30th May 2014
It won’t be easy: shifting the linear “take-make-use-dispose” model of production to a circular one, with energy, water and waste returned to the cycle and companies becoming temporary stewards of materials rather than resource consumers. So are business schools ready to assist?
One institution has embraced the challenge. The UK’s Bradford University School of Management has developed a distance learning MBA on the circular economy in partnership with the Ellen MacArthur Foundation, which works with a range of companies to promote circular economy business models.
“We start off by running a core module with 20 credits on the key concepts essentials,” says Peter Hopkinson, professor of innovation and environmental strategy the school. “That sets the scene so that when they go into the strategy and finance classes, they can think about how these relate to the circular economy.”
In tackling the topic in a serious way, however, University of Bradford is currently treading a lonely path. And when it comes to incorporating circular business models more broadly into the MBA curriculum, schools may find it tough.
Academia is, after all, a world where disciplines are the primary organising force behind research, curriculum design and academic careers. “We are naturally predisposed to simplify and reduce complexity to make things manageable,” says Andrew Crane, director of the Centre of Excellence in Responsible Business at Schulich School of Business. “And business schools have been complicit in this.”
Yet implementing new circular business models is anything but simple. It requires breaking down traditional walls between departments and sectors and increasing collaboration across business units and functions, as well as with consumers, suppliers and even competitors.
In moving towards a zero waste world, enterprises will need to figure out how their by-products could become raw materials for other companies. Some must persuade customers to lease their products, rather than owning them indefinitely.
And all this calls for operations managers to change the way they work with marketing teams or for accounting departments figure out how to put a number on the value of natural resources. Product developers must also adapt, factoring ease of disassembly into their designs.
“Whether the world becomes fully circular or more circular, you quickly get into some important business model shifts,” says Peter Lacy, managing director for Asia-Pacific of strategy and sustainability services at Accenture. “You need to understand the economics and the technology implications – and the principles of that are not yet well ingrained in business schools.”
Crane says schools may also need to challenge traditional analysis frameworks such as Michael Porter’s widely taught Five Forces. “In typical models such as the Five Forces, there’s no sense that resources are limited,” he says. “It’s about a fight for resources and capturing value – so we need to overturn some of those strategy models.”
Of course, while business schools are often accused of moving too slowly to incorporate new ideas into the curriculum, in the case of the circular economy, they could be forgiven. After all, schools need to meet the demands of their market, and despite the talk, only a handful of companies are so far experimenting with circular business models.
“Outside those pioneering businesses that are doing great work, the general demand for understanding this is pretty low,” says Lacy, who sits on the boards of several leading business schools. “So are schools lagging behind business? No, I don’t think so.”
Nevertheless, they may need to get better at future gazing. Given the likelihood of increasing resource constraints and rising commodities prices, this is particularly important, says Jamie Butterworth, chief executive of the Ellen MacArthur Foundation.
He has yet to see evidence of this. “We’ve heard consistently from businesses that someone can go through a functional MBA,” he says, “without necessarily getting a perspective on the way business might look in 10 or 15 years’ time.”
THE GOOD STUFF
Here, I invite my interviewees to name a favourite charity and – in the spirit of Mixing It Up – a favourite cocktail.
Charity: British Heart Foundation
Cocktail: a glass of Riesling
Andrew Crane @ethicscrane
Cocktail: Bloody Mary
Peter Lacy @PeterLacy
Charities: Mifan Mama and Shining Star
Cocktail: Apple Martini
Charity: Ellen MacArthur Cancer Trust