Coro’s Blog: On Purpose
The Circular Economy in Action: HP leading the way
Published on January 20, 2017
More than two million people in six countries subscribe to HP’s “Instant Ink.” When a customer is running low on ink, an internet-connected printer notifies HP and a replacement cartridge is automatically delivered, with a return envelope. Used cartridges are returned and recycled by HP. Compared with conventional business models, printers using this service generate up to 67 per cent less materials consumption per printed page.
This is but one example of how HP is leading the move to a “circular economy” – an ambitious, restorative approach to slow down or prevent materials from reaching landfills, cycling them back into supply chains. The circular economy aims to transform the way products are designed, manufactured, used and recovered.
Getting started going circular
Many of us want to get on board, but how to start? Where can we turn for inspiration? HP is certainly one innovation leader to watch. They have been pursuing circular approaches for decades but have recently committed to scaling up their approach and contribution.
At HP, a key concept in the circular economy is a materials cycle where plastics, metals, and other durable materials are used over and over without being “down-cycled” into lower-grade uses, eventually becoming waste. HP takes a circular approach to its materials management strategy by:
- implementing robust product recycling systems;
- designing for upgradeability and repairability; and
- using recycled content in new products.
The company’s overall long-term and enduring ambition is to take responsibility for its products throughout the lifecycle – to understand and own the impacts of its products along the value chain and to lead the industry in driving circular design and practice. The vision is to keep its products and materials in circulation for as long as possible.
HP’s circular business model follows the approach captured by Accenture’s circular business model framework. The focus areas include:
- Resource recovery
- Product life extension
- Product as a service
Bumps in the road on HP’s circular journey
While driven to cut material costs and shrink waste, HP’s circular journey has not been without its challenges. Here are some:
Legislative barriers: Government policy and regulation have not kept pace with circular economy requirements. For example, in the EU all electronics are considered waste and difficult to move across borders. This makes it challenging to enable cost effective product take-back and consolidation of repair and upgrade operations.
Material quality: It is essential to ensure the technical performance of the recycled material to maintain customer confidence. Controlling reverse logistic routes and developing pure material streams are important pre-conditions.
Customer take-up: A business and consumer mind-shift is needed to reward circular economy innovation. Millennials are more receptive to product as a service while older generations are less likely to share, lease or borrow. Equally, corporate buyers usually favour lowest cost purchases over the direct and indirect lifetime costs of product ownership (called Total Cost of Ownership in procurement terms).
Retailer impacts: Retail channels are incentivized to sell products. Shifting to product as a service requires different incentive structures.
Disruptive innovation: Circular models disrupt the status quo. New business models can destroy or cannibalize a company’s existing value proposition. The innovations may not be as or more profitable for a time: it can take more effort to sell new products/service offerings than those on the shelf. New capabilities and investments are often needed and can slow down the dissemination of an idea.
Accelerating a circular economy takes leadership, collaboration and public policy engagement – all Qualities of a Transformation Company. As a member of the Ellen McArthur Foundation (EMF) Circular Economy 100 – a global platform of leading companies and innovators working to hasten the transition to a circular economy – HP has participated in a working group on reverse logistics. Further, the company has provided case study material for Intelligent Assets – an EMF report on the connection between the Internet of Things and the circular economy and contributes to public policy discussions on the topic. HP invests in both internal and external initiatives thereby creating customer, societal and business benefits.
For more information on HP and circular business models, check out this HP Case Study. These case studies and this toolkit on the Canadian National Zero Waste Council Circular Economy micro-site can provide more inspiration and information to get started.