The Why and How of Change
Stuffed channels, diluted brands, enshittified platforms: each traces back to wasteful production. The result is a culture-wide malaise. Circularity cuts the knot.
As we mentioned at the start of this season, PwC's 2025 survey showed four in ten chief executives believed their company would not be viable in a decade if it stayed on its current path. Nearly two-thirds had already taken a significant step to change how their company makes money. Yet new businesses accounted for only about 7 percent of their revenue.
Christian Rishel
There is information value in that misalignment. Change for its own sake is a poor reason to put a company through the wringer, and most CEOs know it. They are responding to something real. So it is fair to ask: how come? What are they reacting to? And what would it take to fix?
Last week we examined the forces of entrenchment that enervate firms. This week I want to look for the underlying cause of those forces. If there is a single root, Taiichi Ohno named it: overproduction. It is a linear disease, and an addictive one. That is the why. The how follows from it: one transformation, aimed at the source of the problem.
What it costs the producer
"There is no waste in business more terrible than overproduction," Taiichi Ohno wrote. He called it "our worst enemy," because it hides every other kind of waste. A warehouse full of goods looks like wealth. Often it is a problem nobody has had to face yet.
Ken Webster, one of the circular economy's pioneers, argues that we still live in the world built after the Second World War. The war left the industrial economies with extraordinary capacity. Plastics output in the United States rose 300 percent during the war alone. When peace came, the plants needed new customers. By 1967 the career advice to a young man in The Graduate fit in a single word: "Plastics." Material was cheap, the barriers to making things fell, and capacity ran ahead of anything people were asking for. So demand had to be stimulated to keep up. "Goods are plentiful," John Kenneth Galbraith wrote in 1958. "Demand for them must be elaborately contrived."
As crazy as it may seem in hindsight, the march toward overproduction followed sound logic. As Clayton Christensen taught us in our summer reading, good management in the wrong circumstances can do more damage than bad management. Each push to keep the plant busy made sense on its own. The trouble is what the pushes add up to.
Christian Rishel
The first cost is myopia. A firm that must keep volume growing will trade margin to get it. It puts its best people on sustaining innovation, the next model year, because that is what moves the plan. Over time it loses its capacity for self-disruption, just as the cycles speed up. In 1964 a company on the S&P 500 could expect to stay there for 33 years, on average. By 2016 the figure was 24, and Innosight expects the decline to continue.
Christian Rishel
The second cost is distance from the customer. A firm that produces ahead of demand has to put the extra somewhere. It stuffs the channel, shipping more to distributors than buyers will take, and pays for it later in returns and discounts. It stretches the brand across more product than the promise can carry. In 2018 Burberry reported destroying £28.6 million of its own goods in a single year rather than see them sold cheap. That is a company paying to protect its brand from its own output.
The third cost is the race to the bottom. When everyone has more capacity than customers, products converge, and industries consolidate. Where competition survives, it is fought on price more than on product. Commoditization is the predictable consequence of overproduction.
What it costs the customer
The customer pays too, and not only in money.
Take Enshittification, Cory Doctorow's word for the decay of the platforms. In its everyday sense it describes a sequence: a company overinvests to acquire customers, adjusts the product to capture them, then squeezes them once they are captured. It is overproduction imposed on the customer base. Customers are bought faster than the product can earn them, and the bill comes due later. Where the squeeze ends is Manufactured Dependence: the customer now serves the firm.
Christian Rishel
There is a subtler cost. Lifestyles stop evolving. Cars are the clearest case. Each model year adds features, and cost, while the life the car promises stays the same. Cars last longer, buyers drift to the used lot, and the maker turns to selling subscriptions for features already built into the car you bought. The product line keeps moving. The promise has stalled.
People notice. Some of them become punks of a new kind: they mend, they keep, they cancel, and they leave without a word. They would welcome a brand on their side. So far, few have offered.
Christian Rishel
What it costs everyone
Add it up across an economy and Ohno's "vicious cycle of waste generating waste" becomes visible at scale. Gluts lead to markdowns, markdowns to write-downs, write-downs to the next push for volume. Secondary markets ease the glut, then invite more of it. As one expert told The New York Times, it's "like adding lanes on the highway. It will relieve traffic, but it also invites more traffic."
Capital and talent spent pushing volume are not spent renewing the offer. That is part of why, as we saw last week, so many leading firms are entrenched rather than renewing.
Christian Rishel
Overproduction also leaves behind things nobody ordered: carbon in the air, plastic in the sea and our bodies. Donella Meadows explained why such effects are so hard to undo. Like water in a bathtub, they keep rising as long as more pours in than drains out. Slowing the tap only slows the rise.
Seen this way, the list of ills reads as one condition. Channel stuffing, brand dilution, enshittification, the glut: each is what a firm does with output it made faster than demand would take it.
One cause, one remedy
Overproduction is a linear disease. It runs in one direction, from plant to shelf to landfill, and inside the linear model its only remedy is more of the same: another promotion, another model year, another acquisition push. That is what makes it addictive. Edward Bernays saw it in 1928. Mass production, he wrote, "is profitable only if its rhythm can be maintained." Every push to keep the rhythm makes the next one necessary.
The good news is that a single cause permits a single response. Ohno attacked overproduction inside the factory walls, and the gains turned up everywhere: in cost, in quality, in the way people worked. Circularity extends the same attack across a product's whole life, beginning at the Last Moment of Truth (LMOT), where the first life ends.
It helps to be precise about the words. The circular economy is a model: the state we want to reach. Circularity is the organizing principle that gets us there: the systematic elimination of waste for the purpose of economic and environmental prosperity. Quality had Lean. Circularity needs a method of its own.
When a company earns from how long and how well its products serve, rather than from how many it ships, the incentive to overproduce goes away. The channel no longer needs stuffing. The brand no longer needs protecting from its own surplus. A customer is worth more kept well than squeezed. One change at the root, felt everywhere.
Circularity transformation is not a system, but a method. A system implies a proof that is not yet on offer. A method is a way of proceeding, one that you can apply to your work today. Ohno put it best: "what is important is not the system but the creativity of human beings who select and interpret the information." He also said his approach to change required "a revolution in consciousness." The rest of this season asks what circularity's equivalent would be, and tests the Circudynamics method in public as we go.
The takeaway
Overproduction is one waste wearing many disguises. Find the cause, and you can end the charade.
Next week: A Slip of Change.
💬 Discuss: mention @christian@circudyne.com on Mastodon
Below the line are practitioner insights reserved for Dynamo members — the people building plenty with us. If you're reading as a guest, you're welcome here. But the best seats are saved for the builders. Join the Dynamos
