Institutional Investors Make “Sustainable Business” An Investment Priority

12 02 2008

This one is for anyone attending the upcoming ASAE and the Center Social Responsibility Summit.

The 2008 Investor Summit on Climate Risk will bring together more than 400 institutional investors, Wall Street leaders and CEOs from around the world to consider the scale and urgency of climate change risks, as well as the economic opportunities of a global transition to a clean energy future.

According to the Wall Street Journal,”Investors are increasingly trying to come to grips with the uncertainty about how the U.S. government will address the issue of global warming, and what effects that will have on businesses from power companies to insurers…

But just like the “tipping points” that many scientists point to in the Earth’s changing climate, investor interest in how to play global warming seems to be gathering steam. Investors are taking a more proactive role. Last week, three big banks said they’ll toughen financing standards for coal-fired power plants that could come under fire from new environmental regulations.Increasingly, the accent is on business opportunities presented by the world’s efforts to rein in global warming. Morgan Stanley, Lehman Brothers Holdings Inc. and Deutsche Bank AG have set out to identify which companies help the world adapt to changing climate, such as water-treatment companies, as well as businesses that can help mitigate further climate change, like clean-energy firms.”

Why should I care? Follow the money.

Investors are finding that the future of business (and future investment) will be in companies and industries who are innovating business models, product or service designs or delivery systems to be more sustainable economically, environmentally and socially.

It isnt simply about recycling or making modifications to systems proving they cant fundamentally change.

Social responsibility is passe.

Sustainable business models and product/service designs are what investors see as the future.

It is about innovation.

Business got us into this. Business will get us out.

Follow the money.





Making Business Sense of Climate Change – A Practical Guide

3 02 2008

Vanessa Cotton and I reprise for a session on this Tuesday at MPI’s PEC NA here in Houston on the topic of making a business case for developing a “sustainable business strategy” for meetings and events from a planner and supplier perspective.

We’ll be presenting a case study featuring one of MCI’s clients and how MCI led them through via our sustainable consulting services along with the use of a green meeting calculator that feeds to a database for benchmarking your footprint against other events. This effort led to the client choosing ExCel London for an upcoming congress because of its advances in sustainable business services for meetings. They actually have a worm farm that converts waste to compost as a new revenue streams. Yum!!!

Slides are here.





Global Platform for Innovating Sustainable Materials & Products Announced

9 10 2007

Material ConneXion Inc., McDonough Braungart Design Chemistry LLC (MBDC) and the Environmental Protection Encouragement Agency (EPEA) announced a strategic collaboration to create a global platform for developing innovative sustainable materials and products.

Together they will provide services that will help companies expand their ability to innovate and create higher-quality, more sustainable products and processes.

The relationship will help to promote and disseminate Cradle to Cradle design principles by providing greater global access to Cradle to Cradle material information, certification and product development.

As of January 2008, Material ConneXion’s libraries around the world will feature Cradle to Cradle Assessed and Certified materials, and in collaboration with MBDC and EPEA, they will offer Cradle to Cradle Certification and Cradle to Cradle product development.

By pushing for better product design, smart production processes, and a greater use, re-use and recycling of defined, ecologically intelligent materials, companies can incorporate environmentally conscious planning into their own frameworks. To facilitate this, Material ConneXion, MBDC and EPEA will jointly offer the following services: workshops providing an understanding of Material Intelligence, Sustainability and Cradle to Cradle design principles; material assessment, process evaluation and certification; and sustainable material/product development.

About Materials ConneXion

Material ConneXion offers four indispensable assets to architects, designers, and manufacturers.

  1. The Advanced Materials Solution Team advises in the development of materials and products by providing crucial material intelligence gained through extensive research.
  2. Subscription-based Material Libraries on three continents maintain over 4,000 materials reviewed by an independent jury on a monthly basis.
  3. Material ConneXion LABS-temporary library exhibition installations-and Innovation Alerts-keep companies, universities and non-profits on the cutting-edge. New materials create innovative design solutions, provide more sustainable options, and accelerate the design development process.
  4. Dynamic material dialogue is essential to this process, and so Material ConneXion is committed to its creation through active Public Programming, including exhibitions, an annual conference on materials and design, and MATTER magazine, published quaterly. This December, Material ConneXIon will publish its second book, Ultra Materials: How Materials Innovation is Changing the World.

About MBDC

From a June 2007 post here on os.a .

About EPEA

EPEA is an independent scientific research institute based in Hamburg, that develops Cradle to Cradle product solutions. EPEA aligns products to Cradle to Cradle design goals with tools that have been developed for this purpose. Cradle to Cradle design makes products possible that are economically successful, healthy for users and supportive for the environment and future generations.

Their innovative design not only addresses appearance and functionality, but it also addresses the definition of their composition and enables a new dimension of quality and security of these products along with their material flow cycle. By integrating economic, social and environmental aspects, they are superior to currently produced and available products.

EPEA’s driving goal is to not only reach positive effects for end users by aiding in the development of healthy products, but also for the environment in general by way of safe products for consumption and products of service, where technical nutrients are recovered and processed, based on EPEA’s Intelligent Product System (IPS).





ASAE Annual 2007 – Innovation through Sustainability, Inclusiveness, Customer Need

17 08 2007

 

Understanding the Strategic Social Responsibility Opportunity

Susan Sarfati is right when she says that Social Responsibility is potentially a major opportunity for associations as part of their long term strategy.

Unfortunately, people walked away from Chicago with a lack of clarity on the following important questions that could help people understand its potential:

  • What is the difference between the existing SR programs in which my association has invested and this thing called “strategic social responsibility” promoted by ASAE and the Center?
  • What is the business case for “strategic social responsibility?”
  • Who are the innovators leading the way in different industries or professions?
  • How does this impact our existing business model, strategies?
  • What are the resource costs?
  • Who can help me?
  • How can I measure results?

Monday afternoon, Robin Lokerman from MCI Group presented during the learning lab on strategic SR and how it will impact their business. You can download his slides here. It is worth your time, because it illustrates the difference in opportunity and effort required versus program-based social responsibility we have come to know. Lokerman’s fellow panelists from SDA and ADA represent the program variety – very worthy but not strategic in their impact across an organization.

In essence, what ASAE and the Center call “strategic social responsibility” is referred to in the mainstream business press and among business innovators as “sustainable business development.” Those who see the opportunity are rethinking their business models, core strategies, and the infrastructure needed to deliver and measure results so that they can deliver not only financial gain but also social and environmental gain.

In their view, traditional business “externalities” like regulatory costs in which many businesses must comply are examples of inefficiencies or waste that can be designed out of their businesses. In other words, it is a chance to redesign business to become even more profitable while making a positive measurable economic, social and environmental impact to Society.

ASAE and the Center ought to concentrate on highlighting the current market innovators like Herman Miller, Nike, Shaw Carpet, Interface Carpet and others who are pursuing this innovative path. We are talking huge opportunity for growth.

Here is the evidence:

 

 

If Monday’s general session didn’t explain it well enough for you. Listen to this Fortune 500 CEO of a $1.5 billion US company explain their business case.

Check out Interface Carpets’ sustainability website to learn more about their progress toward business sustainability.

Ungovernance – Become More Open, Inclusive & Participatory

Jeff De Cagna’s session was a breath of fresh air. We need more sessions like this willing to ask the tough questions that are likely to deconstruct old tried and true models that no longer work in favor of those which can foster innovation. His session was based on this month’s Association Now article.

It was great to start by having each table discuss what doesn’t work with the present governance models association use. Here is what I collected from the room when we debriefed:

  • Can’t change, always done it that way culture
  • Pushing personal agendas over real world data
  • Slow process, unresponsive, inability to execute
  • Board view not representative of membership POV
  • Desire to control
  • Lack of diversity of ideas
  • Myopic POV
  • Poor coordination
  • Misalignment to mission and strategy
  • Trust paradox (of the rank and file)
  • Poor leadership skills (e.g. strategic thinking)

De Cagna is right when he argues that we should be heading toward an ecology of stewardship that promotes openness.

Certainly the Decision to Join study suggests that the old “walled garden” strategy developed by volunteer leaders and staff in those ivory towers for the good of those outside the walls can not continue unless you wish further membership erosion.

Yesterday, I suggested that the D2J data suggests a fourth principle to add to the three proposed by De Cagna: associations exist to create value not to be governed, innovation is about creating new value, association stewards must focus on the business model.

The fourth might read like this:

The longer your association waits to implement governance and product development changes that are more “open and inclusive” to the rank and file member, the more likely you can expect to generate lower retention rates or product sales.

A last observation from our table discussion was that the strength of an association’s volunteer leadership development program plays a significant role (good or bad) in one’s ability to execute.

If you want to measure yours against a great model, consider the Project Management Institutes’s Leadership Program. They have mapped competencies including leadership and interpersonal development skills and incorporated them into their certification programs.

De Cagna views a more open governance model as having the following characteristics: simplicity of access and engagement, distributed responsibility to innovate (e.g. strategy, investment according to their ability and interest), and diversity of perspective and contributions.

For further thoughts on open innovation, business models, and product strategies:

Market Trends Are Less Important Than Customer Need

Hummer and Mini – Robyn Waters

Robyn Waters’ presentation was useful to help remind us that chasing trends especially now in an era of contradictory choices (Hummers versus MiniCooper owners) can be dangerous to your fiscal health.

Customers cant be fit into boxes anymore and labeled X or Y. More and more they pick products or services across customer segments. So Waters suggests that we focus on “what’s important to the customer and less on what’s next.”

Consider her old employer Target. It is upscale/retail (expect more but pay less). Provide high value but at less of a premium than Nordstrom.

This made me realize that sessions at ASAE ought to teach organizational strategy and how it should be aligned to product development. For instance, are you in the business of providing value to members as the low cost provider, the leading edge innovator or the one who knows you best and provides precisely what the customer wants?

Depending on how you answer, your organization strategy to align operations, product development and customer management would be different.

Waters also believes that in an era of overwhelming choices (an average dept store has over 30,000 skus), you need to focus on customizing products to customer need.

This argues for more open product development processes as described earlier. You cant do everything by traditional market research. You need to engage customers as part of the process of developing what you plan to sell them in real time.

Finally, if not to echo the important or growing importance of social responsibility, Waters believes the data shows that customers will make final product decisions by how socially responsible your business is. Ethical choice is driving consumer choice.

For further thoughts on customer-centric strategy:





Open Innovation to Promote Sustainable Development & Social Innovation – ASHOKA

6 08 2007

Earlier this year, Professor Muhammad Yunus won the Nobel Peace Prize for his groundbreaking company Grameen Bank, an innovative micro-lender promoting economic and social development of the world’s poor. Professor Yunus and many others have embraced open innovation where entrepreneurs apply business principles sustainably using “bottom-up” methods to promote social capitalism and social entrepreneurship to improve opportunities for the less advantaged.

A leader in the field of social entrepreneurialism is Ashoka who “envisions a world where Everyone is a Changemaker: a world that responds quickly and effectively to social challenges, and where each individual has the freedom, confidence and societal support to address any social problem and drive change.”

Rather than leaving societal needs for the government or business sectors to address, social entrepreneurs are creating innovative solutions, delivering extraordinary results, and improving the lives of millions of people.

Changemakers is an initiative of Ashoka that combines compelling stories to explore the fundamental principles of successful social innovation around the world with a global online “open source” community to surface social solutions and engage individuals and organizations to refine, enrich, and implement them.

The heart of Changemakers is its collaborative competitions that periodically issues a core social challenge for its diverse stakeholder audience to consider and prepare a proposal for review by the community and competition judges. This “open sourcing social solutions” model follows a replicable process with clear stages and decision gates. The outcome serves as a platform for building a different kind of practitioner/investor engagement that sparks new waves of innovation around problems stuck using conventional approaches.

Current competitions focus on better healthcare:

Disruptive Innovations in Health and Health Care: Solutions People Want

Recently closed for judging, this competition attracted 308 submissions from over 27 countries. Some entries received over 40 comments from community members during the submission phase.

Why Games Matter: A Prescription for Improving Health and Health Care

Currently accepting submissions, Changemakers in partnership with the Robert Wood Johnson Foundation, is seeking creative solutions that merge computer and video games with health and health care. All competition finalists will go to Baltimore, Maryland, USA in May 2008, to present at the Changemakers Change Summit held in conjunction with the RWJF-sponsored Games for Health Conference.

Here is a video submission from one entry called “Interactive Fitness.”





Emerging Business Units As A Means to Develop Innovation with Customer Involvement

12 07 2007


Broad principles to guide the project defined by the Economist open innovation project team.

Open Innovation at the Economist

A six person team from the Economist magazine group were tasked to create an innovative web-based product, service or business model by July 2007. In addition to the research which the team is conducting in-house, they solicited ideas from the outside world in an effort to attract submissions from a diverse group of people.

Their approach appears similar to the principles of creating an “emerging business unit” model* (aka a new, independent group composed of people from various business units to develop not only the project but also the very organization and culture of the unit itself) for developing and managing the innovation process.

The London School of Business found that ambidextrous organization designs (like the creation of emerging business units to develop “discontinuous innovations”) are significantly more effective in executing transformative innovation than functional designs, cross functional teams, or unsupported autonomous designs.

Calling themselves “Project Red Stripe” they used a blog to conduct a rather open innovation approach to “project ideation” and the development of a business plan for their business idea. It is an interesting read covering the start of this effort about one year ago to the present day which began with three webcasts of around 120 Economist readers to help them define their business opportunity.

In June, they unveiled their idea:

We are developing a web service that harnesses the collective intelligence of The Economist Group’s community (of readers), enabling them to contribute their skills and knowledge to international and local development organisations. These business minds will help find solutions to the world’s most important development problems.

It will be a global platform that helps to offset the brain drain, by making expertise flow back into the developing world. We’ve codenamed the service “Lughenjo”, an Tuvetan word meaning “gift.”

Their initial business model for Lughenjo will be as a social business enterprise and generate revenue through ads.

Some of the more compelling posts during their journey from crude idea to business plan include:

  • We divided the task (to complete the goal of the project) into four basic items: setting up a framework for how we develop ideas; brainstorming and choosing the best idea(s); developing the idea(s); and then writing the business plan and presenting the finished product.
  • Today was a day of building blocks; attending to a number of key components which would underline the overall project moving forward; introductions from team members, scoping some broad principals to guide the project, examining the breakdown of the available time frame..
  • Trying to nail down the meaning of “innovative” is an intellectual challenge: it is one of those weasel words that keep slipping away. But we also have to cope with duller legal stuff: who owns those ideas that are submitted to Project Red Stripe? If we don’t deal with this issue from the start, it could come back to haunt us later – particularly if we dream up a money maker. The fine print on the idea-gathering sites mentioned earlier is clear, though hidden in lengthy legalese. In short: we can do whatever we want with your ideas.
  • (They examined different models for soliciting customer ideas) One of the most overused quotes about the future is that it is already here, just unevenly distributed. But, one might add, at some point the future tends to cluster. Last week, two noted firms launched idea-gathering sites: Yahoo! and Dell. These services, called Yahoo! Suggestion Board and Dell Ideastorm respectively, join a raft of others that went live in recent months. Salesforce.com has a site where customers can make suggestions. IdeaSplicing is an open-source effort to gather and discuss ideas. And then there are firms to provide “idea management” software or services such as Crispyideas, Brightidea and imaginatik.

Ideas from the Crowd
Here are two example of the ideas that came from their “open innovation” methods for contacting customers during their ideation phase that attracted over 200+ ideas.
1. Allow subscribers to participate and even create prediction markets.

The Economist has a perfect userbase for running policy analysis markets. Every article should have a sidebar with the relevant market(s) displayed, suggests Mike Linksvayer. And Scott Harper writes: “Implement online decision markets for Economist subscribers. Open at least one every month with a 12-24 month maturity. Each will relate to a featured article and let subscribers compete with peers in a running points total.”

Perhaps the most intriguing ideas are those suggesting The Economist should create its own private currency, which subscribers could use to make bets on prediction or other markets. Simon Stuart, for instance, suggests that every Economist subscriber receive one thousand Economist dollars per year to trade. This triggered another thought within the Red Stripe Team: Why not let subscribers earn some money (by contributing to a wiki, for instance) and spend it (by donating it to a charity of their choice)? Now there’s an idea: turning the Economist into a real economy.

2. Accessing and creating huge quantities of information is easy, but sorting the wheat from the chaff is the problem

In our idea collection, many contributors suggested expanding The Economist’s service of “trusted advisor and overseer” and applying it to information available online.There was strong support among idea contributors for The Economist to become the “gateway” or “sorter” of a wider body of information beyond that purely generated by itself. Colin Henderson wrote: “I trust the Economist, I trust the content, I trust their analysis and their predictions. But I get all the rest of the information from the internet sorted through Google…..I need a trusted source…that assimilates all the news and information, assesses it, within my personal context and presents it to me.”

Colin’s proposal suggests The Economist becomes the user’s primary respected source which also trawls the internet on the user’s behalf delivering content it feels is most appropriate based on The Economist’s assessment of value, reliability and news-worthiness.

This type of benefit can, to some extent, be achieved with community feedback, as suggested by Earl Killian. With the ability to rate articles and add comments before sharing one’s reading with one’s friends, you build a communal system of receiving information which is most likely to meet your fields of interest. Del.icio.us and Bluedot currently allow this type of interaction with their “tagging” and “posting to friends” functionality. In one of our brainstroming sessions we also came up with the thought of somehow collecting data of our subscribers’ surfing behaviour to compile lists, such as “The Economist’s reader’s favorite websites” and “what other readers of this article have read”. Sites like StumbleUpon and Last.fm – go some way to carrying out this type of action.

Dann Anthony Maurno suggested a point’n’click globe: Economist data and analysis overlaid on Google Earth allowing the reader to scan the globe and zero in on a location of interest to access the relevant country and regional data. Reuters have a Beta version of a map that does something similar (see below). Alternatively, one could move the mouse over a timeline which tells you about major events by time and a keyword.

Some Lessons

  1. To create truly innovative products or services that are discontinuous (ideas that are not simply incremental improvements of existing products and services) you need to get outside your world. New perspectives directly from customers and processing the ideas outside of stove-piped business units that tend to dampen creativity.
  2. Using new media and blogs or wikis to manage the process of cultivating customer participation promotes a more open means of customer engagement in defining product or service ideas.
  3. Forming new groups from different business units and possibly from outside your organization into a completely separate group can improve the chances of creative process and exploration.

In an upcoming post we will explore “emerging business units” as a strategy for fostering innovation.





Business Will Profit through Energy Efficiency and Better Design

11 07 2007

Amory Lovins, CEO of the Rocky Mountain Institute, delivered an interesting presentation at the last AAAS Annual Meeting demonstrating various opportunities for business to grow and profit through better process and product design.

Lovins co-founded and leads Rocky Mountain Institute (www.rmi.org), an independent, market-oriented, entrepreneurial, nonprofit, nonpartisan applied research center that creates abundance by design. Much of its pathfinding work on advanced resource productivity and innovative business strategies is synthesized in Natural Capitalism (www.nat-cap.org). More than 80 Fortune 500 firms have lately used or invited RMI’s consultancy.

Click on the image to watch his presentation.