The AW Circularity Matrix, about making the circular economy happen
What makes an activity successful in a circular economy? In a true circular economy sustainability and healthy economics go hand in hand. In other words, solutions which are economically viable and have a high circularity level are winners. How to achieve this ‘gold star’ level is a key question. Allied Waters presents the AW Circularity Matrix as a new compass.
Goldstars, moonshots, but also dead-end streets
We define a circular economy as an economy that handles products, materials and resources efficiently and in a socially responsible manner within ecological preconditions, so that future generations also retain access to material prosperity. A holistic approach is needed which enables the uptake of circular solutions based on balanced technological, economic, socio-cultural and regulatory conditions. Having said this, we learn from practical experience that an economical driver strongly catalyses the move to circularity.
Building on the motto ‘Let sustainability and economics go hand in hand’ Allied Waters developed a dedicated Circularity Matrix. As a result, we see four categories:
Goldstars: the reflection of the motto above, where both circularity and economics are favourable
Moonshots: highly circular, however, these need additional drivers and/or creative thinking in order to become economically attractive
Dead-end streets: any ongoing business lacking a sustainability/circularity perspective; unfortunately, this still represents the main part of our present economy
No man’s land: to be avoided for obvious reasons, as both circularity and a good economic perspective are lacking
Conventional economics
Among business professionals the BCG matrix – better known as the Boston matrix – is well known for its focus on two parameters: market share and market growth. This results in so-called stars (high market share in high-growth markets), cash cows (high market share in low-growth markets), question marks (low market share in high-growth markets) and dogs (low market share in low-growth markets). The Boston matrix was developed more than 50 years ago. Still, the underlying philosophy is guiding in many of today’s commercial activities. Quite often current economic thinking is dominated by gross and net revenues, cash flows, return on investment and more. However, it is fair to say that these are dead-end streets in terms of the AW Circularity Matrix. Unless circularity in its broadest sense is added to the approach.
“My daily business life is about circular economy, creating new value chains for residuals from water treatment” says Olaf van der Kolk, director of AquaMinerals and collaboration partner of Allied Waters. “The Allied Waters Circularity Matrix provides an inspiring, yet spot-on insight what it is all about. It will most definitely help us to having better discussions with stakeholders.”
Moving ahead from moonshot to gold star
The key question is, how can my commercial organization become a gold star? Some thoughts:
Creating value (USP) based on a truly sustainable company profile which pays off in business practice
Saving costs in the value chain (up- and/or downstream), based on a sound social cost-benefit analysis
Acquiring co-funding through dedicated investments, grants or tax benefits
Rethinking the business model, applying creativity and getting all stakeholders involved
