Planned Obsolescence and The Linear Economy

If you have ever purchased a product only to find it break soon after the warranty has ended, you know the frustrations of planned obsolescence. According to Investopedia planned obsolescence is:

“A strategy of deliberately ensuring that the current version of a given product will become out of date or useless within a known time period. This proactive move guarantees that consumers will seek replacements in the future, thus bolstering demand.”

The process of planning for obsolescence not only hurts the consumer experience with a brand - leading to lower lifetime value but is also terrible for the environment.

When products are designed to break, the potential of their raw materials is not fully realized and instead often end up in landfills. Fresh raw materials are then required to manufacture new products. It’s a vicious cycle, with the environment taking the dual impact of raw materials extraction as well as an increase in waste.

With so many downsides, why do good companies focus efforts on making their products worse?

The Linear Economic Model

This is known as the linear economy, where raw materials are extracted and made into products that are then purchased, consumed and, ultimately, discarded. This process is often referred to as “take-make-waste”.

In a linear economy, value is created by producing and selling as many products as possible. This model grew out of the Industrial Revolution of the late eighteen hundreds. While companies have found ways to make each step the process more efficient, little has changed to update the incentive structure put in place by take-make-waste.

It is this incentive structure that drives brands to do the illogical and design products to be worse, not better - hurting consumers and the environment in the process. It would be beneficial to all if these efforts were focused on a fair value exchange where consumers, brands and the environment could co-exist together in a beneficial way.

A New Way Forward

Luckily, consumers are voting with their dollars and demanding more from their products and the companies that produce them. We are currently undergoing a flight to quality in consumer goods that benefits companies that produce high-quality, long-lasting products — creating loyalty and ultimately driving an increase in lifetime value.

Additionally, sustainability is becoming a topic of increasing importance, with consumers again opting to purchase products from companies that produce products in a sustainable way and work to increase recycling.

This begs the question, if brands need to invest more in sustainable production while creating products that last longer, how can these brands stay in business? A new system is needed where value is exchanged between brands and consumers throughout a product's life and, finally, repaired, upcycled or recycled.

In Part 2 of this series, Circling in on Circularity, we will look at a new economic model powering 21st century business growth.