New Business Models in These Changing Times

New business models poised to change the way the world transacts have Sugata Sircar, CFO and Country Finance Partner, Greater India Zone, Schneider Electric India excited. In this article, he discusses Circular Economy which can radically change business models in the near future.

What is exciting me the most these days, you ask? Well, we are almost in a renaissance phase in business. The new kinds of business models and value propositions which are showing up are quite stimulating. What’s causing them? Well, what I pay for as a consumer, is changing. I may enjoy a service and not pay for it; an advertiser may pay for it for me, with the hope that I will pay for the advertiser’s product or service some day! Where I paid to buy an expensive product before, I may only pay for a service.

In this context, let me refer to the circular economy. This is a concept of industrial economy where manufacturing, product life cycles and services are designed to yield higher productivity from resources and to generate lower waste.

Circular economy has the potential to radically change business models going forward. The traditional product life cycle starts with elements which go into components which are used to manufacture products. These products are used by a consumer or an entity through its useful life, at the end of which it is scrapped, leading to waste.

The circular economy attempts to elongate product life cycles and increase the number of cycles of a product. In some cases it generates byproducts which yield further value. This brings a number of benefits, the first of which is to significantly raise the yield from the same set of resources. If a product, made of metal, plastic, silicon, is scrapped after one life cycle, most of the elements would go back to the earth after one use, contaminating the soil somewhere or polluting the air on incineration. There can be a different approach to manufacturing, selling and using a product.