New Champions and distributed leadership trend
During the closing remarks of the World Economic Forum’s Annual Meeting of the New Champions, held in Tianjin, China, Klaus Schwab, Founder and Executive Chairman, World Economic Forum, argued that the unfolding crisis presents a tremendous challenge to the existing financial order. “This is probably the first transformational crisis of our globalized age,” he said . “Many things will change.” While several of the world’s leading businesses in recent weeks have disappeared, new corporations will emerge from around the world to take the lead. That, in a nutshell, has been the founding insight for Volans - and our aim is to identify and support some of the highest potential champions of the new economic order, most particularly those in our Trailblazers portfolio.
In a poll conducted during the event, participants pointed to the current crisis as the greatest threat to global growth over the next 12 months. Old and new stakeholders need to work together to meet this common challenge, argued Robert Greenhill, WEF Managing Director. Meanwhile, the Forum’s Global Growth Risk Report 2008 argues that risk is exacerbated by focusing only on the current crisis and not planning to move beyond it.
Unsurprisingly, a majority of participants agreed that the greatest opportunities for growth lie in Asia and particularly in China. But now, more than ever, the participants concluded that real leadership is required, and that, while China’s US$ 2 trillion in foreign exchange reserves may make the country wealthy, it is unlikely that China will become the world’s sole leader. More than ever, leadership must be cooperative to weather the current, transformational crisis. “The whole notion of leadership has shifted,” Schwab concluded. “Leadership today is much more distributed.” And that, we believe, is where the power of unreasonable people fits in.
Earth Overshoot Yesterday
Unhappy day. September 23rd, marked yet another unfortunate milestone: As of yesterday, humanity is estimated to have consumed all the new resources the planet will produce this year, according to the Global Footprint Network . For the rest of 2008, they conclude, “we will be in the ecological equivalent of deficit spending, drawing down our resource stocks – in essence, borrowing from the future.”
They continue to say: “The recent bank failures in the United States have shown what happens when debt and spending get out of control. We are seeing signs of similarly disastrous consequences from our ecological overspending. Climate change, shrinking forests, declining biodiversity and current world food shortages are all results of the fact that we are demanding more from nature than it can supply.”
Globally, we now use the biological capacity of 1.4 planets, according to Global Footprint Network data. Earth Overshoot Day (also known as Ecological Debt Day) was devised by Global Footprint Network partner NEF (New Economics Foundation). Each year, GFNcalculates humanity’s Ecological Footprint (its demand on cropland, pasture, forests and fisheries), and compares this with the amount of resources the world’s lands and seas generate. In 2008, the calculations now suggest that in less than 10 months we consume what it takes the planet 12 months to produce. “Humanity has been in overshoot since the mid 1980s,” GFN notes, “when the first Earth Overshoot Day fell on December 31, 1986. By 1995 it was more than a month earlier, arriving on November 21. Ten years later it had moved another six weeks earlier, to October 2, 2005.”
One key metric for the success of the movements and communities of which Volans is part will therefore be to start the clock hand moving back towards December 31 - and, eventually, showing a building process of regeneration. But with billions of new people expected on Earth by mid-century, coupled with the spread of consumerist lifestyles, the likelihood, however hard we work, is that our ecological debt will continue to grow for the foreseeable future.
Opening Maps and Rhizomes
As we work to develop the ‘Pathways to Scale’ framework to help social innovators mainstream their ideas and business models, we are wide open to sources of new ideas and ways of looking at the world. Indeed, being ‘open’ has triggered a peculiar chain of events.
We are developing a 5-stage model that goes by the acronym ‘OPENS‘. with the goal of opening doors, possibilities, and new markets to innovators seeking to solve social and environmental problems. It was therefore intriguing to come by an exhibition of contemporary Latin American photography called ‘Opening Maps’ (Mapas Abiertos).
The exhibition is an authentic journey through Latin American identity, its political and social struggles seen through the subjectivity of the artists and their cameras (picture below, credit: Tatiana Parcero). The intensity of the themes evoked Eduardo Galeano’s classic book ‘The Open Veins of Latin America‘, which describes five centuries of Latin America’s exploitation; a history that forms the basis of today’s political, social and economic injustice.
One of our central concerns is the process by which innovators influence incumbents, who usually have little incentives to address the market failures in the status quo. So these parallels with the opening of routes, maps, and veins felt therefore part of a larger, single narrative.
This single narrative around the ‘opening’ social transformation seems to move freely across organizations, regions, and social classes. It suggests a connectivity of political projects, led by (apparently) disconnected groups of individuals — leaders, artists, thinkers, managers, and the ordinary people that attend exhibitions, read manifestos, and join revolutions.
The work of modern philosophers Charles Deleuze and Félix Guattari is useful to understand this phenomenon. In their book ‘A Thousand Plateaus: Capitalism and Schizophrenia‘ they have borrowed the botanical concept of “Rhizomes” to refer to the way knowledge (including ethics) spreads in society.
A rhizome is a root-like, subterranean plant stem. It is commonly horizontal in its position, and can be thought of as the network-like roots of grass, which shoot and spread sideways. Deleuze and Guattari similarly referred to “rhizomatic networks” as narratives expanding virally throughout society’s disciplines, semiotics, power structures and bodies of knowledge.
The rhizome metaphor is a powerful one, especially for those working to improve the connectivity between actors in order to accelerate social change. The work ahead, in the words of Deleuze and Guattari, should be focused on establishing “connections between semiotic chains, organizations of power, and circumstances relative to the arts, sciences and social struggles.” Spread the word.
Climate and poverty challenge traditional business models
John in Sao Paulo. Photo: Ana Paula Paiva/Valor
The following interview appeared in Brazil’s Valor Economico.
Climate and poverty challenge traditional business models
Certain expressions frequently used in business circles in recent times can be traced back to the thinking of John Elkington. This English sociologist, who for the past 30 of his 58 years of age has concerned himself with issues of the environment and, more recently, sustainability, coined phrases such as “triple bottom line” (the idea that companies should measure the value they add, or destroy, not only at the economic level, but also the social and environmental levels) and its more popular version “PPP - people, planet and profit”.
Co-founder of the research and consulting firm SustainAbility, which enjoys a select and influential portfolio of clients, Elkington is one of the gurus of the global social responsibility and sustainability movement. He has published 17 books, among which the phenomenally successful Green Consumer Guide, which sold over a million copies. In February 2009 he will be visiting Brazil for the final ceremony of the Itaú Sustainable Finance Award, aimed at stimulating academic and journalistic writing on this theme, a project supported by SustainAbility. Below are passages from the interview he gave Valor by telephone from London.
Valor: What kind of changes can you see in corporate attitudes since the introduction of the “triple bottom line” concept in 1994? Have companies made any progress in this respect?
John Elkington: Yes, I think they have made a lot of progress. I look at countries like Brazil and see a growing number of companies, businesses and entrepreneurs taking this path. There still remains, to be sure, much to be done.
Valor: Why, in your opinion, do companies use the language of sustainability yet fail to incorporate it into their practices?
Elkington: It is a very human characteristic that, whenever a new fashion or vocabulary comes on the scene, people play with it for a while. They wear some of the new clothes and try the new words out. I think the same happens with sustainability. When the concept was created, most of the leading companies in the field of corporate citizenship were focused on the environment. Some of them only thought in terms of how much they could save by reducing their energy consumption. They used the term Ecoefficiency, which was adopted by the World Business Council for Sustainable Development. Ecoefficiency is indeed important, but not only from the financial angle. There is also an economic angle to it, in the sense of structuring economies. And there is a social angle too. Many companies, especially in the US, have a difficulty with the social dimension of sustainable development or the “triple bottom line”. To give just one example, retailer Wal-Mart, one of the largest in the world, recently adopted a series of environmental measures and is talking about sustainability, but is not doing very much regarding the social angle.
Valor: What is the reason for that?
Elkington: 21 years ago, when the term sustainability was first introduced, we spent the first two or three years explaining how to spell the word, since no one had ever heard of it before. And now? Now Wal-Mart uses it, General Electric uses it and a host of the most diverse types of companies all over the world use it. I think there are many reasons for this besides just fashion. One reason is the seriousness and importance of the issues involved. Climate change is one of them. There is the whole issue of poverty, the challenge of providing people access to clean water and pharmaceutical products, of producing energy at a cost that people can afford. These are concerns not only for candidates, activitists or governments. There exists a general expectation, the result of globalization, that the corporate world should play a role regarding these issues. This is why I believe that companies are increasingly using the concept of sustainability to describe these challenges that in the past were the concern of governments and no concern of ours. They are beginning to acknowledge the existence of a corporate responsibility as well.
Valor: What are the practical implications of the use of this language by corporations?
Elkington: When we hear people using the language of sustainability we should always say: “It is wonderful that you are so committed to sustainability, but do you really understand what it means?” It is not just a question of cleaning up a factory or doing some philanthropic work. It is a global agenda. Not concerned just with protecting things or saving things. It is about economic change, political change. It is in this context that the “triple bottom line” concept can be useful.
Valor: Does this change include a new way of looking at profit?
Elkington: Unlikely. I do not think we will see any radical redefinition of the concept of profit over the next five years. I think that economies need to be able to measure and generate profits in order to be able to invest in the future. What happens is that people begin to perceive that the current economic and business models are frequently associated with some kind of social or environmental damage that the traditional way of measuring results or profits does not take into account. That is when we see the first leading corporations starting to treat social and environmental results as dividends.
Valor: How do you see this process developing?
Elkington: Certain social entrepreneurs and recently-established foundations have begun some very interesting work on the measurement of social returns and dividends. The real challenge is that, if companies start doing this on their own, financial markets over the long term will not permit companies to aim for social returns if no one is paying for them. There are plenty of arguments about how social returns help companies survive, help legitimize the business and so on, but financial markets do not appreciate this kind of talk. I think that, once again, we are going to need government help to design tomorrow’s markets and put prices on things like ecological systems, natural resources, healthy communities, whatever, in order to help markets understand that companies should look beyond market trends and needs. But I think that, in most parts of the world, we are still far from this stage and there is still a long way to go.
Valor: But how do you see such change coming about, if the market has been king for so long?
Elkington: It is hard to see. I think that market failures, like the problems the banking sector is going through at present, mean that in many countries governments will take action to regulate certain sectors of the economy. Many of them will seek to clean up problems from the past instead of innovating and creating new structures and values. I have gone to the meetings of the World Economic Forum for the past seven years now and it has been amazing to see how the big new environmental and social issues have made their way on to the agenda. Political and business leaders are being virtually forced to pay attention to this new kind of agenda. I imagine that progress will be somewhat checked by the recession, but that it will return even more forcefully in a few years. And financial markets are key to ensuring that capitalism responds in the right way.
Valor: How can the financial system and financial markets make an effective contribution?
Elkington: In Switzerland, one of the world’s largest re-insurance companies – Swiss Re – is extremely concerned with recent trends regarding natural disasters. What scares them more than anything is climate change. Most earthquakes, for example, occur where the population is not particularly affluent – it would be different if they occurred in Japan or California – so the insurance risk is not that great. But climate change is taking place in parts of the world where the population is indeed affluent and has taken out insurance and where the risk for companies like Swiss Re is growing by the day. They are beginning to write into their contracts the environmental standards that the companies they re-insure should practice. It is one way to try to bring about change. At the same time, Swiss Re is a major investor and, in view of climate change, is beginning to rethink its investment strategy. Other major financial institutions have committed to similarly broad agendas.
Valor: What are the practical consequences of this kind of commitment?
Elkington: Today, the presidents and board members of these companies publicly defend this type of agenda. It is not just Greenpeace talking any more. Today’s business leaders have taken up the campaign. And recently they have started calling for action from political leaders. Three or four years ago this would have been unthinkable. Business leaders are waking up. Not everywhere in the world, but they are waking up.
Valor: What practical measures can large corporations take?
Elkington: Large corporations are increasingly requiring that their suppliers, their value chain, adhere to minimum standards regarding the environment, efficiency, human rights and fair trading. If a politician tried to impose new standards, companies would immediately gang up to oppose them. But if Wal-Mart decides that six months from now it will only sell energy-efficient light bulbs, if it announces that it will no longer stock nor sell incandescent bulbs, there is not too much that suppliers can do about it. It is market dynamics that get things moving.
Valor: Your latest book (”The Power of Unreasonable People: How Social Entrepreneurs Create Markets that Change the World”) is dedicated to social entrepreneurs that inspire new business models. Does that go for conventional companies as well?
Elkington: Most people that work in large corporations are not particularly innovative and believe that the way business is conducted today is the way it is going to stay. They forget that individual and global economies go through periods of drastic change, which economists call creative destruction. I think we are going through one of such periods. Social entrepreneurs focus on areas where markets have failed, where they simply do not attend to people’s needs for drinking water, medicine for Aids, malaria, tuberculosis. Where the market is not functioning, they do social business. Companies should use social entrepreneurs as a magnifying glass, as a microscope, to spot future business opportunities.
Trailblazers at work
Homo volans in moat
As the Autum/Fall begins, the latest round of our work with what we now dub our portfolio of Trailblazers has started. These are the 30 or so social enterprises and other innovative organisations we support around the world. In the past week or so, for example, I have been up to Cranfield University’s Doughty Centre for Corporate Responsibility to take part (a couple of panel sessions) in their big event with EABIS and, on Sunday-through-Monday, I was in a small castle outside Leiden, taking part in my first Board meeting with the Global Reporting Initiative (GRI). A brief account of that trip can be found here. The photograph is one I took of a sculpture that stands in the castle’s moat - and which seemed a perfect representation of Homo volans on the lookout for opportunity.
Meanwhile, Pamela has been in the US, doing a three-week stint at Columbia Business School, one of the schools we support as part of Volans Campus.
To be honest, when we came to map out all the organisations we are involved in both as part of our Trailblazers, Campus and Keynote programs, while we were putting together the latest iteration of this website, their sheer number came as something of a shock. On the other hand, we concluded that the sheer diversity and ambition of these organisations provides us with a means to considerably amplify our own impact over time.
Although Volans is unlikely to evolve into a financial venture fund any time soon, we aim to get much better at the art of investing our time, effort and networks in pursuit of social innovation and change. In the process, we would love to hear from people who have developed their own social change portfolios with a similar end in mind.
Silver lining around capitalist market cloud
Long-standing Wall Street institutions are collapsing overnight, the role of the US Federal Reserve is being transformed, investors everywhere are losing complete confidence in the US market and opponents of free market capitalism are pointing to the US situation as proof positive that capitalism without government oversight leads to disaster. It is in this context that entered my classroom in Uris Hall, home of Columbia University’s Business School, to a room-full of 45 MBA students who had signed up for my course, Social Entrepreneurship: A Global Perspective – an elective. Dean Hubbard, head of the Business School, had only hours before gathered the students and faculty to share his insights on the impact of the Wall Street earthquake on the Business School. After all, many of Columbia’s MBAs are recruited directly into Lehman, Merrill Lynch, AIG to name the most recent victims of the debacle.
But the justified mood of gloom and doom stayed outside my classroom. Instead, we talked about the huge opportunity the situation presents to revamp unfettered capitalism which has benefitted a few hugely, some to a degree, but which has excluded the majority of the world’s population from many of the positive aspects of globalization. And because young people are by nature optimistic – and because all people desperately want to believe that change from the current situation is possible – we engaged in an energizing discussion about the emergence of a new breed of entrepreneurs, managers and employees who want more from life than a fat paycheck. I bombarded them with examples from all over the world of individuals who have used their talents to create and run enterprises that are, as US entrepreneur Bo Peabody notes, “fundamentally innovative, philosophically positive and morally compelling” – infecting those who work with them with the belief that they, too, can be agents of change.
But the challenge now – and the chance we have – is to re-examine how these kinds of companies can grow beyond being inspiring classroom anecdotes. Unless we take advantage of the present situation to revamp the way our capital market ecosystem works, our corporate leaders, no matter how well-meaning they may be, will always be slaves to the tyranny of the market.
Learning from the Lystrosaurs
While getting ready to head out to Heathrow and my first board meeting with the Global Reporting Initiative, due to take place in some sort of castle outside Leiden, my mind has been chewing away at the central issue of scaling solutions. Then I read in today’s Sunday Times about new thinking around a complete new class of animals, the pig-like Lystrosaurs, which were among the few survivors of the mass extinction event around 251 million years ago that wiped out 95% of all living species.
One link with the scale issue was the fact that before the volvanic eruptions that caused the extinctions the Lystrosaurs were simply one among a blizzard of species, but the cataclysmic events removed their predators - it is thought that the Lystrosaurs survived because they lived in burrows. They subsequently exploded out across the surface of the Earth, then a single continent, for a golden era of 1-2 million years.
Interestingly, two other small populations of diminutive animals were among the survivors: the cynodonts, that would eventually give rise to the mammals, and the diapsids, that later branched out into the dinosaurs, reptiles and birds.
The article, by Science Editor Jonathan Leake, concludes by quoting a scientist to the effect that: “The amounts of CO2 we are emitting [today] are roughly equivalent to those poured into the atmosphere during the Permian eruptions. Our climate is changing like theirs did.”
In thinking through the implications of the era of convulsive change now coming our way, Volans will need to keep a constant eye on where our team invests its efforts - particularly across our evolving portfolio of ‘Trailblazers‘, profiled elsewhere on this website. Choosing where to place our bets will be as much a matter of intuition and blind luck as of metrics, I suspect, but I am finding that new processes of calculation and weighting are beginning to operate in my brain.
Worried about Black Holes? Well here’s a Green Plug!
Alejandro seems unmoved by the risk of Black Holes at 2 Bloomsbury Place
At home - and in the Volans London office - we have been buzzing with excitement about the launch of the CERN Large Hadron Collider. We’re always keen to know more about our Universe. But when talking in the office the other day with Ben Whitlock, who has been getting all our new computers, BlackBerries, printers and other equipment to talk to each other, someone raised the question whether any of us were worried about the prospect of Black Holes spawned by the LHC? No, I replied, and “Today’s the day we send out a Green Plug.” This was the media release on our new Advisory Board, one of the components of the new venture we have been compiling in recent months. The hope is that these ten extraordinary people - our own Small Idea Collider - will help us view and interact with the wider world in different ways. And we’re working on a parallel experiment, the Volans Ecosystem, of which more shortly.
Lord Puttnam, Eden’s Tim Smit and design guru Tim Bown join former astronaut on Volans Advisory Board
At last we’re under way.
Volans (a name that derives from Pisces volans, the Latin for ‘flying fish’) is airborne. We have new offices, a new COO (Charmian Love) and a new website www.volans.com.
Volans works with businesses and social enterprises. We help them develop and scale market-based solutions to social and environmental challenges by connecting people and ideas, providing insight on market-based solutions and reaching out to the public with our thinking.
Founded in 2008, Volans is a for-profit business based in London and Singapore. Building on SustainAbility’s work in years one and two, it takes on the third year of a 3-year, $1 million grant from the Skoll Foundation, which was founded by Jeff Skoll, the first President of eBay and co-founder of Participant Productions.
The inspiration behind the organisation is articulated in The Power of Unreasonable People: How Social Entrepreneurs Create Markets That Change the World, published by Harvard Business School Press in the Spring of 2008.
Volans has four Founding Partners: Pamela Hartigan was Managing Director of the Schwab Foundation and Kevin Teo ran its Asian operations, while John Elkington and Geoff Lye have a long history with SustainAbility, where both remain on the Board.
Volans is also delighted to announce the members of our 10-person Advisory Board. They are:
— Tim Brown, CEO, IDEO, USA
— Professor Gregory Dees, Professor of the Practice of Social Entrepreneurship and Nonprofit Management, Center for the Advancement of Social Entrepreneurship (CASE), Fuqua School of Business, Duke University, USA
— Frans Johansson, Author, The Medici Effect; MD of Medici Capital Management
— Jerry Linenger, Former astronaut and cosmonaut, and member of Mir space station crew
— Jane Nelson, Director, CSR Initiative, Kennedy School, Harvard University, USA
— Ndidi Okonkwo Nwuneli, Founder/CEO, LEAP Africa, Nigeria
— David Puttnam, Film-maker and member of the House of Lords
— Bunker Roy, Founder of Barefoot College, India
— Tim Smit, Founder, The Eden Project, UK and
— Antonio Soler, Serial entrepreneur, France.
In headlines, Volans has three business units:
- Volans Connects brokers relationships between social/environmental entrepreneurs and mainstream businesses.
- Volans Insight researches, consults and helps build investment portfolios.
- Volans Outreach disseminates the concept of entrepreneurial solutions through the media and keynote speeches.
Simultaneously, Volans announces the appointment of a Chief Operating Officer, Canadian Charmian Love. Her most recent position was with The Boston Consulting Group (BCG), where her project work included planning the inaugural Canadian Social Entrepreneurship Summit and the coordination of the selection process for the Schwab Foundation’s Canadian ‘Social Entrepreneur of the Year’ award. She runs the Volans Core Team, currently numbering 10 people of 6 nationalities.
For more information about Volans, please contact Charmian Love or Sam Lakha , or by telephone on +44 (0)20 7268 0390.
With very best wishes — and with fingers crossed,
John, Pamela, Kevin and Geoff
Volans Founding Partners
HQ in London: Volans, 2 Bloomsbury Place, London, WC1A 2QA, UK
Tel: +44 (0) 20 7268 0390
Fax: +44 (0) 20 7268 0391
Office in Singapore: 5 Tanjong Rhu Road, #17-02 The Waterside, Singapore 436882
Website: http://www.volans.com
Latest Dow Jones Sustainability Indexes
The Volans team is currently racing to get the many components of our new website ready in time for our ’soft launch’ later this week. One component of that work is a pulling together of the nearly 30 organisations that we now serve as members of boards, advisory boards or similar. One of these is the Dow Jones Sustainability Indexes initiative run by Sustainable Asset Management - and they have just released their latest company listings. Well worth a look.