Part 4: Building new business opportunities
Investment in sustainability was once seen primarily as a business cost–a necessary regulatory burden. However, the path to net zero is now recognized as having the potential to lead to new revenue-generating opportunities–and even to a fundamental improvement in how the business operates.
Waste management provides one example. For most organizations, waste disposal used to be a cost center – and a concerning one, because waste-management companies’ charges and landfill taxes are on the rise. However, new models are emerging, says Siemens’ Eryn Devola, that allow companies to reduce the loss of resources through greater circularity and more efficient waste management – therefore saving costs of disposal.
“We’re talking to a start-up that takes all the waste out of a municipality and pays a fee for that trash,” she says. “They divide all the waste into different streams – metal, plastics, fibers, and so on – and then find secondary uses.” Such models are supported by a growing range of digital solutions, from smart bins that can weigh different types of waste to automation technologies that use virtual reality and image-recognition software to identify garbage. Even e-trading platforms for waste are emerging. Municipal waste management can be transformed into a profit center and can contribute to a circular economy. Moreover, the aim is typically to supply manufacturers in the area, facilitating local production of goods and reducing emissions generated by long-distance transportation.
Digital tools can enable organizations to connect and engage with partners in new ways. Low-code solutions that enable individual communities and small businesses to develop their own apps that are tailored to their specific needs are one way to underpin such connections. The Mendix platform, for example, offers solutions for business projects that require the design and launch of new apps where software-development expertise is not available in house. Finally, the industrial metaverse offers new opportunities for people to interact and collaborate to solve real-world problems and deliver improvements and cost savings for designing, producing, and operating real-world assets. This will unlock new savings and efficiencies because we can do things virtually before we do them for real.
Municipal waste management can be transformed into a profit center and can contribute to a circular economy.
More radically, more and more businesses are considering new or alternative business models, recognizing that the traditional ‘make, consume, and dispose’ model is unsustainable. Rather than manufacturing disposable products that are sold in a one-off transaction, businesses are building ongoing relationships with their customers that can extend to a contract to maintain the product with regular servicing – and eventually, perhaps, to refurbish it. This ‘as-a-service’ concept benefits the manufacturer’s revenue model, providing a greater proportion of recurring, predictable income rather than a single upfront payment. Relationships with key customers become more enduring and rewarding. There are clear benefits for customers, too, including lower costs, easier scalability, access to new releases and upgrades, and the possibility of experimentation and proof-of-concept projects.
Businesses are building ongoing relationships with their customers that can extend to a contract to maintain the product with regular servicing.
In this world, hardware and software become constantly upgradable. Over time, third parties and partners may be invited to add their products and services, making for an even broader portfolio of open and interoperable technology. Think in terms of ‘everything-as-a-service.’ In the transportation space, for example, Siemens’ Mobility as a Service apps and tools enable cities and public transport operators to integrate modes of transport and functions spanning trip planning, booking, ticketing, and payment. For such models to work effectively, the manufacturer needs to be able to monitor the performance and condition of its equipment as customers use it. IoT sensors provide the manufacturer with constant feedback on product use and can anticipate potential issues. In the aerospace industry, for example, providers such as Rolls-Royce and Pratt & Whitney are shifting to as-a-service models, selling their engines on the basis of variables such as usage time, with maintenance- and performance-tracking built into the deal. Such models are only possible because these manufacturers have access to performance and status data. Predictive analytics, using AI technologies, provide further benefits. This will be an important principle as businesses install new capacity in areas such as power generation.
How You Mawo built a new digital business model for the eyewear industryThe founders of You Mawo felt it was time for change in the eyewear industry. Established manufacturers were producing thousands of generic pairs of glasses using mass-production techniques with huge inefficiencies and waste volumes. A new, more sustainable model was necessary.
The new model was built around You Mawo’s innovative use of facial-recognition software in designing a pair of glasses that can be personalized for each customer. The product is made using an additive manufacturing process that employs 3D printing, rather than an industrial production line. “Without building digital solutions, it’s impossible to do what we are doing,” says Daniel Szabo, Co-Founder of You Mawo. Its glasses are produced from polyamide powder, and any powder left over after printing can be reused in the production process. Szabo argues that because each pair of glasses is bespoke, their useful life is extended, which reduces long-term consumption.
Without building digital solutions, it’s impossible to do what we are doing.Daniel Szabo Co-Founder, You Mawo
“Most people think we are an eyewear company, but actually we are a tech company,” says Szabo. You Mawo’s additive manufacturing process is largely automated and can scale up easily, allowing the business to open new sites around the world as demand in local markets supports them. “You can use the same workflow for all kinds of consumer goods and have the same impact,” adds Szabo. “You extend the lifecycle because you have a good quality product for a good price. You produce it locally, just in time, and close to the consumer.” The impact of this business model has been impressive. You Mawo has been climate neutral since January 2021, with independent research suggesting that a pair of glasses made by You Mawo produces just a third of the carbon emissions produced in conventional eyewear manufacturing.