Business

Published on January 28th, 2013 | by Priti Ambani

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Circular Economy: Own Performance Not the Product

The circular economy has dawned on us, partly through innovation and partly through the downward spiral of depleting resources. The flat one-directional consumer based economy is being replaced with a need-based-sharing model. Simply put, our consuming mentality needs a rethink in a way that spells all round prosperity for the planet and people.

Obviously this new way of thinking needs new infrastructure in terms of business models to reform how we manufacture, sell and use these commodities. How about, for starters, we forget ownership of goods and materials and only buy performance?

Turntoo is trying to change the business paradigm and make performance count more than anything else. Turntoo is the brainchild of visionary architect Thomas Rau who founded the architecture studio RAU in 1992. In 2009 he founded the Oneplanet Architecture Institute which focuses on issues concerning the new economy. He actively participates in the ongoing international discussions on sustainability and the new economy. According to Thomas Rau,

“The idea that goods are owned by consumers is outdated. As a consumer I am only interested in the performance of a product, not owning it. Sufficient light, comfortable seating, good audio and vision, that’s what counts. From now on we consume based on the performance of products, ”

“Users are no longer the product owner, but pay only for performance. Producers retain the ownership of the products,  which become ‘resource banks’ and in that way remain available for future generations.”

Rau practices what he preaches through the infrastructure he seeks for his own office space, that he calls a “performance based work environment”,

“Why should we posses the interior of our firm? We just want a nice, inspiring space where we can do our work efficiently. Furthermore, why do we need to posses an office interior at the end of its usage cycle? As a consumer I don’t want to collect obsolete possessions and no longer want to be held responsible for the actions of the producers.“

How does Turntoo work?

With ®turntoo products are not consumed but used. Within ®turntoo the user will not be the product owner. The user only borrows the suitable raw materials in form of a product from the manufacturer and can make use of the performance.

The idea to go towards a performance based business model is valuable for a number of reasons:
  • Performance Efficiency: If a user is paying the “producer” for performance, say a fixed quality of lumens/light instead of the fixture, wiring, bulbs etc, now the producer wants to maximize efficiency and use infrastructure that produces the maximum light for the buck – like energy-efficient lighting; curb waste with dimmers and motion sensors and provide maintenance that lengthens the life of the infrastructure. All cost saving measures and guess what, all resource saving measures as well.
  • Material Efficiency: When the “producer” owns all the infrastructure, she ensures and designs for a circular feed back loop that includes appropriate reuse, re-manufacture and repairs. Users do not question her on material as all they care about is performance and lumens in this example. For producers it is important to design and produce the product with a cradle to cradle approach, in such a way that it can be fully disassembled so that the raw materials remain accessible for future generations of products.
  • Responsible Consumption: These service models are designed with usage in mind, no surplus and no waste. It helps change our mentality from “use as much as you can” to “use only as you need”. The producer is also held responsible for the consequences of his own actions, building responsibility right into the business model.

I have used a “lighting” example above as RAU had a successful project with Philips called the “Pay-by-Lux” where Thomas Rau entrusted the company with providing lighting performance. Read the case study here.

What are your thoughts about “paying for performance”? Does it have the potential to disrupt industries? How will it fit into your business model?

Image via University of Bradford



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About the Author

Hi there! I am Priti and I specialize in strategy and communications for impact organizations that aim to create social, environmental and economic wealth for all stakeholders. Working from the ground up, I help these do-gooders craft effective programs for community engagement, outreach and profitability. Follow my work covering do-gooders, cleanweb, start-ups and Web 2.0 businesses on Ecopreneurist and at Crowdsourcing Week. I enjoy traveling with my boys, cooking up a gourmet meal from scratch and entertaining! Join my community for Social Entrepreneurs on G+ Follow me on Twitter, on LinkedIn and Google+



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