It started with a pledge to change the capital equipment industry
Author: Tamara Veldboer, Consultant @ Circle Economy
Late 2017, when the WEF’s annual gathering of the world’s leaders in Davos came into sight, Philips CEO Frans van Houten saw an opportunity. In the spirit of a true leader, he picked up his pen and sent out letters to fellow-CEOs in what we call the ‘Capital Equipment’ industry. He invited them to join in a public pledge to make circular business models and circular operations the new normal. Realising we can only make this tremendous transition in unison, Frans van Houten urged the CEO’s of these global companies to work together, to collectively learn and progress.
And that is how the story of the CEC started: in January 2018, the members of the coalition revealed their individual commitments to preserve and recover the value from the capital equipment they produce. Moreover, they committed to publicly share the progress made each year, and disseminate the lessons learned along the way. Now they invite other capital equipment players to join their effort and enable change in their industry.
The colors of the capital equipment rainbow
So, who are the coalition members and why do they come together? The coalition consists of companies active in a variety of product groups, ranging from large medical equipment to servers and ships (ASML, Cisco, Damen, Dell, KPN, Lely, Philips, and Vanderlande). Yet, what connects them is the shared ambition to drive circular change in their organisations and across the value chain. Why? Because Capital Equipment consumes and stocks more than 50% of all metals and accounts for 13% of financial value creation. The group — consisting of circular economy leaders within these companies — gathers four times per year in a workshop setting. Together they engage in conversations on the highs and lows of being in the lead to shift mindsets; to shape the organisational change necessary to embed circularity principles in both long-term strategies and day-to-day activities.
From an appealing concept to a context-specific action plan
The first year of the CEC resulted in two practical frameworks that provide structure on the journey to circularity. One focused on Organisational Change and one aimed at uncovering Value Drivers.
Both frameworks translate the circular economy concept to fit an organisation’s unique reality. The value driver framework breaks the potential of the circular economy down into seven categories — ranging from new market entry (e.g., satisfying the needs of a thus far untapped market segment with refurbished products) to attract and retain talent (e.g. through a circular ambassador program). While the specific examples and initiatives will differ per company, this framework helps companies to discover and assess the circular opportunities.
Then comes the social side of the medal — to realise the identified opportunities, employees and external stakeholders — suppliers and customers, more often than not two or three steps away in the value chain — have to alter their activities and, arguably most importantly, their mindsets.
A more detailed description plus practical examples from the members are featured in the ‘Circular Value Creation’ report, published for other capital equipment companies facing the same challenges, to help them embark on their own journey towards a circular economy.
This year the CEC is taking a more functional approach to the collective learning experience. The first workshop explored the — changing — role of procurement as a key enabler for circular practices. A best practice shared by one of the members is to organise supplier innovation events, which focus on real business challenges and crowdsourced innovation with internal and external partners. The second gathering put the spotlight on sales and marketing teams. Insights shared touched on topics such as customer segmentation (new vs. refurbished offerings) and using language that resonates with your customers: perhaps they are not thinking about the circular economy yet, although they may be looking into ways to recycle waste or be interested in product take-back schemes. Up next is a focus on design — how do you embed circularity principles into product design? What are the unexpected trade-offs that may surface, for example when choosing an existing resource over a virgin material, but that might contain hazardous substances. What parameters are applied in product design and how do you prioritise and weigh the importance of these parameters?
The road ahead
The CEC is characterised as a peer-to-peer community built on trust. Creating this safe environment to share greatly contributes to the goal of the CEC to learn from each other and uncover the inconvenient truths. This is amplified by inviting functional experts to join the workshops and bring in a fresh perspective and depth to the conversations. Looking to the future, the CEC has the ambition to start new learning cells, expanding both geographically and across the capital equipment value chain.
The CEC is always happy to hear from others who are willing to get engaged and make circular business the new normal.
Interested to join? Please contact us via capitalequipment@circle-economy.com
https://www.youtube.com/watch?v=i1Um_Oj8RhQ
The Capital Equipment Coalition (CEC) is led by businesses with the shared ambition to make circular business models and circular operations the new normal. Representing an industry that consumes over 50% of the world’s metal, CEC members make a public pledge on their circular objectives. Through collective learning and knowledge sharing in a workshop setting facilitated by Circle Economy, the group invites other capital equipment manufacturers to strengthen the coalition and its ambitions.
