Circular Economy

Designing innovations for the circular economy 

The circular economy needs to be grounded in circular innovations

The circular economy needs to be grounded in circular innovations. Image: Photo by Erlend Ekseth on Unsplash

Jovan Tan
Fellow, Shaping the Future of Advanced Manufacturing and Value Chains, World Economic Forum
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Circular Economy

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  • A circular economy can only function if the innovations introduced are designed based on circular principles.
  • The LASER Framework is designed to help innovators create products that follow circular economy principles.
  • The LASER Framework helps innovators to quickly assess and calibrate the circularity performance of their proposed innovations.

Many product innovations today aim to solve our world’s most pressing issues. Photovoltaic modules, for example, allow us to exploit solar energy to accelerate our decarbonisation efforts and achieve net zero. Like photovoltaic modules, all product innovations have a definite shelf life and eventually become waste, unless they participate in the circular economy. Unfortunately, with a global circularity rate of only 7.2%, most products are discarded as waste.

Without significant changes to the status quo, future product innovations will face difficulty participating in the circular economy. They will pollute our terrestrial ecosystem after they have fulfilled their purpose. They will also indirectly encourage further material production and extraction of the Earth’s resources, emiting immense amounts of greenhouse gases in the process. These ramifications negatively impact the environment and human health and will severely diminish an innovation’s contribution to society.

Conversely, if we could recover, treat and circulate the materials back into our ecosystem, we could mitigate these adverse impacts while generating economic returns. For these reasons, we must prepare our future product innovations for participation in the circular economy. Designing innovations for the circular economy, however, requires deep interdisciplinary knowledge and expertise, which most businesses lack. Consequently, we developed the LASER framework, in consultation with domain experts and leaders, to eliminate the learning curve and empower innovators to design their innovations for the circular economy.

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What is the World Economic Forum doing about circularity and the automotive industry?

The LASER Framework, for assessing circular economy participation

The LASER framework is a systematic six step framework. It enables innovators to be 'LASER-focused' on working through the key aspects determining whether their proposed innovation can participate in the circular economy. Each letter in the acronym 'LASER' represents an equally important aspect. Innovators are encouraged to work through each step successively. They are encouraged to continuously reiterate and optimise steps two to four until the desired outcome is achieved before constructing an execution plan (step five).

The LASER Framework enables innovators to be 'LASER-focused' on working through the key aspects determining whether their proposed innovation can participate in the circular economy.
The LASER Framework enables innovators to be 'LASER-focused' on working through the key aspects determining whether their proposed innovation can participate in the circular economy. Image: Jovan Tan

Step 1: Alignment of internal and external factors

The first step of the LASER framework is alignment, both internally within the organization and externally within the macro environment. Internal alignment is achieved when the innovator secures its key stakeholders' acceptance, willingness and commitment to exploring means of designing its product innovations for participation in the circular economy. External alignment refers to supportive and complementary policies, regulations and megatrends in environments where these proposed innovations will be adopted.

Alignment is the bedrock of the LASER framework. Without securing alignment, any innovation endeavour risks a high possibility of incompletion or failure. To increase one’s chance of securing alignment, innovators should consider aligning their intentions with the company’s vision and key business objectives.

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Step 2: Life cycle of the product innovation

The second step refers to the product’s material lifecycle. In this step, innovators must evaluate the end-to-end product lifecycle for its material and technological feasibility to participate in the circular economy. Ideally, the used product should be collected, treated and returned to its original state for safe reintroduction into the ecosystem. This perfect closed-loop system, however, may not be realistic today. Therefore, at the very least, innovators must demonstrate their proposed innovation’s circularity pathway through waste valorisation and industrial symbiosis. Employing cradle-to-cradle design principles, such as mono-materialising techniques, can help innovators achieve the latter. Whenever possible, innovators should also comprehensively assess and factor the carbon footprint of their proposed innovation into their decision.

Step 3: System enablers and value chains

An entire value chain is intricately involved to ensure materials can circulate within the ecosystem. Unless the innovator has the resources to organize and maintain a closed-loop ecosystem for its innovation, it needs to work with strategic partners to enable these critical components of the value chain – e.g. suppliers, waste collectors, treatment facilities and off-takers. Therefore, in the third step of the LASER framework, the innovator must identify its critical enablers to achieve success. It must also consider all aspects of the strategic partnership and devise a mutually beneficial plan to secure participation.

Step 4: Economic viability

The result from steps 2 and 3 of the LASER framework is a draft blueprint of how the proposed innovation will participate in the circular economy. The next step is to evaluate this blueprint's unit economics and viability. This crucial step grants the innovator and key stakeholders visibility on the associated revenues and costs per unit. Innovators and critical stakeholders should optimise steps two and three to achieve their desired unit economics. For situations where an optimal combination could not be reached, the innovator can consider introducing additional layers of innovations – such as business models or process innovations – to create and extract untapped value to improve the unit's economics and viability.

Step 5: Resource planning for efficient execution

After achieving an optimised blueprint, the next step is to devise an execution plan outlining how to bring the proposed innovation to market. As with any typical project execution plan, the critical resources needed (workforce, investment, etc.) and the schedules, milestones, risks and impacts should be detailed. Additionally, being mindful of the overarching objective to reduce the resource burden on society and encourage circularity, the plan must embody the prudent and efficient use of resources.

Step 6: Alignment for commitment and action

Finally, with a well-defined blueprint and action plan, innovators should revisit their critical internal stakeholders from step one and seek their concurrence to act and introduce the proposed innovation to the market.

To conclude, business leaders have an innate desire to better our society. They are actively exploring ways to improve the sustainability performance of their product offerings and organizations. However, specialised knowledge is often the most significant obstacle deterring them from achieving it. Hence, we worked with domain experts and leaders to develop a straightforward and simple-to-use framework for innovators to quickly assess and calibrate the circularity performance of their proposed innovations. Introducing this framework will inspire more innovators to design purposeful innovations for the circular economy.

The topic of circularity is also addressed in the Forum initiative The Circular Transformation of Industriesdiscover more here

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