You need to build it into the sales. If the organization who is developing new products or services, that are producing these products or services, if they see that no one is actually asking for this, that there's no taker of it, then it just becomes a marketing campaign. I think it's very important early to build it into sales and show the organization that this is actually demanded. In our case, we approached our customers customer, the ones who designed a transport system. They don't buy trucks and buses from us. Companies like Walmart, Carrefour, IKEA, but they design a logistical system. If you can approach them and say, "How have you thought about fulfilling your sustainability targets in your logistics?" Then you team up with your customers, and then the three of us in a triangle, we solved a number of boundaries and hurdles that are there, that hinder us to do the transformation. Focus on the business, make sure that you can see it in the income statement, then it becomes more real and then, I think, you get started. When manufacturing companies have been developing more sustainable business models, most of them have focused on resource and energy efficiency. This has lead to relatively less resource extraction, waste generation, as well as reduced cost, both in production and in use. Eco-efficiency has also been branded as a key solutions already since the 1990s. However, even if improved, resource efficiency will remain an important opportunity, there is now a need for transformative innovation that radically improves the absolute resource efficiencies. It's a matter of decoupling economic growth from resource use and the related pollution. This is necessary in order for societies to meet the needs of a global population, which is about to increase by another 50 percent over the next century. The current focus on replacing fossil fuels with renewable inputs and by EDU's electrification is not enough. It needs to be complemented by a radical improvement in the way we, as an industrial society, use resources and produce waste and other forms of pollutions apart from greenhouse gases. One concept that has been promoted and seen to have a lot of business potential is the circular economy. A recent publication that discusses the nature and need for a circular economy is called The Circular Economy: A User's Guide, and it's written by the Swiss architect, Walter Stahel. Since the 1970s, he's been advocating service, life extension of goods by reuse, repair, re-manufacturing, and upgrade of technology. According to Walter Stahel, the two main areas of the circular industrial economy, as he calls this, are the reuse of material and molecules, and more importantly, the reuse, repair, and manufacturing of products and components. Well, the second is related to an old business-driven trend that can be referred to as service sizing. More recently, this kind of solution has also been called product as a service, and is often enabled by digital technologies and in research is referred to as product service systems, PSS. The effects of considering the company offer as a service and not a product is profound, and it can be understood as a new service dominant logic. It's a concept you can learn more about what it means in the reading section. As noted in the book Modern Industrial Management, many industrial companies nowadays offer a range of services that facilitate, supplement, and even replace the physical product. A famous example is Rolls-Royce airplane engine manufacturer, which already in the 1960s, offered its customers to buy engine availability and use at a fixed price. Under the famous slogan Power by the Hour, instead of buying engine maintenance and repairs, the aircraft owner purchased a specific operating time, or, in other words, customers paid for functioning engines, not for repairs or the products. Another example is Ericsson, which originally manufactured telephones, but which, today, in addition to developing and producing telecommunication systems, also operates these systems for several of its customers worldwide. A third example is the company, Apple, which not only offers the buyer a computer, or a mobile phone, or even a tablet, but a whole system of different services which can be purchased from Apple's own online stores, iTunes, and App Store. As companies understand the need to make the world economy more resource efficient, many are now making targets or setting targets to become circular and to shift their business idea from focusing on growth by increased volumes of materials, parts, and equipment, to generating value by offering their products as services and applying subscription models. They can then retain the ownership of the physical assets. Sometimes this is called functional sales. The development of circular business models is summarized well in a report called Circular Economy Playbook for Finnish SMEs. It was released in 2018. The following points were listed in the executive summary. The way we currently design, produce, and use products is leaving a lot of value on the table. This is why we need to rethink linear manufacturing. The aim of a circular economy is to maximize the time, products, components, and materials are kept in use. It is an endless cycle that capture untapped value potentials of the traditional linear or take me and dispose value-chain. Circular business models can be applied across the entire value chain. However, the biggest value potential is typically achieved during the product usage phase, requiring increased forward integration on manufacturing companies. Circular economy models cannot be developed and maintained by one company alone, and collaboration therefore, between traditional and new actors in the ecosystems will be required to close the loops efficiently. Successful transformation into circular business requires a considerable shift in the capabilities, mindsets, and collaborations as manufacturing companies will have to adopt their products, solutions, and designs, and continuously engage with their customers and ecosystem partners. Business intelligence derived from IoT, census, and analytics to improve lifetime productivity can increase value by enabling high lifetime revenues and increased profit margins on the installed base. All in all, in short, circular economy business principles have been around for centuries, but it's not until recently that circular business models have gained increased traction. It's because they are being powered by the rapid technology development and increased focus on delivering customer outcomes. For me, I would say that partnership is the driver for innovation. There is no way that we can take on these large challenges that are out there in society unless we start to collaborate. It's not enough to do the incremental changes anymore, we need to be transformative. To enable that, partnerships between different industries, that's the thing that catalyze these type of developments. When you bring, for instance, a car company like Volvo together with an energy company like Vattenfall, that's when we could put the first plug-in hybrid that was diesel-driven into the market. Neither Volvo nor Vattenfall would have been able to do that unless we had the collaboration.
