Will the circular economy require a radically different approach to management?

According to Allen Alexander, professor of innovation and circular economy at the University of Exeter, the old proverb ‘how do you eat an elephant?’ stands as a powerful metaphor for the nascent and still largely “unknown” circular economy. 

“Nobody knows what form the elephant will take yet or even what size it is,” he explains. “Some businesses are taking chunks out of it working on new products, processes and services, while others are just nibbling at the edge.

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“The circular economy is so unknown and ill-formed in people’s minds. Some think it simply means waste management and recycling, while others hail repurposing such as bicycle chains being refashioned into bracelets.

“Some even mention how Grandma had the same, fantastically functioning fridge for about 70 years or how society was pre-Industrial Revolution. These are all part of circularity, but they are not everything. It touches all parts of society and business from innovation to legal, the supply chain, sustainability, product design and consumer behaviour.”

“Nobody does this”

Allen says we have spent over two centuries perfecting the linear transactional economy, but the modern circular economy dates back only a decade. 

“It might take us another 50 years to get it right, if we ever do. Nobody knows what form the elephant will take or even what size it is,” he says.

Despite this, Allen believes it will emerge as the dominant economic theme. It will be driven by a need to protect the environment and water resources, deal with waste and shore up vulnerable supply chains.

To gain an even better understanding, Allen and fellow editors Stefano Pascucci and Fiona Charnley, also of Exeter, published the Handbook of the Circular Economy: Transitions and transformations in 2023. Stefano is professor in sustainability and circular economy, and Fiona is professor of circular innovation.

Their book was shortlisted for Management Publication of the Year 2024.

The first section is focused on what global thought leaders believe the circular economy is at present and what it could be in the future. It introduces ideas from leaders such as Walter Stahel, who suggests radically hiking the taxation on products and cutting those on labour.

“Nobody does this,” says Allen, “but if we want people to really value products and keep what they buy for as long as possible then it is an idea worth exploring. By removing tax on labour then products can be repaired, refurbished and remanufactured at lower cost. If someone pays more for a product, they will keep it for longer. OK, no government will ever implement this, but we can think two steps back and come up with something innovative.”