Facing environmental and social climate impact, many corporations are exploring sustainable business models. A corporation’s responsibility should go beyond that of consumers and investors, and we’re all responsible for shaping the future of our children. So we must ask, what is considered a sustainable business model?
Take a retail store for example, the planning of a sustainable retail building must include all aspects of its life cycle, from material selection, logistics and transportation, construction, operation management, to demolition and recycling. However, if people’s behavior is not sustainable, ie. wasting water and electricity, throwing away more garbage and failing to implement recycling, a green building will still harm the environment.
Therefore, to create a sustainable business model, we must combine circular design and behavioral design.
The economic model we are familiar with is based on the waste of resources. In a product’s lifespan – from design to raw materials, production, transportation, sales, use, and disposal – poor efficiency and environmental damage exists throughout.
To maximize resource efficiency, the value chain needs to be changed. A product’s worth can be maintained at each stage of its life cycle, and ultimately its resources can be reused. This is the concept of cirular design.
However, changes in the value chain require changes in consumer behavior. For example, the promotion of car-sharing services requires users to change their attitude from car ownership to car use. A change in mindset that says, I don’t have to buy a car, I can get a car that suits my needs when I need it.
The concept of behavioral design is to design with users’ environment and psychology in mind to guide them to take appropriate actions.
In the “Circular Design meets Behavioral Design” forum held on September 30, DRIVE invited Professor Mr. Yuan-Chi Tseng from the Institute of Service Science of National Tsing Hua University and Ms. Shadow Chen, CEO of Circular Taiwan Network to discuss how to integrate circular design with behavioral design to create a sustainable business model.
What is circular design?
Every product eventually becomes unusable, but the resources it took to manufacture it should not. Circular design aims to keep resources “traveling” for as long as possible.
Shadow Chen emphasized that designers must consider the product’s whole life-cycle. They must first ask: how to use the least resources to deliver a product to consumers; how would consumers use it, discard it; who would recycle it, disassemble it, and how to disassemble it. Most importantly, how to recycle the end-of-life resources to be reused. Design thinking should scale from products to services and even the entire value chain.
Three basic principles of circular design: use fewer resources, use for longer, use again.
For corporations, circular design is not only a responsibility but also a market trend. Ms. Chen presented two concepts: “Usership instead of Ownership” consumption pattern, and the rise of “the Right to Repair” awareness.
Gen Z consumers have been born into an era of listening to music on Spotify and using Uber as transportation. Consumers are gradually discovering that using a business model that replaces ownership can meet their needs in different life stages and situations, bringing them more convenience and flexibility.
At the same time, the European Parliament voted in April 2022 to pass the Right to Repair Directive, requiring product manufacturers to list the repair index, product life cycle, and repair services or parts available to consumers in product information. Fairphone founder Bas van Abel said, “If you can’t open your phone, you don’t own it.”
With rising consumer awareness and government policies towards sustainability, both manufacturers and service providers must take more responsibility for the products and services they consume and sell. Improving product usage, maintenance and recycling will be key.
What is behavioral design?
Behavioral design is about balancing motivation and ability; finding the right time, right place, and the right triggers to guide behavior change.
Professor Yuan-Chi Tseng pointed out that behavioral motivation exists in the fundamental needs and intrinsic values of human beings. Good behavioral design will rouse the ideals of users, guide them to reflect, and generate motivation.
In addition, commodities have not only functional value, but also emotional and social value. We must explore the factors that affect the emotional and social values of consumers, and use them to guide behavioral changes. Clothing for example: not only does it protect our bodies, but it also symbolizes personal taste and social status. Personal taste and social status may not come from brands of clothing, but from the recognition of others. When our sustainable behavior is recognized by others, it will create emotional and social value and strengthen the motivation of that specific behavior.
Why do sustainable business models need to integrate with circular and behavioral designs?
Take Nespresso capsule coffee as an example. Although Nespresso claims that the aluminum shell and coffee powder can be recycled and reused, if consumers do not actively recycle the capsules, this innovative product will actually cause more environmental harm.
Therefore, creating a sustainable business model requires integrating the concepts of circular design and behavioral design. On one hand, we must establish a system throughout the product lifecycle, so that resources can be continuously reused. On the other hand, we must apply behavioral design to guide the various participants, employees, manufacturers, and consumers to adopt this sustainable system.
What to pay attention to when designing for circular behavior?
Professor Yuan-Chi Tseng reminded everyone that when designing with circular and behavioral principles, we must carefully analyze the interdependencies between environmental, behavioral, motivation, and reward mechanism. Rewards for sustainable behavior must be designed with care. Take recycling as an example; although providing monetary incentives may encourage recycling, monetary rewards misrepresent goal of sustainability, and may distort the consumer’s motivation. When the financial incentive disappears, the sustainable behavior may stop with it.
Corporate, Consumer, and Environmental Values
Ms. Shadow Chen pointed out, corporations need to figure out the role they want to play in the value chain, in the links between consumer, social, and environmental demands. The retail channel is in a good position to advocate for sustainability, being where various brands and products are gathered. It is where consumers come into contact with, select and purchase products, and where brands communicate values, create experiences, and promote services. For example, Carrefour Taiwan’s promotion of “cage-free eggs” uses its channel strength to encourage chicken farmers to change the way they raise chickens, advocating for humane animal treatment, preventing spread of diseases, and delivering safe and sustainable food to its consumers.
How Should Business Start?
- Create the dialogue: Establish a space where stakeholders within a common value chain can discuss their needs, learn each other’s capabilities, affirm values, and stimulate innovation.
- Start with 10%: Start with a group of people that could have the biggest network effect, instead of trying to change everyone in one go. Start with 10% of your goods or services, instead of transforming your entire business models at once. When 10% of people and business change, a snowball effect will happen.
- Show the impact: With every small change, provide immediate feedback and let users and observers see the positive effects of their action. When the value of the behavior is immediately seen by people, it will increase users’ willingness to continue, and also motivate others to act, gradually expanding this sustainable transformation.
Care for the Future
In the forum, Ms. Chen shared a saying from the North American Indians:
“We do not inherit the Earth from our ancestors; we borrow it from our children.”
It is our responsibility to the next generation to create circular value business models.
At last, Ms. Chen and Professor Tseng jointly called on everyone— to start small, start with ourselves, start now and commit to the changes.