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Symposium 2015

Solution for Re-assessing Waste Management and the Circular Economy

The Challenge

Environmental degradation and resource depletion threaten the sustainability of economic growth in the developed world, and build enormous pressures in the developing world as it strives to match th ...

Environmental degradation and resource depletion threaten the sustainability of economic growth in the developed world, and build enormous pressures in the developing world as it strives to match the West’s prodigal lifestyle. Both issues can be addressed by the Circular Economy (CE): if we stop generating waste, and re-use and recycle resources, we avoid environmental degradation and stave off resource depletion. But, the financial realities of (mostly) capitalist societies make so many recycling initiatives unattractive.

From Mass Production to Mass Customization: Rethinking Waste Management

Background to the solution

The start of the Information and Communications Technologies (ICT) revolution in the late 1970s was a period when multinational corporations were actively seeking to increase their empires internationally. By the late 1980s and early 1990s, ICTs had revolutionized globalization, facilitating easier communications and logistics planning involved in the international transportation of goods and services, and improved global communications. Globalization became an accelerated process, having already received a boost with the invention of the shipping container in the decade prior. As markets grew and product specifications altered to cater to new markets—e.g., different voltages specifications for the same device—product customization made it easier to attract new, or in some cases to retain existing, customers. This dawn marked the transformation of the manufacturing process from one of mass production to mass customization. Record profit levels were achieved, thus, making it desirable to create lifelong partnerships with consumers, a strategy that has been widely adapted to present day as seen with the diverse production areas of major global corporations. It became normal for one multinational to produce cellular phones, computer accessories, and appliances all under the same name brand. Essentially, the scale of mass-producing goods was complemented by mass customizing those same goods. This was accomplished through simple product alterations for specific markets in order to catch up with a growing global middle class demand that had a large appetite. However, the resulting changes to and from production had an aggressively distractive effect on multinationals. They seemed to not be concerned about the implications of their production methods for consumers and their environments as well.

Multinationals vigorously responded to rising disposable income of global consumers, as production in factories increased with each passing decade. Fluctuations in spending power had little impact on production which seemed more dependent on consumer habits, i.e., desire of having the newest edition of a device or product, something that was in large part shaped by multinationals. The critical voice of nonmarket actors on the excess in production was no match for the market competition justification used by multinationals. And where new products were perhaps not sensible, upgrades served a backdrop for keeping production active. Thus, the detrimental phenomenon of overconsumption took hold and burrowed deep into the habits of consumers globally. These factors blended to create a problem of having too much of one thing, but also having too many to choose between of that same thing as well. Although a problem for manufacturing in general, the issue is most pervasive within the technology sector and with electronic products in particular. The institutionalized process of creative destruction that has been engraved into the design process has only been met with arguably ineffective accountability regimes for what becomes of the old production methods and inputs. Products have an average lifespan of two years while their predecessors, which often only slightly differ in design, become waste that we do not know what to do with and often how to dispose of properly.

The buildup of electronic waste (e-waste) some of which is highly toxic, also adds to the strain on the earth’s resources as a second blow on top of what is already inflicted during the production process. Disposing of this waste is sometimes equated to dumping it in poor or developing countries, which are paid to accept waste that they do not have the resources, or in some cases know-how, to dispose of safely. Globally, we are set on a direction that highlights the unsustainable consumption and production patterns of both producers and consumers, and it requires solutions that are also global in nature. While multinationals have begun to invest more in Corporate Social Responsibility (CSR) as a response, action has also been taken on the level of individuals, starting with more conscious and informed buyers, and secondly, passionate entrepreneurs leading innovative startups with social causes.

Proposed solution: Transforming e-waste collection by promoting hardware innovations through industrial policy

A new mold of entrepreneurs and entities are directly or indirectly tackling the problem of e-waste by rethinking the lifecycle of products. They are transforming the way we manage e-waste by creating out of necessity rather than capacity and for impact rather than profit. Therefore, the solution to better waste management needs to start from the design process and not after a products lifespan. An example of a product that successfully meets such guidelines can be found in the Phoneblocs project. Phoneblocs sets out to create a mobile phone that is, well, made up of components that fit together like blocks of legos. Thus, they are more durable and rather than replacing the entire phone when faulty, users only need repair or replace one block. Moreover, the entrepreneurs behind it aim to make it resistant to creative destruction. When efforts like the Phoneblocs project achieve success, they can build pressure on powerful multinationals to follow suit. Doing so would imply that the latter are only continuing to adapt to the preferences of consumers, as this would also be an additional preference to acknowledge—one that desires sustainability. Due to the relatively small number of global market driven innovations like Phoneblocs the overall capacity of such innovations to make contributions toward finding a global solution for the challenge of e-waste is not sufficient. Therefore, we must dig even deeper to solve this challenge.

Before these kinds of hardware innovations are ready for market, innovation capabilities play a central role to making their production possible. Therefore, entrepreneurialism itself must be nurtured because it is possible to build a preference for products with social relevance into innovative new products. Ultimately, the best way to cohesively execute the proposed change is through responsible industrial policy-making because effectively, it has the greatest potential to tackle the obstacles to implementing the desired change.

The obstacles to transforming e-waste collection through industrial policy are identified below:

  • Corporate retaliation from multinationals, and
  • Behavioral inertia from consumers.

 

With overwhelming resources to resist the type of change proposed such as lobbying and legal power, multinationals have what seems an easy task to repel social cause driven innovations, which is further aided by their anticipation of an inability or unwillingness to change consumption habits on the side of consumers. This behavioral inertia within the global consumer body is resistant to changes in any one country and is also the more complex of the two challenges because ultimately consumers hold the greatest influence.

Implementing the solution proposal

While one set of domestic policies would not address the global challenges presented by the accumulation and improper disposal of e-waste, generally there are a few things we can tackle under an international effort. To implement the solution proposed at this level, we must put an end to the sale of e-waste to poorer countries, encouraging greater waste recycling, and supporting production that involves nontoxic elements. Such action should be applied and monitored by supranational bodies like the African Union and the European Union or trading blocs where applicable. Domestically across countries, the relevant stakeholders have to find ways to reassess their roles within the circular economy as well and it begins with the consumers and innovators themselves. They would have to be the first adopters of the policies implemented by governments and, thereby, help to set a future industry standard which would also incentivize large multinationals wishing to enter the same market. Such incentives must translate into the type of innovation seem with the Phoneblocs project, but applied to other larger appliances if it is to have wider level impact on the production of electronics generally.

Critiques of using industrial policy to prevent government interference with consumer preferences might arise to these recommendations. Weighing the possible arguments against the record spending on advertisement by multinationals may expose what could be deemed infant industry protection to be the lesser evil. Therefore, industrial policy should be used as a tool to support the maturity of local markets while continuing to embed standards, which must eventually also be applied to imports. Its effects can impact the development of young entrepreneurs who may have better and more eco-friendly ideas, thereby, helping in the nurturing process of entrepreneurship mentioned earlier. While using industrial policy is not new to firms or markets, it can however be used in new ways such as the ones proposed.

The uptake of products like the Phonebloc may be slow because consumers are simply not ready to accept an entirely new product design for something as important to our daily lives as our cellular phones. Secondly, similar projects may find it difficult to attract investments due to lack of credibility and the scale of operations. However, by partnering with existing firms in the same industry, it could lead to an entirely different outcome for young innovations. Such is the case involving Phoneblocs and Motorola as it too introduced a similar design to cellular phone production. Despite what seemed like an unmatched competition, neither has really been able to succeed on the international market with their devices. This does not mean that it will not be possible for either to accomplish, but it is a signal to Phoneblocs that their innovation has the potential to achieve its aims.

It is equally arguable either way that globalization and mass production facilitated each other, but what is certain is that they fed the process of mass customization that has led to overconsumption; which has naturally produced both negative and positive implications. However, given the global nature of the implications, the challenges associated with the negative aspects have risen to levels that are dangerous if not countered effectively and immediately with greater accountability. Among entrepreneurs we find an encouraging potential resource to creating the desired change for the challenges imposed by waste as a result of unsustainable production and consumption habits. Equally important is their surrounding environments which have to be conducive for their success and with policy, we find a powerful tool for shaping the development of those ecosystems. We have one habitable planet (for the time being) and must be able to live comfortably and sustainably on it at the same time, for our future depends on it.

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