Ep 209: The hidden drivers enabling the circular economy

[00:00:00.000] - Rachel O'Reilly Circularity is working. I think we underestimate what people are capable of, which is an ego problem as much as anything else ask what's enabling rather than what's a barrier. Think about resilience, think about reinvestment.

[00:00:14.760] - Fin Welcome to the Circular Economy Show. I'm your host, Fin and in today's episode, I'm joined by Rachel O'Reilly, Global Human Sustainability Design Director at Accenture. Rachel and I took an exclusive look at some upcoming research which offers a fresh look at circularity. The conversation provides a refreshing shift away from focusing on the barriers towards learning from what's already working on the ground. We hope you enjoy the conversation. Please do share it with a colleague or friend and remember to like and subscribe. Let's get into the conversation.

[00:00:51.300] - Rachel O'Reilly We felt little more optimistically that circularity is working. It's incredibly innate. People have been circling crops for hundreds of years. There was something we felt in looking at where it is working rather than the way it's not. Also, I think one of the key principles was, again, we're very quick to look at the obvious examples. There's a reason for that. Looking at deposit-return schemes, refill schemes, there's a reason for why we would look there. But we felt that actually by looking somewhere where it's also less obvious, people who are looking at open-source coding as a way to create a sharing economy online, for example, or musicians who have a really ripe sharing economy, but they wouldn't call it that.

[00:01:40.780] - Rachel O'Reilly This research was trying to look at where is circularity working? Where do we often not look? Where can we not just survey behaviours which we know limit the responses, but where can we observe and see where that's working? Actually, what it showed us is that circularity is thriving and also, there are particular universal factors that we can find, that are in place when it is working. Whether people are calling it circularity or not on the ground. We were really excited to bring that, hopefully as a way to shift the thinking beyond circling the drain and what isn't working for something fresh.

[00:02:18.700] - Fin It's a really global perspective on how to drive adoption and impact. You've mentioned a few of the case studies there. We're really excited to get into some of them in the episode today. Could you first introduce the hidden drivers of circularity in the research?

[00:02:32.340] - Rachel O'Reilly Yeah, so these were… Again, we didn't quite know what we would find when we went out into the research. We could have found that actually things were incredibly different and nuanced. But what became clear there were these five really key… As we call them factors, drivers, but you could call them enablers… Things that were in place consistently across a really broad range of cultural contexts and actually circular models that make it work.

[00:03:03.460] - Rachel O'Reilly Some of those things are about operationalising it. Some of them are more about value and what drives adoption. But we were very excited and I guess optimistic that there were these five things that always seem to be in place. We believe that they can give us learnings in terms of how we take this back into our corporate and brand-led efforts to increase the scale and adoption. I'll give some more information on what they are, but that's them as a principle.

[00:03:32.000] - Fin We hope to get into some of those key learnings today so that these drivers can be used for brands to make circularity a real success. Let's discuss the first one in more detail now. Can you tell us about the financial rewards and incentives?

[00:03:45.980] - Rachel O'Reilly Yeah. This is where I think it's the most familiar starting point. There's no shortage, again, when we come to circularity of talking about the financial payback that consumers expect. I think as businesses as well, we're obsessed with it. We talk about cost savings often and how circular is a way to either get more value out of an object or to recoup costs.

[00:04:12.860] - Rachel O'Reilly What we were really excited to learn was, yes, of course, that's really key and it's one of the main levers that certainly businesses can pull. You can help incentivise people back if you have a bag that you've loved for ages and you take it back and get some money back. Brilliant. The research doesn't say that that's not true, but what it does find is actually a broader topic around reinvestment and the personal economics of it. I'll give you a few examples because it sounds a bit abstract.

[00:04:41.170] - Fin Please do.

[00:04:41.970] - Rachel O'Reilly For example, I got the pleasure of going up to Liverpool to meet a load of musicians, which is, again-

[00:04:47.540] - Fin Wow!

[00:04:48.160] - Rachel O'Reilly -not necessarily where your head would go for circular… Taking me back to my old days. What we learned there was this really active behaviour of circular practises, be it buying second-hand instruments or even car sharing. There's a real sharing economy up there. The musicians told us in the research that actually it was all about this personal economics of reinvesting savings that you get from these circular behaviours back into their future career. It meant that by fixing their guitar rather than replacing, they could then invest in something else, which then extended the opportunities that had in their career.

[00:05:31.280] - Rachel O'Reilly It sounds really obvious, but I think when we think about circular financial rewards, we always think about just the product to company return on investment. This is talking about a much broader view of how people are using it to reinvest into careers that from a particular brand you may not see because it goes into something else; a different brand, a different purchase, a different behaviour. But this is one of the key we think incentives for people. It's about the personal economics of reinvesting into something.

[00:06:03.080] - Rachel O'Reilly If you translate that slightly niche example into something like the financial services sector, there's a lot of thinking around circular and ethical finance. These companies have always been in the practise of helping people to create investments. Yet when it comes to circular, we're so narrow in terms of thinking about cost savings. I think it's a real opportunity to expand the way that we're defining financial rewards and even measurement on the business side as well. There's an example.

[00:06:35.540] - Fin We often talk about long term growth and economic security when discussing circularity. But what you're saying is we're going beyond just savings and we're actually building self-sustaining behaviours as well on the more human side. Thinking about widening that out, you've obviously mentioned the ethical financial aspect of it, what could be key for brands to learn in terms of trying to scale? I think we discussed measurement. Is that a key part of things?

[00:07:03.700] - Rachel O'Reilly Yeah, I think so. I think more broadly, the way that we measure and look at the economics around circularity needs to fundamentally change. We know that there are some business metrics that actually encourage the opposite of what we're trying to get to. That's the basic. But I think when we think about the consumer lens, which is, I guess, where this research comes in, I think we overlook some of the key metrics or KPIs. Yes, there's loyalty. Yes, there's retention. Yes, there's engagement. Yes, there's brand love. There's all these things. Yes, there's size of basket, for example.

[00:07:39.550] - Rachel O'Reilly But I think there's also this point around longer term, economic resilience. What it looks like in terms of people extending the economic value beyond just a singular product. I think that is measurements, one really key thing. I think also when we think about the basics of value propositions, companies are trying to work out continuously, what is the perfect value equation for circularity? I think thinking beyond a very narrow linear way of just getting something back in the short term could really be exciting.

[00:08:14.780] - Fin Everyone's looking for their niche. I think what we're saying here is we want to go beyond just clicks and actually understand behaviours. Yeah, some real key learnings there. You were obviously lucky enough to go and see that in person, which must have been an amazing experience.

[00:08:29.760] - Rachel O'Reilly Yeah, it was amazing. One of those is such an example of a hidden but thriving circular economy. They're everywhere, they're all over the world, but we ignore them. That was 1st April.

[00:08:43.400] - Fin Some clear takeaways and inspiration like you say, the local level, but perhaps some learnings there for business as well. That actually brings us nicely onto the second driver or area we're going to talk about today around social infrastructure. Could you tell us a little bit about this one?

[00:08:59.320] - Rachel O'Reilly Yeah. This is much more… If the first one was about the value proposition and the adoption side, I think this gives us clear learnings in terms of how you operationalise and scale circularity and the role of a brand in it. What we found was in all these different examples. Again, I'll give a few. Gambiarra in Brazil is the practice of using DIY fixes to solve problems that already exist. For example, using old bottles to fix a shower as an example. But it's an extremely robust, well-respected, extensive practice of circularity that goes on there, for example.

[00:09:37.980] - Rachel O'Reilly Another might be in terms of more traditionally looking at the system of donation boxes across Hamburg, the city in Germany and how that actually exists already as an informal circular economy. What we learned from both of those, but actually all of the examples, was that there are robust social systems, logistical infrastructures that exist already without brands trying to do anything to do with circular. Be it school systems where parents are sharing clothing and resources, for example, is a classic one. Actually, in Hamburg, again, there's the deposit return scheme for bottle recycling, which is a system-wide approach.

[00:10:26.040] - Rachel O'Reilly Again, yes, that's a formalised system actually put in from a government down, but there's an informal network where people are returning bottles, but not actually taking them to the end store, but leaving them somewhere public where someone who might need the deposit more than them can pick up. That's not an altruistic niche behaviour. It is a system city-wide behaviour that's going on. The point here is that social infrastructure exists already. These complex networks and logistics systems are already in place locally on the ground and extremely robust.

[00:11:02.000] - Rachel O'Reilly I think as brands and companies, we assume that we need to build our own infrastructure, and our own logistics, and own those channels, which is an ego problem as much as anything else, if I'm brutally honest. But the point here that we found and that we're putting out is perhaps if we learn more on the local side what exists already and try and work with those networks rather than assuming we need to own and create our own, then the pieces are already in place and the chances of success are much higher because they're owned by the people not by a brand. If you extend that to what that means for competition, it's exciting because actually you don't have to own the channel as an individual brand, but you can work across. We were particularly interested in this one.

[00:11:48.180] - Fin Of course, yeah. As you say, I think we're perhaps underestimating what we have locally, the skills. I think often when we talk about the circularity, we talk about creating new jobs and the new skills that will be required. But as you say, actually, some of these systems are already in place. I guess this is crucial because locally, these are the people that know the context, they know how to implement the solutions, and they know how to design solutions that are most applicable to them. Have you got any other examples that you're able to pull out the research?

[00:12:17.060] - Rachel O'Reilly In terms of the social infrastructure one?

[00:12:19.200] - Fin Yes.

[00:12:20.460] - Rachel O'Reilly Yeah. I guess this makes me think more specifically, actually, of something else beyond the research which was your point around the local point. Working in Mumbai a couple of years ago with the H&M Foundation, we learned about this very point around the assumption that we, from a centralised perspective, know best. It was just a very simple example about an aircon regulation, which was about reducing aircon.

[00:12:48.560] - Rachel O'Reilly Actually, on the ground, it was resulting in significant heat stroke health issues because the centralised dictated system way of doing things wasn't appropriate for local culture. That's an example I think of where we're underestimating the importance of the local element, but also the infrastructure that already exists on the ground. I guess that's not from the research, specifically, but it certainly feeds into the same theme, I would say.

[00:13:19.780] - Fin Thank you. Then we've touched on it a bit already, but is there any other learnings that we could perhaps take from these local proof points that businesses or whoever can implement, turn them into global scale?

[00:13:35.420] - Rachel O'Reilly Yeah, I think the point on always checking and understanding where you're going or where you're going to be operating is number one learning, which we touched on. Not trying to just centralise things from a brand agnostic of where you're operating would be number one. I think number two as we've said, is looking at the channels and the systems that already exist. Looking both at a grassroots community level, at a local government authority level, but also cross-brands in terms of who else is using that and using that as the starting point for creating and operationalising circularity rather than starting from your own ownership perspective. My number one learning would be the ego check, I think on this one, which again sounds brutal, but here we are.

[00:14:27.000] - Fin That's why we're here. We're making the case for scale. It's perfect. When you were last in the studio… I'm just going to move on now to the narrative point. You spoke about the fact that as humans, we care about resourcefulness, we care about our futures. How can we invest better in people thinking about that point?

[00:14:44.620] - Rachel O'Reilly I think investing in people is the point here. I think we underestimate what people are capable of from a circularity perspective. As I said right at the beginning, the narrative is always that people want to do this. They say, "Do, gap." They want to do this, but they're not capable of it. This research, I believe, proves the opposite point, which is that people are not only capable of being circular, but are already doing it innately and purposefully themselves, but they're not going to call it circular.

[00:15:15.720] - Rachel O'Reilly Just an example of one of the participants in India, which was all about the fire movement, so financially independent, retire early, which sounds great to all of us, I believe. But it's really taking off there. That particular gentleman was using this as a way of completely changing the way he lived to economise, minimalise, essentialise his spending, how he's using resources. But he's not talking about being circular. He's just doing it for a very specific reason. I think we don't give consumers credit enough for how capable and robust they are already from a circular perspective. That's more of an emotional and confidence base of investment, but I think that's really key. Let's not overlook it.

[00:16:05.920] - Rachel O'Reilly Also, I think the point in terms of looking beyond the traditional unknown spaces is a key point for me as well. Yes, it's important to look at the very obvious examples, but look at the musicians and what we can learn from them. Look at the fire movement, look at the people who are using open source code to revolutionise the way we share information This is an empowerment piece, I think, that if we look at these slightly tangential examples, we can learn a lot and bring them back into the core circular initiatives that we're trying to do around refill, take back, et cetera.

[00:16:43.820] - Fin There's some real inspiration out there for sure. I dropped a little hint about narrative there. How important is narrative when you're looking to drive the circular economy?

[00:16:53.920] - Rachel O'Reilly This was one of the key drivers or things that we found that are pretty consistently in place when circularity is working. I don't think it will be new to a lot of people. It's very obvious that the idea that when an object has a story, a sense of emotional attachment to it, sentimentality, people look after it. Of course, they do. That's why we keep jumpers from relatives in our cupboards or repair a box that was given to us.

[00:17:22.800] - Rachel O'Reilly Likewise, if you think about repair fairs… We looked at a lot of these in the US and there was a real sense of coming together to take care of an object, and the process of taking care of that object, and the story that that had. I think it's not something that we should underestimate. Yes, it's how we've always marketed good products, but again, when we think about circularity, we often go back to this very technical, rational world. We know that human beings aren't technical or rational, they're emotional. I think there's more to be done in terms of the story potential of how we incentivise people to look after things beyond just a personal story. There's a network effect there.

[00:18:06.620] - Fin Emotional connection seems like a vital theme, really and then leads to the inherent benefits of circular business models around building brand loyalty around customer satisfaction. How do we connect narrative to real changes on the ground and the way things operate?

[00:18:23.820] - Rachel O'Reilly I think narrative really helps with the adoption piece. It's less in my mind about operationalising. That was more the social infrastructure points. But I think narrative helps us. It's something that we shouldn't forget in terms of how we market and communicate about the value of why you would take care of an object, why you would share that object, why would you give it back into a system rather than put it to waste? There were some brilliant examples. I go back to the musicians, but they describe their instruments as teammates or having a soul. There's a real sense of emotional connection with that.

[00:18:57.100] - Rachel O'Reilly Equally, there was another example around in the Hamburg, a re-gifting system around clothes and donation. Someone really holding on to the idea that this is a T-shirt that has a band that I like, but I don't know who it is. Whose T-shirt it was. I think sometimes we think about narrative as a very personal individual experience, but something I think we learned was that actually it's a very human connection point. We're always looking for stories back to the past and in the future, whether we know them or not. We're quite romantic at heart, I think.

[00:19:34.160] - Rachel O'Reilly Your question around how is this helpful? I think it's one of our most powerful tools in our armoury for how we communicate the value of a particular object. It has implications for how we market and communicate something, how we introduce that product, how we change the role of that product as we repurpose it. I think it's something that shouldn't be underestimated.

[00:20:01.240] - Fin As you say, we always resonate with stories more, we've all got that sentimental piece of clothing, or that object that carries that real significance. Then looking wider and the lessons for business, we're obviously looking for solutions that have enough relevance to be of scale across multiple geographies. What can businesses learn from this narrative point from the individual and then opening it up more widely to scale?

[00:20:27.480] - Rachel O'Reilly I think businesses have always been in the business of narrative. Certainly good marketing has been. Just because it's a very personal connection to a story doesn't mean that you can't scale it. There will always be that balance between how you market a particular object. But I think you can tell stories that are relevant to cross audiences. It is a universal need to take care of things, to have a connection with people who we might not have met or who have meant something. That is something that's universal. It doesn't have to be too individual. Each culture will have a version of that.

[00:21:06.540] - Rachel O'Reilly In particular cultures, I think South Africa, with some of the research we were doing, there's a whole narrative around newness and materiality and what it means to own something. You'll always need to adapt it to that. But I do believe this is a universal thing that brands can take back and take from the personal level, but use it as a principle, if you like, for how they communicate markets, articulate the value of objects and why you would do something.

[00:21:34.320] - Fin You can embed narrative and sentiment into circular products that maybe drives adoption and then through that drive for adoption leads to bigger scale.

[00:21:44.600] - Rachel O'Reilly Yeah, very well put.

[00:21:46.800] - Fin Thank you. Unfortunately, that's all we got time for today, but we've heard some amazing case studies, some real inspiration, and then some more operational or more practical guidance for business. But that's not all of the insights that we were here to discuss today. There's more for people to keep their eyes on, isn't there?

[00:22:03.000] - Rachel O'Reilly Yeah, absolutely. There were these five drivers, of which I guess we've talked about three, mainly. I think also, I'd applaud the ethos around the research as well as one of the key findings. For example, look where it's working, not where it isn't. Ask what's enabling rather than what's a barrier or stopping. I think this can unlock and help companies move beyond circling the drain of how to break the circular adoption business viability, chicken-and-egg issue, which we know is going on. I think the point around looking where it's obvious and where it's not obvious is really important.

[00:22:41.960] - Rachel O'Reilly Yes, learn from the traditional take-back schemes, but also look to the places where an informal circular economy is happening, whether it's called circular or not. Again, there's huge amounts we can learn from that. The point around social infrastructure and not underestimating local, but also check the ego in terms of the brand's role and what already exists and can be used, which is, I guess, circular innately. Then thinking about the value proposition and how you articulate and why people do circular, which is why this starting with where it's successful has really been helpful.

[00:23:19.440] - Rachel O'Reilly Look beyond just the personal economics of an immediate take-back and return. Think much more broadly in longer term. Think about resilience, think about reinvestment. Think about story and the story potential of objects, for example. There were others in terms of engagement and looking at the process rather than trying to hide the process of circularity. There's loads of good stuff in there, but fundamentally, they help us think about how do you operationalise, how do you market, communicate, articulate the value of circularity? Hopefully, it's helpful.

[00:23:54.840] - Fin Definitely. Thanks, Rachel, again. Thanks for joining us. I think resilience, long-term thinking, that's going to be crucial as we move to this implementation phase of the circular economy. Yeah, thanks again. Always nice to hear from you and we'll see you again soon.