We (or at least many of us) sure do love our beer. Globally, 189 billion liters (roughly 50 billion gallons) of suds are swilled every year. The problem is that beer comes with a by-product: spent grains that are left over after the brewing process. Some are sold to farmers for animal feed, but most are trashed. That’s a lot of landfill.
But brewers are now finding new ways to both avoid this waste and put it to good use while making some money. One example is Scottish independent brewery BrewDog, which is now using its spent grains to generate energy for its brewery. It has also made dog treats from the spent grain that would otherwise be thrown away and will soon release Bad Beer Vodka, a spirit made – as the name implies – from the company’s subpar beer.
Given the current climate crisis, literally nothing should go to waste. Environmental concerns dictate that we must use the resources we have to their utmost capacity and with minimal leftovers.
Rethinking how we use and conserve resources is not just an environmental issue; it’s also tied to financial stability and business continuity, as we have learned all too well from COVID-19.
During this period of economic uncertainty, businesses need to wring the most value from everything they do. That means not just finding better, more efficient ways to do what they already do but also discovering untapped resources and capabilities that are hiding in plain sight, such as the spent grains in a brewery. Identifying these “new” resources and ways of doing things doesn’t have to be a random accident; it can be a highly disciplined and repeatable practice. Called “capacity capture,” it is an emerging way of doing business that will help companies manage these challenges, become more efficient, minimize waste, improve competitiveness, and find new revenue streams.
Reframing waste as a potential asset is part of adapting to expectations across the board, says Andrew Winston of Winston Eco-Strategy. Waste is beginning to look just… wrong. “I think increasingly your investors, your communities, your employees are just less and less impressed with a company that doesn’t operate more efficiently and use its resources better,” Winston says.
Capacity capture – the utilization of assets and resources that were considered waste or weren’t used completely – is a key element of the circular economy, a model in which one enterprise’s waste becomes another’s inputs for production. But even companies that recognize the necessity of this change have difficulty understanding how to implement capacity capture. That’s because capacity capture is a philosophy and a new approach to business. It takes creativity and a willingness to take risks and challenge assumptions. Businesses will need to reconsider fundamental assumptions about what they are and how they work.
Apart from the fact that the environment is in real trouble – the planet is literally on fire, that birds are dropping from the sky, and we’re eating plastic with every meal – disposing of waste is getting too expensive. “I see a growing interest for a company to convert waste into resources,” says Rémy Le Moigne, managing director of Paris-based consultancy Gate C. “For a lot of companies, especially, for example, chemical companies, the cost to get rid of spent chemicals is sometimes very high, and they’re looking for solutions to reduce this cost, and one of the possible solutions is to convert waste into resources.”
Capacity capture questions assumptions
The 2020 pandemic has accelerated the idea that values are among the most important criteria for a company’s success and longevity. The new trifecta of price, quality, and now, values is driving consumers’ brand loyalty and purchasing decisions. Values have become less of an afterthought and more of a crucial distinction.
We witnessed which companies lived up to their stated values, like ensuring the safety and health of their workforce, and which did not – when, for example, they failed to provide public-facing workers with personal protective equipment (PPE) as COVID-19 reared its spiky, microscopic head. Whether businesses are walking the values talk is now being scrutinized, from how they source raw materials and labor, to the energy they use in production, to what they do with their waste.
Winston believes there’s just been more awareness of waste in recent years. “Companies increasingly have to prove their value to society, their role in society, that they’re taking care of resources effectively,” he says.
But the pandemic, along with other challenges facing companies today like the environment and increasing costs, has offered an opportunity to embark on a new way of thinking. Companies need to look for ideas that may not make sense in the context of how things have been done before. That includes ingrained assumptions about how the value of assets impact capacity.
Capacity capture is about stretching organizational thinking by exploring untapped resources across three categories: Physical assets are the tangible objects and places that an organization holds. Digital assets include network infrastructure, data, and software. And human assets refer to people – their behaviors, roles, and skills.
The capacity capture mindset looks at each of these assets with fresh eyes to find ways that value can be realized. This approach examines each untapped resource – no matter which category it falls in – to consider whether it is unwanted, excess, or underused (see “Three types of untapped resources: Questions for exploration”).
Prospective resources can be evaluated by considering how they could be reused by another part of an organization, either by themselves or combined with other resources; how a resource can be used as much as possible; and when and how selling, recycling, and donating make sense.
Capacity capture looks at the value of assets in these categories and finds ways they can be exploited. For example, in some countries, fast food chain McDonald’s utilizes its used cooking oil as biofuel for delivery trucks, and one restaurant donated some as a replacement for liquid plastic for 3D printing.
The capacity capture approach focuses on three asset categories – physical, digital, and human – and asks whether they are unwanted, excess, or underused.
Unwanted assets are created or accumulated as a by-product of another process. Excess assets are produced or gathered intentionally; they become surplus either because there are too many of them or because the process that created them is no longer in use. Underused assets are created intentionally; they’re in use but not to their full potential.
The following examples look at different assets through the capacity capture lens:
- Physical assets (tangible objects, such as facilities, heavy equipment, and office supplies)
Unwanted: What is created unintentionally as a side effect and then discarded?
Example: UK’s Wensleydale Creamery works with a nearby bioenergy plant to convert whey waste into home heating energy.
Excess: What is produced intentionally but becomes surplus?
Example: Several European utility companies are working with Nissan and Mitsubishi to develop a means for electric car owners to sell energy stored in their vehicles’ batteries.
Underused: What kinds of existing assets are not used to their full potential?
Example: Coca-Cola transports vaccines using empty spaces in its refrigeration trucks.
- Digital assets (network infrastructure, software, data and metadata, and bandwidth)
Unwanted: What is collected incidentally and rarely used or analyzed?
Example: UnitedHealth Group spinoff Optum repurposes aggregated data and provides pharmaceutical companies an analysis of how their products are being used.
Excess: What is developed or gathered intentionally but rarely used?
Example: LED bulbs can be programmed to transmit data through visible light communication or Li-Fi networks.
Underused: What kinds of existing storage and channels are not used to their full potential?
Example: Amazon rented out excess computing infrastructure capacity, creating Amazon Web Services.
- Human assets (people and their behaviors, roles, and skills)
Unwanted: Where are people or their behaviors seen as undesirable?
Example: Mobile phones at business events were once considered rude. Now companies encourage employees to promote brands on their smartphone social media accounts.
Excess: Where do you gather people or encourage behaviors but then not use them fully?
Example: A company that invites retired employees to use their experience and institutional knowledge as coaches.
Underused: How can you tap into unrecognized skills and capabilities?
Example: The Hilton Worldwide hotel chain keeps records of employee skills, giving the company fast access to people with certain knowledge (such as language fluency) when needed.
Even some assets that have been conventionally thought of as valuable are being challenged. For example, with the rising population of remote workers, the value of real estate is being questioned. Companies like Shopify and REI Co-op are going mostly remote; REI is even selling its recently built headquarters. Now companies must ask if such assets are really driving the value of business and if they can do business better without them.
Technology makes it easier
A capacity capture approach involves identifying an asset or activity and then figuring out how it might be valuable to somebody, somewhere. That could mean, for example, looking to other industries for opportunities. The car company Renault is investigating repurposing batteries that can no longer supply the huge energy demands of its electric cars for less demanding uses, such as storage for wind or solar power.
But finding the right match or use for an untapped asset, particularly outside a company’s own industry, is not an easy task. The main hurdles, says Le Moigne, are usually the risk and investment required. Companies generally prefer to direct investment capital to new production. “When you start such a project, you don’t know what the result will be,” he says. “Companies are not sure they will find a solution, and they’re not sure how expensive the solution will be.”
But that’s changing.
Technology platforms increasingly make finding new partnerships and assessing market potential quicker, less risky, and less expensive. Cloud service providers make it straightforward to spin up the back end of a new business venture, for example. Drop-shipping and warehousing services ease access to logistics services. Intermediaries like Material ConneXion make available a collection of raw and manufactured materials to companies that could use them, while online networks like Upwork and LinkedIn provide a parallel service for peoples’ talents. Together, these and other communication channels and transactional networks connect supply with previously inaccessible demand across industries and physical distance. They lower the bar for trying out a new business model or working with partners in other industries, making the capacity capture opportunities easier to explore.
Another example is one of Le Moigne’s clients, iNex, a startup in Paris that acts as a matchmaker for companies with industrial waste and companies that could use it. “In the past, the waste was valuable, but finding a company that needed it and wanted it was terribly difficult and expensive,” says Le Moigne.
The case for a chief capacity officer
The essential work of capacity capture may never happen unless companies make it someone’s job. A chief capacity officer would be in charge of uncovering where value is being lost or is untapped. The role would be to look outside a company’s core competencies, to look at different ways to use fallow assets, and to try to find those with the most potential.
But this position and its team would need people who can think in truly unexpected and unconventional ways, who can come up with ideas that are, on the surface, almost ridiculous. They would need to be able to look outside a company’s core competencies to spot those unwanted, excess, and underused resources and explore potential for value outside the usual channels. Not everyone has the ability to think like this, so assembling the right team may require counterintuitive choices.
In fact, a company that develops the expertise in capacity capture can take its capability further by turning the activities into a line of business, helping other companies create their capacity capture mindsets and projects.
How to encourage the capacity capture mindset
During the initial stages of the COVID-19 pandemic, companies and manufacturers that suddenly found their production lines and employees idle came up with ways to contribute to the overwhelming need for PPE. Distilleries made hand sanitizer, clothing factories made medical gowns, and camping outfitters made masks. Other pivots in response to the new normal include office workers, event planners, and entertainers doing business online. Restaurants and shops expanded outdoors into parks and streets. Some of these changes have been temporary, but others have revealed entirely new audiences and ways of working.
How can we build this way of thinking into everyday business strategy and planning? Here are three moves:
- Continuously identify untapped resources. Use the physical, digital, and human categories to stretch your team’s thinking. Keep an ongoing resources list and invite many people to contribute from all parts of your organization.
- Regularly explore potential opportunities. As part of your strategic planning, ask a diverse group to explore the untapped resources list and generate possibilities for capturing value both inside and outside your organization (see “Prompts for capacity capture idea generation”).
- Reach for the unexpected. As you analyze the list of resources, suspend disbelief and convention. Look for the seemingly ridiculous ideas – true innovation often feels uncomfortable at first.
This mindset can lead to opportunities when you look hard enough – beermaker BrewDog and its canine treats is one example. Retailer Ikea is another. Its stores are globally consistent – big and flat – and the company has committed to creating as much energy as it uses. So far it has installed 900,000 solar panels on its stores’ roofs. The British Wensleydale Creamery converts its waste from cheesemaking into biogas for home heating. And the grandparent of circular economic activity, the industrial park in Kalundborg, Denmark, famously hosts 13 companies that exchange materials like sludge, steam, and fly ash in a cyclical harvest of waste into inputs and energy.
Consider unwanted, excess, and underused materials as assets in the following categories. For each identified resource, ask the following questions to generate potential value:
Reuse: How could it benefit another part of your organization?
Extend and combine: What other things could you do with this resource, alone or combined with another resource?
Spin off: What could you do with this resource if you removed it from its current context to stand alone?
Maximize: How could you create and use even more of this resource?
Sell: Under what circumstances might someone else value this resource enough to buy it from your organization?
Recycle: How could another organization use this resource when you’re done with it?
Donate: Could you create non-monetary value and save the cost of disposal by giving this resource away?
Thinking flexibly for the future
Like Renault, companies that are nimble and successful at capacity capture often are doing it outside their given industry. In fact, the very idea of industries is becoming less relevant. The competitive companies of the future will be operating in several industries, cross-pollinating ideas and innovations. When Renault sells its old batteries outside the automotive industry, is it still a vehicle manufacturer? Or a renewable energy and utility company? Or all of the above?
The challenges facing companies today – including climate change, shrinking resources, and of course, the pandemic – have also offered an opportunity to embark on a new way of thinking. Flexible exploration of resources and business models is proving critical to connecting with new markets and sustaining organizations through disruptive change. What are your organization’s equivalents of spent grains, flat roof space, or used batteries? Capacity capture offers a way to broaden your thinking about what’s possible, reduce your organization’s footprint, and uncover the value that’s hiding in plain sight.