient capabilities (and the transition to a circular economy requires a lot of capabilities) companies will remain stuck in the middle or even lie behind.

How many companies have adequate and sufficient capabilities to move forward to circular economy nowadays?

Developing an adequate organizational culture in order to embark on exploitation and exploration simultaneously is not easy. Specialized literature identifies the following approaches:

  • Companies can focus the organization culture on either exploitation or exploration alternatively due to the difficulties in pursuing both simultaneously.
  • Companies can develop both capabilities at the same time, through the establishment of structurally separated units within the same organization.
  • Contextually, companies can support and allow people to judge for themselves how to divide their time between exploitation and exploration activities.
  • Depending on their leadership, companies can decide that top managers play the most important role to develop exploration and exploitation activities.
  • Companies may outsource exploitation or exploration activities to external companies, or develop strategic alliances with other companies.

 

Obviously, the transition to Circular Economy requires different organizational structures, processes, and strategies. 

This statement is largely valid not only for companies (producers, importers, retailers, waste management) but for all the other stakeholders: local authorities, industry and professional associations, compliance schemes and so on.

Standalone innovation is not enough for transitioning to a Circular Economy. New structures, processes and strategies are required. Stakeholders must find an optimal approach between mechanistic structures, routinization, control, bureaucracy and organic structures, improvisation, and autonomy.

 

CONCLUSION

When addressing the Circular Economy desideratum, the first challenge of companies is how to create that organizational culture able to develop synergies between “continuous improvement” and “business model innovation”.

To succeed in a circular economy, the companies have to strategically integrate exploration and exploitation activities and to capture their benefits simultaneously.

 

WHAT’S NEXT?

Once such a culture is in place, the next critical success factor to be addressed is: Business Model Innovation.

 

About the author:

Marius BrinzeaMarius Brinzea has a managerial experience of over 20 years and he is a graduate of Strategy Executive Programs within INSEAD. He has worked in managerial positions both in Romania and abroad, also providing consultancy in a series of projects in Europe, USA and South America.

 

Nespresso and Caran d’Ache an outstanding link for Sustainability!

June 1st, 2018   •   Inovation, News   •   no comments   
Nespresso and Caran d’Ache an outstanding link for Sustainability!

Nespresso and Caran d’Ache together for Sustainability!

When strategists become increasingly skeptical about the accelerated evolution of business models (not referring to R&D or technological developments), Nespresso and Caran d’Ache demonstrate once again that business models innovation has no limits.

More than that, the business model innovation can start anywhere: value proposition, key resources, key activities, strategic partnerships/alliances, customer segments, channels, etc.

The last “evidence” is the “strategic partnership” between two of the world’s most admired companies: Nestlé Nespresso and Caran d’Ache.

The strategic partnership objective is to increase the sustainability of both business models and to create a shared value: developing a ballpoint pen made of recycled aluminium coffee capsules.

Why Nespresso and Caran d’Ache are great business models?

Without any doubts, Nespresso represents a unique experience for consumers. An exceptional coffee, futuristic expresso machines, gorgeous shops and a functional coffee capsule collection and recycling program. We could also add the unforgettable Nespresso George Clooney commercials.

For the economists, and especially for strategists, the Swiss company means fundamentally much more.

Nespresso is considered one of the most famous business models and is constantly studied in prestigious educational institutions around the world (INSEAD, Harvard, etc.).

Nespresso’s success stems from:

  • how the business model generates revenue (“recurring revenue”);
  • continuous business model innovation (“permanent pivoting downstream and upstream segments “);
  • and “continuous improving sustainability” of the entire value chain.

Nespresso value chain development entails designing compatible business models at the level of the lead firm, and at the level of suppliers.

 


 

Founded in 1915 Caran d’Ache is the world famous Maison de Haute Ecriture in Geneva and has become through the years the emblem of Swiss manufacturing tradition.

Caran d’Ache creates and develops the highest quality writing tools!  The combined the best materials with the most advanced technologies in order to meet the deepest human needs:

  • expressing,
  • creating
  • and communicating.

I love this brand!

The Caran d’Ache business model incorporate best practices in terms of the social, environmental and economic life. For its internal structures, as well as in its regular exchanges with suppliers and partners.

Caran d’Ache works tirelessly to preserve the natural environment and its resources while placing human beings at the heart of its development.

Respect for the environment is reflected in activities aimed at optimizing energy efficiency and closed-cycle processing of metals.

 

Welcome Caran d’Ache 849 Nespresso!

Apart from the fact that both Swiss companies offer their clients a unique experience what else they have in common?

Both companies are highly certified for sustainability.

But is the certification a driver for sustainability? Of course not but the business model is.

In order to linked their visions for sustainability, Nespresso and Caran d’Ache launched a ballpoint pen made from recycled coffee capsules.

 

Nespresso has partnered with Caran d’Ache to produce a limited-edition ballpoint pen made from recycled aluminum coffee capsules.

Caran d’Ache 849 Nespresso is a message for recycling! The message is designed to remind consumers of the infinite durability of aluminium which can be reused again and again. It aims to encourage the recycling of Nespresso coffee capsules by showing the infinite potential of aluminium.

 

Read more in the Nestlé Nespresso press release. 

About the author:

Marius BrinzeaMarius Brinzea has a managerial experience of over 20 years and he is a graduate of Strategy Executive Programs within INSEAD. He has worked in managerial positions both in Romania and abroad, also providing consultancy in a series of projects in Europe, USA and South America.

European Council adopts NEW RULES for Waste Management and Recycling.

May 24th, 2018   •   News, Strategy   •   no comments   
European Council adopts NEW RULES for Waste Management and Recycling.

 

Waste management and recycling targets

European Council adopted on 22nd of May 2018 the Waste Package which sets out NEW RULES for waste management and recycling targets for the period 2025-2035.

Member states will have to meet the following targets as they increase the reuse and recycling of municipal waste:

 

Member states will set up, by 1 January 2025, separate collections of textiles and hazardous waste from households. In addition, by 31 December 2023, bio-waste is either collected separately or recycled at source (e. g. home composting). This is in addition to the separate collection which already exists for paper and cardboard, glass, metals and plastic.

 

The legislation defines specific packaging recycling targets:

 

The legislation contains a landfill reduction target, and sets minimum requirements for all extended producer responsibility schemes.

Producers covered by these schemes must take responsibility for the management of the waste stage of their products, and to contribute financially.

Mandatory extended producer responsibility schemes for all packaging have also been introduced.

Member states shall endeavor to ensure that as of 2030, all waste suitable for recycling or other recovery, in particular in municipal waste, shall not be accepted in a landfill.

 

The waste package will lead to more recycling of waste and so contribute to the creation of a circular economy. It will encourage the use of recyclable packaging and reusable packaging and will improve the way waste is managed.

 

See full documents:

European Directive Packaging and Packaging Waste

European Directive Waste

European Directive WEEE

European Directive the landfill of waste

 

BACKGROUND

  • The European Commission presented a revised circular economy package on 3 December 2015;
  • On 19 May 2017, EU ambassadors agreed a mandate on the package, paving the way for trilogies, which kicked off on 30 May 2017;
  • After several rounds of negotiations, a provisional agreement was reached on 18 December, and EU ambassadors endorsed the agreement on 23 February;
  • The adopted legislation will enter into force 20 days after its publication in the Official Journal.

 

 

About the author:

Marius BrinzeaMarius Brinzea has a managerial experience of over 20 years and he is a graduate of Strategy Executive Programs within INSEAD. He has worked in managerial positions both in Romania and abroad, also providing consultancy in a series of projects in Europe, USA and South America.

 

 

 

 

 

Water and energy – the essence of mankind existence

May 31st, 2016   •   News   •   no comments   
Water and energy – the essence of mankind existence

Water and energy represents the essence of mankind existence and the fundamental elements of all systems ever built on earth.

More than ever, the evolution of mankind depends on the interconnection, the availability and affordability of these two elements.

Obviously, Elon Musk (Tesla) through his vision, produces fundamental changes on the perception regarding energy and thorough technical solutions developed for energy storage, generates premises of independence energy situations (in the not too far future), both individually (for isolated areas) and at society level.

Maximization of the real benefits of energy trends will be conditioned by the accessibility and affordability of water.

That’s because the interdependencies between water for energy, and energy for water, are based on fundamental common elements (management systems, transport and storage, infrastructure, sustainability and efficiency) and therefore the approach regarding these two elements must be harmonious one.

If in the case of water, the groups of interest (authorities and corporations), through all kinds of regulations, will follow the same strategy – “close the door behind you and make money” (as in the case of fossil fuel), by restricting the access to water, then surely mankind will face the same paradigm that facing today.

But if the policies regarding access and affordability of water will follow first the fundamental interests of the individuals, then surely mankind will enter in a superior stage of evolution.

Disruptive technology will only be an accelerator of it.

What is the future of the actual business models?

May 7th, 2016   •   Inspiration, News, Strategy   •   no comments   

“59sec” How mobile apps boost your sales conversion and redesign customer experience with your brand.

April 8th, 2016   •   Marketing & Sales, News   •   no comments   

Successful players are adapting faster than their competitors: they increasingly invest in digital and bring innovation—new functionalities in their mobile apps. This usually means shifting investments from traditional marketing channels to digital.

Mobile has been the major disrupter, particularly in the last couple of years. The rise in mobile makes the proliferation of apps ever more critical. Digital usage is shifting customers away from desktop and laptop to mobile—and specifically to mobile apps. When …

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people use mobile devices, they’re using apps, decreasing the influence of the web-based searching.

“59sec”  – Case Study

Kuantero, a Romanian e-marketing agency, faced in 2012 a controversial situation with a customer, a major player in automotive industry, regarding a Google AdWords campaign: lack of conversion.

After a lot of reviews and re-settings of campaigns, the problem still remained. The leads were generated, but, at the end of the month, when the analyses were made, the conversion lacked. Everybody in the agency was puzzled. Why this happened? Why the conversion was so low?

At some point, the agency did a mystery shopping. What was the result? The client’s sales agents followed up the leads in an average of 24 hours. That explained the low conversion rate.

study

 

 

International researchesUntitled

A study developed by Kellogg and MIT in 2007 proves how fast sales representatives response improves contact rates.

 

 

Following a meeting between Agency GM Constantin Ferseta and the President of the automotive company, they both conclude that a different approach is necessary to manage this situation. The major inconvenient was that customer has several sales agents, but they could not make them act fast and grab the leads.

In these circumstances Mr. Ferseta developed a new service, 59sec, that act as a set of procedures for sales teams in order to boost conversion rates.

How “59sec” works?

    • Potential customer generates the lead on the company site;
    • In the next second, all sales agents receive notifications on their mobile devices (if they are agents on the ground) or on computer (if they are in a Call Center);
    • First available agent grabs the lead. The counter stops and the lead disappear from the list (in order to avoid duplication);
    • The agent calls the potential client. This fast response generates a UNIQUE experience for client. Usually this translates in increased conversion even 20x higher;
    • After the call, the agent goes to CRM, where he set the status of the lead plus he has to set a follow-up date/time.

If the lead is not grabbed in 10/30 minutes, all agents receive reminders. If the lead is still not grabbed, the manager will receive a notification:

Hey, your sales team could not grab this lead. You are wasting money on Google AdWords and Facebook Ads. Either your team is overwhelmed – or you have to hire more people, either your team has the wrong priorities. Again, you should do something about it.”

If a lead is set to follow-up, the agent is required to enter a date and hour. When the time comes, the agent is notified that he has to do the follow-up. If the follow-up is not done, there are 2 reminders. If the follow-up still is not done, the manager receives again a boss notification.

59sec also provides useful statistics for manager and teams. More details on how to get a guaranteed boost in conversion we can receive from Constantin Ferseta (www.59sec.com, www.kuantero.com). I presume he will grab the lead!

 

Conclusion                       

This case highlights the real impact of mobile app on today businesses. Transforming customer experience with the brand in a UNIQUE EXPERIENCE through mobile apps is becoming an unquestionably source of competitive advantage!

When Mr. Ferseta and his team started developing 59sec he was focused, mainly on aspects related with sales operations:

    • Poor response time of internet generated leads;
    • The number of follow-ups required, to successfully conclude a sale;

59sec not only generated a highly increased conversion rate and boost sales,  but actually reshaped customers experience with the brand. Engaging clients with the right experts in the wright time and in the right channel (in order to close a deal) is more than a differentiation tactic, is every customer dream.

Definitely all marketers and sellers must fundamentally reorient upstream. They can no longer rely on simple sales collateral or traditional lead generation method.

First impressions have always mattered, but now they involve building out a relevant and deep digital footprint to reach a potential customer early in the buying process, staying on his short list, and engaging the customer with.

To create distinctive customer experience, companies need to push the boundaries and adopt next-generation digital thinking and practices (what Mr. Ferseta done). And this is only the beginning. Distinctive customer experience needs to develop deep empathy with customers, a clear vision of his entire ecosystem, understanding relevant interactions that extend beyond the experiences the company controls.

 

Related articles:

Kuantero Launches 59sec, a Mandatory Tool for Any Sales Force – PR.com

Cum sa ajungi la client in doar 59 de secunde? – CRM REVIEW

O agenţie de marketing lansează 59sec, un program de optimizare a vânzărilor companiilor – BrandReport.ro


Author:

Marius BrinzeaMarius Brinzea has over 20 years of management experience, graduate of INSEAD Executive Program, acted in various senior management positions both in Romania and abroad, providing consultancy for a number of cross-border projects in Europe.