Why Strategy Stalls in the Boardroom
Flip open any annual report and you’ll see paragraphs on “value creation.” Profit. Brand equity. Technology. All true and all incomplete.
The quiet truth is this: most leadership teams have never run a forensic audit on how enterprise assets create, leak, and retain value over time. They track revenue lines and operating costs in meticulous detail, yet the hidden P&L, the place where under-used resources drain margin, never makes the slide deck.
That blind spot turns every “digital-plus-sustainability” initiative into a sideshow. If a $50 million turbine sits idle 18 % of the year because maintenance cycles are mis-timed, you are torching more cash than any procurement saving can recoup. If data from the field is never looped back into design, you’ll build the same inefficiency into the next generation.
Circularity, properly defined, is an asset-value retention system.
It asks: Where are resources slipping the net? Where could they generate further economic return if we redesign, redeploy or share them? Nail that, and you transform capital discipline, cash-flow quality, and enterprise resilience, three metrics every director understands.
We believe the circular economy conversation often begins with a fundamental misunderstanding of value itself. Therefore, let’s reframe the discussion by examining the three critical dimensions of value in business operations.
Understanding Value
Value Leakage
The traditional linear economy inherently creates value leakage through waste generation. For instance, when materials, energy, labor, and products are discarded while still holding value, businesses are literally throwing away potential profits. This represents both an economic and environmental cost that impacts not just individual businesses but also entire supply chains and communities. Where it hits the financials: Gross margin, working capital, depreciation expense.
Value Creation
While businesses excel at creating value through products and services, many overlook the full spectrum of value potential. In other words, the essence of business profitability lies in value creation. Yet, traditional models often leave significant value uncaptured. As a result, this oversight represents a missed opportunity in the current economic paradigm. Where it hits the financials: Revenue, product contribution
Value Capture
The circular economy presents a transformative approach to value capture through:
- Resource optimisation, which ensures maximum utility of inputs.
- Extended product longevity, which reduces the need for frequent replacements.
- Material exchange across value chains, fostering collaboration and reducing waste.
Where it hits the financials: Recurring revenue, asset turnover, capEx avoidance.
The spread between Leakage and Capture is the leadership team’s new playground. Cut the first, expand the third, and enterprise value moves in months, not years.
The Real Circular Economy Value Proposition
The circular economy is about identifying and capturing value that’s currently being lost. To illustrate, before discussing the value proposition of circularity, businesses should first assess their current value leakage points:
- How much material value is lost in your production process?
- What percentage of your products end up in landfills while still functional?
- Where are the opportunities for value recovery in your supply chain?
By carefully examining these aspects, businesses often discover that the transition to circular practices isn’t just an environmental initiative, it’s a powerful business strategy for value retention and creation. In fact, the circular economy doesn’t just create new value propositions; it helps capture value that’s already there but currently being wasted.
Five board-level questions that surface hidden profit
-
Where do our strategic resources bleed margin?
-
What percentage of inventory sits idle for more than 90 days?
-
How many capital assets operate below 80% of rated capacity?
-
-
Who owns end-of-life liability — and could that be turned into revenue?
-
Are we entitled to refurbish, lease, or data-mine returned assets?
-
-
How volatile is our primary resource exposure?
-
Nickel, rare-earths, carbon liabilities: what was the three-year swing? How did it impact earnings?
-
-
What is the internal interest rate on stranded capital?
-
Finance teams price cash; few price idle resources.
-
-
What would the enterprise value be if we shifted 25 % of turnover to recurring service streams?
-
Push your bankers for the multiple uplift. It is rarely less than 1.5×.
-
If leadership can’t answer in dollars, percentages, or IRR, the opportunity remains invisible.
Strategic Implementation
For businesses looking to capture this lost value, the approach should be systematic. Consequently, the following steps can guide organisations:
1. Map Current Value Leakage Points
Firstly, identify areas where materials, energy, or labour are being wasted. This could include inefficient production processes, underutilised resources, or products reaching the end of their lifecycle prematurely.
2. Identify Opportunities for Value Creation Through Circular Design
Next, explore how circular principles—such as modular product design, material reuse, and renewable inputs—can enhance value creation. These practices can help maximise the lifespan and utility of your products.
3. Develop Systems for Value Capture and Retention
Finally, implement systems that recover, reuse, and redistribute resources. For example, consider reverse logistics for product returns, partnerships for material exchange, and innovation in recycling technologies.
Circularity is Simply Superior Capital Allocation
Strip away the buzzwords. Circularity, at executive altitude, is a disciplined practice of extracting maximum economic return from every resource the enterprise touches.
It is capital stewardship.
• Lower raw-material exposure shields earnings from commodity spikes.
• Performance-linked service contracts replace lumpy sales with annuity cash-flows the street rewards.
• Predictive maintenance extends asset life, freeing CapEx for growth instead of replacement.
It is strategic resilience.
• Resource shares and second-life assets build optionality when supply chains seize.
• Full-life ownership meets tightening disclosure regimes head-on, turning regulation into competitive edge.
It is valuation acceleration.
• Recurring revenue and superior asset turns boost EV/EBITDA multiples.
• Demonstrable resource-retention stories attract ESG-aligned capital at lower WACC.
Want proof?
Our Circular Advantage System delivers a diagnostic that converts under-performing assets into quantified upside, in dollars, not slogans. Within four weeks, you will know the delta between current performance and best-in-class, with a plan to close it.
Because the smartest capital you’ll ever deploy is the capital already on your balance sheet, you just haven’t cashed it in yet.