Open Innovation and Circular Economy: the winning combination

The necessary change can only come from a new model of economic development based on the circular economy supported by innovation projects that are open and available to all.

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circular economy open innovation

by Cleopatra Gatti |

"The pandemic has exposed the fragility of our model of economic development, revealing two sides of the same coin: no sector is solid enough to withstand radical change without a process of continuous innovation and it is necessary to rethink the current model in a logic of greater attention to sustainability and respect for the environment. The model we are used to, the linear one, based on the extraction of raw materials, mass production and consumption, and the disposal of waste, has shown many cracks, especially in recent months. A striking case is that of fashion, a strategic sector for our country: after years of offshoring to Asia, the pandemic has blocked entire supply chains by simply closing the borders. Only those who have been able to readjust their development model have shown sufficient resilience to cope with the crisis. One example of this is the food supply chain, which has survived thanks to a decentralised system, the use of proximity models and the digital channel of e-commerce," says Riccardo Porro, Chief Operations Officer of Cariplo Factory.

According to Porro, it is necessary to rethink the economic cycle in terms of circular economy: a system designed to be able to regenerate itself, based on the valorisation of waste, the extension of the life cycle of products, the sharing of resources, the use of recycled raw materials and renewable energy. However, a change of course of this magnitude cannot be borne by individual companies, which is why it is necessary to bring Open Innovation into the Circular Economy.

Italy well positioned in the Green Economy

The first 2019 National Report on the Circular Economy model produced by the "Circulary Economy Network" shows that Italy is in first place in Europe in this area: with a score of 103, it beats the United Kingdom (90), Germany (88), France (87) and Spain (81). According to the report 'The Bioeconomy in Europe', produced by Intesa Sanpaolo's Studies and Research Department, the market is huge and in Italy is worth around 345 billion euros and two million people employed: numbers that put us in third place in Europe behind Germany and France. " The circular economy has the capacity to create integrated multidisciplinary factories in local areas and to return environmental resources, always locally, creating profit in the process, " comments Porro.

However, the lack of centralised legislation generates bureaucratic tangles that lengthen time and discourage companies from taking the circularity route. An emblematic case is that of FaterIn order to recover used nappies and sanitary towels, with the aim of putting cellulose back into the production cycle, Fater invested millions of euros in technology, but then had to wait almost seven years for the administrative go-ahead.

Investments in Open Innovation

The relaunch of the economy based on a circular model should therefore depend on support from the institutions: clear rules, less red tape, a plan of incentives from the state, but also support from the credit sector such as that offered by Intesa Sanpaolo with a EUR 5 billion ceiling.

Porro goes on to explain: "The economic resources collected in this way should then be catalysed to launch wide-ranging innovation projects, activating the supply chain managers of Italian industries. This is the only way to succeed in transforming an entire ecosystem into a virtuous model capable of creating jobs in the region and supporting recovery.

Companies have realised that these are not costs, but rewarding investments. What is lacking are the skills to govern change, but these can be acquired through Open Innovation, which enables access to external ideas, particularly those developed by innovative start-ups. " Since you cannot have all the tools to change internally, you need the ability to bring the Open Innovation paradigm to the Circular Economy as well, because no one is able to tackle the complexity of the issues and frontiers that bring about such changes on their own, " Porro concludes.

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