Combatting short-term pressures with a digital circular economy approach

When times are tough, the instinct of many executives is to squeeze existing assets: make platforms do more with less, reduce the total cost of ownership, and extract value through cuts.

One study found that 76% of CFOs said that challenging market environments increase pressure on them to drive cost efficiencies and hit short-term earnings targets. Those cuts can involve funding for long-term priorities; the same study found that 50% of finance leaders aimed to meet short-term targets by reducing investment in areas such as Environmental, Social and Governance (ESG).

It is the sort of approach taken from a playbook that’s been deployed in any major economic downturn, and in many ways, it feels a bit antiquated; nascent sustainability initiatives were some of the first cuts in 2008, for example.

Those companies that take this approach diminish the impact it can have on maintaining competitiveness in the medium and longer term. While it is easier to agree on a tactic that has previously generated the desired results, operating predominantly in the short term can leave businesses constantly reacting. This, in turn, limits their ability to be ahead of the competition.

Finally, there is only so much that can be cut.

But what if there was an alternative that could not only get more from existing investments, but provide a foundation for future innovation?

Turning to the circular economy for inspiration

This alternative is embedded in the circular economy. It is about a shift in mindset and approach that focuses on building extensible, modular, and low-waste digital platforms that evolve, rather than ripping and replacing every 18 months.

It draws from the circular economy, combining a commitment to sustainability with innovation and smarter design principles to create new value. It is a marked shift away from planned obsolescence; instead, the focus is on creating products and services that embody longevity.

The circular economy already draws heavily on technology to enable its operations.

For instance, companies like Rheaply and Too Good To Go provide digital marketplaces to connect those with resource needs to those with excess resources.

Rheaply was originally set up to link scientists with underutilized lab equipment and consumables and has helped organizations recapture $4.1 million in value in the last year.

Too Good To Go allows restaurants and retailers to sell unwanted food to consumers. An app allows customers to browse parcels of surplus, while a B2B platform helps food companies track, manage and distribute their goods.

Then there are those businesses that are taking the principles of the circular economy and embedding them into digital products.

For example, modular consumer electronics that can be repaired, that don’t struggle when new updates are pushed to them, and as a result last for far longer than industry averages. Fairphone, in the Netherlands, is one such manufacturer, producing smartphones and headphones that combine recycled materials with extended warranty and repair packages.

Embedding digital circular economy principles into product lifecycles

These approaches are not limited to businesses dealing in physical assets, either. Inspired by the principles of the circular economy, product teams can reduce tech debt, increase longevity and cut costs, without compromising on speed and performance.

This is achievable with a strategy that is biased for modularity, human centered design and a focus on releasing minimum lovable products (MLP) over minimum viable products (MVP), with continual iteration. It is about integrating circularity and long-term fitness into everything a team develops.

Specifically, that includes:

• Investing upfront to avoid downstream waste: A well-structured discovery phase prevents over-engineering and cuts both delivery time and long-term complexity.
• Embedding extensibility from day one: No one can predict what the future will bring, but efforts must be made to future-proof where possible. Using open APIs and scalable frameworks enables growth without costly refactoring later.
• Going modular, not monolithic: Designing in interchangeable modules allows for targeted upgrades and reduces the need for full rebuilds, extending the life of each component.
• Use smaller, cross-functional squads to stay lean and focused: Small teams reduce coordination overhead, speed up decision-making, and avoid layering in unnecessary processes or tech.
• Combine bespoke and off-the-shelf: Cloud-native and low-code platforms offer speed and savings, without sacrificing reliability, and can be augmented with custom tools for specific use cases.
• Treat sustainability as a design constraint: Restrictions fuel creativity, which can lead to fantastic design solutions. Challenging teams to think about what the lowest waste path to value is at each stage of the product life cycle helps decision-making that will cut carbon and costs.

Lean and focus over sprawling and wasteful

At its heart, sustainability is about optimizing resources, with no waste. That is what implementing digital circular economy approaches do; they are a constant process of making use of what is available to extract maximum value, with little to no waste. It is sustainability that pays for itself.

That includes looking at the teams developing products and services. Large teams with multiple layers can feel safe, but they can also be bloated, over-engineering for the sake of it. Smaller teams can reduce time-to-value, strip out excess and deliver modular builds that are easier to extend, maintain and evolve.

Small does not mean under-resourced; it removes the opportunity to become unfocused, sprawling and wasteful.

Combatting economic pressures with digital circular economy principles

There is no doubt that executives are facing significant economic pressures. The tendency will be to cut, but in doing so, there is a risk of waste and, more importantly, losing competitive advantage in both the mid- and long-term.

Instead, there is an opportunity to reframe the situation, to still do more with less, but in a way that does not sacrifice future objectives.

Turning to the digital circular economy means unlocking opportunities with products and services that really do extract every ounce of value. In doing so, companies will not only secure their future, but they’ll be better set up to achieve a form of growth that allows them as businesses to be both profitable and sustainable.

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