Accidental circularity?

Being and becoming a circular business, it goes without saying, is not a linear path. But there are ways to make it more possible, profitable, and operational.  

We discussed this and much more with Leah Pollen, who helps companies evolve their business model to the circular, and maximise their profitability in the used electronics space. She hosts her own podcast, the ReTech Roundtable. The conversation took some interesting and insightful turns, which we’ll delve into here.

Circularity does not guarantee social and environmental sustainability

Leah elucidated how the major phone manufacturers have created what she calls “accidental circularity,” in cultivating and supporting the resale market. Why accidental? Because their primary motivation is to get people into new phones quicker, and profit off the resale of the old devices. Both to aspirational customers or those in secondary markets with less access to or financial means to purchase the latest devices. 

While finding a new life for old devices rather than going straight to recycling is a step in the right direction, it needs to go further. How? Designing products from the start for a longer life. Modular hardware updates. Plus cleaner sourced and more easily reusable materials, among other things. It is possible, with a shift of perspective design approach and business model, to accrue greater residual value from longer lasting devices. 

If you want to delve deeper into what it takes to be a truly circular, regenerative business, our episode with Fabrice Sorin of Circulab goes into great detail. 

On Apple’s domination of the resale market

Leah touched on at various points how Apple has the lion’s share of the resale market. That while they comprise less than 50% worldwide of new phones, they make up 80-90% of used phone sales. Why is that?

As Leah explained,

“Samsung devices, Android devices, in particular, are more difficult because they're not as universal as the Apple ones. They have modem and perhaps connectivity issues, and they don't retain their value in the same way that an Apple device does.”

It goes deeper. 

“Apple dominates the secondary market, both because of their pricing strategy and because they create their phones to be more long-lasting. They were the ones who recognised (early on) the value of the secondary market -  that they can get users into a new phone quicker if they leased their phone, because the users wouldn't have to pay for the full device.”

We were curious to follow that thread, and in this article by Peter C. Evans comparing the Apple and Google platforms it became clear: 

“Apple’s platform architecture is highly integrated and centrally controlled. Apple designs and manages both the hardware and software for its devices, which allows the company to implement standardized programs for trade-in, repair, and recycling across its entire product lineup. This integration ensures that new circular initiatives-such as diagnostics, refurbishment standards, and resale processes-can be rolled out quickly and uniformly, maintaining consistent quality and consumer trust. 

In contrast, Android’s platform is open and decentralized, used by a wide range of manufacturers who each make their own hardware and software modifications.This fragmentation makes it much harder to coordinate and standardize circular economy practices across the Android ecosystem, leading to slower adoption and more variable user experiences.”

While there are indeed lessons to be learned here for other companies, we as supporters of the open source model of technology and software have a qualm with this absolute control. While it’s efficient in this regard, it stifles innovation and accessibility, which is part of the circular economy as well.

Many parts of the world rely on open source software, including Android, for everything from health care to education to more affordable individual devices. However, this means that with more 24,000 Android devices in the world, the increase in specialisation is a challenge to recirculation.

Google, Peter’s article notes, is making strides to bridge the circularity gap, making resale of their devices more easily implemented.

The unexpected activator of the circular economy: empathy

The conversation took an interesting direction when talking about how to approach those considering transitioning to a circular model of business. For those deeply entrenched in the linear and looking to go circular, it can be a scary leap to make. 

As Leah put it:

“If someone who spent a majority of their career, which would include a lot of senior decision makers in the manufacturing spaces, are confronted with a business case, even if all of it was laid out for them, there does need to be some level of empathy for the mindset shift that needs to happen.

We all know new ideas take time. They take time to process. And especially, if you've been doing things a certain way where your whole business, your whole career is built on linear. On an individual level, that's difficult. It's hard to not know something when you know so much. And it does require a little bit of opposite thinking. A line is not a circle, a line is not an infinite loop, and that point, getting products from point A to point B and that's it. 

Anyone who's operated in both spaces understands that it is different. And so to have empathy when you're coming with your business case or when you're trying to have a conversation with a decision maker, understand that they need some time.

Yes, successful stories. Those are important. Data is important...even those high level decision makers, they're always looking for new streams of revenue. That is, in my opinion, how we're going to get there. Because everyone needs, well, at least where I live, people need to answer to Wall Street, and as soon as it becomes a more viable, accepted business model, you're going to see a shift and it'll be a tipping point.”

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If you’d like to delve further into how to evolve your business, with unexpected lessons from the automotive and fashion industries, along with how to optimise your products, software and overall mindset, we invite you to go to this episode’s dedicated show page. There you can quickly glean the key insights, listen to the full episode, or take your time sifting through the full transcript.