Infinity recycling – an idea produced by circular economy thinking may just become the norm, especially as our economy is run by a ‘take-make-dispose’ approach that generates a huge amount of waste, writes TIM PLENDERLEITH of Aurecon.
Who ever said ‘happily ever after’ was just the stuff of fairytales?
These days those words are written into the soles of Lionel Messi’s cleats. (Or at least, that’s the idea.) The “Sport Infinity” range by sports apparel company Adidas uses worn-out cleats and, by combining them with scrap materials from other industries, reimagines them into high quality new shoes. “The football boots of the future could contain everything from carbon used in aircraft manufacturing to fibres of the boots that scored during the World Cup,” Adidas said in a statement.
It’s called infinity recycling – one of the many good ideas wrought by circular economy thinking – and it may just be the Sunday game norm someday.
With three billion new middle-class consumers expected to enter global markets in the next 15 years, we can expect three billion more hungry appetites for the resources and infrastructure required to meet their lifestyle demands.
Currently, our economy is run by a ‘take-make-dispose’ linear approach that generates a breathtaking amount of waste. According to Richard Girling’s book Rubbish!, 90% of the raw materials used in manufacturing don’t even make it out the factory doors, while 80% of products made are thrown away within the first six months of their life cycle. The resource crunch is more like a suffocation, with our incriminating fingerprints all over the planet’s throat. The extractive industry’s approach is unsustainable – raw materials are being depleted quicker than they can regenerate.
The circular economy may be a highly practical solution to our planet’s burgeoning woes. The idea behind a circular economy is to rethink and redesign the way we make stuff. Rather than ditching your worn-out old jeans, send them into the factory for recycling and upgrade to a new pair. Done with your old iPhone 5? Reconsider buying the Puzzlephone, which can be easily disassembled, repaired and upgraded over a ten-year lifespan.
In the circular economy, products are not downgraded, as they are in recycling, but reimagined to infuse the same, if not more, value back into the system. Basically, there’s no such thing as waste in a circular system – all waste bears the raw materials to become something else. By finding fresh, creative ways to use the same resources, a one-way death march to unsustainable collapse is inadvertently avoided.
Could we halt the downward spiral by using waste to solve the waste crisis?
With McKinsey rolling out projections as high as $1 trillion to gain from a closed-loop economy, circularity seems to have our ‘thumbs up’ in principle. The truth is however, we are a far cry from adopting its practical reality in our design-distribution streams. So how will we get there? If the circular economy is indeed the way of the future, what needs to change now to usher it in? Could the circular economy define the end of the extractive industry as we know it?
We have to believe in a new buying power
The Kingfisher Group has much to say on the future shift in consumerism, and they’re using power tools to say it. Rather than buying that drill that is used on average six minutes in a year, why not rent it for the day? Surely it would be better value for money on that rare occasion when a hinge is loose?
Their company, along with others like Mud Jeans and Philips, are paving the way for new ideology and design around products and how we relate to them. Consumerism is moving to stewardship, with the emphasis on service over product acquisition. So, in other words, the ‘pay per use’ contractual agreements associated with smartphones could extend to washing machines, DIY equipment or even Levi jeans. Access, not ownership, to a product will be the new trading power. This will launch fantastic new intelligent systems to undergird the process.
But it will firstly require a good deal of unlearning and open-mindedness for us who have been immersed in linear thinking.
We have to up our game
Within the former linear structure, sales were the success markers. Manufacturing and design simply had to align just enough to make the product sparkle, shine and ultimately sell. They didn’t have to consider the total fossil fuel emission of production or its biodegradability in landfill. The product’s recyclability was not in question. It was only the swipe of the credit card.
A circular economy, however, is really complex. It accounts for a product’s entire life cycle in its design. Systems-level redesign and skills we haven’t yet imagined will be needed in order to recall, repair and reincarnate products into an upgraded former self. Rapid innovation will generate IoT platforms and seamless technologies into new services and product offerings.
The need for ongoing research and development will drive STEM (Science, Technology, Engineering, Mathematics) disciplines. We need to prepare for these complexities, so that the added layers of life cycles are anticipated in tomorrow’s briefs and an egg-on-face situation is narrowly averted.
We have to collaborate
Circular solutions will only realise sustainable, future-proofed ecosystems if everybody is on board. Perhaps even more important than the engineers and designers, governance and regulation are crucial in endorsing these processes. Redesigning supply chains and business models require robust round-table discussions between businesses, universities, social groups and policymakers.
Initiatives such as the Ellen MacArthur Foundation’s Circular Economy 100 embraces this idea that closed-loop ambitions can never be achieved by working in isolation. This group ties together supply chain leaders, industries and geographies. From designers to academics, CEOs to city mayors, people are locking heads and sharing their complementary expertise. The result of which is a more effective and holistic solution that generates wins for both the planet and our pockets.
Linear thinking can’t meet the needs of the emerging circular economy. However, all is not lost. Draw a straight line long enough and it would actually envelop the globe, paradoxically making a circle. What we need is linear thinkers to be open-minded to extrapolate their thinking out far enough in order to, ultimately, draw the same conclusion – that a circular approach is actually where all roads lead. Going forward, drawing circles around our consumer behaviour may be the best way to draw the line.
* Tim Plenderleith, Market Director for Manufacturing at Aurecon.
VoD cuts the cord in SA
Some 20% of South Africans who sign up for a subscription video on demand (SVOD) service such as Netflix or Showmax do so with the intention of cancelling their pay television subscription.
That’s according to GfK’s international ViewScape survey*, which this year covers Africa (South Africa, Kenya and Nigeria) for the first time.
The study—which surveyed 1,250 people representative of urban South African adults with Internet access—shows that 90% of the country’s online adults today use at least one online video service and that just over half are paying to view digital online content. The average user spends around 7 hours and two minutes a day consuming video content, with broadcast television accounting for just 42% of the time South Africans spend in front of a screen.
Consumers in South Africa spend nearly as much of their daily viewing time – 39% of the total – watching free digital video sources such as YouTube and Facebook as they do on linear television. People aged 18 to 24 years spend more than eight hours a day watching video content as they tend to spend more time with free digital video than people above their age.
Says Benjamin Ballensiefen, managing director for Sub Sahara Africa at GfK: “The media industry is experiencing a revolution as digital platforms transform viewers’ video consumption behaviour. The GfK ViewScape study is one of the first to not only examine broadcast television consumption in Kenya, Nigeria and South Africa, but also to quantify how linear and online forms of content distribution fit together in the dynamic world of video consumption.”
The study finds that just over a third of South African adults are using streaming video on demand (SVOD) services, with only 16% of SVOD users subscribing to multiple services. Around 23% use per-pay-view platforms such as DSTV Box Office, while about 10% download pirated content from the Internet. Around 82% still sometimes watch content on disc-based media.
“Linear and non-linear television both play significant roles in South Africa’s video landscape, though disruption from digital players poses a growing threat to the incumbents,” says Molemo Moahloli, general manager for media research & regional business development at GfK Sub Sahara Africa. “Among most demographics, usage of paid online content is incremental to consumption of linear television, but there are signs that younger consumers are beginning to substitute SVOD for pay-television subscriptions.”
New data rules raise business trust challenges
When the General Data Protection Regulation comes into effect on May 25th, financial services firms will face a new potential threat to their on-going challenges with building strong customer relationships, writes DARREL ORSMOND, Financial Services Industry Head at SAP Africa.
The regulation – dubbed GDPR for short – is aimed at giving European citizens control back over their personal data. Any firm that creates, stores, manages or transfers personal information of an EU citizen can be held liable under the new regulation. Non-compliance is not an option: the fines are steep, with a maximum penalty of €20-million – or nearly R300-million – for transgressors.
GDPR marks a step toward improved individual rights over large corporates and states that prevents the latter from using and abusing personal information at their discretion. Considering the prevailing trust deficit – one global EY survey found that 60% of global consumers worry about hacking of bank accounts or bank cards, and 58% worry about the amount of personal and private data organisations have about them – the new regulation comes at an opportune time. But it is almost certain to cause disruption to normal business practices when implemented, and therein lies both a threat and an opportunity.
The fundamentals of trust
GDPR is set to tamper with two fundamental factors that can have a detrimental effect on the implicit trust between financial services providers and their customers: firstly, customers will suddenly be challenged to validate that what they thought companies were already doing – storing and managing their personal data in a manner that is respectful of their privacy – is actually happening. Secondly, the outbreak of stories relating to companies mistreating customer data or exposing customers due to security breaches will increase the chances that customers now seek tangible reassurance from their providers that their data is stored correctly.
The recent news of Facebook’s indiscriminate sharing of 50 million of its members’ personal data to an outside firm has not only led to public outcry but could cost the company $2-trillion in fines should the Federal Trade Commission choose to pursue the matter to its fullest extent. The matter of trust also extends beyond personal data: in EY’s 2016 Global Consumer Banking Survey, less than a third of respondents had complete trust that their banks were being transparent about fees and charges.
This is forcing companies to reconsider their role in building and maintaining trust with its customers. In any customer relationship, much is done based on implicit trust. A personal banking customer will enjoy a measure of familiarity that often provides them with some latitude – for example when applying for access to a new service or an overdraft facility – that can save them a lot of time and energy. Under GDPR and South Africa’s POPI act, this process is drastically complicated: banks may now be obliged to obtain permission to share customer data between different business units (for example because they are part of different legal entities and have not expressly received permission). A customer may now allow banks to use their personal data in risk scoring models, but prevent them from determining whether they qualify for private banking services.
What used to happen naturally within standard banking processes may be suddenly constrained by regulation, directly affecting the bank’s relationship with its customers, as well as its ability to upsell to existing customers.
The risk of compliance
Are we moving to an overly bureaucratic world where even the simplest action is subject to a string of onerous processes? Compliance officers are already embedded within every function in a typical financial services institution, as well as at management level. Often the reporting of risk processes sits outside formal line functions and end up going straight to the board. This can have a stifling effect on innovation, with potentially negative consequences for customer service.
A typical banking environment is already creaking under the weight of close to 100 acts, which makes it difficult to take the calculated risks needed to develop and launch innovative new banking products. Entire new industries could now emerge, focusing purely on the matter of compliance and associated litigation. GDPR already requires the services of Data Protection Officers, but the growing complexity of regulatory compliance could add a swathe of new job functions and disciplines. None of this points to the type of innovation that the modern titans of business are renowned for.
A three-step plan of action
So how must banks and other financial services firms respond? I would argue there are three main elements to successfully navigating the immediate impact of the new regulations:
Firstly, ensuring that the technologies you use to secure, manage and store personal data is sufficiently robust. Modern financial services providers have a wealth of customer data at their disposal, including unstructured data from non-traditional sources such as social media. The tools they use to process and safeguard this data needs to be able to withstand the threats posed by potential data breaches and malicious attacks.
Secondly, rethinking the core organisational processes governing their interactions with customers. This includes the internal measures for setting terms and conditions, how customers are informed of their intention to use their data, and how risk is assessed. A customer applying for medical insurance will disclose deeply personal information about themselves to the insurance provider: it is imperative the insurer provides reassurance that the customer’s data will be treated respectfully and with discretion and with their express permission.
Thirdly, financial services firms need to define a core set of principles for how they treat customers and what constitutes fair treatment. This should be an extension of a broader organisational focus on treating customers fairly, and can go some way to repairing the trust deficit between the financial services industry and the customers they serve.