Open Vodafone’s 2014 sustainability report and you’ll find two distinct sections. One is arguably more exciting than the other: Transformational Solutions and Operating Responsibly. As the titles suggest, the former focusses on Vodafone’s initiatives to make a positive difference to the world through deploying its technology, in seven areas from smart working to agriculture, ‘unleashing the power of Vodafone to contribute to sustainable living for all.’ Vodafone’s mobile money transfer product, M-Pesa was launched in 2007 and supports millions of low-income customers without access to banking services.  The company sees much opportunity to play a role in women’s economic empowerment and low-carbon solutions such as smart metering and M2M technology.  By contrast, the Operating Responsibly section is focussed on preserving Vodafone’s licence to operate, majoring on the issues you’d expect such as mobile masts and health, and minimising the company’s environmental footprint.

Unilever takes a similar approach. The company’s Sustainable Living Plan sets out goals under three overarching themes; pledging to help more than a billion people improve their health and hygiene by 2020 whilst enhancing livelihoods and halving the company’s environmental footprint. The Plan focusses on how Unilever can use their scale and reach to effect systemic change, and the level of ambition is high. The company states:

“We have set a bold ambition to achieve change within our own company – through our brands, innovation, sourcing and operations. But we are only one company among many and the change needed to tackle the world’s major social, environmental and economic issues is big - and urgent. What’s really needed are changes to the broader systems of which we are a part – whether that is in food, energy or health. We have decided to deepen our efforts in three areas where we have the scale, influence and resources to create ‘transformational change’. By that we mean fundamental change to whole systems, not simply incremental improvements.”

For companies where sustainability has become a central strategic driver, there has been a palpable shift away from incremental improvements in favour of audacious goals.  IKEA’s Steve Howard is a strong proponent of this view, claiming ‘the only target worth setting is 100% change.’ The Guardian’s Jo Confino reinforces this: “The truth is that resource efficiency is only going to get us so far, and it's hardly the stuff of excitement that is going to get people leaping out of bed in the morning.”

This is not to say that companies should not use resources wisely, set targets for cutting carbon emissions and water usage, source responsibly, everything that falls within their traditional boundaries. Many of these initiatives save money and reduce exposure to risk. These activities make sense from an efficiency standpoint and from a purely ethical point of view- but they are quite simply the very minimum society and a prudent shareholder should expect.

Increasingly, the more progressive companies recognise that by harnessing commercial nous and capacity for innovation to tackle social and environmental challenges, they can open up new revenue streams and help to trigger systemic change, thus safeguarding their organisation’s long-term prospects. Unilever is amongst the private sector leaders which has also recognised the need to work more collaboratively with governments, NGOs and other players within its own sector to speed up progress- ‘by working together, we believe that fundamental change is possible in the near term.’  Regular readers will not be at all surprised to hear how much I am in favour of this partnership approach when executed well, for reasons I explain Here and Here. It’s also something the post-2015 Sustainable Development Agenda looks set to endorse.

This shift from corporate responsibility to a more deliberate social innovation strategy is also visible in the rise of corporate venture capital (CVC) investing, in which large companies take an equity stake in a business to which it also provides expertise and guidance. Crucially, CVC investors increasingly look for a positive social and/or environmental impact as well as a strategic match with their core business and a sound financial return. The Volans report ‘Investing in Breakthrough’ provides an interesting study of this trend, featuring case studies from Intel, GE, Patagonia and Pearson and highlighting the potential of corporate venture capital as a driver in the social economy.

I am encouraged by Vodafone and Unilever’s attempts to use their considerable resources for good. The execution may not be perfect- but their programmes share a willingness to go beyond operating responsibly, to think creatively about the transformational change they can effect using their organisation’s unique access to technology, skills, scale and influence. It is something Walmart CEO Doug McMillan and SVP Sustainability Kathleen McLaughlin call long-term capitalism. In a recent essay for McKinsey they observe:

“If in the past 20 years the discussion has been about the need for business to serve stakeholders beyond just the customer and the shareholder, the next 20 years will be about the need for companies to improve the networks and systems they depend on. Leading businesses are actively using their scale and their particular assets to accelerate progress on tough social and environmental issues”

Are there any downsides? There are vocal detractors, such as George Monbiot who forcefully question the right, and desirability of corporations to assume the role of societal do-gooders- attempting to tackle social ills that, in his view, should remain the domain of government and NGOs. Perhaps, also, you might reasonably argue that this focus on transformational solutions encourages a bias towards product and service innovation, feeding an obsession with growth at all costs when we are in need of innovative ideas to cement responsible operations, rein in consumption and bring resource use safely within planetary boundaries. This may be true, but handled right, and with sensitive leadership, I think the transformational trend could have many other benefits.

Harnessing the power, ingenuity and influence of the private sector for good has enormous potential. Not least- people will get this. Employees will feel galvanised by it in a way that they quite frankly don’t by a plea to put their recycling in the right box. Do it right, resource it well, and this is as exciting for employee engagement for sustainability as it is for the potential impact it could have on the wider world. This new appetite to tackle systemic change opens up all sorts of possibilities for cross-functional, cross-organisational and cross-sectoral project teams. It has always nagged at me that perhaps we have been trying to engage people on the wrong things- because tinkering is dull. It is still hugely important to manage operational impacts- but they should not spearhead our employee engagement efforts. Where the exciting stuff happens- the new business models, ideas, services, circular economy thinking- that’s where people will want to get involved- and where they will be able to use their existing skills most effectively.

There is an excellent organisation called the League of Intrapreneurs dedicated to supporting employees in large organisations to innovate for good, 'transforming business from the inside out'. If companies do more to legitimise this sort of intrapreneurial spirit, to encourage work on ‘transformational solutions’ such as those attempted by Vodafone and Unilever,  I think we would find employees coming to work with a renewed sense of purpose.

And how powerful would that be?

by Jenny 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

Much of Oak Grove’s philosophy is based around the idea that if a business is going to create a new product, service or way of doing things- it should be doing so responsibly and preferably responding to a genuine need rather than engineering wants. More innovation projects, especially those looking at entirely new business models or revenue streams, should focus on creating a positive social and/or environmental impact as well as a healthy financial return. It’s a concept the burgeoning social enterprise sector has embraced- but it’s arguably far easier to start with a blank sheet of paper, with the start-up’s freedom to create a viable business model suited to your sense of purpose. In mainstream business the pockets of social and environmentally driven innovation are harder to find. 

Let’s not be too downcast- we know it can be done. B&Q is developing power tool rental and repair options- a circular economy holy grail switch from product to service. Interface's commitment to closed loop, modular carpets was famously triggered by Chairman Ray Anderson's 'spear in the chest epiphany.' There are plenty of nascent examples of ‘green’ product innovation, particularly in the automobile sector where the penny has well and truly dropped that electric cars are the future. (See my blog on BMW’s i3). 

Despite all this, the responsible innovation tide has not turned yet for most businesses. So what’s stopping us? Justin Adams, The Nature Conservancy’s new Managing Director for Global Lands in the UK and former BP renewables executive has some interesting 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. Large corporations want to work more responsibly but can’t get there on their own—that’s why our work with corporations is so important. Part of protecting the lands and waters on which all life depends is determining how to make that mission an integral part of economic development”

Although Justin doesn't elaborate on what these forces might be that so efficiently prevented BP from innovating 'away from its core competence', one can well imagine they ranged from investor interests, urging more immediate returns, to cultural factors and a strong temptation to stick with a tried and tested profit generator that doesn't require major restructuring or risk-taking. History has a few lessons to share from companies who clung grimly to their original business model despite warning signs that the market was beginning to shift under their feet- and paid the ultimate price. (See the follow-up blog from Jesper Ekelund elaborating on this here)  

I have to agree with Justin on the huge potential of partnerships to tip the balance. It is, perhaps, unrealistic to expect businesses founded on a particular model to make fundamental shifts towards more environmentally and socially regenerative methods of income generation in isolation. The status quo is often too strong a straitjacket. This is where the power of partnerships comes in. Not just partnerships between businesses and NGOs, but collaboration at every level, incorporating insights and challenges from customers and stakeholders, competitors and sceptics. 'Critical Friends' with the ability to ask the obvious, sometimes uncomfortable questions and suggest left field solutions. Such an approach doesn't neutralise those cultural and institutional forces every large organisation will inevitably face, but it might just help you pull in the right direction.

After all, if you wanted to rewire your house to make it safe- you’d probably ask an electrician. As a business, if you want to rewire your business model to fit within planetary boundaries- you surely need input from organisations whose mission, expertise or interests are geared to this purpose. 

by Jenny Ekelund

The Institute of Environmental Management and Assessment (IEMA) launched a major initiative in September 2014 shining a light on the green skills deficit. The Skills for a Sustainable Economy campaign, of which Oak Grove is a founding supporter, highlights IEMA research showing that only 13% of organisations are confident they possess the necessary skills to compete in a sustainable economy. As such, they are ill-equipped to weather what the Institute calls 'the perfect storm' and make a successful transition to 'the system which provides the only viable future for business.'  

This is, of course, hugely relevant for education providers and young people too. How do we ensure we provide appropriate career pathways and training opportunities for new entrants to the workforce? IPPR research published in the summer highlighted a grave mismatch between what young people are training for and the types of jobs available- with 868,000 16 to 24-year-olds out of work. Somehow, we must connect the dots.

Earlier this month, IEMA published a position statement calling for collaborative action between business, government and the education sector to address this critical issue. The document calls for sustainability skills to be 'mainstreamed'- and for the incoming government in 2015 to develop a sustainability skills strategy as a matter of urgency. Vocational skills essential for the new green economy must be consciously developed alongside strategic and organisational capabilities essential to sustainability literacy. Crucially, this applies to the existing workforce just as much as it does to the next generation- we cannot afford to wait.

The IEMA campaign is geared primarily towards addressing the skills gap faced by industry- but highlights that this cannot be done without collaborative systemic change and substantial partnership work. The report emphasises the importance of systems thinking in transitioning to a sustainable economy- and this for me was one of the most significant points. Systems thinking, the ability to consider how processes interact within a whole, in this context implies 'appreciating that our current economy cannot work in the long-term and reframing the systems within it to deliver one that is capable of equitable growth within the natural limits of the environment.'  This concept is poorly understood in modern industry and teaching of it in schools, universities and further education establishments is rare. IEMA makes a particular plea for business schools and MBAs to ensure that systems thinking is a core part of their teaching and that it is consciously linked to sustainability challenges and opportunities faced by business. 

This campaign is ambitious and timely. It has the potential to galvanise the change that is needed. The recognition that technical 'green' skills and leadership competencies must be upgraded alongside an increased ability to think systemically is vital if we are to transition to a sustainable economy. Equally crucial is the call for government, business and education providers to work together on this- an investment in skills that will benefit us all.

by Jenny Ekelund 

It is no longer news when charities and business choose to work together on sustainability. Twenty years ago, an initiative such as 'Refrigerants, Naturally', drawing together Greenpeace, Unilever and McDonalds would have been unthinkable. Nowadays, it is rare to find a charity that has not, at some point, worked with a corporate partner on a shared programme- whether on a simple cause-related marketing campaign (more akin to philanthropy) or on a complex, balanced partnership involving skills exchange, perhaps, or the joint development of socially responsible technologies or training. 

There will always be those who feel the private and voluntary sectors should keep firmly to their own territories, allowing NGOs to carry out their mission freely without compromising their reputation and safeguarding their essential ability to criticise without restraint. It is very healthy that these critics exist- ensuring NGOs enter into partnerships having asked the right questions and feeling entirely able to end the relationship should they no longer feel it is consistent with their mission. Equally, corporate partners must feel confident that their initiatives will stand up, internally and externally, to accusations of greenwash and tokenism. It is imperative that both parties can demonstrate the partnership has impact.

The ambitious post-2015 Millennium Development Goals agenda promises to raise the stakes yet again for multi-stakeholder partnerships. As collaboration between sectors becomes more the norm than the exception, as I believe it must if we are to accelerate the transition to a sustainable society- quality is absolutely key. There are some fantastic resources available to those seeking to set up and run partnerships for sustainability- detailing the nuts and bolts of how best to organise budgets, ensure a healthy balance of power and evaluate impact, for example. The Partnering Initiative is a great place to start- collecting together a vast pool of knowledge from those who have worked in the field for decades and offering case studies, training and support.

Whilst the potential rewards may be great, cross-sectoral partnerships are, by their nature, challenging, time intensive and frequently frustrating. There are many ingredients for a successful partnership, but reflecting on my own experience, I believe it helps to keep the following three things in mind:

Remember that people and relationships matter hugely
Of course, working relationships take time to develop, and cross-sectoral working is not usually comfortable. However, if your partnership team is obviously floundering, be prepared to do something about it. Whether it be investment in training to develop partnering competencies, or a rethink of team responsibilities, ensuring an effective working dynamic is critical. After all, confident partnership managers with the right skills will leave the partnership in the best possible shape to handover when they move on (which they probably will.)

Write a clear Memorandum of Understanding (MoU) at the start but be prepared to amend it
You won't be able to foresee all the ways in which the partnership might develop, but starting out with a clear set of common objectives (obvious though it may seem) is vital. Build in the option to make additions to the MoU in the future, should an interesting opportunity arise- and where possible, keep the document as simple as possible. 

Where possible, move towards longer-term partnership agreements
Of course, all partnerships are different and programme durations should be designed to best serve each initiative's aims and objectives. However, there is often a tension between the NGO for whom long-term funding security is important and the company for whom the ability to switch budgets and priorities is equally important. Somewhere in between may help build momentum and commitment on both sides. Starting with a one year pilot and pledging to develop a three year programme, for example, will save administration costs, allow longer-term planning, promote learning and reflection and cement relationships. It is rare that great things can be achieved during the course of a one year partnership on annual renewal, and the burden of yearly renegotiation can kill enthusiasm and innovation on both sides.

by Jenny Ekelund

BMW may have taken its time entering the electric vehicle (EV) market, but its latest offering, the carbon-fiber i3, is creating a stir in the motor industry.

What makes the i3 interesting is the thinking that went into its design. Jacob Harb, Head of Operations and Strategy explains: [the project]..started a decade ago, looking at how to ‘future-proof’ our business…it sounds a cliché, but we really started with a blank slate, we re-examined the design process from the ground up. Sustainability and innovation are embodied in the i3.”

The result is a carbon fiber chassis, 50% lighter than steel. Amongst other efficiencies, production uses 50% less water and 70% of the energy used in conventional processes.

Designed with disassembly in mind, the i3 is an impressive 95% recyclable. Perhaps just as importantly, it is the sort of car you can imagine people aspiring to. It’s not a half-baked nod to sustainability, it’s a car that expects to capture a good portion of the market on its own merits. The i3 may well shake up the burgeoning EV market and push its competitors (the hitherto dominant Chevy, Nissan, Tesla and Prius) to go one better.  This can only be a good thing- for consumers and for the environment. It’s a good example of a competitive marketplace driving a ‘race to the top’, stimulating more creative thinking to solve our sustainable transportation challenges faster.

Delve a little deeper into BMW’s story, however, and you’ll discover that supply-chain and community collaboration also played a key part in creating the world’s first mass produced carbon fiber vehicle. Carbon fiber is pricey. Very pricey. So in order to make the production process cost effective and reliable, BMW formed a partnership with SGL Carbon SE and opened a hydro-powered carbon fiber plant in Moses Lake, Washington. The two firms worked with a local community college to train employees for the plant, which created 80 new jobs, and according to SGL’s Managing Director, Dr Joerg Pohlman aided in “starting the production at a high level of quality and efficiency.” Without the bold $100m invested in the Moses Lake joint venture, BMW’s vision may have stalled.

The i3 is an interesting example of an innovative, more sustainable product created for a highly competitive market. Yet it is also a useful case study in collaboration and the value of well-managed partnerships in creating social and environmental value.

It’s a conclusion Darwin arrived at more than a decade after the publication of On The Origin of Species. In the Descent of Man (1871) he outlined his conviction that cooperation and reciprocity were as essential as competition to the evolutionary process. According to philosopher Roman Krznaric, Darwin’s new thinking was “largely neglected at the time, and we are only beginning to recover it now.”

Perhaps what businesses really need to help solve the knottier social and environmental challenges of our time is more of this kind of thinking- a philosophy that balances intelligent and well executed collaboration with an ability to compete (and fight fairly!) in the evolution of ever more effective and sustainable products and services. Perhaps then we might realise the true power of the emerging social economy.

by Jenny Ekelund