Creating Value through Strategic Partnerships in a Circular Economy
Stacey Stormo & Behnosh Najafi explore various types of strategic partnerships which bring Circular Economy models to life.
The concept of a circular economy is gaining momentum as a means to address Scope 3 emissions and drive more sustainable business models, supply chain operations, and product design. Circular business models differ from traditional business models, because they decouple business growth from simply selling new products made from virgin raw materials and employ innovative approaches to reuse, upcycle, and recycle goods and materials.
Businesses engaging in a circular economy will require new strategies and mindsets to unlock their potential to generate new business revenues, as well as reduce costs, minimize landfill waste, or create social initiatives that support workers and communities. Strategic partnerships can provide organizations with new, innovative opportunities to activate and streamline circular business models or initiatives.
In this post, we explore the value partnerships can provide; present examples of different partnership structures; and outline some of the predictable challenges that can be avoided.
The Concept of Shared Value
One of the key advantages of stakeholder partnerships is the concept of shared value. Shared value, a concept introduced by Michael Porter and Mark Kramer (see Harvard Business Review )involves creating economic value while also addressing societal or environmental issues in a way that benefits both the company and society. Partnerships that support circularity can create value for all parties involved, including customers, suppliers, and investors. Collaborative partnerships can provide many different benefits including, but not limited to: access to new and/or cheaper materials; reduced transportation and energy costs; knowledge sharing; creation of new business offers; and sharing of risks and rewards.
Same-sector and Cross-sector Partnerships
Large organizations may choose to partner with other businesses to access materials, expertise, technology, systems and processes, or to generate economic value. For example, REI works with the start-up Trove to process returned customer items, as well as provide the back-end technology to process these exchanges.
Collaborating with start-ups provides larger corporations with an environment to experiment, take calculated risks, and learn from failures without encountering the bureaucratic hurdles and security concerns inherent in large-scale transformations within the organization. In turn, start-ups can leverage corporate resources to explore and validate novel concepts while gaining insights and expertise that can enable them to grow and expand their businesses. The symbiotic relationship between the two parties can facilitate start-up scaling and increase the likelihood of acquisition by larger enterprises, if that is a desired outcome.
Public and private partnerships can be especially fruitful as they are ideal for scaling circular ventures within a region. The NextCycle Washington platform, which builds off of the successes of NextCycle Michigan and NextCycle Colorado, provides financial and technical support for circular businesses and community projects to tackle primary municipal waste streams. The initiative is funded using public dollars through WA Departments of Ecology and Commerce, as well as King County in WA state. Both private and public entities provide the governance structures needed to implement the program. In its first year of implementation NextCycle WA supported over 50 businesses and organizations in launching or further developing their business ideas.
2023 NextCycle Pitch Competition. Photo by Bridgette Pollaski, RRS (www.recycle.com).
Collaborations between public sector partners can also be a driving force for promoting regional, socially impactful circular economies. Consider the Just Circular Communities (JCC) project, whose aim is to co-develop community-owned circular infrastructure projects that not only reduce waste and pollution, but also seek to regenerate ecosystems, prevent economic stagnation through jobs and cooperative businesses, while building resilience in frontline neighborhoods within the Duwamish Valley, Seattle's industrial area. Key partners in this work include the City of Seattle, University of Washington researchers in the College of Built Environments and community organizations Sustainable Seattle (S2), Duwamish Valley Sustainability Association (DVSA) and Circular Pacific Northwest. The work of this partnership supports ongoing community initiatives like DVSA's biodigester project and also launches the inaugural cohort of UW's Research Action Collaboratory. Outcomes of this research collaboration will ultimately be in service to the communities participating in the co-design process to establish a just transition toward circular resilience in the Duwamish Valley.
Finally, industry collaborations represent an especially powerful form of partnership engagement as they can impact entire systems that open circular opportunities for all other businesses within that industry. The Fashion Industry Target Consultation led by Global Fashion Agenda and the UN Environmental Programme engage multiple stakeholders in the fashion Industry to create and align around standards in five different areas:
Respectful & Secure Work Environments
Better Wage Systems
Resource Stewardship
Smart Material Choices
Circular Systems
These new standards will be announced at the next Global Fashion Summit, September 27, 2023. The standards are expected to drive more sustainable value chains in the textiles industry, and will make sustainable procurement more accessible.
Partnership challenges
Establishing the right partnerships may seem like a daunting task, even when a clear need for a partnership has been established (Frishammar & Parida (2021). Some of these challenges include: establishing mutual agreements to advance specific goals for each organization; establishing a shared vision and company-wide engagement with new partnership ventures; and following up after new products and/or services with their associated workflows are established.
Circle Economy has provided some guidance on establishing effective partnerships, which includes a step-wise process that serves to address these challenges. As Design Strategists, we are also interested in exploring methods to facilitate and streamline these processes, including developing ideation workshops to consider the wide range of possible partnerships for a given organization (and the opportunities they may unlock), as well as conducting upfront partner (i.e. user) research to articulate and align goals for prospective partners.
As the details of the partnership further develop, new product and service offerings will likely be created, and understanding how users or customers interact with them will be crucial. Human-centered designers are well-versed in creating, piloting, and evaluating new offerings. Multiple design iterations of new offerings and associated workflows over time ensure the partnership continues to provide value for all stakeholders, including (the too often overlooked) users or customers.
Charting a Path Forward
While partnership engagement may present itself as a novel, complex activity, we are optimistic that continuing to surface and develop the value generated in these arrangements will incentivize organizations to pursue more circular business strategies and operations, This value may be expressed through cost reductions, generating new sources of revenue, increasing innovation, and more resilient local economies and communities. Transparency, tactfulness and a willingness to share data are important aspects to keep in mind as partnerships are forged and terms of engagement are established. We believe we have only scratched the surface of what’s possible in the context of these collaborations, and anticipate the development of many more strategic partnerships as decision-makers realize their potential.
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About the Authors
Stacey Stormo, MS-SDM
Stacey Stormo, MS-SDM, Sustainability Consultant, College Professor, Design Strategist, Instructional Designer, and Founder of Stormo & Co. Sustainability Design.
The focus of her myriad skills is designing innovative strategies and learning experiences to equip individuals with the skills needed to build a better, more sustainable future.
Stacey received her bachelor’s degree from University of Washington and her her Master of Science in Strategic Design & Management from the New School in New York City, where she is an adjunct professor. She is an alum of Leading the Sustainability Program, a simulation-based professional certification for sustainable business powered by WholeWorks.
Behnosh Najali, Ph.D.
Behnosh Najafi, Ph.D., leads Circular by Design, a circular design and strategy firm that supports business efforts to design circular products and services, and new business models. She works closely with her clients and their stakeholders to help them stay ahead of market risks and to meet growing consumer demands for sustainable product offerings. Behnosh also sits on the governance board of NextCycle WA and regularly contributes her time as a mentor and judge to circular business pitch competitions. For more than a decade, Behnosh has supported businesses, foundations and nonprofits connect to their end-users and work towards strategic objectives, often through unchartered territory, Her clients have included the Bill and Melinda Gates Foundation, the Allen Institute for Brain Sciences, REI, the state of Washington and the Seattle Good Business Network.
Behnosh received her PhD in Developmental Psychology from the University of California, Santa Cruz and holds a professional certificate in Human Centered Design and Engineering from the University of Washington. She is also an alum of Leading the Sustainability Program, a simulation-based professional certification for sustainable business powered by WholeWorks.
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