Keeping materials in circulation- Part 7: Making your transition to Circular Economy
Revision: 1
Are you a sole trader, an employee within a larger organization, or a CEO? Do you want to convert your business to be 100% focused on Circular Economy projects? Great! now to find the time, money, and resources.
Below is a matrix I bastardised from the wonderful book Zone to Win by Geoff A. Moore. I highly recommend reading this book (and all his books) if of interest.
Zone 1: Cash Cows
Regardless of your occupation, you are probably already familiar with Zone 1. These are the most important products / services / clients / projects / jobs / activities that you perform to keep your business operational.
For most of us, the majority of our income comes from this Zone and is where we spend most of our time and effort. However, we shouldn’t spend ALL our time and effort just on Zone 1. To build a sustainable organization (financially, socially, and environmentally) we need to free resources spent on Zone 1 to be become more efficient and develop new projects. These projects (Zones 2, 3, and 4) will in the future replace these Cash Cows (Zone 1).
Zone 2: Optimisation
What work do you do that your customers are not willing to pay more for? Are there products, services, tasks that you provide that few or no customers use anymore? Are you or another team member doing the same tedious work over and over again? It’s time to optimise!
Optimisation comes in many forms. It can be automation, merging, outsourcing or even elimination. The goal is to free up resources without harming the main sources of income. In many cases, it can make the customer experience better.
To make this change:
- Ask what your customers value about your services.
- Are you doing jobs, tasks and projects that really you should say no to?
- What are you providing (directly and indirectly) that could be optimised? These can include admin, IT and many other operations that may be required to run a business but something your customers don’t believe is special about your business.
- Can you merge existing products, services and create processes so less time is needed to maintain them.
- Can you hire 1 person who is a specialist in these jobs and can do the work of 4 other employees. Sidenote: I have yet to meet an engineer or designer with excellent spelling, yet it amazes me how many mid-level and senior engineers and designers are tasked with administrative work.
It is vitally important that savings (time, money, and resources) are reinvested back into the organisation in the form of research (Zone 3). Optimising without reinvesting the savings back into Research (Zone 3) will leave you open to be disrupted in the future by new and novel competitors.
Please also note the difference between cost cutting and optimisation. Firing people is expensive and I will always advocate that people trained within your organisation can be upskilled or reskilled and should always be given opportunities to move within the organisation.
Zone 3: Research
For many, this is the fun part. For others (especially those who follow the costs) it can sometimes seem a waste of time and effort. Results are not guaranteed and research projects are often shelved, never seeing the light of day.
As research is very broad topic I will summarise my experience so far:
- 5–15% of time and revenue is a good start for reinvesting back into Research. Budgeting for this at the start of a month/year is ideal. If you are a 1 person operation, you would be surprised how much you can do with 100 euros a month and/or 1 hour a day.
- Have a way to note ideas, hypothesis and other sources of information.
- Pick and work on 1 idea at a time.
- Write a brief, goals, and budget for what you want to achieve. Try to avoid doing aimless research. (BTW, I recommend the Intercom blog)
- Strive to produce sketches and low fidelity prototypes that you can show others.
- All feedback is good feedback. But feedback from people who will be future customers is most important. Don’t waste too much time or be dishearted if someones give bad feedback. If they are not the target market, make changes, or move onto the next person.
- All research should have excellent documentation and easy for anyone to pick up and use in the future. As we have learned in 2020, the world can change suddenly and you may need to unearth and fast track past research.
Zone 4: New Product Introduction
Important for any new project entering Zone 4 is that only 1 project can enter at a time. Key to New Product Introduction (NPI) is picking a new product/service from the Research group (Zone 3) that will generate at least 10% of the total revenue of the business. Zone 4 (NPI) is capital heavy, if the business feels this new project cannot achieve this, then it should stay in Zone 3 (Research) until it is ready.
Lastly, set horizons (1,2, or 3), expectations, timeframes, and have teams and systems ready before entering bring a project in Zone 4.
I will cover this in more detail in future articles but Googling Mckinsey's 3 Horizons should provide enough detail for the moment.
How should the 4 Zones be organised?
As you can tell, each Zone requires a different goal. Therefore it is best to build teams that sit in each Zone and pass the projects between them. In most cases, the zones will share some people from the neighbouring Zones to help the transition.
These teams will often have a mix of professions (engineering, marketing, design, and many more). Regardless of the Zone, it should not be dominated by only one profession or skill set. For example, Zone 2 Optimisation should not be for engineers only. Having other skills in these zones can prove to be very beneficial. Remember, the main difference between each Zone is the goal that is needed to be achieved.
What is the difference between Critical and Non-Critical?
Critical product/projects (Zone 1 and Zone 4) need to have the whole organization clued into what is going on. These are critical (hence the name) activities that the majority of the time, effort, and money has to be applied to for them to succeed. This space (Zone 1 and Zone 4) is where a CEO will spend most of his/her time.
Non-Critical products/projects (Zone 2 and Zone 3) are blocks of work that are managed by small or siloed teams. While important, their progress does not need to be shared with everyone and often they go unnoticed. In large organisations, these are tasks delegated to others and should not require most of the CEO time.
Above is my interpretation of the book Zone to Win by Geoff A. Moore. I highly recommend this book as it goes much deeper into the topics discussed above.
Regardless of your occupation understanding the concepts is very important and something I hope you apply to your own situation.
Can you help me with a survey I am doing?
I am working on a new project aimed to help reduce the waste generated by footwear. Currently, up to 23.5 billion pairs of shoes are produced annually & up to 90% end in landfills. I want to help solve this problem but I need your opinions. If you can spare 5–7 minutes, I would appreciate it if you could participate by clicking this link:
Typeform Survey Link: https://pkm6199gyd8.typeform.com/to/KDaTQ5tn
About the Author
Mark Murray is an Irish design engineer based in Spain, working remotely since 2017 ( linkedin.com/in/markmurray406 ). After learning of the volume of products and materials that end in landfill every year, he is using his 10+ years of design engineering experience towards products and systems for Reuse and Reverse Logistics.
Focused on the customer’s experience, he is designing solutions that are beneficial to both the customer and businesses providing the products.
Opinions and Feedback are welcome.
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