Davos Agenda

Successful circular economy 'trailblazers' do these 5 things: Report

Image: Photo by heylagostechie on Unsplash

Liselore Havermans
Research Director at ScaleUpNation, Founder of Havermans Consultancy
Menno van Dijk
Founder, ScaleUpNation
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Davos Agenda

This article is part of: The Davos Agenda
  • Building a circular economy requires that innovative circular solutions become the standard across industries.
  • Only a small group of organizations are well positioned to build innovative businesses in the circular economy that can trigger systems change: circular trailblazers.
  • A new report by the World Economic Forum and ScaleUpNation shares research-based insights into what helps circular trailblazers successfully change entire industries.

The world is becoming less circular. As a result, it’s moving further and further from an ideal where waste is eradicated and economic activities strengthen the environment and society at large. Given the current pace, we'll likely see a doubling of global material use by 2060.

Shifting to a new way of doing business will be challenging and will require support for 'trailblazers', a special type of innovator poised to trigger change across industries and entire value chains.

Why ‘trailblazers’ are different

Trailblazers are the subject of a new report from the World Economic Forum and impact organization ScaleUpNation. The special study was conducted to better understand these entrepreneurs with research centered on innovators within the circular economy given the $4.5 trillion opportunity they present for both job creation and economic development.

On the surface, circular trailblazers look like any fast-growing 'scale-up'. Such businesses are focused on solutions that scale, are between 3 and 10 years old, have between 10 and 100 employees, and grow their ranks of full-time staffers by 20% or more each year.

However, trailblazers stand apart -- even among the ranks of impact scale-ups, or those seeking commercial success and societal change. Trailblazers actively pave the way for others across sectors to take up circular solutions. As a result, they can have outsized impact on entire industries, accelerating work toward the United Nations Sustainable Development Goals. These entrepreneurs, not tied to the status quo, can prompt change that would not be possible through classic commercial strategies.

Tactics for trailblazing impact
Tactics for trailblazing impact Image: World Economic Forum

Our research shows that only 1 to 2 percent of all companies in the scale-up phase enact a trailblazing strategy. Identifying these companies can help maximize efforts to tackle sustainability and climate change. Understanding the strategies these entrepreneurs employ can increase the chances that others will succeed and inspire more circular innovation.

Identifying trailblazing companies

According to our research, successful circular trailblazers use these 5 tactics to achieve impact beyond their own size:

  • Storytelling for impact: Trailblazers use storytelling to raise awareness regarding the societal challenge they are aiming to tackle, and the type of solution they see as the way forward. They craft a compelling and authentic story, create or find the right stage, and engage effective storytellers inside and outside their organization. For example, Dutch circular mobile phone manufacturer Fairphone looks to shape a sustainable electronics industry. It shares stories of changemakers through blogs, podcasts, workshops, and events to forge memorable human connections while building awareness and support for ideas such as worker well-being and reducing electronics waste.
  • Setting a higher standard: Circular trailblazers raise the standard for their product category and even create new categories with their innovative offer. Their entry into any established space can threaten incumbents, but by continuing model transparency and inclusive industry change, they can grow support for their movement. Packaging company Polymateria, for instance, didn't just develop an innovative biodegradable solution for conventional plastic packaging, it worked with legislators to ensure its solution could officially become the new benchmark for the British standard in biodegradability. This trailblazer's one-of-a-kind approach is both commercially viable and is helping reshape the sector.
  • Sharing insights: Trailblazers share their intellectual property openly. This practice helps others provide circular solutions that build support for new standards. Such sharing could take many forms, such as licensing technological knowledge, training others or even open-source tools.

    Additionally, trailblazers share in a way that helps grow the market without sacrificing their own competitive position. For example, fashion company Rapanui founded Teemill, a T-shirt brand with circular production process. It has opened access to this process allowing thousands of other brands to participate, helping to further reduce water inputs and emissions. The system allows Teemill to thrive while breaking down barriers to the circular transition.
  • Initiating collaboration: Trailblazers understand they don't act alone. They build alliances with a wide range of actors, including policy makers, academics and industry experts as they push for technological breakthroughs, new industry standards and wider market access. Such systems change will often require the involvement of likely and unlikely allies such as scale-up peers, big corporates, academia and non-profits. Trailblazers collaborate because they know they cannot change entire industries on their own.
  • Influencing public policy: Trailblazers work to influence public policy to break down barriers to the circular transition. They do this by building consortiums to advocate for policy changes such as stricter regulation, certifications, taxes for harmful practices, or subsidies for circular practices.

    As an example, US based clothing brand Outerknown has published a call to action to other players in the fashion industry to jointly lobby for preferential tariffs for the use of circular fibres. Such a move shows an understanding for the need for public policies that support systems-wide change.
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Looking ahead

To be sure, these 5 approaches alone cannot guarantee a trailblazer's success. Most start-ups stall in their own growth, and fewer still trigger change across industries.

To increase their chances of success, these businesses need support. Trailblazing is a strategy with a long-term horizon and high risk, driving home the need for investors who are comfortable with this unique risk/return profile and who are supportive of maintaining circular impact across industries at the core of the value proposition.

Building back after COVID-19 will require we prioritize these trailblazers, the innovators best poised to transform industries and those best positioned to lead us into the “markets of tomorrow”.

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