Articles on this Page
- 02/05/14--15:59: _Conflict Strategies...
- 02/05/14--23:32: _Remaking the indust...
- 02/06/14--09:44: _The ‘Moneyball’ App...
- 02/07/14--01:07: _Subway to remove ch...
- 02/07/14--08:33: _Four Tips for Bette...
- 02/09/14--03:52: _Find the Coaching i...
- 02/11/14--01:09: _THE WORLD'S TOP 10 ...
- 02/11/14--01:14: _Eight Essentials fo...
- 02/11/14--02:31: _Decentralising R&D ...
- 02/12/14--06:48: _Never Say Goodbye t...
- 02/13/14--18:31: _Empty Economics 02-14
- 02/13/14--23:43: _Seeking Their Fortu...
- 02/14/14--09:49: _Do brain connection...
- 02/15/14--23:57: _India’s New HR Chal...
- 02/16/14--06:27: _How Retail Is Evolv...
- 02/16/14--06:48: _STEM: How to Put Yo...
- 02/16/14--07:55: _Next frontiers for ...
- 02/16/14--15:38: _What Americans Don'...
- 02/16/14--16:12: _Creating Value Thro...
- 02/16/14--18:58: _What Social Data Ca...
- 02/05/14--15:59: Conflict Strategies for Nice People 02-05
- 02/05/14--23:32: Remaking the industrial economy 02-06
- Renault’s plant in Choisy-le-Roi, near Paris, remanufactures automotive engines, transmissions, injection pumps, and other components for resale. The plant’s remanufacturing operations use 80 percent less energy and almost 90 percent less water (as well as generate about 70 percent less oil and detergent waste) than comparable new production does. And the plant delivers higher operating margins than Renault as a whole can boast.
- More broadly, the company redesigns certain components to make them easier to disassemble and use again. It also targets components for closed-loop reuse, essentially converting materials and components from worn-out vehicles into inputs for new ones. To support these efforts, Renault formed joint ventures with a steel recycler and a waste-management company to bring end-of-use expertise into product design. Together, these moves help Renault save money by maintaining tighter control of its raw materials throughout its vehicles’ life cycles—or use cycles.
- Renault also works with suppliers to identify “circular benefits” that distribute value across its supply chain. For example, the company helped its provider of cutting fluids (a coolant and lubricant used in machining) to shift from a sales- to a performance-based model. By changing the relationship’s nature and terms, Renault motivated the supplier to redesign the fluid and surrounding processes for greater efficiency. The result was a 90 percent reduction in the volume of waste discharge. This new arrangement benefits both companies: the supplier is moving up the value chain so that it can be more profitable, while Renault’s total cost of ownership for cutting fluids fell by about 20 percent.
- Renault’s experience is just one data point in a growing body of evidence suggesting that the business opportunities in a circular economy are real—and large. In this article, we’ll explore the concept of such an economy, examine the arguments and economics underpinning it, and discuss the challenges that must be overcome to make it a reality. The work, which draws on McKinsey’s recent collaboration with the Ellen MacArthur Foundation and the World Economic Forum1 (see sidebar, “An enabler in a big system”), suggests that in addition to the implicit environmental benefits that a circular economy would bring, there is a significant economic impact. In fact, our research suggests that the savings in materials alone could exceed $1 trillion a year by 2025 and that, under the right conditions, a circular economy could become a tangible driver of global industrial innovation, job creation, and growth for the 21st century.
- Net materials savings. On a global scale, the net savings from materials could reach $1 trillion a year. In the European Union alone, the annual savings for durable products with moderate lifespans could reach $630 billion. The benefits would be highest in the automotive sector ($200 billion a year), followed by machinery and equipment.
- Mitigated supply risks. If applied to steel consumption in the automotive, machining, and transport sectors, a circular transformation could achieve global net materials savings equivalent to between 110 million and 170 million metric tons of iron ore a year in 2025. Such a shift could reduce demand-driven volatility in these industries.
- Innovation potential. Redesigning materials, systems, and products for circular use is a fundamental requirement of a circular economy and therefore represents a giant opportunity for companies, even in product categories that aren’t normally considered innovative, such as the carpet industry.
- Job creation. By some estimates, the remanufacturing and recycling industries already account for about one million jobs in Europe and the United States.7 The effects of a more circular industrial model on the structure and vitality of labor markets still need to be explored. Yet we see signs that a circular economy would—under the right circumstances—increase local employment, especially in entry-level and semiskilled jobs, thus addressing a serious issue facing many developed countries. Ricoh’s remanufacturing plant, for instance, employs more than 300 people.
- 02/06/14--09:44: The ‘Moneyball’ Approach to Hiring CEOs 02-06
- 02/07/14--01:07: Subway to remove chemical from bread 02-07
- 02/07/14--08:33: Four Tips for Better Strategic Planning 02-07
- 02/09/14--03:52: Find the Coaching in Criticism 02-09
- 02/11/14--01:09: THE WORLD'S TOP 10 MOST INNOVATIVE COMPANIES IN BIG DATA 02-11
- 02/11/14--01:14: Eight Essentials for Scaling Up Without Screwing Up 02-11
- Understand that you are spreading a mindset, not a footprint. Scaling requires instilling the right beliefs and behaviors in people, not just running up the numbers as fast as you can.
- Approach scaling as a problem of both more and less. As an organization or program expands, traditions, strategies, practices, and roles that were once helpful outlive their usefulness, creating friction and frustration. They must be streamlined or eliminated.
- Consider where you want to be on the Buddhism-Catholicism continuum. That is: do you concentrate on making people true believers, then let them localize the rituals as much as they like – or do you legislate the behaviors you’ve identified as best, assuming they’ll act their way into a state of believing?
- Link hot causes to cool solutions. Making a rational argument for a change isn’t usually enough to instill a new mindset and unseat old habits. The most effective campaigns stir up “hot” emotions in people (pride and anger are especially effective) and then channel that energy and passion into “cool” (clear and step-wise) actions.
- Connect people and cascade excellence. Exposing people to a conference, a few speeches, or a bit of training isn’t enough to fuel scaling. It requires building or finding pockets of excellence and, in turn, using them to guide and inspire the creation of more such pockets.
- Cut cognitive overload, but embrace necessary organizational complexity. As the cast of characters in an organization or program grows, coordinating all those people and sustaining healthy social bonds among becomes more difficult. The trick, and it is a difficult one, is to add just enough complexity so that people can do their work, but not so much that “they feel as if they are walking in muck” as Twitter’s SVP of engineering Chris Fry puts it.
- Build organizations where people feel “I own the place, and the place owns me.” Scaling starts and ends with individuals. Effectiveness spreads and sticks when people feel obligated to live the right mindset and equally compelled to hold others to the same standards.
- Go from bad to great. To clear the way for excellence to spread, the first order of business is to clear away destructive beliefs and behaviors. Indeed, a big pile of academic studies and business cases show that “bad is stronger is stronger than good.”
- 02/11/14--02:31: Decentralising R&D to allow innovation 02-12
- 02/12/14--06:48: Never Say Goodbye to a Great Employee 0-12
- Flexible time: Flexible shifts, compressed workweeks, and individualized work schedules.
- Reduced time: Part-time options, job sharing, self-scheduling, leave-of-absence programs, and cyclic or project-based work.
- Flexible place: Mobile work and telecommuting.
- Tasks, not time: Requirements to put in only as much time as it actually takes to get the work done, removing restrictions around a prescribed time or place.
- Decelerating roles: Career path options that go ‘down’ (to lower levels of responsibility).
- 02/13/14--18:31: Empty Economics 02-14
- 02/14/14--09:49: Do brain connections help shape religious beliefs? 02-14
- 02/16/14--06:27: How Retail Is Evolving In An On-Demand Economy 02-16
- 02/16/14--06:48: STEM: How to Put Your Kid on the Fast Track to Success 02-16
- 02/16/14--07:55: Next frontiers for lean 02-16
- 02/16/14--15:38: What Americans Don't Know About Science 02-16
- 02/16/14--16:12: Creating Value Through Business Model Innovation 02-17
- 02/16/14--18:58: What Social Data Can Tell You (And Why) 02-17
Conflict Strategies for Nice People
Do you value friendly relations with your colleagues? Are you proud of being a nice person who would never pick a fight? Unfortunately, you might be just as responsible for group dysfunction as your more combative team members. That’s because it’s a problem when you shy away from open, healthy conflict about the issues. If you think you’re “taking one for the team” by not rocking the boat, you’re deluding yourself.
1. The power of the inner circle
2. The power of circling longer
3. The power of cascaded use
4. The power of pure inputs
Squaring the circle
The curse of the status quo
Toward a circular economy
The ‘Moneyball’ Approach to Hiring CEOs
It was the lesson of the best-selling book-turned-movie, Moneyball: Don’t throw money at big-name baseball players or judge future performance by purely physical attributes. Assess them, instead, by more relevant measurements, like their on-base percentage.
Wharton professor J. Scott Armstrong and Philippe Jacquart of EMLYON Business School in Écully, France, say the same principles can be applied to choosing corporate executives. In a recent paper, they challenge the popular belief that higher pay leads to selecting chief executive officers who will outperform their lower-compensated counterparts.
Subway to remove chemical from bread
Four Tips for Better Strategic Planning
Find the Coaching in Criticism
Feedback is crucial. That’s obvious: It improves performance, develops talent, aligns expectations, solves problems, guides promotion and pay, and boosts the bottom line.
Eight Essentials for Scaling Up Without Screwing Up
Back in 2006, my colleague Huggy Rao and I launched an executive education program at Stanford called “Customer-focused Innovation.” Mornings consisted of lectures and case studies in a traditional classroom in the Stanford Business School; this was the “clean models” part of the program. In the afternoons, we moved the group to the (then) new Hasso Plattner Institute of Design, or “Stanford d.school,” for the “hands on” part. That midday transition could be jarring. The d.school was in a crowded, messy, and rather run-down double-wide trailer in those days. And then there was the fieldwork. That first year, the d.school team (led by Perry Klebahn) sent the executives out to observe and interview customers in BP gas stations. Their assignment was to prototype solutions to problems they heard about, revise them in response to user feedback, and then present them to a demanding group of BP executives.
Decentralising R&D to allow innovation
Tableware specialist ARC International began with a single site culture, but chose to spread its production locations. Today, its design offices are situated in different markets in order to better serve local consumer needs. Design and collaboration tools are vital in ensuring the effectiveness of this setup.
ARC International is a business that had based all of its development in a huge manufacturing site in northern France, for sales across 160 countries. But in recent years the group has moved away from French production alone in favour of manufacturing sites in the countries where we want to sell our goods, principally emerging countries. We have built factories in China, United Arab Emirates, the United States and Russia.
Local manufacturing to win in emerging markets
Opening production sites in our large markets was only the first stage, because consumer tastes are markedly different across the markets we serve. We sell very different products in western Europe compared to China or the UAE. Our approach is to support manufacturing sites in mastering product design, and we work with consumers to develop our innovation in these markets, to strengthen our brands and to minimise the time needed to take products to market.
Our research and development was initially very centralised. We wanted to change this in order to succeed in the other markets. Our plan was split into two stages: firstly we introduced a single CAD design system for the whole group, and secondly we added a management system that would allow each country to design products appropriate to the local market.
Products and tools on the same platform
Our design platform is used for glass products but also for any accessories such as our case for the Purebox, a storage box with a clear plastic cover. In addition, the platform is used to develop a whole number of items, including tools and moulds, and all of the elements in the product lifecycle are centralised in the same environment. This system replaces our ageing management technology - we had been running specialised and bespoke systems accumulated over the years since 1989. We moved to an off-the-shelf system in 2004 to cover 95 design workstations globally.
Before these changes, we had approximately 200,000 design files. It's worth noting that, when designing new products, we would find design elements right across each of these files. Each new file had to be found and connected, and linked to other files. The idea was to keep all of the links between new products in our database.
Two years on
The main challenge of the project had been our technology legacy. We thought we would easily deal with the issue by cutting or grouping files but we quickly realised this was not working. We needed to put in place a much more elaborate solution and to heavily involve our teams: 25 staff were dedicated to this task, with 130 days planning to make it work. Finally, in April 2013, we rolled out the new application. Our users were happy and were able to see a great improvement, and the software worked on the first day without any problems, providing all of the expected functionality. The extensive preparation had paid off.
We are now working closely on our collaboration between sites. It is absolutely conceivable for us to begin a design in France, continue it in China, transfer it to the United States and finish it in the UAE, as part of a totally fluid process. We are not quite at the stage of seeing it in full production, but we know it is working. The next stage is for this full multisite design, which will allow us to share our capabilities in each market and optimise resources.
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Never Say Goodbye to a Great Employee
How Retail Is Evolving In An On-Demand Economy
When lean met services
What Americans Don't Know About Science
Creating Value Through Business Model Innovation
Business model innovation can also help companies stay ahead in the product innovation game, where as one CEO from another study explained, “you’re always one innovation away from getting wiped out by a new competing innovation that eliminates the need for your product.”5A good product that is embedded in an innovative business model, however, is less easily shunted aside. Someone might come up with a better MP3 player than Apple’s tomorrow, but few of the hundreds of millions of consumers with iPods and iTunes accounts will be open to switching brands.
About the Research
Business Model Innovation in Practice
Apple’s Performance, Before And After Business Model Changes
The Stock Price Of Htc Vs. Apple
How to Innovate in Business Model Design
Six Questions About Business Model Innovation
Interdependencies in Business Models
Six Questions to Ask Before Launching a New Model
Taking a Systemic View