Last Thursday I attended a very interesting debate hosted by The Guardian and GSK on ‘what motivates the private sector to do social good?’  The panel consisted of a great mix of speakers with the CEO of Business in the Community Stephen Howard, COO of CPD Frances Way, President of R&D at GSK Patrick Vallance, Co-Founder and MD of JustGiving Anne-Marie Huby and the Co-Founder of BuffaloGrid Daniel Becerra. The audience was also a great mix of small and large companies as well as many, diverse NGOs.
 
It was timed to coincide with the launch of the Sustainable Development Goals (SDGs) and on top of the panel debate, each of the five tables in the audience were assigned a fictional company and asked to identify how we would convince our boards that we should actively work to support SDG 10 – reducing inequality within and among countries.
 
There will be a write up in the Business section of The Guardian on the 13th of October so look out for a full synopsis then, but a few points that really resonated with me during the debate are summarised below:

• Quarterly pressures: there was a lot of debate around how ‘doing good’ sits with the quarterly financial targets and pressures of publically listed companies, with people in the room suggesting that even Paul Polman at Unilever can’t get a away with too many poor quarters in the short term.  How do we get investors to start taking a longer term view? Frances Way suggested that we need to engage the asset owners more, rather than the asset managers – if you are a pension fund the value of that fund in 30 years’ time is crucial.
• All business models should be inherently good to thrive in the long run: Stephen Howard argued that businesses exist first and foremost to solve a problem. They need profit the same way humans need oxygen – it is critical but not the purpose of their existence.
• Changing customer behaviour: Howard also argued that the real difference companies can make is to change how their customers behave through their products and services – something I wrote about last year.
• Regulation is good, but only if implemented well and with the right parameters (with the Social Value Act held up as good example of a missed opportunity). There was broad agreement that good regulation will help those at the forefront of innovation, something Gavin Warner of Unilever confirmed earlier this year at the Re-Thinking Progress conference.
• NGOs are great at spotting opportunities and innovation but not always at doing ‘scale’. Anne-Marie Huby made a strong case for corporate-NGO partnerships with this really insightful statement.
• Choice editing: there was a question from a Sainsbury’s employee in the audience about whether they should be doing more choice editing as they already do with bananas for example (they only sell fair-trade).  There was broad agreement that retailers should be doing this as customers often want to do right but simply don’t have the time to read every label.
• You can communicate to half a billion of the poorest people in the world by text message. Daniel Becerra highlighted that of the 1.2bn poorest people in the world who have no access to electricity, 600m have a mobile phone.  This is potentially a very powerful tool to get mass health and other important messages out quickly and widely.
• Flat organisation structures drive innovation: Becerra also highlighted that the flat organisational structure and empowerment of staff at BuffaloGrid has been a catalyst for creativity and innovation, a belief I have long held.

​by Jesper Ekelund​

A recent blog by Jenny Ekelund highlights the importance of partnerships and the critical role they can play in shifting business models and innovating for good. She quotes Justin Adams, The Nature Conservancy's new Managing Director for Global Lands in the UK and former BP renewables executive, who had this insight from his time at the oil giant:

"I…learned how hard it is for any organization to innovate away from its core competence. There were all sorts of forces that constantly brought BP back to its core purpose of extracting fossil energy as efficiently and responsibly as it can."

​This quote really struck a chord with me.  If we look further at BP as an example, their inability to change is really no different to, say, Kodak (who invented the digital camera!) or Blockbuster (whose CEO declared that Netflix wasn't on its “competitive radar” as late as 2008) both of which have now gone bankrupt in the face of digital competition.  It is fundamentally about an inability to innovate the business model. For ‘digital’ you can easily read ‘renewables’ in BP’s case.

So why do so many established companies find it so difficult to evolve?  Looking at Kodak’s inability to adapt as an example, we can see many of the issues that are often at play. For example, one of the big problems was that it made 80% gross margins on photo film.  As a result, every innovation project, especially the digital ones, had far too high a hurdle to overcome to be taken forward.  Kodak had invested a lot in this ‘Razor and Blades’ model and this led to the board’s blinkers and unwillingness to cannibalise their core business. It is not that they didn’t see the digital revolution coming – they just couldn't make it work within their culture and corporate world-view.

I would suggest that some, if not all of the following things were therefore at play at Kodak:

• (lack of) senior management buy-in to its innovation programme
• short-term targets driven by shareholder demands and staff compensation structures
• an unwillingness or inability to challenge company / industry assumptions
• an unwillingness to cannibalise existing markets
• asset and capabilities / skills gaps
• cultural barriers
• not understanding the customer need well enough
• lack of foresight and plausible future scenarios

Managers would do well to be aware of the list above and make them a central part of innovation focus, decision making and wider strategic planning. Some of them, such as short term focus, are fundamental to the whole strategy and need to be addressed head on, taking all stakeholders, including shareholders, on a journey to longer term returns – Paul Polman is setting a great example at Unilever in how to do this.

Changing the culture and willingness to challenge the status quo won’t happen over-night.  But it needs to be a priority for senior managers to address these barriers head on. There is a ‘green’ and circular economy revolution happening in every industry and those that don’t, or worse, are unable to embrace it because of some of the straitjackets listed here, might just be the next case study of a business that failed to evolve its business model.

by Jesper Ekelund

I have just completed an excellent eight-week MOOC (Mass Open Online Course) on ‘Planetary Boundaries & Human Opportunities’ delivered by Prof. Johan Rockström (Executive Director of the Stockholm Resilience Centre) and his colleagues on the UN backed Sustainable Development Solutions Network education platform.  I would highly recommend it and do look out for re-runs of the course that have been promised.

The original Planetary Boundaries framework was published in Nature in in 2009 and an update of the research, Planetary Boundaries 2.0, has just been published in Science.  Despite dozens of peer reviewed critiques that have strengthened the evidence in the updated version, none of the boundaries have been dropped nor have any been added, highlighting the robustness of the framework.  The boundaries are now more granular though, and allow them to be applied more easily at a regional level.

In summary, it proposes nine key planetary boundaries that we need to remain within to avoid abrupt and potentially irreversible tipping points in the earth system (see below).  Climate Change and Biosphere Integrity are the two principal boundaries, whilst the seven others are all still critical with potential knock-on effects on many other boundaries if they are transgressed.  They are: Stratospheric Ozone Depletion, Atmospheric Aerosol Loading (soot, diesel particulates, steam etc.), Ocean Acidification, Biochemical Flows of Nitrogen and Phosphorous, Freshwater Use, Land-System Change (deforestation, agricultural use, etc) and Novel Entities (pollution by toxic synthetic substances, release of radioactive materials or nanomaterials etc.). We have already transgressed four of the nine boundaries (see diagram) highlighting the critical importance of accelerating sustainability efforts globally.

The course unsurprisingly focussed on the remarkable resilience of the earth system but spends significant time highlighting the concept of planetary and local scale tipping points. Tipping points are where systems (in this case- Earth Systems) reach critical points where they suddenly and rapidly transform into new systems and stable states; critically it is often very difficult to revert to the original state. Examples of this in nature that we have already witnessed include dead zones in coral reefs or eutrophication of fresh water lakes.  It forms the crux of the argument for staying within planetary boundaries.

To me, what is most powerful about the Planetary Boundaries framework is that it approaches the issue from such a neutral point of view – it is not trying to argue right or wrong but merely to indicate where the boundaries of human development lie. It will then be up to all of us to work out how we organise ourselves to remain within these boundaries.

It starts with a simple question: 'what is the optimal state of the earth to support human development and thriving?' The unequivocal evidence is that the Holocene of the last 10,000 years represents this.  Until the Holocene we did not have the conditions to develop modern agriculture which ultimately underpins human prosperity today, and it is no surprise that we have seen such phenomenal progress in the last 10,000 years. If we accept this, then surely our goal as humans in the Anthropocene is to do everything we can to stay within this state? Carl Folke, Science Director at the Stockholm Resilience Centre, summarises it perfectly: 

“Thinking green is not a moral perspective but a question of survival and wellbeing. There is no business to be done on a dead planet”

So what does it all mean for businesses, NGOs and Governments? I would argue that the implications are profound and we will be exploring in the coming months how we can integrate planetary boundary thinking in all of our work with clients. It has implications from how and where we innovate to how we report on sustainability performance.

As a final thought, and with Paris 2015 looming large, I would propose that the Planetary Boundaries need to feature much more heavily in negotiations and the setting of the Sustainable Development Goals.  Rockström highlights that most of the social goals are quantified with clear deadlines whilst the environmental goals are mainly statements of intent without hard targets or dates – the Planetary Boundaries framework wouldn't be a bad place to go for some of these…

by Jesper Ekelund

I have seen many articles and found myself in several Twitter conversations recently debating the relative merits of consumer behaviour change programmes and to what extent we can 'tell' customers that green is better. The consensus seems to be that we have failed miserably so far as witnessed by the most recent Greendex survey by National Geographic or Trewin Restorick's (founder of Global Action Plan and now Hubbub) eloquent summary of how poor the green movement's communications have been to date. 

Too often I find that many in the green movement are both too closed a shop (see Gareth Kane's excellent commentary) or too optimistic: ignoring the fundamental truth that many simply don't care no matter how loudly we shout - paying the mortgage, making sure the kids are happy, a holiday in the sun etc. are always going to take precedent for the majority. Sorting today's issues will usually seem more important than addressing our future sustainability.

Coupled with this is my fundamental belief that the basic premise of capitalism and democracy (free markets, consumer choice etc.) must be preserved - I think most people, no matter how dyed in the wool green they are, would admit that they wouldn't like to be dictated to on what they can and cannot buy or do. This doesn't mean that we can continue with our current 'take - make - dispose' economy. Nor does it mean that we can continue with the great inequality that today's capitalism is increasingly creating. But using longer term thinking and concepts such as circular business models we can preserve the freedom and choice we are afforded today.

So how do we take the majority on this journey?  By making sustainable choices the default choice - not because 'it is the right thing to do' but because they are better, cheaper, 'cooler', more desirable and efficient. In other words, innovating to meet sustainability and customer needs.  

We do however need to be mindful that much 'green innovation' to date has been focussed on the select few who can afford a new Tesla or the latest Nest thermostat. But the likes of Ikea and H&M (Swedish focus purely coincidental...!) are showing that you can make desirable products at low costs through an end-to-end approach innovating their business models.

I'm not for one second suggesting it will be easy (how do we address meat consumption in the West for example? Synthetic meats are probably the answer).  But we stand a much greater chance of creating positive change by working  to meet customer needs than by offering dull, less functional or expensive options 'because they are the right choice' or shouting from the roof tops that 'green choices' are better for the environment. The customer's choice is the right choice - so build it and they will come.

by Jesper Ekelund

Our business operates on the premise that innovation and sustainability are intrinsically linked fields and that the thinking from each can greatly benefit the other. They are alas both also buzzwords that are misused in many ways. So what do we mean by 'innovation', 'sustainability' and the two combined?

'Innovation' seems to be popping up everywhere at the moment and I question how genuinely innovative many propositions or concepts purporting to be so are! But it is also fair to say that innovations don't have to be big or earth-shattering. They just need to combine new thinking with successful implementation (however success has been defined). Our favoured definition of innovation actually comes from the Glossary of Electronics, the wonderfully simple:

 "Innovation = creative idea + implementation"

We have previously discussed the semantics around sustainability and why to an extent it doesn't matter what it is called, as long as it resonates with your stakeholders.  But we still feel that 'sustainability' does the best catch-all job to describe what we do and are interested in.  And we don't think anyone has described it better than the original sustainable development definition in the Brundtland report: 

“Development which meets the needs of the present without compromising the ability of future generations to meet their own needs”

Most importantly, this definition makes it clear it is not just about the environment - economic and social sustainability are just as critical going forward.

So what do you get when you combine the two? The above would suggest something around successfully implementing creative ideas that will lead to development without compromising the ability of future generations to meet their own needs.  But this is quite long-winded and in attempting to come up with something snappier, we realised no one has been able to summarise the essence of it better than Einstein.  So now when anyone asks us what innovation for sustainability is, we give the following one liner from the great man himself:

"We cannot solve our problems with the same thinking we used when we created them"

by Jesper Ekelund

Last week I had the pleasure of attending a talk on the Circular Economy by Jamie Butterworth (CEO of the Ellen MacArthur Foundation) and Peter Lacy (MD Strategy & Sustainability, Accenture APAC). The talks are part of a series of seminars organised by Oxford University's Smith School of Enterprise and the Environment to explore how we meet future sustainability challenges. Whilst it was very intellectually stimulating, the key for me was the practical insights and case studies on how we can re-frame innovation and growth challenges.

Many academics and practitioners alike have for many years been looking at how we can sustain our economic wellbeing without depleting our resources.  Some, like Tim Jackson, have suggested we can have ‘prosperity without growth’, or slow down growth significantly, but I don’t buy this – and nor does Peter Lacy, who said that this is simply not a conversation you can have in Asia (the area he covers) where billions of people want to lift themselves out of poverty. 

Instead, we need circular economy thinking (as opposed to our current ‘take, make, dispose economy’). Jamie summarises the circular economy as “a framework for an industrial economy that is restorative by intent. At an individual business level this provides the opportunity for businesses to begin to decouple economic growth from resource constraints and drives innovation and value creation”.  The short, eloquent clip by Dame Ellen MacArthur below also summarises the concept really well using her sailing experience as an analogy.

Peter outlined five business models for circular economy thinking and they make great lenses through which to innovate.  They’re not all new, but are very compelling. 

Products to services
“Every product is a service waiting to happen”. To my mind, this drives much of the rest of the circular economy thinking. The key is to get to the heart of the customer value proposition and look at how we can reframe it.  Are we selling cars or mobility? Gas or a warm house? Light bulbs or light?  For example, Philips has started selling lumens of light to municipalities for their street lighting, thus retaining ownership of the assets and reusing the resources at the end of the life-cycle.

More radically, how might you make shoes a service? Timberland have been trialling exactly this with the ‘Earthkeeper’ shoe for kids.  Kids of a certain age are notorious for going through many pairs of shoes a year, so instead of buying, say four pairs a year for $50 a go, Timberland will sell you the right to a shoe for your child for $100. Timberland retain ownership of the shoes and recovers many of the materials at the end of the life-cycle. It also has the great benefit of ‘closing the customer loop’ as customers are not exposed to the marketing mix and competitor products as they would every time they go back to a store to buy new shoes.

Sharing economy
We have talked about this trend on our blog before, but there is much scope for it to grow.  How can you use (digital) technology and social media to create ‘clearing houses’ to create a sharing effect, ultimately leading to a radical shift in heavy resource use? Great and prominent examples include Airbnb, ZipCar and Uber, highlighting how the sharing economy can drive growth with limited resource use; indeed, Airbnb now has a market cap to rival all major hotel groups.

Circular supplies
Looking at the supply chain and asking how we can make our inputs more circular, be that through R&D, supplier or even competitor collaboration. An obvious example is renewable energy in the manufacturing process and a more high tech one is around ‘green chemistry’ as demonstrated by Dutch chemical company DSM, who have developed some bio based substitutes designed closed loop from the start.

Resource recovery
Driven by service vs. product thinking, how do we design for disassembly and resource recovery from the start and ensure we maintain ownership of the raw materials? Much like Interface in the US, Dutch carpet supplier Desso are also pioneers in the sustainability field: they rent out carpets by the tile, replacing just the ones that are spent and reusing the materials for new carpet. This allows for lower costs for customers, predictable input costs, increased profits and radically reduces resource use. 

Product life extension
Linked to the above, how do we create products to maximise their life-cycle from the start? How do we design for remanufacture and refurbishment from the outset? For example, BMW now designs parts which in some cases up to 80% of the part can be refurbished and re-used – and put back into the market with the same warranty levels.

According to Peter, over 50% of 1000 global CEOs interviewed as part of a UN study, said they are introducing circular economy initiatives in the coming years.  Whilst it is early days, it is clearly moving from being a niche concept to a more mainstream reality with huge potential for innovators.

by Jesper Ekelund