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Innovative Companies with Sustainable Business Models: Pure Waste Textiles

Company profile

Name: Pure Waste Textiles
Founded: 2013
Founders: Hannes Bengs, Anders Bengs, Lauri Köngäs-Eskandari, Jukka Pesola and Maela Mandelli
Industry
: Sustainable fabrics and clothing
Main products: 
Recycled fabrics and clothes
Sustainability: Pure Waste Textiles provides recycled fabrics and clothes to consumers, other clothing labels and retailers.

Company history and idea in brief

One of the most important issues related to circular economy is making sure that we use existing resources as efficiently as possible. In fact, waste should be completely designed out from our products and production systems. This is where a company like Pure Waste Textiles can help.

Pure Waste Textiles is a clothing company that produces 100% recycled fabrics and clothes. This is how Pure Waste Textiles works: the company buys leftover materials and fabrics that would normally go to waste from textile manufacturers, sorts the waste by color, tears the fabric apart into raw cotton, spins the cotton into yarns and finally turn the yarns into usable textiles. The end product is a 100% recycled and high quality textile that would have normally been disposed as waste. Furthermore, because the company sorts the waste by color, no extra dyeing is required during the process.

The process Pure Waste Textiles uses to create its products. Photo from Pure Waste Textiles website.

The process Pure Waste Textiles uses to create its products. Photo from Pure Waste Textiles website.

Pure Waste Textiles was founded after the owners of the Finnish ecological clothing label, Costo, began searching the markets for cotton that would be 100% recycled. A while back the Costo label was using surplus materials from other clothing manufacturers in its products, but in 2010 the company wanted to take things up a notch by creating a clothing line out of completely recycled fabrics. Using recycled fabrics would not only be a more ethical choice, but it would also make more business sense, as it would allow the company to provide a steadier stream of supply for its retailer clients. However, according to one of the founders, Hannes Bengs, the task of finding 100% recycled fabrics proved difficult:

“Back then we started thinking about using completely recycled textiles and so we began looking for fabrics that would be 100% recycled. To our surprise, we couldn’t find any suppliers for recycled fabrics. We then got excited and realized that we could start supplying recycled textiles ourselves.”

Carding machine. Photo from Pure Waste Textiles website.

Carding machine. Photo from Pure Waste Textiles website.

The company set to work straight away and began creating prototypes and test batches, which finally lead to the founding of Pure Waste Textiles in 2013. Potential suppliers were found from China and India, and after long negotiations the company was able to form partnerships with local manufacturers.

“We had Jukka Pesola working with us, who had 15 years of experience from doing trade in Asia. He knew about the local manufacturers, factories and recycling centers. The technology for producing recycled textiles was actually in place, it just hadn’t been used for creating 100% recycled fabrics before”, says Bengs.

Although the company had the benefit of using existing contacts, finding a partner wasn’t easy. The company needed to prove that producing completely recycled textiles would actually work. Bengs elaborates:

“The biggest challenge was that no one wanted to produce anything for us at the beginning. They were mostly afraid that using recycled fabrics would break their machines. After wrestling with this issue for some time, we were able to produce a few working test batches and then things finally took off.”

Some of the raw cotton waste Pure Waste uses.

Some of the raw cotton waste Pure Waste uses.

Pure Waste Textiles wants to create a positive change in clothing industry by making ecologically produced clothes and textiles more available. According to Bengs, the biggest sustainability issues in clothing industry are related to quality and time.

“If a company is selling a t-shirt with 5 or 10 euro price tag, it is cutting costs in either quality, materials or labor. It just isn’t possible to produce a quality shirt for 5 euros. Another major issue is the existence of fast fashion. Having a product go out of fashion in six months is simply not sustainable.”

The main problem behind both issues is that the externalities, such as carbon emissions, destruction of habitat, or social issues that are caused by cheap manufacturing are not paid by the companies themselves, but by local communities, national governments, or by future generations. If the full cost of producing a t-shirt or a pair of jeans was paid by the companies, we would most likely have very different clothes prices.

In the future Pure Waste Textiles wants to form partnerships with big clothing manufacturers and labels, where Pure Waste would provide the fabrics and the manufacturer would do the rest. The company’s vision is that when people think of recycled, high quality, and ethical clothing, they will think of Pure Waste Textiles, similar to how people think of Gore Tex when it comes to dry and water-proof clothes. Today Pure Waste Textiles already has competition in the recycled fabrics markets. For example, Eco-fi, a US company, sells polyester fiber made from post-consumer plastic bottles, while Brentano, also from the US, offers post-consumer recycled polyester fabrics.

Business Model: Recovery and Recycling

Value proposition: We make 100% recycled, premium quality, and sustainably produced yarns and fabrics.
Main customers: Clothing brands and manufacturers.
Revenue generation logic: The business model is based on selling fabrics and yarns to clothing manufacturers and brands. However, the company’s main cash flow still comes from selling t-shirts to companies and individual consumers.

Below is Accenture’s framework of 5 different circular economy business models. Based on this framework, Pure Waste Textiles has a Recovery and Recycling business model. According to Accenture (2014), the model enables companies to eliminate material leakage, and is good fit for companies or industries that produce large volumes of by-product. In this case, Pure Waste Textiles helps clothing manufacturers to eliminate waste from the clothing manufacturing process by turning by-product into usable fabrics.

Accenture's (2014) 5 Business Models for a Circular Economy.

Accenture’s (2014) 5 Business Models for a Circular Economy.

While the manufacturing processes and technologies used to create fabrics might be complex and sophisticated, the business model of Pure Waste Textiles is relatively simple. The company buys by-products from manufacturers, turns them into usable fabrics or clothes and sells them forward.

What’s particularly interesting about Pure Waste Textiles and its business model is the scale of the unused resources that the company is trying to tap into. According to Pure Waste Textiles, 10-15% of the produce from clothing manufacturing is usually wasted, which only a few companies have so far been able to take advantage of. If that 10-15% could be turned into profitable business, we could see a great rise in material use efficiency in the clothing industry.

Pure Waste yarns. Photo from Pure Waste Textiles website.

Pure Waste yarns. Photo from Pure Waste Textiles website.

Moreover, while reducing the waste and by-products from industrial processes is an important issue in and of itself, there are other even bigger opportunities for improvement to explore. What if we were able to recycle all clothes – not just the pre-consumer fabrics? What industries, what companies and how many circular economy jobs could we see emerge when we start exploring such opportunities? Pioneering companies like Pure Waste Textiles often pave the way to finding other places where innovative business models and technologies could be used to create circular economy businesses.

And most importantly, while advanced technologies will be needed in the future to create a circular economy, Pure Waste was able to rely on existing technologies in creating its circular business model. Sometimes it’s not better technology that we need, but better purposes for using our technologies.

References:

Accenture. (2014). Circular Advantage: Innovative Business Models and Technologies to Create Value in a World without Limits to Growth.

Frugal Innovations – Creating More for Less

Last week I had the opportunity to attend apparently the world’s first dedicated seminar on frugal innovations, right here in Helsinki Finland. The seminar was held in April 16-17, 2015 by the Nordic Frugal Innovation Society, at the General Electric Health Innovation Village.

 

Among the speakers at InnoFrugal 2015 was Navi Radjou, who has written two books on frugal innovations and is also known for his 2014 TED-talk about the same subject.

Before coming into contact with the idea of frugal innovations, Radjou was working as an innovation expert in Silicon Valley, where he helped large companies develop innovations. During his work at the Valley he made an important observation: western companies often use huge amounts of money on research and development without achieving major product or service innovations. A good example of this “more for more” approach is the seemingly never-ending line of new versions of the iPhone.

Navi Radjou

Navi Radjou delivering a TED talk in 2014.

Radjou’s observation about bloated R&D budgets drove him to seek ways to create more for less. He eventually went back to his home in India and started researching how Indian entrepreneurs are creating innovations with limited resources.

His research lead him to dive into the concept of jugaad – Hindi for innovative fix – innovation. Jugaad, or frugal innovation, was a very different approach to product and service development than what we’ve used to in the west. Furthermore, it is something that Indian entrepreneurs are very good at.

So, what the heck is a frugal innovation?

According to Radjou, frugal innovations are about doing more with less. Frugal innovations are products, services, business models or production processes that use significantly fewer resources, but achieve the same level of quality and usability compared to their non-frugal counterparts.

Here is a richer definition by Nesta, the British think tank:

Frugal innovation responds to limitations in resources, whether financial, material or institutional, and turns these constraints into an advantage. Through minimising the use of resources in development, production and delivery, or by leveraging them in new ways, frugal innovation results in dramatically lower–cost products and services. Successful frugal innovations are not only lower in cost, but outperform the alternative, and can be made available at large scale. Often, but not always, frugal innovations have an explicitly social mission.

Based on this definition, frugal innovations are products and services that are lower in cost, outperform the alternative and can be made available at large-scale. Therefore, frugal doesn’t imply cheap, but smarter and more resource-efficient.

Book Jugaad

“Jugaad: Hindi word meaning an innovative fix; an improved solution born from ingenuity and cleverness; resourceful. Also known as zizhu chuangxin in China, gambiarra in Brazil, D-I-Y in the United States, jua kali in Africa, and système D in France.”

 

One great example Radjou talked about during the seminar was MittiCool refridgerator. MittiCool is a refrigerator that was developed by an Indian entrepreneur, named Manshuk Lal Prajapati. The refrigerator is entirely made out of clay and doesn’t use any electricity, with the temperature inside the fridge 8 Celsius degrees cooler than the room temperature. It can hold vegetables fresh for four days and milk for two. The MittiCool sells for 3000 rupees in India, making refrigeration accessible for poor people (and allows tapping into a huge market).

Another example of frugal innovation Radjou mentioned and which might bring a smile to Finns’ faces is the Nokia 1100. Nokia 1100 was released in 2003 and it is remembered by being seemingly indestructible. While Nokia 1100 had no extra features, the phone was durable, reliable and came with a low-cost, which made it perfect for people in developing countries. Having sold over 200 million units, the Nokia 1100 is one of the best-selling phones of all time.

Using what is abundant to overcome scarcity

What’s important to understand about both MittiCool and Nokia 1100 is the fact that both serve the most important needs of the customer while cutting back on other, often unnecessary features. This is a more user-centered approach to product and service development, as it focuses on the core needs and expectations of the customer.

In the west, companies are used to having access to huge amounts of resources, which often causes companies to use brute force when developing new solutions. However, sometimes limitations can be an important source of innovation. Trying to overcome limitations, most importantly resource scarcity, is the starting point of frugal innovations.

According to Navi Radjou the defining quality of frugal innovation is using what’s abundant to overcome what is scarce.

This requires thinking creatively about what we do have now, instead of fixating on what we lack, and finding ways to use existing assets in a way that creates new value. It also requires understanding what’s really important and trying to find a design that can include the most necessary features.

For example, there is a service called M-Pesa in Africa, which helps people transfer money where there is no internet access. This is possible, because M-Pesa uses good old SMS technology to send payments. While internet access is scarce in Africa, mobile phones are abundant.

M-Pesa

The M-Pesa service being sold in a kiosk in Africa.

 

Another service used in Africa, called M-Kopa, is an example of how frugal innovations often allow people in developing countries to leap-frog into advanced technologies. The M-Kopa III service Solar Home System comes with a solar panel, several led lights, a solar-charged radio and a phone charging station. The M-Kopa is also priced in such a way that even the poor can afford it and gain access to electricity where there is no grid available. Thanks to this service, people have been able to leap-frog from candle light into solar light.

Some final thoughts

 

Frugal Innovation = Disruptive Innovation?

Frugal innovation sounds a lot like disruptive innovation, a term coined by Clayton Christensen. According to Christensen, a disruptive innovation “allows a whole new population of consumers at the bottom of a market access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill.”

As frugal innovations enable a lower price point while maintaining the most important product features, the connection between disruptive and frugal is very clear. Both terms involve tapping into new markets by enabling consumers with fewer resources to access a product or a service previously inaccessible to them.

Is more with less enough?

Okay, so frugal innovations can be a really good thing for both consumers and businesses, but what about the big picture? Can frugal innovations help us transform our current, unsustainable economic system to a sustainable one?

Based on initial observations, I think the answer in the short-term is yes, but in the long-term no.

In the short-term we need radical improvements in efficiency in order to reduce our overall resource use and emissions. Frugal innovations can help us obtain higher efficiencies effectively as they can potentially change how whole industries work.

However, in the long-term creating more value for fewer resources spent – or being less bad – is not enough. No degree of efficiency will help us become sustainable if our economies and industrial processes continue to produce harmful toxins, emissions and waste. This is especially true because our economies can grow at such a rate that gains in eco-efficiency can be overcome by the sheer speed of the growth.

Frugal innovations are a good start and certainly necessary. But what we truly need, is a circular economy.

 

 

Creative Commons Wakala providing M Pesa service by Development Planning Unit University College London is licensed under CC BY 2.0.

Creative Commons Now you can fly with M-PESA ! by cesar harada is licensed under CC BY-NC-SA 2.0.

3 Interesting Picks on Circular Economy

Below are some interesting picks on Circular Economy I wanted to share with you.

Unfamiliar with circular economy? Check out an introduction to the concept!

Company pick: Rype Office

Rype Office is a UK-based company that sells and leases office furniture. What makes Rype Office different is that they offer a buy-back guarantee for their furniture, which makes it easy for companies to recycle Rype Office products. The company also contributes to circular economy by leasing office furniture, which allows companies to easily increase or decrease the amount of furniture.

 

Book pick:  A New Dynamic – Effective Business in a Circular Economy

The concept of circular economy emerged from the work of different experts working independently on similar ideas. A New Dynamic is an inspiring book that brings these different ideas together in one place, making it an essential read for anyone interested in circular economy.

 

Article pick: What Will Come First: The Sharing Or Circular Economy?

The article pick of the week was written by Andrew Cave, a business journalist and a contributing writer at Forbes. In the article Cave discusses and makes comparisons between two similar (yet different) concepts: the sharing economy and the circular economy.

 

I would love to hear some of your picks! If you have books, articles or inspiring organizations in mind, go ahead and share them in the comments section.

Creative Commons Seedlings in Peet Pots by Jackal of All Trades is licenced under CC BY-NC 2.0.

Wicked Opportunities in Sustainability

While our world has become more dynamic and more complex, so have our problems. Wicked problems, such as climate change, terrorism, social inequality and destruction of natural habitat are extraordinarily difficult to deal with because they are almost impossible to define accurately. However, if we change our perspectives and reframe the issue in a new way we can overcome the wickedness of the challenge.

 

Wicked problems

 

“[Wicked problems are a] class of social system problems which are ill-formulated, where the information is confusing, where there are many clients and decision makers with conflicting values, and where the ramifications in the whole system are thoroughly confusing”- Horst Rittel

 

The definition of wicked problems is as complex as the problems themselves. Wicked problems have been a topic of discussion since the 1970s when Horst Rittel and Melvin Webber published their article, Dilemmas in a General Theory of Planning. The authors explained how wicked problems differ from engineering problems in that they are almost impossible to define.

To illustrate, let’s imagine that you have a rising drug problem in your city. The root problem appears to be a new gang that is importing large amounts of drugs to the city from overseas. After identifying the gang leaders, the city police finally apprehends the gang leadership in a large raid and confiscates all the drugs. For a while it seems that the amount of drug offences is decreasing. Surely the problem has been solved, right?

In reality the opposite is the case. In the following months a violent gang war ensues and the amount of people detained for drug abuse is actually increasing! The reason? By eliminating the dominant gang, the police created instability in the hierarchy between other rival gangs in the city and in the drug markets. This instability was then corrected by a violent power struggle between the gangs that remained.

The police had therefore introduced only a temporary solution to the drug problem. In fact, the real problem is not the use of drugs, which is only a symptom of the underlying cause. The use of drugs and other criminal activity were the result of a variety of other societal problems, such as poverty, racial issues and bad city planning. These underlying, systemic issues were not addressed by getting rid of one gang, which is why the drug problem only got worse.

Here are some other examples of wicked problems:

  • Climate change
  • Global terrorism
  • Nation-wide obesity
  • Acidification of the oceans
  • Deteriorating biodiversity
  • Poverty

All of the above problems consist of several interconnected parts. For example, climate change cannot be reduced to one problem definition with simple cause-effect relationships, because the climate itself is very complex and hard to understand. The climate is not a singular thing, like a mountain is, but the cumulative effect of all the streams of air, water and heat in our planet.

Understanding the nature of wicked problems is absolutely necessary for today’s problem solvers and decision makers because most problems worth thinking about are essentially wicked. It is easy to become paralyzed after realizing how challenging it is to solve wicked problems. However, I believe that by reframing the issue we can unleash our creative thinking and turn the problems into an opportunity

Wicked opportunities

What if I told you that climate change, inequality and other similar issues are only problems if we choose to define them so? In fact, I like to think of wicked problems as signals telling us that change is necessary – that we need to start doing something fundamentally different from what we’re doing now. It means that we need to design new and better economic, social, governmental and physical systems than the ones that are now in place. Therefore, our biggest challenge is in fact overcoming our unwillingness to change.

Change is sometimes very difficult, but whenever there’s fundamental change involved, there are also great opportunities. Furthermore, we humans are experts in change! Just think of how different our world is from a hundred years ago – or fifty, or even twenty years ago. The automobile, the airplane and the advent of ICT have all changed our lives and the society so fundamentally that our forefathers would think they’re in a different planet if they saw our world today. So there’s nothing new to systemic change – it is already happening all around us.

Therefore, what we need to do is reframe wicked problems as opportunities. They are opportunities for creating new value, new business and new, more sustainable ways of living. I am happy and inspired to see many companies, such as Demos Effect, PlantagonMBA Polymers, Ecovative Design, Piggybaggy, RePack and thousands others, adopting this attitude.

There’s a lot to do, so let’s not waste time trying to solve problems because it leads nowhere. Let’s instead choose to change our perspective and begin creating the world we want to live in.

Here are some suggestions how you can reframe wicked problems:

  • If you or your organization are faced with a difficult challenge, ask yourself whether it’s really an opportunity disguised as a problem.
  • When dealing with a wicked problem in your own life, instead of trying to solve the problem, try to think of ways you can re-design your life.
  • If you hear someone talking about a difficult challenge, try to identify the social systems that are involved in the issue. Then try to think of how we could go around the problem by designing the systems better.

References:

Rittel, H. & Webber, M. (1973). Dilemmas in a general theory of planning. Policy Sciences. vol. 4. pp. 155-169.

Buchanan, R. (1992). Wicked problems in design thinking. Design Issues, vol. 8. no. 2. pp. 5-21.