What if impact entrepreneurship and corporate intrapreneurship were a genuinely two-way street?

The interconnected challenges of the climate emergency and deepening social inequality are the symptoms of a system that doesn’t fully account for impacts on people and planet. Historically, the fundamental purpose of creating a product or service has been to create profit — not only that, but to pursue maximum profit for a small group of people, which necessarily depends on externalizing social and environmental costs.

As pressure mounts on all sides, there can be no long-term future for any business that’s seen to undermine the health of the very social and environmental systems on which we all depend. The tables must turn if business is to live up to its claim to be part of the solution. It must reimagine what it’s for, reframing the fundamental purpose of business as profitably solving the problems of people and planet, and not profiting from causing them.

As Paul Hawken writes in Regeneration, if we’re to succeed in engaging the bulk of humanity in ending the climate crisis, we need to create a world worth saving — one that addresses current human needs and injustices, not an imagined dystopian future. This means enshrining social justice, economic inclusion and environmental regeneration as intertwined design values and operating principles for everything business does. It means innovating new products, services and business models as the vehicles for advancing these principles, and solving the defining problems of our time. And it means redefining success, with profit not an end in itself, but the means to scale (and what flows from scaling) equitable access to those solutions.

This is where impact enterprises already live. Impact entrepreneurs make it their business to identify the causes of exclusion and marginalization; to develop, test and scale new value propositions with the potential to disrupt that status quo; and to forge a new state that creates long-term value for society and builds the ecosystem to sustain it. If impact enterprises signal the future of business — and I believe that they do — then we should be doing everything in our power to see that they achieve scale and prominence as quickly as possible.

Helping impact enterprises to reach true scale and prominence isn’t just an end in itself, though. Nor should it be seen or understood as a one-way act of benevolence. That’s because providing undeniable examples that there’s a different way to run successful businesses that solve society’s toughest challenges is also the means to achieve something bigger — to encourage businesses of all sizes to think and act more like impact enterprises.

When the ingenuity of social innovators meets the scale of large corporations, that’s when we shall finally reach a tipping point. So, to paraphrase JFK, let’s not only ask what large corporations can do for impact enterprises. Let’s also ask what impact enterprises can do for large corporations.

There’s a reason we find many of the best ideas and boldest actions for tackling inequality among impact enterprises operating in low-income and marginalized communities. It’s because necessity is the mother of invention. This is where people are at the sharp end, not only of inequality, but also the impacts of climate change that threaten to deepen it still further.

Likewise, there is a reason the Sustainable Development Goals (SDGs) also go by the shortened moniker of the Global Goals. While challenges are certainly more acute in low-income countries — where billions of our fellow human beings are still denied equitable access to life’s essentials, such as clean water, reliable energy and dignified sanitation — inequality is not unique to those contexts.

Feelings of being left behind by the forces of globalization, and frustration at the lack of meaningful action to avert runaway climate change, are rife throughout societies all around the world. If business truly wants to be seen as part of the solution, and not the cause, then it must recognize the interdependence of economic, social and ecological systems. It must understand that all three can only thrive when social justice and environment regeneration are embraced as essential to long-term economic prosperity and business success.

For corporations wishing to better understand how to weave those concerns into every aspect of their decision-making, who better to work with and learn from than impact enterprises?

What if big business reverse innovated from impact entrepreneurs to create systems change?

A blog from Mighty Ally caught my eye, this week, for its very readable and insightful treatise on the need for focus if social enterprises are to achieve game-changing scale. It struck a chord with me for a couple of reasons…

Firstly, one of its most interesting insights is that, rather than pursuing the conventional advice of going after multiple sources of funding, apparently 90% of the social enterprises that have managed to scale to >US$50m in annual turnover have done so by raising capital from a single type of funder. That started me to thinking – what if more big businesses applied their considerable knowledge and resources to helping build the capacity of the kind of impact entrepreneurs EY supports through the EY Ripples program? Wouldn’t that be one of the most powerful ways at their disposal to evidence their commitments to building more just and sustainable businesses and societies, and to position business as a solution rather than a cause of the immense global challenges we face?

Secondly, while reading the blog, I heard echoes of Getting Beyond Better – an excellent 2015 tome, sub-titled ‘How social entrepreneurship works,’ co-authored by Roger Martin and Sally Osberg (respectively the former dean of the Rotman School of Management and the former CEO and President of the Skoll Foundation).

In it, they present (for me) one of the most compelling descriptions of the DNA of impact entrepreneurs. In effect, they pitch impact entrepreneurship as a verb – i.e., what distinguishes it from merely advocating for social justice, or building a business that just so happens to help the world while driving profit, is its steely focus and deliberate action to systemically and permanently transform a socially inequitable condition:

• Impact entrepreneurs explicitly set out to do this by…
  • Identifying an unjust equilibrium that causes exclusion, marginalization or suffering
  • Developing, testing, refining and scaling a proposition with the potential to disrupt that status quo
  • Forging a new stable state that unleashes new social value and builds the ecosystem to sustain it
• To achieve all that, they generally have to maintain a very specific focus, and know their fields and communities really well, which…
  • Makes them great sources of market intelligence on unseen opportunities – to address the unmet needs of low-income and marginalized groups that generally go unnoticed by conventional businesses
• Because they’re primarily motivated by social impact, not profit (profit is still important but, by and large, only as a measure of financial sustainability and capacity to scale), they…
  • Have greater freedom than most to take risks and try out bold new ideas and business models
  • Are consequently more likely to come up with genuinely disruptive innovations – ones that may eventually end up spreading across more mature markets as well

To that last point – building on the questions above – I’d venture to suggest that another incredibly powerful thing big businesses can do is to think and act more like impact entrepreneurs – to take inspiration them as sources of product, service and business model innovation with the power to create lasting and systemic change.

Too often, it seems to me, big business innovates in the context of more mature, high-income markets, then tries to hack lumps off what they create to make it fit in emerging, lower-income settings. IMHO, there’s much to be said for doing the exact opposite, recognizing that stuff done out of necessity in low-income markets is a desirable direction of travel in more developed markets too.

Consider, for example, the ‘paygo’ technology platforms that underpin the business models of many of the impact entrepreneurs we work with through Ripples – technology that enables low-income customers to finance the purchase of life-changing products, such as home solar systems, via mobile micropayments spread over several years; also to fund those payments from savings generated through the actual use of those products, e.g., vs. buying dirty, dangerous and expensive kerosene to light their homes.

How different is that approach, really, from the concept delivering products-as-a-service – considered an essential component of a new circular economy? How many people in the markets we live in would be quicker to install solar panels on their own rooftops if they didn’t have to stump up the cost up front and worry about how long it might take to recoup their investment? How many more similar parallels and opportunities for ‘reverse innovation’ might we think of?

Questions worth noodling on, I reckon.

Why it’s time to get behind container-based sanitation

Today is World Toilet Day. It’s a day to focus minds on the fact that 4.2b of our fellow humans still lack access to the basic need of safely managed sanitation; to reinvigorate efforts to reach the SDG target of safe and equitable sanitation for all by 2030; and to shine a light on entrepreneurial enterprises innovating better answers to the global sanitation crisis.

That’s why I’m pleased to have had a hand in important new research, which, I hope, will help to remove a major barrier to scaling container-based sanitation (CBS) enterprises, which are vital to making safely managed sanitation accessible and affordable to some of the world’s least-served populations.

In case you’re not familiar with CBS, it’s a service-based business model built around provision of standalone toilets that store waste in sealable, removable containers. CBS enterprises provide the toilets and maintain a managed service for the collection of full containers, their replacement with empty ones and the transport of full containers to facilities for safe treatment, disposal or reuse of the collected waste (an excellent example of circular economy principles).

Whether toilets are provided in people’s homes (household-level CBS) or as facilities shared by multiple households (shared CBS), it’s a model ideally suited to urban slums and other hard-to-reach locations. In short, it reaches people and places that other forms of sanitation often can’t.

CBS already ought to be a much more prevalent answer to the question of how we provide equitable access to safely managed sanitation for all by 2030. Cited by the World Bank, an EY report from a couple of years back – The world can’t wait for sewers – has helped make significant headway, contributing to formal recognition of household-level CBS as a “safely managed” form of sanitation by the Joint Monitoring Programme (JMP) for Water Supply and Sanitation (the official UN body that monitors progress toward SDG6).

However, a big barrier to scale remains…

Many governments, funders and investors still think of sanitation as they do other public infrastructure investments — i.e., involving high upfront capital outlay, with smaller ongoing costs for operation and maintenance. With CBS models typically the exact opposite, this has led to misconceptions that they’re more expensive over the long term than traditional forms of sanitation, such as pit latrines, septic tanks and sewers, thus hampering investment.

But what if that wasn’t the case?

Enter this new research, carried out for the Container-Based Sanitation Alliance (CBSA), which compares the direct costs of CBS vs. other in-market sanitation options across low-income communities in Haiti, Ghana, Kenya, Peru and Madagascar. Analysis reveals that CBS can, in fact, be provided at significantly lower cost than pit latrines, septic tanks and sewers – and well below the World Bank’s benchmark for water, sanitation and hygiene (WASH) affordability.

Compared with sewer connections, safely managed, household-level CBS models examined cost between 37% and 83% less per household per year. The majority, specifically those operating at scale, are also less expensive than pit latrines and septic tanks, by up to 38% and 74% per household per year. Shared CBS services compare even more favorably, costing 65%, 79% and 93% less per household per year than household-level pit latrines, septic tanks and sewer connections respectively.

What’s more, CBS is still a relatively immature technology compared with these other more established forms of sanitation, and there’s every reason to believe that even greater economies of scale can be achieved.

So what does this all mean?

Myth dispelled that CBS models are more expensive to implement and maintain than safely managed sewers, septic tanks and pit latrines, it should mean that governments, funders and investors do more to create the conditions for CBS to thrive and fulfil its true potential to scale. That includes building policy and regulatory frameworks that:

• Endorse CBS as an essential component of city-wide, blended approaches to sanitation provision (on which front significant progress has already been made in Kenya)
• Enforce provision of safely managed sanitation for poor and marginalized communities
• Incentivize creation and support of markets for the reuse of waste
• Encourage public-private partnership to provide CBS enterprises with more reliable revenue streams and lower their costs of capital and customer acquisition

Just as was called out in another previous EY report — Make way for the future of sanitation — it includes developing more innovative, outcomes-based financial instruments that can encourage greater investment in the sector – blended financing that recognizes the challenges of operating an innovative utility focused on the urban poor, and that emphasizes social impact over financial returns.

In the case of shared CBS models, it also includes encouraging the JMP to disaggregate its criteria for safely managed sanitation. At present, this highest-level classification requires all three of the following:

• Hygienic separation of excreta from human contact
• Safe treatment or disposal of waste
• That the sanitation facility is not shared by more than one household

This dictates that no shared sanitation option can currently be classed as safely managed, even if it hygienically separates waste and provides for its safe treatment or disposal. Nor do these criteria account for other dimensions of safety – for example, resilience to climate variations, such as floods, which can render pit latrines, septic tanks and sewer lines unusable.

Separation of JMP criteria would support clearer recognition that shared CBS models are, in fact, safely managed across multiple dimensions, helping to encourage further investment in these models, as well as household-level ones. Since shared CBS models are frequently deployed in the lowest income communities, and may be the only viable means to significantly improve the safety and quality of sanitation in those locations, this would be a hugely important and valuable development.

Celebrating a major milestone for GARV

For me, few things are guaranteed to raise a smile quite like an unsolicited progress update from an impact enterprise that EY has previously supported. It’s always a pleasant surprise – a great reminder of why we do what we do, under the auspices of the EY Ripples program, and of the life-changing impact each of these enterprises can create for hundreds of thousands (sometimes millions) of people in marginalized communities.

Earlier this week, I received just such an update from GARV Toilets, which proudly announced a major milestone – installation of its 1,000^th IoT-enabled public restroom, which now collectively cover 118 locations across India and provide safe, dignified sanitation for 190,000 low-income customers daily.

Alongside other past and present innovators in the Toilet Board Coalition’s Sanitation Economy Accelerator program, GARV was called out in a major report I had a hand in writing earlier this year – Make way for the future of sanitation. And like other enterprises in that program, GARV has also benefitted from previous EY Ripples projects – in its case, using business modeling to help figure out how it might achieve profitability and impact at scale.

What’s cool about GARV loos is the way they tackle the issues of vandalism and poor maintenance that hinder the safe and effective functioning of public toilets. This includes not only the modular design of loos in vandal-proof stainless steel, but also how toilet cubicles are solar powered and integrate smart technologies such as sensors and RFID tags.

These sensors automatically activate LED lights, exhaust fans, and floor and toilet pan washing, for example, making for a much safer and more pleasant user experience – particularly valued in schools, where the absence of decent facilities is often a significant cause of kids (especially adolescent girls) missing or dropping out of school. Sensors also enable monitoring of the number of user visits and user behavior (e.g., how many times they flush and use the soap dispensers), providing a wealth of insights to inform development of more effective public health strategies and campaigns.

Especially when you consider the still-shocking statistics – e.g., 4.2b of our fellow human beings still without access to safely managed sanitation; more than 670m people still practicing open defecation; and almost 830,000 people in low-income countries dying each year from the preventable effects of poor water, sanitation and hygiene – it’s great to feel part of the story of enterprises like GARV and their continuing mission to transform the sanitation economy.

On silver linings to a very large cloud

Times like these are a crucible, amplifying both the best and the worst in human nature. As news abounds of tragedy, idiocy and selfishness, I wanted to spread a little positivity, courtesy of a great letter sent by Jacqueline Novogratz, CEO of impact investor Acumen, last week.

You can read her message in full below, but one paragraph resonated with me especially:

This world is full of fear, not only of COVID-19 but of the economic hardship already happening in countries directly and indirectly impacted by the pandemic. And yet, in this past week, we have also become acutely aware of our interdependence—that our collective success will not only depend on how we care for ourselves, but also how well we include and care for the poor and the vulnerable. Everywhere, I am seeing people and businesses reaching out, connecting, offering support. This crisis is giving us the chance to find our best selves again and to renew our connection to one another in ways with deep local roots and with branches that extend across the world.

The chance to find our best selves again.

What a wonderful and powerful opportunity that is – to not return to ‘business as usual’ once the crisis fades, but to preserve some of the good that will have come out of it as a ‘new normal.’ To not bin those new ways we found to stay connected and have fun together. To retain and build on that deeper sense of our interdependence; to devote ourselves more fully to the ideals, people and relationships that are truly important to us, and to the health of the communities around us. And, yes, to keep reminding ourselves that maybe we don’t need to travel as much as we used to.

Those are just a few of the ‘close to home’ things I can think of, off the top of my head. I’m sure we could all think of many more, and I’d encourage us to do so.

It won’t erase the months of hardship and tragedy that will have befallen so many. But it can at least mean that we emerge from the experience wiser – more conscious of the precariousness of so many people’s lives, and more acutely aware of the impact of our behaviors on people and planet.

It’s a great opportunity to double down on building better. Let’s not pass it up.

PS. Jacqueline’s letter in full:

To our remarkable Acumen Academy community,

I’ve always marveled at the traditional greetings of different cultures, acknowledgments that range from, “Peace be upon you” to “How did you sleep?” The phrases we use in our daily interactions say much about the historical or modern experience of each generation. No longer able to greet with a handshake, today we find ourselves greeting one another with a look in the eyes, a question about health or an invitation to dance together through a cell phone or computer screen. Many people feel not just a new anxiety, but a new tenderness. And most of us agree that we suddenly find ourselves in a new world.

This world is full of fear, not only of COVID-19 but of the economic hardship already happening in countries directly and indirectly impacted by the pandemic. And yet, in this past week, we have also become acutely aware of our interdependence—that our collective success will not only depend on how we care for ourselves, but also how well we include and care for the poor and the vulnerable. Everywhere, I am seeing people and businesses reaching out, connecting, offering support. This crisis is giving us the chance to find our best selves again and to renew our connection to one another in ways with deep local roots and with branches that extend across the world.

We are also seeing new skills emerging among our most effective leaders, who are partnering in creative ways and prioritizing our collective health and well-being over individual profit. Shining examples of moral imagination, these entrepreneurs have the humility to recognize the ugly realities we must confront today and the audacity to envision and work toward a better future.

I couldn’t be more inspired by the actions members of Acumen’s community are undertaking in response to COVID-19. In Bozeman, Montana, Acumen America investee MyVillage, a company that helps people open and operate high-quality, home-based early education programs, has raised emergency grant funding to ensure that its childcare providers can continue to educate young children into April. MyVillage Co-Founder and CEO Erica Mackey says the goal of the funding is to minimize disruptions to educator income and help parents manage costs incurred during a COVID-19-related exposure or absence.

Also part of Acumen America’s portfolio is a restaurant chain called Everytable that offers healthy grab-and-go meals in low-income, underserved communities. Last week, its Founder and CEO Sam Polk wrote a letter to his community stating the company’s commitment to doing, “whatever it takes to ensure that everyone across greater Los Angeles has access to healthy meals,” including senior citizens, underserved schools or individuals who are struggling. Sam and Erica’s moral leadership remind us that we need to celebrate the actions of such role models so that more actions like these become the norm.

Acumen is fortunate to also be able to learn from its leaders in communities around the globe. Whether their communities are plagued by viruses, conflict, homelessness, despair or the stressful uncertainty that poverty brings, they constantly remind us what resilience looks like, and the importance of kindness and gratitude when all you see around yourself is darkness. One such leader is Acumen West Africa Fellow Niniola Williams, founder of DRASA Health Trust, a public health organization named for her aunt, Dr. Ameyo Stella Adadevoh, the doctor credited with halting the spread of the Ebola virus in Nigeria. Since 2015, Niniola and the DRASA Health Trust team have been creating government partnerships and public education campaigns to promote good hygiene to prevent the spread of infectious diseases. In many ways, they’ve been preparing for five years for the arrival of COVID-19.

We have miles to go, but we can address the new realities of this global health and economic crisis while holding with fierce, persistent aspiration to the good that can be done in the midst of it. Every Acumen entrepreneur, Fellow, Partner and, of course, our amazing team, Board and Advisors are in this together, equally committed to keeping one another healthy and safe so that we can stand together and bring our best selves to the work we came to do.

And we are thinking hard about what we can do to keep our community connected to one another during this time. We welcome your ideas, your stories and your inspiration.

With gratitude to you for all that you do. With hopes for peace, good health and love for you and for all who are suffering, for the lonely and fearful, for all of us. And with an abiding commitment to give everything we can to a world that needs all of us.

Jacqueline Novogratz
Founder & CEO, Acumen