The Real Reason Circularity Isn’t Working

And what it takes to make it work

Circular economy solutions aren’t stuck because we lack ideas or innovations. They’re stuck because we’re collaborating the wrong way.

And most of us know it.

It’s the moment in a project where all the right ingredients are there — smart people, strong intentions, solid pilots — but things stall. Or swirl. Or quietly fizzle out. You’ve generously invested time and ideas with a potential collaborator and they use it for their own gain. Or you are simply ghosted after inviting you to meet to talk about ‘doing something together’.

It’s not because people don’t care, or because they don’t want to collaborate.

It’s because the way we’ve been working together isn’t fit for the challenge in front of us right now.

We are at a unique point in time — one that Margaret Wheatley and the Berkana Institute describe powerfully in their Two Loops model.

It tells the story of how systems naturally rise, peak, decline, and ultimately die. But as one system dies, a new system doesn’t automatically replace it. Instead, it begins quietly — built by pioneers, innovators, and early adopters who recognise that the old way no longer serves us.

Image adapted from the Berkana Institute’s ‘Two Loops’ Model

The challenge in front of us is making the transition (actually, the giant leap) between the current linear economy and a circular economy.

Simply put, we are stuck in the messy middle.

The dominant take-make-waste system has started to feel the squeeze: Rising costs. Bankruptcies. Loss of profit and social licence.

Raw material prices are rising. Climate instability is disrupting supply chains. Compliance costs are ballooning. Meanwhile the constant lack of clarity, changes to expectations and significant demand on expert skill sets from regulations with global reach like the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) continue to put pressure on the exact teams and people (sustainability, innovation, finance, strategy, operations… all of us, actually) we need to navigate us all through the messy middle.

Instead of enabling bold action, these pressures often pull us backwards:

• Outsourcing thinking.

• Ticking boxes.

• Scrambling under pressure — fast.

The result?

We never have time to both find and address the root cause of the challenges we all face - because we are all stuck in a system that no longer works.

But here’s the critical point Wheatley’s model highlights:

A new system won’t scale simply because the old one is crumbling.

The stakeholders in the old system will want to hold on tight. They have a lot at stake, least of all profit, economies of scale and infrastructure, and they hold control over the resources and the rules that binds it all together.

Transitioning to emergent circular system requires connection, collaboration, and care — done differently.

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Collaborating differently is how we not only survive this messy middle moment, but thrive through it.

We’ve helped businesses use circularity not as a sustainability tick-box, but as a pathway to value creation and resilience.

We’ve looked back on our XLabs circular innovation labs where:

→ 25,000+ people engaged

→ 144 circular solutions were created

→ 88% implemented within 6–12 months

→ Across $20B in revenue

We’ve noticed that for the circular solutions to succeed — the people within them didn’t just ‘collaborate’, they are collaborating differently.

Going beyond new ideas to form networks of trust — the vital scaffolding that allows the emergent system to take root and grow strong enough to build strong communities who eventually replace the dominant one.

Digging into the research - we’ve seen there is a direct correlation between collaboration done right and productivity. When done right, collaboration:

• Generates profitable returns, not just pilot reports

• Reduces the cost and complexity of meeting sustainability, climate and circularity disclosure requirements

• Strengthens relationships between businesses, people and communities

• Improves access to the data we need to improve outcomes and impact

• Opens up new revenue streams and increases short, medium AND long-term resilience

That value lies between companies, industries, governments, communities and sectors.

Which is why collaboration cannot be an afterthought.
It’s the unlock.

Three characteristics of ‘Collaboration done right’

1. Silos are broken and productivity increases.

When collaboration goes wrong, old-school approaches are taken — RFPs, late-stage stakeholder workshops and transactional engagements. These cumbersome methods hinder problem solving because there is limited opportunity to explore what the challenge actually is, who can help, or how we solve it.

Stakeholders involved continue to apply the existing knowledge most prevalent at the time (dominant system’s logic) - resulting in either incremental or no improvement to the status quo. Old school approaches silo insight (insights are how we gain an accurate or deep understanding of something), slow execution and lead to solutions that don’t stick or work.

Simply put, these approaches to collaboration actively prevent people from accessing the information or understanding they need to solve the problem or create new forms of shared knowledge that move us forward.

Individuals within leading businesses (those demonstrating kick-arse collaboration) connect early and across their supply chain, seeding trusted relationships with partners, suppliers, and even competitors. The ‘Two Loops’ model describes these individuals as the connectors - they connect people and businesses, create clear decision rights and set shared success metrics.

The result? Delivery of outcomes that are faster, stickier, and smarter. A Deloitte study found that businesses that collaborate well report 15–20% higher productivity than those that don’t.

2. Costs and risks reduce exponentially.

No business can go circular alone. Outsourcing the design and/or delivery of circular solutions is a fast track … to failure. Old school approaches outsource the problem and identification of a solution to a third party and then wonder why the ‘solution’ delivered isn’t fit for purpose.

For circular solutions to work, they have to be designed by the people who will be necessary for their implementation. They co-design with their value chains, regulators, and customers — creating resilient, lower-cost solutions that lower compliance risk and reduce dependence on volatile, finite resources.

The result? Building understanding and capabilities across teams and businesses involved in solution co-design and delivery leads to lower costs, stronger resilience, and better performance and disclosures.

3. New forms of value are created that were previously out of reach.

McKinsey estimates circular strategies could unlock $4.5 trillion in value by 2030 — but not if we stay stuck in silos.

Leading businesses don’t think of circularity as being limited to or driven by risk management — their transition is driven by the opportunity to create entirely new possibilities.

The result? Secondary revenue streams, product-as-a-service models, and digital infrastructure that benefits entire sectors.

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We all want to collaborate differently - but too often, we get stuck in the same old, same old. And it sucks.

So if you’re sitting inside a large, complex business, and you read, hear about (or better yet, are ‘informed’ by that stakeholder in your business who seems to block all of your ideas and solutions before telling you to solve problems faster…) a kick-arse circular business model or product, you’re often left thinking:

“That looks amazing… but bringing together the people required to make a transition like that would be impossible in my team, my business, my industry… my budget…’”.

It isn’t.

Our work has shown us that successful circular solutions come from people who are capable of and confident in collaborating differently.

Most circular solutions don’t start with perfect conditions or the perfect partner.

The new product or business model you see now — clean, successful, scalable — often began as messy, underfunded, and uncertain.

We’ve seen this first-hand in how solutions are designed and delivered through XLabs, our circular innovation lab, that has connected over 25,000 people and built communities of practice within Aotearoa’s leading businesses of all sizes from Zespri to Silver Fern Farms, Rescued Kitchen, EV Martime and NZ King Salmon.

We know there are more.

Each successful collaboration contains a new way of working that can be broken down and shared. We want to do that with you here.

Because circularity isn’t just about new ideas.

It’s about better ways of working.

And better ways of working are skills we can all learn.

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That’s why we’re building a Collaboration for Circularity Blueprint

Not a summary of theories and research.

A make-it-work-under-pressure-with-actual-people-and-partners kind of blueprint.

Over the coming months, our goal is to find and share stories from the frontlines—food systems, fibre, infrastructure, tech and finance.

From founders, operators, supply chain leads, innovation managers, and sustainability teams — all building partnerships, challenging defaults, and navigating the tension between ambition and execution.

Not just polished wins. The real stuff:

• How they got buy-in

• When they pivoted

• Why something clicked—or completely fell apart

• And the critical success factors that made it actually work

Because when done right, collaboration isn’t a soft skill.

It’s a hard strategy for driving transformation at speed

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Join the Series

This is the first article in our series Making Circularity Work. But this isn’t just a newsletter—it’s a shared space to learn, build, and experiment in public —to go beyond the theory and dig into the real, behind-the-scenes stories of the collaboration behind circular projects that actually worked (and the ones that didn’t).

Because transformation doesn’t come from 200-page strategies or a shiny innovation lab. It comes from people learning how to work together—differently.

If that’s what you’re trying to do, we hope you’ll follow along. Some will be free, most will be for subscribers.

Better yet—

Get in on the ground to co-create the blueprint by joining us as a founder partner

We’d love to include your stories, challenges, and solutions in future pieces. Tell us: What’s the biggest blocker to effective collaboration you’re experiencing that needs to be challenged, and why?

Drop it in the comments or DM us.

This isn’t just a newsletter. It’s a build-in-public blueprint. One that will be built better with you.

Talk soon, Louise and Samantha