Waddilove B.J.(a) and Charnley F.J.(b)

a) Home Product Design, Welwyn Garden City, UK
b) Cranfield University, Cranfield, UK

Keywords: sustainable design, complexity, whole system design, business models, circular economy.

Abstract: As a response to increasing resource constraints and price volatility many organisations are investigating new circular business models, which re-examine a product’s value across multiple lifetimes. One of the many challenges faced is the integration of key stakeholder perspectives across a company’s broad value network for the impact of change to be fully visualised.

Whole System Design (WSD) has been identified as an appropriate methodology to address sustainable business models. However there is currently a lack of guidance for companies wishing to adopt such an approach. This research aims to define a WSD tool, which will enable business to effectively evaluate product and service innovations for a circular economy. The tool will demonstrate the relative importance of flows in resource, and support the identification of a company’s stakeholder network in order to understand how business models may change as maintenance, re-use, remanufacture and recycling are investigated.

The tool, presented within this paper, comprises of a card game played in three stages. Stage one identifies the existing business system, stage two clarifies hazards and opportunities and stage three reveals circular innovations relevant to the business value network. In addition to written data collected using the tool, video recordings and a qualitative questionnaire are also used to incorporate participant’s responses and post interview reflections relevant to the research criteria. Findings of the research contribute valuable insight, including the importance of WSD in addressing complexity inherent in circular business models and the requirement highlighted by literature for a workable WSD tool.

Introduction

Declining product longevity is contributing to dramatic increases in resource demand and yet our world’s natural resources remain finite. Our current “take-make-dispose” economy is largely linear with a reported 80% of mined or harvested products ending up in landfill within only a couple of years of sale to consumers (Inglethorpe, 2013). This wastage must change if we are to guarantee continuing prosperity for future generations. Companies can benefit by targeting resource productivity through the development of products, which either endure or are restorative by design. This is the concept of a Circular Economy (CE), where waste can be reinvested as resource for future products and services (Ellen MacArthur Foundation, 2013).

A key challenge for developing CE business models is “the cognitive limits of human ingenuity in the face of complex dynamics and the associated failure to anticipate unexpected consequences of innovation” (Westley et al., 2011, p. 774). Designers and managers considering product longevity must therefore take a whole system view to ensure innovations provide long term value not only for the consumer but also for the manufacturer and its supply chain. To address the challenge, this research describes the development of a new Whole System Design tool that enables a variety of business stakeholders to take a systemic view of their company in order to explore transition to CE.

Background

Strategies for product life extension

There is a lack of willingness within industry to design with consideration for product life extension. Recent reports have highlighted a significant increase in the volume of complex electrical waste being sent to landfill (UNEP, 2010). Products within these waste streams contain a variety of metals, plastics, glass and ceramics, often bonded together in complex assemblies. A lack of consideration for disassembly or future recycling in the design of these products often results in inefficient methods of recycling which may also pose a risk to health and environment (UNEP, 2013).

Research by Bakker et al., (2014) aims to identify the optimal lifespan for certain electronic products. Findings suggest that the definition of “optimal life” will vary significantly for products according to how they are used. If we consider environmental impact, recent improvements in energy efficiency for products have not been sufficient to offset the negative impact of declining product life spans. Consumer groups have begun to react against planned obsolescence, using Repair Cafes and Hackerspaces to fix their broken electrical products (Charter & Keiller, 2014). Some traditional recycling companies have also taken interest in the refurbishment and re-use of products as a growing revenue stream.

However, these activities are primarily reactive to the waste problem and do not address the redesign and remarketing opportunity for mass manufacturers and global brands. Bocken et al.’s (2014a) review of literature around sustainable business has identified eight business model archetypes which can be further explored to achieve product sustainability; four are complimentary to the field of product life extension “Creating value from waste”, “Maximising material and energy efficiency”, “Delivering functionality rather than ownership” and “Encouraging sufficiency”.

Baines et al. (2007) highlight successful examples of Product Service Systems (PSS): the sale of “product use” versus “product ownership”, such as Electrolux’s pay-per-wash washing machines and Mobility of Switzerland’s car sharing scheme. Companies considering a transition to PSS must, however, address consumer uncertainties highlighted by Catulli (2012) such as warranty, maintenance, product upgrade and delivery. Clearly companies considering PSS must also consider the consumer service relationship in addition to design for improved durability and serviceability.

One key goal for PSS and other business models aiming to achieve product life extension is to achieve an enduring brand relationship with the end user. Such services offer opportunities to revisit the user and provide additional valued services to address consumer uncertainties. Service innovation is therefore one of the key opportunities (and challenges) in moving to CE.

A reflection on existing ecodesign tools

Many ecodesign tools have been identified to aid the development of sustainable products. However, a taxonomy of this field by Bovea and Perez-Belis (2011) highlights that these tools often consider the environmental aspect of a product in isolation without due consideration for the ongoing design process. Their paper aims to facilitate the integration of these tools but little mention is made of service design, user experience or brand values – all are key considerations in the development of how a product or service is delivered to the customer.

Other papers identify the importance of “system” or “holistic” tools in providing a wider view of the complete life cycle for a product. Many designers struggle with the specialist skills required to deliver a full life cycle assessment (LCA). Vogtlander (2010) acknowledges that the LCA process may have become needlessly complex with the use of sophisticated software and specialist jargon. Such software requires that designs are mostly complete and material or energy data are clear – this is impractical when environmental impacts are best minimised at the Front End of Eco- Innovation (Bocken et al., 2014b).

The importance of business model innovation

Considering a holistic view, Boons and Ludeke- Freund (2013, p. 17) describe how business models require a systemic perspective built “from the viewpoint of how the firm can connect to, or build up, that system while delivering a certain value proposition” as ultimately “without a successful diffusion in society, eco- innovations are meaningless” (Boons & Ludeke-Freund, 2013, p. 11). Businesses exploring innovation through a circular value chain are further challenged because “the scope of the business model is both broader and more complex than in the traditional linear model” (Roos, 2014, p. 267).

Addressing complexity, Boons et al., (2012) highlight the importance of stakeholders in sustainable business models. A stakeholder may be “any group or individual who can affect or is affected by the achievement of the organisation’s objectives” (Freeman, 1984, p. 46). This may describe internal employees or outside collaborators; each has crucial insight into value generation.

Exploring the whole system

Whole system design is a technique of collaboration defined thus:

“(WSD) considers an entire system as a whole from multiple perspectives to understand how its parts can work together as a system to create synergies and solve multiple design problems simultaneously. It is an interdisciplinary, collaborative, and iterative process” (Blizzard & Klotz, 2012, p. 458).

WSD as a field of practice remains young and literature defining the technique is also limited. Research by Coley and Lemon (2009) highlights the collaboration of multiple stakeholders as essential to holistic solutions. Charnley et al., (2010) define 10 common themes for the process including the requirement for trans-disciplinary skills, necessity for actors to develop shared purpose, and development of cohesive teamwork through mutual understanding. Blizzard and Klotz (2012) acknowledge that workable WSD tools for designers and business planners are as yet undefined.

This paper aims to address the gap by defining a WSD tool, which is effective for a wide variety of businesses in evaluation of innovation projects for CE.

Criteria for the tool

In consideration of the WSD tool development, the literature review above has highlighted five key criteria. The tool must:-

a) Address the breadth and complexity required for a systematic approach to circular business models by revealing the complete framework of the organisation (Roos, 2014).
b)  Provide a systemic view of the business, which (unlike current LCA) everyone can understand (Vogtlander, 2010), highlighting key materials and energy flows including human capital.
c)  Be an educational tool, encouraging cross- disciplinary learning and mutual understanding (Charnley et al., 2010).
d)  Encourage exploration of service innovations for CE such as product service systems (Baines et al., 2007).
e)  The tool should demonstrate how firms can connect to, or build a value proposition during transition from linear to circular business models (Boons and Ludeke- Freund, 2013).

Methodology

Tool Development

A formal workshop with 40 experts from the CE field was held with the aim of identifying a suitable methodology for addressing the above criteria. Various existing tools were evaluated which aim for broader adoption by business of CE principles. The review highlighted the need for a tool to encourage participation across many individuals within an organisation from CEO to Janitor, regardless of experience. The concept identified with most potential was the idea of a “toy or game” to be played with an individual or group of people.

In order to deliver WSD criteria a card game was developed based upon three stages of interaction. Firstly a series of cards to clarify the existing business model, next a set of cards which highlight threats, opportunities and ideas, then finally a third set of cards highlighting CE innovation opportunities. A small UK-based sustainable furniture business was chosen for the first case study. The activities and structure of the business were examined and stakeholders across the business enlisted for one-on-one interviews and game play.

Research method for primary case study interviews

A qualitative approach was selected for the research in order to explore individual perceptions of processes throughout the company (Robson, 2002). Each interview took between 45-90 minutes and was conducted over a large table so that game cards could be clearly spread out. Interviews were recorded using video and at the end of each interview photos were taken detailing each individual’s system map. All memo notes attached to cards during the game were collected and transposed into a spreadsheet.

Card Design

Card designs are shown below (Figure 1) and arranged according to the three stages described.

card design summary

Card Game Procedure

Before the game began, participants were asked to focus on an existing company product as a theme for the card game.

Introduction for the theme for the game

Players were shown the diagram in Figure 2 which summarises subjects revealed during the game. Each interviewee was asked to describe their personal view of the company system as it related to the product in question.

Each player was handed a selection of memo note pads in various colours along with a black pen. Players followed the ‘Game Instructions’ shown in Figure 3 and memo notes were added to each input card as it was placed on the table.

Player instructions

On completion of level one the underlying system of the current business becomes clear. Players then proceeded through stage two and then on to complete stage three where CE innovations are finally identified.

Research Method for Round Two

Once the primary case study was completed for a simple UK business a second round of research interviews were undertaken with 12 companies to test the tool with complex, international businesses. In addition to using the tool itself, participants were asked a series of 10 questions as a “post intervention interview to help incorporate the participant’s perspective into the findings” Robson (2002, p. 270).

Qualitative questions used during round two resulted in three new card designs proposed by various players to address missing parts of the process. First, a “Reverse Logistics” card to help players consider how materials and products might cycle back to factories or suppliers. Second, a “Partnerships & Collaborations” card so that partners could be named for specific projects. Third, a new Design Card “Material Science” to help designers suggest new materials or developing technologies.

Research findings

Primary case study: Fluteoffice

Fluteoffice is a UK based manufacturer and marketer of 100% sustainable cardboard furniture for the workplace. Their FlutePRO desk is designed to be taken back, re-used, re- cycled, up-cycled or re-manufactured. As such, it is a useful example of a sustainable business already exploring CE innovation. Initial interviews at Fluteoffice were held with five different stakeholders, summarised below in Figure 4:

Fluteoffice sumary

Interviewees were challenged to describe subjects outside the main focus for their job. The game’s systemic approach was useful in meeting this objective however this was also a small company where employees are encouraged to “multi-task”.

Thematic analysis (Braun & Clarke, 2006) was carried out on comments recorded during primary case study interviews. Figure 5 shows key insights using a three column chart to demonstrate how each stage of the research builds. Common themes across multiple interviews lead to tangible challenges which either directly or indirectly reflected the ideas generated.

Thematic analysis of memo notes

Secondary case study: relevance to industry

For the second round it was important to examine a variety of products and organisations. (Figure 6.) In some cases the product was more complex, including a variety of materials and components, and elsewhere the business relied upon manufacturing or raw materials from distant countries. Many companies in this round were far reaching international brands with comprehensive product lines.

Summary of 12 companies

Further thematic analysis was carried out on data collected during this second round. Each video interview was transcribed to record relevant comments based upon identified tool criteria (Robson 2002). Qualitative questioning generated a variety of insights relevant to the original tool criteria:-

a)  Understanding breadth and complexity.
Cards gradually build system complexity, challenging interviewees to think beyond their normal scope of work. One interviewee stated, “It has opened my mind to considering parts of the process that I hadn’t previously identified as an opportunity before.”
b)  Provide an easily understandable systemic view.
Simple pictures and text make the cards approachable for all employees. One team noted “It’s accessible by people at different levels of the organisation.”
c)  An educational tool for cross- disciplinary learning.
The WSD tool was proven to encourage collaboration and education between different stakeholders. One designer said “With a tool like this we could talk executives through the reasoning for initiatives.” Another external business partner stated “Helps us to understand each other’s processes and to stop thinking in a linear process.”
d)  Exploration of service innovations for CE.
Various interviewees highlighted that the tool was particularly useful for exploring service innovations. One commented directly “It works well for service!” and another explained “If you’ve got a product that has significant enduring value you can keep going at the right side of the system map.”
e)  Building value during transition from linear to circular.
As the game unfolds people can see the value in a transition to CE. One participant summarised as follows “What’s good is it’s not theoretical… It’s where we are now and what practical steps can be taken toward the goal of a circular economy.”

Discussion

The intention of this research was to define a WSD tool, which is effective for business in evaluation of innovation projects for CE. One challenge is to enable a clear systemic view, as business models within CE will potentially be more complex. However, complexity is necessary in discovering value for materials and energy flows throughout a company system. Modern computer technology enables fine filtering of systemic business value to enable measurement of ‘total value throughout life’ for each product created. In a future circular economy the measurement of enduring value is an essential counterpoint to highlighting the futility of waste.

If we reflect on interviews where the tool was successful, it appears that the three stages play an important role in identifying opportunities for change. Innovations identified during stage three were grouped around business challenges identified in stage two. This observation links to studies around diffusion of innovations by Geels (2004) where opportunity niches play a vital role as seeds for business transformation.

Interviews in the second round highlighted the value of this WSD tool in considering the international perspective for CE. In a global marketplace, I.T. infrastructure for big data plays an important role in the accurate valorisation of business opportunities. Companies who benefit most from CE will be those with significant influence over their whole supply and service system.

Conclusions

This research contributes valuable insight for two fields of interest. Firstly, research addresses the requirement highlighted by Blizzard and Klotz (2012) for a workable WSD tool. The innovation card game was originally intended for product development teams, however companies in the second round have also demonstrated value for service innovation, highlighting the tools adaptability. The card tool is particularly beneficial in aiding the transition to CE as it enables participants to think non- linearly whilst building new circular innovations upon the foundations of an existing business framework. The tool also enables individuals interested in sustainable design to explore system-wide opportunities for transition to innovation models based upon CE.

Secondly, business leaders can benefit from a methodology, which helps to address the complexity challenge highlighted by Roos (2014) for companies in transition to CE business models. The three stage approach of this WSD tool demonstrates how business challenges often provide the seeds for change in any organisation through identification of opportunity niches as defined in Geels’ (2004) work on diffusion of innovations. Future developments of the tool must be data-rich whilst also highlighting business value, key deliverables and ownership in order to ensure successful implementation of circular projects.

Acknowledgments

The authors would like to thank the many industry experts who took part in both primary and secondary research for their valuable time and input. Also thanks to all academic reviewers who highlighted weaknesses and suggested improvements for the paper.

Finally thanks to the Ellen MacArthur Foundation for their valued advice and support throughout this project.

Ellen Macarthur Foundation

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