The Value Hill

Apr 15
3 min read

A circular economy tool applied in practice

In this blog post, you’ll learn how the R-strategies can be compared and how the Value Hill can support strategy development.

The Value Hill Explained – The Linear Economy

In a linear economy (see Figure 1, left side), we assign the greatest value to materials and products when they pass from the producer to the consumer—that is, when they are sold. This can be explained quite simply using the example of a car. The extracted raw materials are relatively inexpensive; they are processed into individual parts through several steps and gradually gain value. Finally, the individual parts are assembled into the finished car, and the new car is sold at a relatively high price. At this point, the monetary value we attribute to the car is at its highest. As soon as the first few miles are driven, the car has already lost value. Over the years, the car’s value continues to decline until it is eventually sold or scrapped. This happens even when the materials and functionality of the car are still largely intact. Thus, the take-make-waste process begins anew, over and over again.

Fig. 1: Value Hill by Thinkubator, inspired by Circle Economy

The Value Hill Explained – the Circular Economy

On the right side of Figure 2, you can see where the individual circular economy strategies come into play. In short, the circular economy is about retaining value. Figure 2 shows that, with the help of R-strategies, products and materials can be kept on the Value Hill and can even move further up it. To some extent, the circular economy is already being practiced today - or rather, it is still practiced as it was in the past; repairing cars, for example, is completely normal. Unfortunately, the situation is different when it comes to a T-shirt. As a rule, slightly damaged T-shirts end up in the trash these days instead of at a repair café or a dry cleaner. In a circular economy, if the tear is too large, the fabric is still reused and repurposed, for example, into a cleaning cloth. (For further examples, see the blog post “9R Strategies”)

The arrangement of the R-strategies along the Value Hill shows that different strategies should be chosen depending on how high the value of the product in question still is. An intact wine bottle, for example, should ideally be reused as a wine bottle, and only when it can no longer be used as a wine bottle should it be melted down and recycled. The arrangement of the R-strategies has a second meaning: the higher up on the Value Hill it is, the less additional energy and resources are required for implementation. Recycling is located at the very bottom right, which means this strategy should be applied last, when the condition of the product in question no longer allows for any other strategy—recycling as the last option.

The example of glass clearly illustrates that we still live in a largely linear system that ultimately forms a recycling loop. This loop must be assessed differently for each material; for glass, however, it is very, very water- and energy-intensive.

Applying the Value Hill

The Value Hill was developed to help companies position themselves and understand and refine their strategies and business models. This enables improvements to material cycles and fosters new partnerships. We use this tool, among other things, to illustrate the cascade of R-strategies and to channel creativity toward the higher-level R-strategies during workshops. The division into pre-use, in-use, and post-use is very helpful for sketching out business models and highlighting their impact (the white arrow). The higher this arrow is, the better.

The Value Hill is also intended to help companies finance their circular business model:

Although the opportunities for investing in circular business models are widely available, current investment methods do not match the needs of these particular businesses. Businesses need to create an attractive business model for financiers, and financiers need to change the way they perceive the risks and opportunities associated with these models.

- European Circular Economy Stakeholder Platform

The Value Hill was developed by the Sustainable Finance Lab, Circle Economy, Nuovalente, TUDelft, and het Groene Brein.

If you want to dive deeper and explore further circular economy tools and frameworks, we recommend you to keep on reading and check out our blog posts about the 9R-strategies, the Butterfly Model and the APV Framework.