Everyone is familiar with the U.S. national economy, which is the balance of the revenue the nation takes in, primarily through taxes, and what it spends through its annual budget. Two major components make up the macro national economy. They are the gross domestic product, which measures the amount of goods and services produced in the country, and the consumer price index, which measures the cost of goods sold. There are other statistics that offer a finer study of how the economy is functioning.
Large businesses often develop their economic policies from the numbers generated by the national statistics. Budgets, policies and practices, balance sheets, profit and loss calculations — all are influenced to some degree by the national economic indicators and how well the economy is functioning. The resulting business plans are linear and characterized as a “make, take and destroy” economy, meaning products have three stages: production, distribution and waste disposal.
There are two other economies. They are the circular economy and the gig economy. Both economies are based on current trends in the nation. The trends for a sustainable environment through recycling and proper waste disposal, corporate downsizing and the increasing numbers of part-time workers are influencing both.
Recycle, reuse, reintegrate
The circular economy is about creating value in each of the stages of production, distribution and disposal. The circular economy is based primarily on the ability to recycle products as much as possible to create a continuous resource that was planned in advance and integrated into the design of the initial product.
Its aim is to make the most of the nation’s products, materials and components by utilizing them to their highest quality and value “at all times.” It is a system of restoration and regeneration strategies with reintegration into the economy according to a report from the Ellen Macarthur Foundation in November of 2015. It is a system that integrates its principles into the design of each product to expand and transform its utility in the marketplace.
In other words, from early in a product’s design, designers have already considered how it can be continuously used and what form its reintegration will take. Additional value is gained at each step. Think of tires transformed into roadways, the many lives of plastic bottles and large metal products recycled as usable materials for other products and services. The junkyard becomes a source of new ideas rather than just a pile of scrap.
Think of the circular economy as a large system of product transformations with a different design and application that begins with a comprehensive design plan to identify what to do until the product and its component value is exhausted. General Electric is moving toward the regenerative demands of the circular economy by its Ecomagination strategy.
Through this strategy GE “solves problems for customers and finds solutions that make things better for society, the environment and the economy. We believe that innovation is at the heart of sustainability,” said CEO Jeff Immelt in 2015. The company generated $36 billion in revenue from Ecomagination technologies and solutions that same year
Products for transformation are those both made and used by your company. Recycled paper and ink cartridges come to mind. Repeated use of a product’s transformation is the ultimate goal that creates the additional value.
Gig to gig, contract to contract
The gig economy is another direction to watch. The gig economy focuses on people who take a series of different contract jobs so they can have a steady income and balance their work and family life. They are not typically just part-time workers. An Intuit 2020 Report suggests that 40 percent of American workers would be independent contractors in the near future.
The rise of independent contractors and part-time opportunities provide that people can move from “gig to gig” rather than remain part of the full-time employee base. People can literally search the world for contract work, which means they work for a limited amount of hours before they move on. They are not consultants, but they typically have the right expertise or experience to fill a current company need. It’s an opportunity to grow at a steady pace from each chosen assignment.
One drawback is there are typically no benefits other than what the individuals obtain on their own. It pushes the burden on the employee to find a health care program, save for retirement, pay taxes and decide when to have a vacation. Flexibility has a price. Gig workers have less legal protection. And the Pew Research Center found that twice as many gig workers in 2016 made under $30,000 at year when compared to the general population.
With greater financial pressures on companies to reduce their workforce, and the emergence of a digital world, it means working from home has become a national trend embraced by much of Generation Y. Working from home can encourage people to enter the gig economy. A person can be doing several contract jobs at once and connect to each company through a variety of social media. The gig economy can also supplement a full-time job. Uber, the ride hailing service, is an example where people can augment their income to help meet a family’s needs.
The dream of being one’s own boss continues to be attractive, and both the circular and gig economies provide opportunities to fulfill that dream through innovative product ideas and frequent contract opportunities. And both are mostly about testing how resilient products and people can be.