CIOs are well-positioned to take a leading role in creating new business value and bolstering competitive agility in the circular economy.

As we enter this decade, the facts are clearer than ever. We are fast approaching a tipping point, where linear systems of production and consumption are no longer fit to support a growing economy, prosperous society and protected planet. The decades of "take-make-waste" thinking — combined with global geo-political and economic challenges — are locking future generations into an unsustainable world, with devastating and irreversible consequences. At the same time, the opportunities to leverage a new system — the circular economy — to create a more just and sustainable world are tremendous.

Companies are increasingly rejecting traditional linear approaches in which raw materials are extracted, turned into products, and after being used or consumed, the products are typically thrown away as non-recyclable waste (or at most, they are recycled or downcycled). Instead, they’re shifting to a circular economy in which they keep products and resources in use for as long as possible and, at end of use, cycle their components and materials back into the system. There is a move to eliminate the concept of waste altogether and fundamentally change the way we produce and consume, creating a healthier, thriving ecosystem that circulates value throughout the economy and society.

Leading companies across industries are showing clear progress, but they are just scratching the surface in terms of unlocking the full potential of circular business models. And with a $4.5 trillion-dollar value at stake, the time to accelerate this movement is now.  

Technology takes the lead

As is the case of myriad other challenges and opportunities facing companies today, technology is a critical driver towards building the circular economy. As technology improves, data becomes more abundant, and new, innovative solutions automate activities that were previously labor intensive, organizations can better recover (and obtain greater value from) increasing volumes of wasted resources.

This increasingly important role of technology puts CIOs in a central position in the transition to circularity. With a unique view and understanding of the overall tech needs of their organizations, CIOs can — and should — assume the role of a corporate change agent responsible for driving circular innovations.

There are several key steps CIOs can take to do that, but first, let’s take a step back and delve into how technology is enabling the circular economy. To fully realize the value of a transition from linear to circular models of production and consumption, organizations should embrace fourth industrial revolution (4IR) technologies in the physical, digital and biological realms:

• Digital — technologies based on computer, electronics and communications sciences, which make use of the increasing volume of information and connectedness of physical resources, such as artificial intelligence, internet of things (IoT), big data analytics, machine learning, and blockchain, among others.
• Physical — technologies based on basic properties of materials, energy, forces of nature and their interactions, such as 3D printing, robotics, nanotechnology, and energy storage and harvesting, among others.
• Biological — technologies based on aspects including, but not limited to, biological systems or living organisms and processes for specific uses, such as bio-energy, DNA marking, bio-based materials, and genetic engineering, among others.

Accenture research found that these 4IR technologies can both accelerate and scale the move to circular economy across all industries. And, when applied strategically, these technologies can unlock tremendous value for the organization:

• Enabling greater efficiencies and thus reduced waste.
• Driving innovation by allowing new entrants to disrupt existing markets while challenging incumbent companies to pivot to new business models and new markets.
• Increasing information transparency, allowing companies to gather and analyze data quickly to obtain valuable insights through new levels of visibility (into equipment usage and product, energy, and material flows), connectivity (between machines, customers, and decision-makers), and flexibility (the capability to modify or adapt a device, function, or process).
• Moving away from the use of traditional limited or resource-intensive materials.

4 tips for driving the circular innovation agenda

While all three categories of technologies — digital, physical and biological — can enable circular business models, companies have generally adopted digital innovations more widely than physical or biological technologies. For example, 59% of 1500 companies analyzed by Accenture Strategy over the last five years have deployed digital technologies. However, the companies most advanced in their circular journeys tend to deploy combinations of the three technologies.

For example, a company could use IoT to monitor, track, and trace the use of a product and then apply big data analytics to mine insights that could be used to generate circular value. The analysis could, for instance, help determine whether any returned products should be refurbished for resale or instead have their parts harvested to obtain the highest value. Another example would be the use of machine vision and AI to improve the performance of physical technologies, such as robots.

It’s clear that technology is a central component to building the circular economy. CIOs can evolve their role and shape their companies’ circular agenda by:

• Leading the way: CIOs will be central in the circular economy transition and, in most cases, will need to champion those initiatives themselves, including staying up to date with trends and working to understand and drive the circular potential of their organizations.
• Embedding circular innovation: CIOs must help foster an innovation culture targeted at circular value by raising internal awareness, by setting up innovation hubs, and/or by assigning specific roles for the discovery and assessment of technologies that enable circular value.
• Enabling agility: CIOs need to build the foundations for a flexible operating model to enable the testing and pivoting of new technologies and/or business models.
• Collaborating across the organization: CIOs should work with teams in R&D, design and development, production, logistics, and other functions to understand each business unit’s needs, challenges, and readiness to integrate new technologies that facilitate a circular journey.

The ability of technology to solve environmental challenges is being demonstrated in new ways all the time. There’s no one-size-fits-all solution for creating circular value, but technology’s powerful capabilities must be explored. CIOs that seize the opportunity now will help their companies create new value and bolster competitive agility while also reducing harmful environmental impacts and improving socioeconomic outcomes.

Diana Bersohn

Diana Bersohn is a managing director in Accenture Strategy - Technology. She is a leader in strategy and transformation, specializing in global IT operating models and large-scale business and technology transformations.