Feature of the Week

September 1, 2013 11:35 pm

Fresh perspectives from the high seas

Dame Ellen MacArthur, photographed near the river Thames for Business Education.©Charlie Bibby

Dame Ellen MacArthur on the banks of the River Thames

She became a household name in February 2005 by becoming the fastest person to sail solo around the globe. Now yachtswoman Dame Ellen MacArthur is tackling another global issue, the depletion of natural resources, with a business model based on “circular management”. Her ideas are gaining traction among some of the world’s top companies. But what is circular management?

Isn’t it just an extension of lean manufacturing?

No, she says resolutely. “If you concentrate on efficiency, you don’t change the system.”

Today’s production is linear, so natural resources are extracted and manufactured into a product, which is subsequently discarded, she says. “We have to create global materials flows.”

Circular management tips the traditional business model on its head. For example, rather than buying a washing machine that finishes its days in a landfill site, consumers could rent a machine from the manufacturer and pay per wash. When it breaks, the manufacturer replaces it and re-engineers the defunct machine, putting it back into the system.

Are companies already doing this?

Dame Ellen cites the example of car company Renault. It remanufactures the injection pumps, gearboxes and turbocompressors from its cars at its Choisy-le-Roi factory in the Paris suburbs. The refurbished parts are cheaper than new ones yet have the same Renault warranty. These “as new” re-manufactured parts use 80 per cent less energy, 88 per cent less water and 92 per cent fewer chemicals than making parts from scratch. And Renault makes a profit to boot.

Where did the idea come from?

“When you put together a project to sail around the world it’s very complex. [But] when you cross the start line all you have is what you take with you,” Dame Ellen says. “You are often 2,000 or 2,500 miles from land and fives days from a hospital. You have to be self-reliant. You develop an overwhelming sense of what finite is.”

How did you implement your ideas?

With determination, she says. “I was that four-year-old girl who wanted to sail around the world. I had no idea how to make it happen.”

Economics was completely new to her – “[It] wasn’t even a subject I studied at my school” – so she talked to experts to learn how the global economy worked.

“Energy was the first area I looked at. You only have so much diesel, so much electricity.” Then she looked at the supply of raw materials. “We’ve seen raw materials become more and more expensive.”

For the first 18 months Dame Ellen funded the project herself, then in September 2010 a group of five founding partners – B&Q, BT, Cisco, National Grid and Renault – united to create the Circular Economy movement under the auspices of the Ellen MacArthur Foundation. The group’s first move was to commission analysis from McKinsey to try to put a value on economic loss in today’s disposable world. Among other things, the report argued that throwing away garments resulted in $68bn worth of textiles disappearing each year globally.

“The next stage is a global alliance of business so we can create a scaleable business platform,” says Dame Ellen. “We need big corporations, small innovators and regions.” Recent supporters include brewer SABMiller and the country of Scotland.

How do you educate supporters?

Dame Ellen is on a mission to train schoolchildren and managers. For those in the corporate world, the foundation teaches a summer school and a six-week online executive programme with Bradford University School of Management in the UK. The two will also collaborate on an MBA programme combining traditional academic areas of finance, marketing and strategy within a circular economy framework, which will launch in January next year.

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Letter in response to this article:

Understanding lean management / From Dr Anton Grütter

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