Innovation explained: Circular Economy

Sustainability, sharing economy and system thinking – all these concepts are an essential component of our future. They describe elements of the so-called circular economy, which deals with the world of tomorrow. According to a McKinsey study, the environmental service branch in Germany could reduce expenditure on mobility, housing and food by up to 25 percent by 2030. In this revolutionary system, raw materials are stored as free of waste and emissions as possible and are reused for as long as possible and divided by innovative sharing concepts. According to the McKinsey study, the German economy could grow at an annual rate of up to 0.3 percent faster. But what does the concept of recycling really mean?


The concept of Circular Economy

The basic principle of the Circular Economy is that the economy works effectively at all levels. Both small companies, as well as large corporations, individuals and organizations, all contribute to the preservation and design of the system, globally and locally.

The introduction of a closed-loop economy therefore not only entails adjustments aimed at regulating the negative effects of a linear economic system, it also requires a complete systemic change that creates long-term resilience and stability.

Kreislaufwirtschaft erklärt (Quelle: Europäisches Parlament)
Circular economy explained (Source: European Parliament)

As the popularity of the new system increases, there are more and more circular principles and systems based on a wide variety of innovative systems. From blockchain to the Internet of Things, many technologies are represented in the Circular Economy.


New business models in the Circular Economy

This versatility also enables new business models. In order to establish the new economic system, action plans are needed that explain the relationship between goods, trade and administration and devise solutions. A company with a purposeful business model therefore considers not only the product, but the entirety and also creates gratifiers that motivate the customer to return used items and participate in the Circular Economy.


“Private households in Germany would benefit most from the introduction of a closed-loop Circular Economy” – Martin Stuchtey, Head of the McKinsey Center for Business and Environment


Looking to the future, it can be said that the Circular Economy is ushering in a whole new era of production and use, which will affect many companies over the next few decades. Companies must therefore begin to think into this promising economic system today, to change perspectives and to look at the functioning of our economy from a new perspective in order to shape the world of tomorrow in a sustainable and long-term way.

Alexander Pinker
Alexander Pinker
Alexander Pinker is an innovation profiler, future strategist and media expert who helps companies understand the opportunities behind technologies such as artificial intelligence for the next five to ten years. He is the founder of the consulting firm "Alexander Pinker - Innovation Profiling", the innovation marketing agency "innovate! communication" and the news platform "Medialist Innovation". He is also the author of three books and a lecturer at the Technical University of Würzburg-Schweinfurt.

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