Turning up the volumes

When a new product enters the market, how can it be continuously circulated, keeping its materials at their highest value at all times? That’s a key challenge posed by the circular economy. Every day, a growing number of companies, including Dell, Method, Patagonia and Sprint, are stepping up to meet this challenge. They are sending products to market that are upcycled, recycled or otherwise on their third or fourth lives.

In 2014, as part of the company’s 2020 Legacy for Good plan, Dell started offering the OptiPlex 3030 (pictured on page 94), the first computer that uses UL Environment-certified “closed-loop” plastics, in collaboration with environmental partner Wistron GreenTech, a subsidiary of Taiwan-based Wistron Corp.

Cleaning products producer Method offers its customers a suite of more than 80 products that are “Gold level” Cradle-to-Cradle certified. This certification indicates that scientists have evaluated those products’ ingredients, packaging materials, designs and processes to ensure they are created with maximum reuse in mind.

Outdoor apparel company Patagonia has been taking back its own clothing from customers for recycling since 2005 and has been using postconsumer recycled plastic bottles to make polyester for its fleece since 1993. In fact, the company was the first in the clothing industry to do so.

Furthermore, the company maps out its supply chain partners via the Patagonia Footprint Chronicles, available at www.patagonia.com/us/environmentalism. Midlife product regeneration is a profitable move beyond traditional value chains. Some estimate it to be a $1 trillion revenue opportunity. Companies like Sprint agree and have embraced the circular economy to unlock cellphones’ market value.
 

Sprint's reuse history

In 2001, Sprint launched the first phone trade-in program in the U.S., offering customers a financial incentive to trade in their old phones when they upgrade to new phones. The program was quick to catch on as smartphones emerged and customers wanted the latest and greatest.

But the program also was a win for the company. Not only were customers pleased with an instant service credit, but Sprint also found a way to better manage insurance claims by using phones that had been traded in and remanufactured to like-new condition as replacements.

Using original manufacturer tools and skilled labor, Sprint has reused 80 percent of the phones that come through its take-back programs. Many are remanufactured for reinsurance or resale.

This is good news not just for the customer who wants a like-new phone at a better value but also for the environment when you consider 135 million phones get discarded every year and only 11 percent are recycled. It also has made a positive impact on Sprint’s bottom line, avoiding more than a $1 billion in costs.

Selling these remanufactured phones may only be the beginning for Sprint as it works to unlock cellphones’ true value.
 

Students compete

In February 2015, Sprint announced the Smartphone Encore Challenge in conjunction with Brightstar Corp. and HOBI International (Sprint’s phone reuse and recycling vendors), which targeted college students from more than 155 U.S. Net Impact chapters to find profitable, innovative ways to repurpose old smartphones while applying their business skills for social and environmental good.

Participation was limited to the first 25 individuals or teams. Submissions were judged on how well teams defined the problems, markets, solutions, innovations, value propositions and financial feasibility associated with their ideas and on their pitches of their submissions.

The winning individual or team received $5,000, which could be used toward attending a Startup Weekend, where they would have the opportunity to strengthen their team’s business model through strategic guidance from Sprint, Brightstar or HOBI executives.

The winning team from the University of California, Berkeley, created TouchCart, a “smart” grocery cart that aims to transform traditional shopping carts into multipurpose shopping assistants.

TouchCart can provide shopping lists, a store catalog, a customer service phone line and scanning capabilities right from the shopping cart so that customers can bypass long check-out lines. The system would enable the store to track spending, overall customer experience and coupon use. It also would provide insight for store inventory and sales forecasting.

Two teams were selected as runners-up in the challenge. The first, a team of two MBA students led by Sreekanth Krishnakumar from Ohio State University’s Fisher College of Business, converts old smartphones into onboard monitoring devices for vehicles. The StreetSmart device calculates automobile insurance premiums based on individual driving behaviors, provides feedback and financial incentives for users to adopt better driving practices and serves as a black box recorder that can be reviewed in case of accidents.

The second runner-up in the Smartphone Encore Challenge was a team led by Biplab Deka, a Ph.D. student in electrical and computer engineering from the University of Illinois at Urbana Champaign. This entry, Neo, transforms preowned smartphones into affordable computers for budding programmers. The device could help address the “digital divide” by providing computer access to school-aged children who otherwise would not have access to such technology.

The panel of judges for the competition consisted of representatives from Net Impact, the participating companies and other thought leaders, including Andrew Morlet, CEO of the Ellen MacArthur Foundation and leading voice on the circular economy; Morgan Clendaniel, editor at Fast Company (FastCoExist); Beth Comstock, president and CEO of GE Business Innovations and GE’s chief marketing officer; and Barbara Kyle, national coordinator for the Electronics Takeback Coalition.
 

Why a contest?

Sprint wants to show that opportunities to repurpose preowned smartphones are endless, as they are affordable minicomputers equipped with a wide range of built-in sensors and tools. Most are less than two years old when their first owners are done with them. Sprint understood that upcycling these cellphones could stimulate aftermarket demand for used devices; create new sales channels for Sprint, used cellphone brokers and remanufacturers; spur the creation of jobs and new startups through entrepreneurial ideas; and develop additional sources of device, accessory and wireless service revenue for carriers.
 

Where from here?

Sprint realizes that an ecosystem approach works best. That’s why Sprint’s partners in the contest, Brightstar and HOBI International, were key. Both companies remanufacture and resell preowned smartphones and have a vested interest in increasing demand for their products.

Looking to the future, Sprint sees opportunities to engage device manufacturers in a dialogue about open-ended design to make repurposing even easier; work with academic labs and incubators to explore the potential of repurposing; crowdsource ideas to identify creative new products and solutions; and accelerate entrepreneurial ventures with viable business opportunities.

In the meantime, Sprint plans to give a couple of the students from the Smartphone Encore Challenge the opportunity to prototype their concepts in Sprint’s Technology Innovation Lab this summer. The company also will seek ways to support the development of other promising ideas that arose from the competition.

As Darren Beck, Sprint director of environmental initiatives, says, “We hope this contest and its initial results will spark the imagination of the industry, inventors and entrepreneurs. We are interested in supporting them and growing this aspect of the circular economy.”

The author is Sprint’s spokesperson on corporate responsibility, including its cellphone recycling and reuse efforts. She can be reached at marci.j.verbrugge@sprint.com.