Give Me More

Throughout the world, disruptions like EcoWorx’s carpet tile backing and Ford’s River Rouge living roof make the transition from line to circle a bit smoother for the rest of us. Paving the way for a whole new reality, the innovations emerge by the hundreds, solving emergent problems and ironing out strategic wrinkles. The 2010 book The Blue Economy: 10 Years, 100 Innovations, 100 Million Jobs, by Gunter Pauli, offers 100 such solutions to choose from. The second edition of The Performance Economy, by Walter Stahel, offers a collection of 300 solutions. The Circular Economy 100 and other efforts of the Ellen MacArthur Foundation bring together companies, innovators, and regions to accelerate the transition to a circular economy. The foundation shares a growing list of innovations via its 2012 and 2013 Towards the Circular Economy reports, collection of online cases, and other publications. GameStop, the world’s largest multichannel video game retailer, is among them.

“If you want to understand GameStop, you must understand refurbishment.” This take on corporate identity by the GameStop CEO, Paul Raines, can hardly be called inspirational, but a 182,000-square-foot(around 16,900 square meters) facility filled with workers polishing discs; putting together video game consoles; and scrupulously testing pre-owned iPads, iPhones, iPods, and Android tablets, speaks louder than any words. A 20-employee operation in 2000, 12 years later the Refurbishment Operations Center is a $7 million facility with more than 1,100 professionals working in various functions, such as the giant testing unit, where iPads, iPods, and iPhones are checked for basic functionality of the buttons, the screen, the microphone, the headphone jack, the charging port, and software features. One such station rolls out one tested product every 42 seconds.

Originally a “normal” software and video game retailer, GameStop quickly saw an opportunity in recircling the products that were at the end of their life. As the customers began to move to new electronics more and more quickly, abandoning fully functional products before the end of their life, few companies provided an easy, attractive process for turning wasted electronics into value for consumers. Remember all those old cell phones no longer in use? GameStop took them on, along with a growing list of products in a wide range of electronics. Take Android tablets, for example—the company now accepts 42 different ones for trade-in credit and plans to refurbish and sell all of them before long, as it already sells new Android devices at 1,600 stores. “Why would a retailer have a factory? This was a big bet on the future,” says Raines. This bet brought along significant know-how challenges: for every product accepted into the refurbishing cycle, GameStop had to figure out how to reverse-engineer it in the most cost-effective way, without any guidance from the manufacturing companies. The result: a growing set of competencies for a new world. Today, GameStop has a strong skill set around buying, selling and trading. “We could trade shoes if we wanted to,” says Raines.

And the refurbishing experiment seemed to pass its 2011 experimental stage: in 2012, sales of rebuilt mobile devices alone were projected at $200 million. Products that are hopeless and cannot berefurbished are either dismantled for parts or destroyed and then recycled. More than three million pounds of electronic waste got recycled in 2011. But the plant also does double duty as a manufacturing center and an idea incubator, where the new history is being developed. And the industry seems to agree. In his 2012 article for the Verge, Sean Hollister put it best: “Somewhere in here, amidst the shattered screens and broken drive trays, lies the future of retail.”

The recent (and never-ending) economic crisis left many companies struggling with overcapacity. Business equipment, skills and knowledge of employees, and real estate all stood still as sales plummeted and the flow of goods and services stalled. Four years after Lehman Brothers’ bankruptcy, volumes have been recovering slowly, but the overcapacity remains. FLOOW2 looked at this omnipresent challenge as a glowing business opportunity and became the first business-to-business marketplace to enable companies and institutions to share equipment and personnel skills that are currently underutilized. The platform was launched in early 2012, and one year later it was offering over 4,500 types of equipment and services.

The company’s business model is based on the concept of collaborative consumption, where participants share access to products or services, rather than pursue individual ownership. FLOOW2 took a well-tested peer-to-peer and end-consumer model (after all, it has been successful in such areas as peer-to-peer accommodation [Airbnb], peer-to-peer task assignments [TaskRabbit], and car sharing [Zipcar])—and applied it to a business-to-business sector. The natural starting point for the company was the heavy-equipment market, but they went out of the comfort zone, detecting a number of other, less obvious markets in which the platform could trade overcapacity,among them health care, knowledge and skills, transport and logistics, and theater and events.

No question, user-friendliness is the key to the success of FLOOW2. For customers, the process starts with easy and free registration—if you have some capacity to share, you have simple ways of posting what is available and when; and different forms of insurance and assurances exist to protect all parties. The company developed the customer interface of their platform to include a free online planning tool for managing equipment requirements and availability. They also provide additional services, such as online payment services, credit checks, tracking and trace service on assets, and insurance through partnerships with other businesses. And the revenue is generated through fees that participants pay to advertise their equipment on the platform, at a cost of EUR €1 (approximately $1.30 US) per day as well as by subscription.

While they were disturbed and disrupted at first, “FLOOW2 is noticing that professional renting companies, OEMs [original equipment manufacturers], and leasing companies accept that collaborative use is here to stay,” note Will Robben, company founder, and Geraldine Brennan, doctoral researcher, Imperial College London.

Trendwatching.com called this phenomenon “owner-less,” adding it to its “11 Crucial Consumer Trends for 2011.” The reasons seem rather clear:

 

• Traditional ownership implies a certain level of responsibility, cost, and commitment. Consumers looking for convenience and collecting as many experiences as possible want none of these things.

• Fractional ownership and leasing lifestyle businesses offer the possibility of perpetual upgrades to the latest and greatest, the ability to maximize the number and variety of experiences, and allow consumers to access otherwise out-of-reach luxuries.

• Owning bulky, irregularly used items is both expensive and unsustainable, especially in dense urban environments where space is at a premium. With more consumers having mobile access to online systems, it becomes easier to book items whenever and wherever they are needed.

No wonder Time magazine named collaborative consumption among its 2010 “10 Ideas That Will Change the World.”

CNBC estimates that companies that provide access—rather than ownership—could generate $3.5 billion in 2013. Among them are Uber and Airbnb—numbers 6 and 12, respectively, on the Fast Company list of the World’s 50 Most Innovative Companies in 2013.

Uber, a geo-tracking app that makes private cars and drivers available at any time to registered users in a matter of minutes, has grown its operations to 21 cities worldwide as of 2013. The value proposition for the consumer is rather obvious: get a clean car, a professional driver, and automatic billing (no cash necessary)—all at your fingertips. In 2012, the company reported growing more than 20 percent month over month. “The company’s CEO and founder, Travis Kalanick, said the straightforward consumer experience of pushing a button so ‘a Mercedes pulls up’ provides better ways for urban dwellers to navigate transportation,” said CNBC.

Airbnb, the poster child of the sharing economy, grew out of the same idea: you have a spare room in your apartment or a tree house suitable for adventurous traveler—we will let you rent it out! Founded in 2008, the company now offers stays in over 34,000 cities in 192 countries, with over 10 million nights booked by the end of 2012. As expected, the company battles a number of problems associated with an innovative business model—including the issue of paying taxes on the money paid to the individuals or meeting the housing code requirements. Yet the venture seems to push through all of them in stride. “This year, Airbnb is moving beyond rentals to partner with local communitiesand enhance the entire travel experience,” says Lindsay Harrison of Fast Company. “Our product isn’t just our website; it’s also our hosts, listings, users, photographers, and employees. Our product is the entire community,” echoes Brian Chesky, company CEO. I am sold.