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Archive for the ‘entrepreneurs’ Category

Sustainability should be much simpler than what we make it out to be. It’s not very complicated – take actions today that leaves the world in a better or no worse place for future generations. But the devil is always in the details. And this made me think a little of what are the different levels of sustainability. And how the concept of sustainability and the current trends influence business in the future. I’m sure this is way too simple so feel free to chip in and help define the levels of sustainability. These are rough thoughts that was hatched during my daily commute on public transport and therefore very rough…

Why make these distinctions? Because it helps us know how to work with and help each company. They are all very different and needs to be treated differently. Many moons ago I had a client who asked me to help them become “like Timberland”. My response was pretty straight forward – “You know you are an extractive company, right?”

More importantly, it helps us think of the future of sustainability. We know what a sustainable future should or could look like – what role does business play in this future?

1. I don’t do sustainability

There are many companies out there who just plain do not believe in sustainability. They believe in one thing and one thing only – increasing their ROI for the next few days. Even a quarter is a long-term vision for them. They will campaign against anything that asks them to take their impact into consideration – climate change, labor rights, equality in the workplace etc. They will comply to local laws because they have to and not always because they want to. That’s why they lobby and fight against so many of these laws. They will take subsidies without thinking of their own responsibility. They will cut corners where they can – and in most cases stick within the law. They will sell you snake oil and call it green. They’ll do the minimum and think that is the actions of a responsible company. They will use meaningless words and phrases that sound cute but mean nothing like “the business of business is business“. I won’t spend too much time on these companies. Arguing with them is a losing fight. They see what they want to see and nothing we can say or do will make them change their ways. I won’t invest in them and I won’t work with them. There are just too many other companies trying their best and who needs counsel, help and support. Let’s rather focus on those who see the sustainability of their company and the world as linked to their business bottom line. In any case, I don’t believe these companies will survive for long. History shows us that companies that think this way eventually just die a slow death. Eventually society will see them for who they are – in it for themselves and not really part of society.

2. I act responsibly

Of course there are a range of companies who just aren’t sustainable. The nature of their business and/or their current business model means that they can act responsibly but the company itself cannot be seen as sustainable. They must change how they source or manufacture over time to become sustainable. It doesn’t mean that they can’t be good corporate citizens. Many if them are good citizens who act with great responsibility. I see them as the CSR group rather than the sustainability group – a small but important distinction. Let me use an industry as an example. Most companies in the extractive industry just cannot be seen as practicing sustainability. They take stuff from the grounds and can’t replace it. They can’t leave that specific world in the same or better place. It’s a stretch for them to claim that. I worked with a very well respected luxury goods company and they refused to use the word sustainability. When I asked them why their response was “Because we mine diamonds and can’t put it back. And eventually we will run out of diamonds.” When will they run out of diamonds? Who knows! But the principle is right. But they do incredible work – one of my top 5 companies when it comes to CSR. Incredible work. They do everything right when it comes to sourcing their diamonds, adding value in developing countries where they source from, refuse to buy rubies from Burma, lobby against unsustainable mining practices – they tick all the boxes. But the nature of their business means they take full responsibility of their impact and are incredible corporate citizens – just not sustainable. This is in no way knocking them. Many of these companies do incredible work in difficult circumstances and delivers a product we desperately need today (and tomorrow) – we can’t live without them. I am proud to be associated with them and to work with them. So many of them are shining examples of what responsible businesses could and should be doing. Those in the group who practice sustainability can learn from these companies on what true responsibility in communities and supply chains mean and how to measure and reduce your impact in the world.

3. I am sustainable

Sustainability is slowly but surely becoming mainstream. More and more companies are embracing the discipline of sustainability to build a better business for the future. They have practices that highlight what can be done to make business work and help secure our joint future. They source in ways that do not deplete these resources. They take action on their energy use and tackle climate change in action and voice. They treat workers with respect and speak out against injustices. They will help their suppliers to become more sustainable themselves. They will take responsibility for their products and empower consumers to take responsiblity where they have a joint responsibility – such as driving recycling with consumers. These are the companies who are the leaders of today. They believe in values adding value. They know their future business success is tied to the sustainability of the world around them. The way they operate, source and manufacture, ensures they still have the ability to operate this way in future – the resources are replenished to ensure a better or same tomorrow. The world will be a poorer place without them. In so many ways.

4. I help make the world sustainable

This fourth category is the one that bugs me the most. It’s the most challenging and most complex. Maybe I should break it up into more levels of sustainable businesses, but for now I will keep the three distinctions of this group here.

The easy part is identifying those social innovators and entrepreneurs who focus on developing a business solution to a social problem. They are different from group 3 mentioned above because the nature of the products and services of group 3 is not aimed at a social problem but more about the “wants” of people. Most of the purchases of today are not because we need it but because we want it. We think we need a tablet but we don’t really need it, we just want it. A smartphone is a luxury and not a need. How many pairs of shoes do you need versus how many you want? Companies who are in group 3 still sells products in the “want” category but do so by taking responsibility for their actions and impact by making sustainability part of how they source, manufacture and take responsibility for their final product (waste etc). The social innovators focus on creating products and services society needs – new ways to get clean water to the poor, medicine people need to survive, nutritional products aimed specifically at groups in need, renewable energy solutions in challenging environments, energy-efficient cars (it’s more of a need than want if you only have one car!) – and much much more. They link the need of society to new product or service development and build a business around that. In some cases they might be a non-profit but the principle is still providing a tradeable solution to societal needs – micro-financing is a classic example.

Some of the companies in this category falls outside of this social innovation group though. They are still innovators but they actually focus on the want and not on the need. They develop new products and services that still deal with the current consumer behaviour of buying more stuff that is cool. They tap into the pop culture and fashion of the day and gives it a unique spin by giving it a social value over and above the hip new product. Think of TOMS. The product they sell isn’t unique and neither did they bring a product to life that deals with a specific societal need. They tapped into the mainstream consumer market by creating a cool new “I-want-that” product that has a huge societal benefit attached to it. The business model is very unique but the product itself is not. The concept itself is not that unique either. It is a logical evolution of cause marketing coming into maturity. From attaching a cause to a product to the cause becoming central to the product concept development itself.

The 3rd and last group in this category is the one I struggle with the most and my ideas are still only half-baked here so please feel free to rip it apart. But humor me for a moment.

All of these businesses in this group and the other categories still work within the system we know – sell more products and services to consumers. It operates within the current system. The challenges we face as a society today is challenging this system though. The question being asked is whether we can continue to expect these levels of consumption and be a sustainable world? I’m not talking about a narrow definition of sustainable consumption. Sustainable consumption debates have focused on selling more sustainable products and taking responsibility for your product post-consumer- whether it is how they are manufactured or used. The premise remains the same – sell more stuff. Sell stuff to increase ROI by creating new markets or pushing market share.

Is this system itself sustainable though? Can we really expect to build a more sustainable future by maintaining the same credit levels and expecting people to continue to buy more things? Let me give you an example… Are we any closer to sustainability if every single pair of shoes sold in the world now and in the future is made by TOMS? If we buy TOMS at the same rate of growth – does that make the world sustainable? TOMS might have a great business model but the world can’t handle buying at the same level we’ve had over the last 10-30 years – even if it is TOMS…

That is the essence of the challenge for companies – how to change the business model to remain profitable in a world that needs lower consumption levels and somehow keep investors happy. This would be the next level of business and sustainability. But this is a balancing act that is asking a lot…

The honest truth is that I have no clue how we can do this. Like I said, it’s just something that is bugging me at the moment. Somewhere the answer lies and I believe that good businesses, and society in general, will come up with an answer. We don’t have much of a choice as the runaway levels of consumption is not sustainable. And neither is the continuous pressure on the business bottom line via squeezed margins and market share. We’re close to a tipping point.

This goes way beyond the “Shared Value” concept. Shared Value argues we look at where business and society intersects and finding the joint value in that relationship to drive business and societal benefits. But what if the real value is to share less?

I don’t have the answer. But it’s worth exploring the options as doing nothing might not be an option for much longer.

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Give us a bit of water and some sand and we will build the Empire State building. It amazes me how innovative people in Africa can be. Natural born entrepreneurs. I know we have loads of issues and problems – and our own baggage to carry as well. But some of the things we do when we get our hands on something new is just “awesome”. (I have been in the US for too long! Picked that one up from my daughter…) The way people in Africa use mobile phones and the Internet in Africa is way beyond what any of us (or foreigners) predicted or dreamed of.

I know. I said that we in Africa are staying disconnected from the world. But that is just part of the story. Yes, we struggle to stay connected but don’t give us half a chance or we will rule the world. Once we get off World of Warcraft or Facebook. Boy are you lucky we don’t use that too often. Imagine people who like being connected to each other having the opportunity to do social networking while in different places! World here we come! I wonder if we will ever get off the Internet and still live and interact with each other if we were given that opportunity? Thank god for staying disconnected – it allows us to stay connected.

But I have two other stories about us and our version of web 2.0 to tell you about. The first one starts in Zimbabwe…

Yes. Zimbabwe. The country that is going through hell at the moment. And it has been going on for the last few years. But give someone a mobile phone and see us fly. OneWord Africa (one of my favourite sites – hidden agenda, I worked with them for a while a few years back. Hi Patricia!) reported on how people are using mobile phones to go hi-tech in campaigning for the upcoming election. It is not that easy to campaign in Zimbabwe at the moment. Crazy Uncle Bob isn’t what he used to be. Democracy isn’t what it used to be in Zimbabwe. He isn’t allowing much freedom for people to campaign for anyone other than him. And he instigates violence and riots against the opposition. So what are people to do?

Well. He made the mistake of allowing people to have mobile phone. And when you have some water and sand… We campaign. The people in Zimbabwe text each other left, right and centre to get the message across. But not just personal messages. No way. They do it African style. In a way to make sure people know where it comes from and who they all support. A group with no place to meet – but a group none the less. They text a message that identifies them as a supporter of a specific party or person. A simple “Vote for Simba” to highlight support for Makoni and a longer “Have you not suffered enough? Morgan is the solution” for Tsvangirai’s faithful. Simple, but beautiful and genius. Bob – you control the radio, television and newspapers, but you can’t control the keypads.

But they don’t stop there. No way. They go further. Ring-tones. Here it is more about opposition to Crazy Uncle Bob than support for an individual. The opposition play a local song, which asks in Shona: “How long will you vote for ZANU-PF?“. Pure genius. People phone you and others hear. One snag. Run when the phone rings and you are close to the police! Pure genius for keeping democracy alive though. I almost gave up hope on Zimbabwe, but the people proved me wrong again. And I like being wrong in cases like this.

My other story comes from one that was told to me by Martin Feinstein a few years back. He used to run Proudly South African, but now runs Enablis that tries to help entrepreneurs use the Internet to enhance their business – and support them financially and with management support. (I can’t vouch for them. They have good methodology, but I don’t know how effective they are. Just haven’t been keeping an eye on them. So this is not a plug for them.) He was telling me about this guy in Soweto who found a brilliant business idea – a pure win-win (almost). And all he needed was a computer and a shipping container for an office and storage. His plan? So simple. He used to go to one of the markets every single day to buy his stuff. And there were hundred, if not thousands, of women selling their goods. But they closed every single Monday to go to the wholesaler to buy their stuff they sell. They all got into the taxi’s and travelled into the city to buy their goods.

And what a loss for their business. No discount because they bought little amounts at a time. Loss of business for the day they were closed. And money for their travels. And the wholesale had to deal with so many people at the same time. His idea? Why not get them to place their order with him and he logs it into the computer and sends one order (with separate packaging) to the wholesaler. The wholesaler then delivers because it is a huge order and gives him 15% discount for the large order. That is his cut – the 15%. The women didn’t pay anything more than the usual and actually saved because they didn’t have to pay the taxi. And they were open on Monday’s for an extra day of business. Genius isn’t it? Everyone won. Okay – the taxi guys lost out, but less sympathy there with their driving skills… The plan was not rocket science, but still genius by the guy to see the opportunity. (Sorry – never got his name.) And what did he want from Martin and them? Just help to get a container and a computer. Less than $2,000 and bam you have a highly profitable business. I love that story – it tells us so much about the entrepreneurs hiding away all over Africa.

Okay, so it is not the typical web 2.0. But we are not “typical” in Africa either. We take technology and turn it into something that helps us make our society better – and ourselves better. The fastest growing mobile phone users in the world? USA? UK? Maybe India or China? Try Africa. We have few landlines. No problem – we’ll go wireless. Yes, we are disconnected from the world. But we are so connected between the ears.

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The capitalist have left the building. We just can’t find them anymore. Everyone seems to be a social entrepreneur (when they aren’t green investors). Do-gooders with with spreadsheets as they are called. People who take a social need and turn it into a business.

And we have some classic examples to look up to. Aussie Nic Frances whose group, Easy Being Green, plans to cut carbon emissions in Australian households over the next 10 years. The business? He hands out free low-energy light bulbs and low-flow shower heads in return for the rights to trade the carbon emissions the equipment will save. Nic sells the carbon credits to industry, and is now aims to take his business global.

Isaac Durojaiye runs a franchise in Africa. In a continent where children die from diarrhea from bad sanitation, Isaac supplies mobile toilets to slum areas and young people run the franchise in the slum. They keep 60 percent and the rest goes to Isaac. And Africa is a large continent with a huge market to expand the franchise.

Bottom line (no pun)? Their business address a social need AND they make money from the enterprise. Of course, they put more money back into the business to buy more light bulbs or more toilets – a typical business expansion strategy of investing back into your business for expansion. And I am sure they take enough to ensure they don’t suffer too much.

But there are other classic examples of social entrepreneurs. Another classic example of a business idea that started with a focus on a social need and expanded this globally? Wal-Mart. Sam Walton started with a very basic idea of offering the community what they needed and wanted straight after the Second World War – stores that offer goods at the lowest possible prices and that stayed open later during key holidays. He passed on the saving he made from buying from lowest priced suppliers to his customers. A basic social need of the time developed into a business model social entrepreneurs have duplicated ever since – give people what the need at a price they can afford. If it works, give it to more people.

At the heart of almost every large business lies the social entrepreneur. Timberland started from the idea of giving working people a set of work boots they can afford and that will protect them from the elements they have to face in their work. McDonald’s from giving people, who work long hours and earn low wages, quick and cheap food they can have ‘on the run’. Pfizer from the simple need to make medicine taste better. The Home Depot from the need to give people the tools and skills to do the DIY job themselves. These companies were all started by social entrepreneurs.

The challenge for most companies is to remember why they started in the first place and ask themselves – are we still serving a social need? And for our future growth – what social need can we serve to continue to grow as a company, still be socially relevant and needed by society. And no one said you only had to serve one single social need through your business. There is no reason why you can’t give people goods at an affordable price, lower your environmental impact, and provide your workers with health care and pension. Ask Tesco’s, the Body Shop, Ben & Jerry’s or Starbucks – they continue to do that. (By the way, you don’t have to like any of these companies. None of them are perfect. Not even Nick and Isaac will go through life without making a mistake).

Now, if only I can find a social need to package and sell it like Nic and Isaac. Oh, I don’t know – maybe a pill to end poverty, a drink that will end hunger, a shoe that provides shelter, a lipstick for good health, or crops that will end abuse.

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