Innovation a revolutionary evolution?

There are two major changes going on in Europe. This brings a strong emphasis on the need for innovation. 

The first change can be characterized as the “Energetic Society”. People, individuals are not waiting anymore for initiatives by governments or companies, they start their own cooperative company on car-sharing, care, maintenance, energy-suply and other issues. It is the joint feeling of independency that is a hughe driver for these initiatives. Being independent from large companies, like the energy-companies, being independent from unreliable partners (f.i natural gaz supply from unreliable partners) and being independent of the large financial system, that seems to be the collective feeling that brings people together. Those, mostly local, initiatives strive for self-sufficiency but now they still need the national grid for continious energy-supply and that is the same in many domains. So organize locally, use national partners: it has characteristics of an hybrid situation.

The second change is the transition from a linear to a circular economy. A circular economy is an industrial system that is restorative or regenerative by intention and design.. It replaces the ‘end-of-life’ concept with restoration, shifts towards the use of renewable energy, eliminates the use of toxic chemicals, which impair reuse, and aims for the elimination of waste through the superior design of materials, products, systems, and, within this, business models. Such an economy is based on few simple principles. First, at its core, a circular economy aims to ‘design out’ waste. Waste does not exist—products are designed and optimized for a cycle of disassembly and reuse. These tight component and product cycles define the circular economy and set it apart from disposal and even recycling where large amounts of embedded energy and labour are lost. Secondly, circularity introduces a strict differentiation between consumable and durable components of a product. Unlike today, consumables in the circular economy are largely made of biological ingredients or ‘nutrients’ that are at least non-toxic and possibly even beneficial, and can be safely returned to the biosphere, directly or in a cascade of consecutive uses. Durables such as engines or computers, on the other hand, are made of technical nutrients unsuitable for the biosphere, like metals and most plastics. These are designed from the start for reuse. Thirdly, the energy required to fuel this cycle should be renewable by nature, again to decrease resource dependence and increase system resilience (e.g., to oil shocks).

The major shifts in thinking are to be acknowledged as process- and systems-innovation. They will bring fundamental shifts in thinking: ownership will be a changing paradigm with hughe consequences for responsibilities.

This needs reconsideration for the energy system.

The dominant system in energy is a centralized system: powerplants, national grids and so on. It has advantages: low prices based on scale, reliability and continious quality. It also has disadvantages: dependency, centralized price mechanisms, strongly based on traditional resources (fossil fuels) and uncontrollability for the individual customer.

The new system can be characterized as a decentralized system. This also has some advantages: local producers of energy (sun, wind, geothermal and bio), client as partner in production and consumption, local grids, autonomy. Ofcourse there are also some disadvantages: maintaining continuity in supply, need of new organisation-models and gaining the right quantities in supply.

The actual system is more and more a hybrid solution: use the advantages of both systems, deminishing the disadvantages. One could say that it is like the change in ships: steamvessels (new) with sails (old) in the 19th and early 20th century. By the way: we see this change nowadays appearing again. In the energysystem we see the same movement: from local energyfactories in the early 20th century to a completely centralised system in the early days of the 21th century and now we turn this around again.

The hybrid situation is part of the transition: we use the good elements of the old system to compensate the first failures of the new system. It is all about reliability.

So when a change is dawning from the actual linear economy to a circular economy, we tend to look for hybrid solutions. In the Netherlands there are initiatives to create a ‘Resources Roundabout’. That sounds circular and it has the intention to be the basis of a circular system but we organize it as a new solution for the failures of the ‘old’ linear economy. The name says it already: roundabouts are not intended to change the system of logistics in traffic management, it is just a solution for the vulnerability of the crossroads of lines, roads. It helps traffic streaming more efficiently and safe. Not bad but also not a fundamental change. Maybe in the long term it will evolve or adapt to the new circular system.

The most difficult part of such a transition, from linear to circular, is to find the new ways of wheeling and dealing. What’s new? We see some initatiatives that found a new way: forget ownership of the customer, pay for performance, (collective) ownership of resources, growing attention on services etc. We will need to find more and fundamental solutions in the new, circular, system. That’s what we at OPAi are working on these days: new businessmodels, new value creation, new systems solutions and help/advise on implementing of the new, circular, economy in businesses and organisations/institutes.

For the moment we see a lot of hybrid solutions. Don’t worry, that’s a good thing: the existing has value, new values need to be developed and such a transition doesn’t need to be a deadly revolution, better might be the evolutionairy road. I would say, we need a revolutionair evolution. Why revolutionary? Because we need speed. Speed in innovation, new businessmodels, new economic values, new contracts and everything that is part of the new circular economy.