Category Archives: Design & Innovation

Discovering new-found respect for philanthropy

I’ve always had a bit of a downer on corporate philanthropy, having tended to equate it with first generation sustainability strategy and practice – a model based on ‘giving something back’ that often pays little or no heed to what the corporation takes in the first place. In so doing, I’ve always felt, it tends to perpetuate the framing of sustainability as a discrete agenda, separate from core business.

Reflecting further on the latest Acumen Debate hosted by EY earlier this month, however, I’m thinking it’s maybe time to revise that view.

The spur for this reflection is a thought-provoking comment made by Sam Parker, director of the Shell Foundation, in speaking against the motion that, “This house believes that impact investors don’t need to compromise between financial and social returns.”

He was following on from – and directly responding to – the argument made in favour of the motion by Diana Noble of CDC, the British government’s development finance institution. Her experience, she said, proved there was no compromise. CDC has achieved an average 6% return on investments in its portfolio of ‘base of the pyramid’ (BoP) enterprises over the last 20 years; and on her regular visits to Africa and South East Asia, she could not go anywhere without seeing the benefit of businesses, “that simply wouldn’t exist without CDC.”

The essential thrust of Parker’s retort was that’s grand, but how did those businesses get to a place where they became an investible proposition for the likes of CDC? “Somebody somewhere had to do the heavy lifting,” he said. “Somebody somewhere paid for that.”

And you know what? I think he’s right.

If you think about it in terms of something like Ichak Adizes’ famous corporate life-cycle model, impact investors like CDC might only really enter the fray once an enterprise has reached ‘adolescence’ and the risk of ‘infant mortality’ has passed.

Work backwards through the ‘go-go’, ‘infancy’ and ‘courtship’ stages – where ultimately the business idea is but the proverbial twinkle in the parent’s eye – and, chances are, you’re going to be looking at investors with a very different profile.

Go back one step, and you might be looking at investors prepared to work at breakeven; go back two and they’re maybe willing to put up with a 50% loss; go right back to the outset, and you’re probably looking at pure philanthropy – the, “early-stage patient grant,” as Parker put it, without which, “there would be nothing to invest in.”

For me, that logic felt hard to refute and, whereas the show of hands at the end of the event appeared to show several of the audience metaphorically crossing the floor from the ‘opposed’ to ‘in favour’ camps, much to my surprise, I found myself moving in the opposite direction.

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A more beautiful question

For a while now, I’ve been searching for what author and journalist Warren Berger calls ‘a more beautiful question’ – the kind of question that, with elegant simplicity, can encapsulate a wealth of ideas, concepts and possibilities; that can help to shift the way we perceive or think about something; and that has the capacity to spark breakthrough ideas.

While that kind of preamble almost inevitably sets me up to fail, I think I may finally have fashioned one worth sharing, and it goes like this:

What if business reoriented itself as society’s greatest problem solver?

I use the word “fashioned” advisedly, of course. I don’t claim any originality, save perhaps for the particular combination of words. The ideas and concepts that underpin it are many, varied and long-established – the self-same ones that have preoccupied me (and many others) for years now.

While people may choose different labels to describe the conceptual space here – be it sustainability, creating shared value, purpose-led business, inclusive capitalism or whatever – they are fundamentally united by a common set of assumptions:

  1. That, whatever your views on the role of business, and the capitalist system more generally, in creating many of the problems and inequities we see today, it’s also essential to solving them (as evidenced, for example, by the inclusion of business as a key partner in achieving the UN’s 2030 Sustainable Development Goals);
  2. That business, and again capitalism more generally, is perfectly capable of this kind of ‘reboot’ (indeed, as powerfully argued by some smart folks at McKinsey, creating and scaling solutions to human problems may always have been at the heart of how and why capitalism works);
  3. That the fates of business and society are interdependent and it’s in the best interests of both that business steps up to assume this role as a partner of choice in solving social problems (whisper it quietly, but business-based approaches are frequently more effective than government or charitable aid in reducing inequality).

What this all boils down to – what we arguably lost during the cult of maximizing shareholder value, and what we are now slowly rediscovering – is the understanding that the long-term prosperity of business and society go hand-in-hand. Business cannot, and should not, divorce its success from the health and resilience of the social and ecological systems that give it life.

Moreover – in line with Peter Drucker’s famous dictum that the only purpose of business is to create a customer – the idea of seeing business first and foremost as a problem-solving engine, rather than solely a vehicle for maximizing short-term shareholder gain, would seem a much better and broader reflection of what successful companies actually do.

With specific regard to the third point above – and offering an inkling of what reorienting business as society’s greatest problem solver might look like – probably the greatest joy of my current role is the exposure I get to the work of some outstanding social entrepreneurs.

As a firm believer that the sustainability imperative represents the innovation opportunity of a lifetime, understanding and telling their stories (and EY’s role in helping them build the internal capabilities to extend their reach and impact) is something I find endlessly fascinating. After all, in many ways, social entrepreneurs are the purest incarnation of purpose-led business – a mash-up of the social mission of a non-profit with the market-driven approach of business to innovate new products, services or approaches to tackling society’s most pernicious problems.

Take Jibu, for example, a clean water franchise business in East Africa, conceived by brothers Galen and Randy Welsch as a better way to tackle the problem of affordable access to safe, clean drinking water. Its ingenious business model equips local franchisees with advanced, solar-powered filtration equipment that can clean locally sourced water and make it available at a fraction of the price of other bottled water – each franchise effectively becoming a water purification plant for the surrounding community.

More than the question of affordability, the structuring of the business as a franchise also neatly addresses the problem of sustainability (in terms of long-term viability). Whereas donor-funded water schemes often suffer from a lack of local ownership – as a consequence of which, around half of them fail within a couple of years – every Jibu franchise is run by a member of the community it serves.

This puts the very people who benefit from the service in charge of running it, combining their need for clean water with their desire to control their own destinies and build a more prosperous future for their families. It’s a virtuous circle that should see the growth of the business not only provide permanent access to safe water for more than a million people by 2020, but also create 8,000 jobs, in turn providing 8,000 families with a decent and reliable income.

What makes stories like Jibu’s more compelling still is the fact that, more often than not, social entrepreneurs are achieving this kind of success against a backdrop of massive resource constraints. These are master hackers, and you have to wonder what might be achievable if big business took the time to observe, draw inspiration and reverse innovate from their approaches.

Of course, encouraging business-at-large to do so is precisely the purpose behind searching for (and hopefully finding) that more beautiful question in the first place.

Mindset matters

Just over a year ago now, I wrote about the vital importance of ‘metaskills’ as an (possibly even the most?) important avenue of intervention if we are to equip young people with the chops to succeed in an ever more complex and rapidly changing world.

A good place to start this post is exactly where I left off last time, with a thought-provoking extract from Marty Neumeier’s excellent book, Metaskills: Five Talents for the Robotic Age.

Today we find ourselves caught between two paradigms – the linear, reductionist past and the spiraling, multivalent future. The old world turned on the axis of knowledge and material goods. The new one will turn on the axis of creativity and social responsibility. To cross the gap we’ll need a generation of thinkers and makers who can reframe problems and design surprising, elegant solutions. We’ll need fearless, self-directed learners who embrace adventure. We’ll need teachers, mentors and leaders who understand that mind shaping is world shaping – who give learners the tools they’ll need to continually reinvent their minds in response to future challenges.

If you’re anything like me (and since you’ve found your way to this post, I’m guessing you are) you’ll be nodding in vigorous agreement with everything Marty says.

I mean, think about it…

Kids starting school in 2015 probably won’t retire until 2070. Our education systems are meant to be preparing them for this life ahead, yet we can’t even predict with certainty what the world will look like five years from now. The U.S. Department of Labor apparently estimates that 65% of children currently in grade school will end up in job functions that don’t even exist today. Meanwhile, research by the Oxford Martin School on the future of employment suggests that as many as 50% of current corporate occupations will disappear by 2025 as a result of computerization.

How on earth are we supposed to help our children prepare for, and succeed in, such an unpredictable world? For folks like Marty, education gurus like Sir Ken Robinson, and my friends at the Network For Teaching Entrepreneurship (NFTE), the answer is as plain as day…

The secret has to lie in fostering agility, adaptability, and applied knowledge and imagination. That means helping young people to develop typically entrepreneurial skills and behaviours such as initiative and self-direction, communication and collaboration, and creativity and problem solving — fundamentally human characteristics that can help our kids to stay ahead of the ‘robot curve’ (as Marty puts it), to be able to adapt to constantly changing circumstances, to better recognise opportunities, and to remain confident and resilient in the face of challenges.

The teaching of these very sorts of skills and behaviours – fully integrated into the school curriculum – is one of the main reasons my wife and I chose our daughter’s school, and I’m constantly reminded of the difference it can make. Every year, I take part as a judge in the school’s Dragon’s Den-style event (Shark Tank in the US?), where girls as young as six pitch their innovative ideas for new products or services. They never cease to amaze me – not just with the quality of their ideas, but with their confidence, self-assurance and ability to think on their feet – and it seems so obvious that it’s this emotional intelligence, more than their recall of history or trigonometry or whatever, that will stand them in greatest stead in the future.

Cards on the table, this is a fee-paying school and I fully appreciate that these sorts of programs are a luxury not afforded to the vast majority of students. But then that’s precisely why I’m so excited by NFTE’s work on an Entrepreneurial Mindset Index – an emerging methodology for measuring and evaluating the presence of an entrepreneurial mindset among young people and, potentially, to influence policy in such a way that teaching it is given much greater prominence in all our schools.

I’m excited because, IMHO, learning about this stuff shouldn’t be the exclusive preserve of a privileged few. Mindset matters. It should be available to everyone.

If you’re interested in learning more, NFTE is hosting an Entrepreneurial Mindset Summit in New York on 27 October. Check it out.

Screw AppleWatch. Give me LYF!

Lordy, is it really 4 months since I last posted? Shame on me!

Well, it’s only fitting that I should break such a prolonged period of radio silence with news from my favourite discovery of 2014: the brilliant LYF Shoes.

If you haven’t come across this little gem before, clear 15 mins in your calendar to watch LYF founder Aly Khalifa’s talk from the Sustainable Brands conference in London last November. Seriously, do it. The design – not only of the product, but also the entire ecosystem and customer experience it spawns – is genuinely breathtaking in its scale and ingenuity and, as you pause and reflect on it, you’ll wonder why shoes would ever be made any other way in this day and age.

That’s why I couldn’t be happier to be one of the lucky few to be involved as an LYF Pioneer, shortly to receive my ‘LYF Fit Kit’ and begin the journey towards my first ever pair of custom-fit, one-of-a-kind, made-to-be-made-again footwear.

This may be the first time in my life that I’ve ever truly been an Early Adopter. I couldn’t give a stuff about all the hype surrounding the latest gadgets, like the AppleWatch, but LYF is different.

You see, I’m a sucker for anything to do with sustainability-inspired innovation, and the chance to play some small part in the development an enterprise with the potential to disrupt an entire industry is simply too good to miss. I also happen to be 6’7″ with size 14 feet, which means I’ve struggled for pretty much all of my adult life to find clothes – and especially shoes – that fit.

LYF, with me at least, has hit the mother of all sweet spots!

I’ll let others rave about the opportunity to design their own uppers and create a truly individual fashion statement (I am, after all, a 42-year old straight white male, which makes me something of a fashion vacuum).

What really intrigues me is the chance, for the first time ever, to own a pair of shoes that has been individually customised to the length and width of each of my feet (that’s right, folks, different sized feet receive different sized shoes!); more than that, to own a pair of shoes that will actually capture biomechanical data on the way I walk, using a device embedded in the heel, so that the design of the next pair I buy will be refined to fit even better; and all serviced by a closed-loop, circular business model that eliminates harmful substances from assembly, uses 100% recyclable materials, and spurs local economic development by encouraging micro-enterprises to spring up and fulfil all parts of the value cycle from Original Equipment Manufacture to assembly and retail.

Normally it’s my missus who has the exclusive preserve on getting excited about a pair of shoes but, on this occasion, I’ll gladly buck the trend.

Sustainability-inspired disruption: LYF Shoes

Traditional shoe-making is a nasty business, explains a video from LYF Shoes.

Cheap raw materials, exploitation of foreign labour, toxic adhesives and mega-heat ovens used in assembly, wasteful packaging, long-distance shipping and distribution… That’s a very long list of negative effects for the making and use of a product that, in the vast majority of cases, is ultimately destined for landfill.

Of course, all of this makes it an industry ripe for disruptive innovation. There has to be a better way, right?

Well, LYF Shoes (Love Your Fit. Love Your Fashion. Love Your Footprint.) looks like they may have found it – not just a product with a sustainable twist (a la Oat Shoes), mind you, but an entire sustainable system of design, production, distribution and consumption. A new and disruptively innovative business model.

Ready for the whistle-stop tour? Here are some of the headlines, viewed through the lens of the fundamental principles of design for sustainability, as described in my book

Clever!

Material inputs: How might you redesign products and processes to reduce the amount and types of materials used? Are those materials recyclable, so that waste is no longer waste, but the food for another process? Could your raw materials come from someone else’s waste (or your waste become someone else’s raw material)?

LYF shoes are designed from the ground up to use 100% recyclable materials – from the recycled rubber and plastics in the sole and ‘performance plate’, to the cork insoles (the cork coming from recycled wine bottles), to the all-natural uppers. What’s more, those uppers are precision-cut and printed on-demand, using an all-dry digital printing process, so as to minimize ink and material waste.

Very clever!

Modularity and longevity: What is the expected life span of your product? How easily can it be repaired, updated or put to alternative use? How easy is it to dissemble the product into its component parts to aid that repurposing/updating/re-use?

LYF shoes are specifically designed for ease of assembly and disassembly – five component parts that fit together entirely without glue. That makes it a doddle, either to extend the life of the shoe by replacing a single worn component (no need to throw the baby out with the bathwater) or, if the shoe has given up the ghost completely, to return it to source to be recycled and turned into a new shoe. 

Cleverer still!

Closing the loop: How can you make use of reverse logistics to reclaim discarded outputs and turn them into new inputs? How close are the points of production and consumption? Can these distances be shortened to further increase the efficiency of your value cycle?

Here’s where it gets cleverer still. The simplicity of design and assembly – no glue, no ovens, no screen printing – enables a decentralized model of production and distribution. It paves the way for local microenterprises to spring up to fulfil just about every part of the value cycle – whether that’s Original Equipment Manufacture (OEM – i.e. manufacture of the component parts) or the job of assembly and disassembly at retail.

What’s more, this model slashes the costs and impacts of distribution and packaging by synchronising the points of production and consumption. And with customers incentivised to return end-of-life shoes, by virtue of a buy-back scheme (those shoes easily disassembled at the point of return and their components sent back to OEMs for remanufacture), the LYF model creates a ‘closed loop’ at a local level.

Cleverest of the lot!

Imagine you had absolutely no knowledge of all this ‘under the hood’ stuff. Instead, just pause and reflect on the entirely different customer experience it creates:

  1. You get to design your own shoes – before they’re made! Initially choosing from a range of styles and textile patterns, as the business grows you’ll eventually be able to upload your own print for a truly individual fashion statement. And you get to watch those shoes being made – at the point of retail, in front of your very eyes, in a matter of minutes.
  2. The shoes you receive won’t only be more to your taste in fashion, they’ll be functionally superior too – custom fit, more comfortable (and only getting more comfortable with every subsequent purchase, as an embedded digital capture device tracks biomechanics and builds a user profile that can be used to refine the design).
  3. And if, for whatever reason, those shoes just aren’t doing it for you any more – hey, no problem! Simply return to the store and either have them ‘upgraded’, or trade them in for a new pair, safe in the knowledge that every ounce of materials will go towards make another pair of shoes for someone else.

Seriously, what’s not to love? And if this sort of business model innovation floats your boat as much as it does mine, don’t be shy – go forth and shout about it! Here’s a wee video worth sharing as an introduction to/summary of the LYF story:

Generation Jobless: How do you make a dent on youth unemployment?

Add together not only those officially classed as ‘unemployed’, but also those who have simply given up looking for work and those who are part of the ‘working poor’ (i.e. earning less than $2/day), and the number of young people between the ages of 15 and 24 without productive employment apparently reaches an eye-watering 600 million.

That’s one in two of the total global population of 15-24 year olds. If they were citizens of a country, it would be the third most populous in the world, behind only China and India.

Gross oversimplification though it is (we are, after all, talking about the product of a major collision of demographics and global economic recession), my inner MBA can’t resist the temptation to categorise possible interventions using the time-honoured 2×2 matrix…

tackling youth unemployment 2x2

Boxes 1 and 2

Looking through the lens of sustaining innovation (improvements within the current paradigm), and seeing youth employment as predominantly a supply-side problem (an insufficiency of appropriate skills), would suggest interventions to improve young people’s readiness for the world of work.

That might include anything and everything from improving access to a quality education for people from disadvantaged backgrounds (creating equity of opportunity), to greater availability of internships and apprenticeships (providing more practical work experience), to better careers advice and guidance on things like CV writing and interview technique (improving chances of converting opportunities).

[A brief aside: equity of opportunity and richer work experience are where initiatives like the Akasa Young Pioneers program – which also happens to be linked to sustainable development – are to be wholeheartedly welcomed and supported, IMHO.]

Viewed as predominantly a demand-side problem (an insufficiency of appropriate jobs) might direct one towards equipping young people with the requisite skills and knowledge to consider setting up their own business, as an alternative to the ‘traditional’ corporate career path.

Indeed, development of a more entrepreneurial mindset might well be a bridge between supply and demand-side views of the problem. As EY Chairman and CEO, Mark Weinberger, alluded to in a recent piece for Forbes, studies suggest that the sorts of skills and behaviours typified by entrepreneurs – e.g. initiative and self-direction, flexibility and adaptability, communication and collaboration, and critical thinking and problem solving – are precisely those that employers currently deem most lacking among millennials.

All of the above are definitely areas where, as Mark says, business can and should be looking to lead and make a tangible contribution. That said…

Boxes 3 and 4

I can’t shake the feeling that the biggest inroads will only be made with systemic change – tackling profound questions like ‘Are we even teaching our kids the right stuff in the first place?’ and ‘Do our tax and economic policies really incentivise job creation?’

Admittedly I’m no expert, but I’ve unsurprisingly found myself nodding in vigorous agreement with a couple of passages that I’d like to share with you, the first of which comes from Metaskills: Five Talents for the Robotic Age – yet another outstanding and profoundly thought-provoking book from the brilliant Marty Neumeier (@MARTYneumeier):

“With the exception of language and math basics, the subjects we now teach at school are the wrong subjects. The right subjects – the ones that will matter in the 21st century – are metaskills. Students today should be learning social intelligence, systemic logic, creative thinking, how to make things, how to learn. What we now think of as subjects – sociology, trigonometry, physics, art, psychology and scores of others – should become ‘drill-downs’ from these metaskills – specific disciplines, designed to explore the higher order subjects…

Today we find ourselves caught between two paradigms – the linear, reductionist past and the spiraling, mutli-valent future. The old world turned on the axis of knowledge and material goods. The new one will turn on the axis of creativity and social responsibility. To cross the gap we’ll need a generation of thinkers and makers who can reframe problems and design surprising, elegant solutions. We’ll need fearless, self-directed learners who embrace adventure. We’ll need teachers, mentors and leaders who understand that mind shaping is world shaping – who give learners the tools they’ll need to continually reinvent their minds in response to future challenges.”

The second passage comes from Walter Stahel, founder director of The Product-Life Institute, in a contribution to A New Dynamic: Effective Business in a Circular Economy, published by the Ellen MacArthur Foundation:

“Sustainable taxation should reward desired developments and discourage unwanted effects of activities. In a sustainable economy, taxes on renewable resources, including work – human labour – are counterproductive and should be abandoned. The resulting loss of state revenue could be compensated by taxing the consumption of non-renewable resources in the form of materials and energies, and of undesired wastes and emissions. Such a shift in taxation would reward a circular economy with its low-carbon and low-resource solutions.”

Having always felt that the tax system would provide a far more effective tool to incentivise the right behaviours than the blunt instrument of regulation, that makes intuitive sense to me. What do you think?

Sustainable growth: an oxymoron?

If you haven’t come across Mike Townsend (CEO of Earthshine), before, then look him up (@mike_earthshine on Twitter). Recently, I’ve read a couple of great pieces by him, which have inspired me to write this post – an attempt to get to the nub of whether there is such a thing as ‘sustainable growth’?

We all know the problem, right? In our bones, we know that continuous, conspicuous consumption and the economists’ nirvana of infinite growth just isn’t possible in a world of real physical limits. On our current trajectory, reports estimate that not even two planets’ worth of natural resources would be sufficient to meet our material needs by 2030.

As Mike suggests, there can only really be two answers to this dilemma: either to make growth sustainable, or to make de-growth stable. For business, the preferred answer is naturally the former. But what exactly does that entail?

For starters, it has to mean distinguishing between good and harmful growth and, in my book, growth that pays no heed to the people and resources impacted by its generation is harmful growth. In this scenario, business is the enemy, continuing to exploit and deplete those resources in the narrow pursuit of maximising short-term shareholder returns.

By contrast, growth that focuses on real, life-enhancing and truly value-adding goods and services – conceived and delivered in recognition of finite ecological limits – is good growth. In this scenario, business views acceptable, long-term returns as the by-product of serving a higher purpose and, rather than being the enemy, is potentially the saviour – the only institution pervasive enough to be capable of concerted, cross-border action to deliver social progress and preserve the environment.

Only good growth, IMHO, can create long-term value for all stakeholders. Only good growth is socially meaningful. And only good growth is capable of being supported by natural systems.

So how do we get more businesses to cotton on to this and change the way they operate?

Show them the size of the pot of gold at the end of the good growth rainbow!

Show them the mounting evidence from multiple studies, like Havas Media’s Meaningful Brand Index and the Stengel 50, for example, which correlate the pursuit of shared value with superior financial performance (superior to the tune of 120-400% versus the general market, depending on which study you look at). Regale them with real-life case studies that demonstrate, as Jim Stengel brilliantly puts it, that “maximum growth and high ideals are not incompatible, they’re inseparable.”

Show them, too, the research conducted by McKinsey and the Ellen MacArthur Foundation, which calculates that there’s more than US$1tn of value (and 100,000 new jobs) to be created by 2025 by adopting the principles of the circular economy. Regale them with real-life examples of these principles in practice – for example how the combination of biomimicry-inspired innovation and reverse logistics developed over the first decade of Interface’s Mission Zero strategy not only cut greenhouse gas emissions by 94% but, over the same time period, helped to increase sales by two-thirds and double profits.

Companies like Interface – well on the way to eliminating any negative impact on the environment by 2020, while substantially growing their business and increasing its resilience (through decoupling that growth from the wellhead) – clearly show that sustainable growth needn’t be a contradiction in terms. But they also show that the activities of the vast majority of companies still falls woefully short of what is required to achieve it.

As ever, it’s worthwhile remembering the sage words of Paul Polman with which he launched Unilever’s Sustainable Living Plan, explicitly framing it, “not as a project to celebrate, but a new business model to implement.”

Sustainable growth is possible. It just won’t be achieved by tinkering with existing business models to make them a little bit less bad. It requires businesses to do more and, if research into the potential of the circular economy is accurate, there are more than a trillion reasons for them to want to.