Can we keep growing while also replenishing our planet?

The Internet of Things, the brave new world of machines talking to machines, is still in its early stages. But already, it has created profitable business models for those companies that have seized the moment.

Take GE, for example. Back in 2011, they added digital sensors to their machines, connected to a cloud-based system. A Harvard Business Review article praised this new approach: “Now revenue from jet engines, for example, is tied not to a simple sales transaction but to performance improvements: less downtime and more miles flown over the course of a year.” The authors claimed the new model helped GE generate more than $800 million in incremental income in 2013.

One interesting question is whether this new technology, forecast by some to connect 50 billion things to one another, that holds so much promise, could be utilised to drive forward the circular economy, a regenerative model that aims to build healthier cycles of products through recycling, re-manufacture and re-use.

This would enable business to continue to produce for the ever growing world population without dangerously running down our planet’s resources. As mentioned in previous blogs, we need to develop business models that recognise that the earth has finite resources. This would be good for business, enabling us collectively to meet growing world demand for goods and services, without harming the planet on which we all obviously depend.

This is, perhaps, one of the big business challenges of our times. As McKinsey put it recently, “Could economic growth be decoupled from resource constraints? Could an industrial system that is regenerative by design – a ‘circular economy,’ which restores material, energy, and labour inputs – be good for both society and business?”

We are familiar with these challenges, and our companies have been working towards circular economic business models since 2008. One of the challenges of doing so is ensuring that manufacturers can keep track of the material flows. One way is to shift from an asset-owning culture to one in which more and more producers are leasing a service. This strengthens the ability of the producer to maintain an eye on the goods and determine they are brought back for the next cycle.

One of the cutting edge questions is whether the Internet of Things can help? With sensors embedded in products, the most relevant information can be relayed back to the supplier. This can help ensure we provide the best possible service, optimising the equipment and goods on the customer’s behalf. But might it also be able to help circular economy producers keep tabs on the make-up of the materials, ensuring they are healthy, and aiding the process of disassembly and recycling, refurbishment or reuse?

The World Economic Forum and the Ellen MacArthur Foundation are addressing this very issue of asset tracking as part of Project MainStream, a cross-industry collaboration for scaling up the circular economy. As a member of its steering committee, Desso has been deeply involved in these discussions, so important in creating the conditions for positive change. Indeed, the discussions continue at this year’s Annual Meeting of the New Champions in Dalian, which is focused on ‘Charting a New Course for Growth’. It will also be on the agenda at Davos next year.

It’s very early days in these discussions as the focus in asset tracking and the Internet of Things is so new; much of the early application of this new technology is focused around such areas as optimising manufacturing techniques and processes and customer service. But it is only a matter of time before more brains will be put to work around how it can be applied to the circular economy. Joy Tan, President of Global Media and Communications at Huawei Technologies, a Chinese networking and telecoms equipment and services company, noted that only an innovative shift will move things on. “Using the [Internet of Things] to enhance sustainability will require a radical new form of collaboration. Companies in different industries – with sharply different products, cost structures, and operating models – will have to work together much more closely than in the past,” she said.

The will is there for this kind of collaboration as is the need to innovate to develop a truly sustainable global business model that delivers on the triple bottom line. Asset tracking technology fused with the precepts of the circular economy could really move things forward.

The Annual Meeting of the New Champions 2015 is taking place in Dalian, China, from 9-11 September

Have you read?
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7 technology disruptors set to change your world

Author: Remco Teulings, President EMEA, Tarkett Group

Image: An employee selects parts of discarded computers in the recycling department of Itautec SA, in Jundiai, April 20, 2011. REUTERS/Paulo Whitaker