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What We Buy Matters

It's Sunday after Thanksgiving. Christmas must be tomorrow, or maybe "Black Friday" has become "Black Every Day" based on my email inbox and all the TV commercials I've seen the past few days.

Buying stuff is alive and well.

But something else is in the air, something I'm reminded of as I plow through end-of-course papers written by my students in my course on "Solving Societal Problems Through Innovation and Enterprise." That something else is the spectrum of ways we can vote with our wallets to bend corporate behavior.

I believe that we can shape the evolution of a better society by creating better tests and then amplifying the efforts of companies that pass them (worldchangingbook.com). What follows are sketches, inspired from students, that give illustration. As these ideas continue to percolate, you'll be hearing more from me about nouveau consumerism.

Mia B. alerted me to consumerism for "slactivists." These are people who aren't deeply involved with political or social causes but can be induced to participate when the situation is right.

Carrotmobs (carrot: as in reward, as opposed to a stick) are relatively ordinary consumers who, when given a signal, mob a store that commits to using an agreed-upon percentage of the mob's revenue to make "sustainability" improvements like changing its lighting or buying organic seeds to grow and sell more healthful produce. 9carrots (9: I have no idea) operates similarly by letting shoppers find participating stores, buy lunch or a ladder there, and receive "9carrot receipts," which direct 10% of their purchases to the proprietor's energy upgrades and allow consumers to track these energy improvements.

For consumers, these can be fun experiences, maybe a bit time consuming if lines get long (but, hey couldn't that make them more fun?), and they just buy what they already intended to anyway. Companies learn that a more inclusive way of being tested ("I'll shop at your store more if you're more socially relevant") can help their business.

TOMS Shoes (TOMS: as in "tomorrow," not Thomas) creates a generational dividing line. I've polled friends and family in my age group -- above 30, well above -- and no one (and I've asked at least two people) has heard of TOMS. But as Mary Fritz begain her paper, "It's impossible not to notice that all the cool kinds are wearing TOMS." TOMS combines consumer choice with a business model built at its foundation to create a better society.

TOMS Shoes creates a better world through consumerism by donating one pair of new shoes for every pair that someone buys. This model has placed one million pairs of shoes on the feet of poor children.

Why shoes? When kids go barefoot it shows that they're poor, but it also contributes to their poverty by increasing the odds that they'll contract disease, get injured, or be denied admission to school. Other buy-one-give-one companies are sprouting up, selling everything from eye glasses and clothes to books, food bars, and even services like tutoring.

Whereas 9carrots lets consumers know that, if they need Crest toothpaste, they can purchase it "sustainably" by shopping at a particular store, the buy-one-give-one business model shapes consumer preferences. Consumers view TOMS as "social" shoes and seek them out, creating a strong, "hip" brand.

GoodGuide is a step ahead of TOMS, possibly 140,000 steps. GoodGuide lets consumers choose products based on characteristics covering their entire life cycle (from manufacture to disposal),  helping put in place new and better tests of which products are best.

GoodGuide takes publicly available information and lets consumers conveniently use it to compare various products. Consumers choosing coffee, T-shirts, or even cars can make comparisons based on societal/environmental considerations including their toxicity, greenhouse gas emissions, labor practices, etc. All told, 140,000 products are rated using over 1,000 different indicators. GoodGuide's genius? Making its free information operate in the background on consumers' computers and smart phones while they create shopping lists, order items online, or want to spot compare at the supermarket. Social comparisons become no more burdensome than deciding that 2 for $1.50 is a better price than 1 for $1.

Bigger efforts to promote sustainable purchasing, led by other parties, are under way, too. Those will have to wait for another day.

Still, the best way to vote with your feet may just be to walk the other way. Ask Patagonia.

Patagonia.jpg

Unbuilding Complexity

Building blocks.  I'm fascinated by building blocks. Without them, complexity is impossible. But recently, I've been toying with the idea of "unbuilding blocks" -- elements or processes that can help disassemble entrenched activities, processes, or institutions that are causing the world difficulty.

An arch depends on its keystone for its strength and stability. Similarly, activities, processes, and institutions  -- with all their function and dysfunction  -- might be altered for societal benefit by removing key building blocks, even if we desire fundamental change. How do we remove the building blocks that are producing climatic disaster?  That have created so many "have nots"?  That leave parts of the world centuries behind others?

Musings:

It's 5 a.m., I've walked our dog, made some coffee, and am easing into the day (too early! can't sleep!) with email.  Something drew me to a message showing my LinkedIn Updates, the kind of thing I usually trash without reading, but today I looked at the Updates and saw a post by someone I've met once and don't actively follow (thanks Lev Gonick) -- a link for a crowd-sourced film.

A 4-minute video, a trailer for the longer (still short) film, Connected, begins with an explanation:

On the 4th of July, 2011,
we posted a request online
to #participate in a short film
about #interdependence

Video makers and artists around the world submitted work to illustrate ideas in the film's script.  Online voting determined which snippets made it.   The trailer is being crowd-translated into 100 languages.  So, who made this film?  A bunch of crowdsourcing strangers.














The film has not hit Ann Arbor, where I live, and I didn't make it to Cannes this year.  (Of course, I've never made it to Cannes.)  So I am guessing based the film's website and various online reviews what it's about.  I'm also guessing I'll like it.  A lot.

Fast Company describes this film by Tiffany Shlain as illustrating

"the power of digital connectivity and access to knowledge ... [and the] connectedness between major issues like the environment, consumption, technology, human rights, and the global economy [and] a personal journey of discovery about connections in [Shlain's] own life. The film shows the beauty and tragedy of human endeavor and champions personal connection and how the "power of one" has become digitally exponential."
"Digitally exponential" sounds to me like The Onion describing how to approach a difficult math problem; but never mind, I think I get the drift:  That somehow the right email found me this morning as I'm thinking about how to teach fifty odd students (fifty odd means "approximately fifty") to create change through video.  In our (my) wildest dreams, we'll go viral.  I've never done anything like this before, and neither have they.

The unexpected email, on a topic precisely relevant to my needs, even directing me to a film when I'm wondering what a film about changing the world might look like suggests that our new "connecting technologies" create serendipitous events like these, and far more often than ever before.  And as they do, our interdependence can create something bigger than any of us is even remotely capable of as an individuals.  People are smart. Groups, especially when diverse, are crowd-smart.

Connecting with others can create communal actions in the Arab world powerful enough to topple regimes, so what else might it do? Might it change what what we buy (and so what is produced), what we tolerate and what we won't (to force legislators' hands), how we live our lives (with the impact that has on others around the globe)? Can connecting dismantle building blocks?   

Our progress as a civilization has come from creating an elaborate technological and social edifice, based on simple building blocks at first such as wheels and chieftans, and now involving highly sophisticated building blocks like computer chips and multinational corporations.  

At heart, we are social animals who want, even need, to communicate.  With our family, our tribe, our community -- even as our community includes crowds that we've never met in person. Through our communications, we might begin to remove building blocks.  

Can we create some new unbuilding blocks to create a world that is not racing towards a cliff?  Maybe Tiffany Shlain's movie will provide some answers when I see it.   It's certainly gotten my day going at an early hour.
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Who's going to save the world -- Wal-Mart or the social entrepreneur toiling away with little fanfare?

Let's consider:

Wal-Mart, the world's largest company, sells slightly more than $400 billion a year.  The poorest two-thirds of the planet -- people living $4 a day or less -- spend about ten times that amount.

Each year, Wal-Mart serves 100-200 million customers.  At most, that's less than 3% of the world's population.

Wal-Mart's recent shift from focusing exclusively on everyday low prices to finding profit in acting in pro-social ways has been commendable.  It has committed to creating zero waste and obtaining all its energy from renewable sources.  It announced this week that it will open 300 stores to bring fresh food to inner-city "food deserts" in the next five years (on top of the more than 200 it already operates).  It has entered the low-income banking business in Latin America and, in the U.S., where it can't officially run a bank, it works through partners to offer unbanked Americans low-cost money orders, check cashing, and overseas remittances.

Despite Wal-Mart's heft and new found focus on creating business opportunities from addressing societal ills, it can't meet many of the most basic requirements of the needy. 

In the developing world, access to clean water is arguably the most fundamental need of the poor.  Protection against preventable diseases, including malaria and diarrhea, is close behind.  These are beyond the ambit of Wal-Mart's merchandising. 

Even Hindustan Unilever, with its more targeted efforts to address the needs of the poor, has been unable to respond effectively enough to these needs.  With revenue one percent of Wal-Mart's, Hindustan Unilever does reach deep into Indian rural life through efforts such as its Project Shakti, which creates door-to-door selling opportunities for poor, rural women. (Have you heard of Avon Ladies?)  It recently announced an altruistic effort to study the under-supply of water, and has made previous efforts to help renovate village ponds, manage watersheds, and promote improved water harvesting.  Despite these efforts, clean water remains in short supply, with more than 750,000 deaths occurring each year in India alone from water contamination.   

In the United States, basic needs are under-served, too.  Despite (or motivating) Wal-Mart's food efforts, food deserts exists throughout the country.  (See the USDA's interactive map.)  The consequences?  Poor people eating less nutritious, usually fattening food, or inconvenient and costly (in time and money) travel to obtain food of higher quality.  Likely, too: a higher incidence of serious illnesses and premature death.

Nor is the financial services picture rosy for the U.S. poor.  The FDIC estimates that over one-fourth of all households, accounting for 60 million adults, are unbanked or underbanked.  For blacks and Hispanics, the proportion is approximately 50 percent.  The alternative financial services that these un- and underbanked use -- non-bank money orders and check cashing, payday loans, pawn shops, and others -- are necessary, but costly, ways to live without formal banking.

So, where do social entrepreneurs come in?

Social entrepreneurs provide services where companies are absent, where they don't sell the right products, or where they sell products that are simply too expensive.

Social entrepreneurs (or non-profits) together with companies form a co-adaptive ecosystem.  What companies leave unattended -- in their "background" -- creates the foreground environment for social enterprises, shaping their opportunities .  In turn, social enterprises can serve as a type of free, and early, testing ground for companies.  The success of non-profit microfinance institutions in providing banking services for the poor, for instance, caught the notice of larger, for-profit banks, spurring their entry into the same market.

As
social entrepreneurs prove successful in reaching their constituents, for-profit companies take notice.  And, as companies change their focus, they affect social entrepreneurs.  This interplay has led nonprofit microfinance institutions to serve poorer, more rural customers as larger, for-profit providers use capital markets to offer more, and larger, loans to wealthier segments of the poor.

Today, we are seeing examples overseas of early-market activity among social enterprises in the field of water:  Naandi (water purification and delivery), Wello (water transport and business opportunity), and Sarvajal (a filtration and franchising model). 

In the U.S., healthful food is offered to the poor through a variety different kinds of social enterprises.  D.C. Central is a community kitchen that not only "recovers" and delivers good food headed for waste, but trains low-income individuals for jobs in the food services industry.   Peaches and Greens, a mobile produce market, makes scheduled delivery stops and home-deliveries in inner-city Detroit three seasons a year.  And even urban farming is proving viable, as organizations such as Growing Power, headquartered in Milwaukee, are proving. 

It waits to be seen whether such efforts in water and healthful food will one day be viewed as attractive opportunities for many large companies.

----

So, who's going to save the world -- mega-corporations like Wal-Mart with their size, reach, and efficiency; or social entrepreneurs, who can attack deeply entrenched problems without a slavish focus on bottom-line results?

My answer: both -- by acting and adapting in response to each other even as they continue to do what they do best.

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Evolution and Invention


How can we make sense of all the changes taking place around us?  More importantly, how can we create the change necessary to attack our most pressing societal problems?

 

Short answer:  building blocks.  I will return to this theme again and again in other posts.  But for now: a preview.

 

Eric Beinhocker's Origin of Wealth leans on the theory of complex systems to show how, little by little, a small thing like a wheel gets incorporated into increasingly complex components and systems.  First we see carts, then bikes, then the Audobon.  More building blocks mean more complex combinations built from them.  And these combinations give rise to greater variety, greater sophistication, and greater wealth.

 

Brian Arthur's The Nature of Technology provides a related account, up to a point, but emphasizes how change is not always gradual and continuous.  For instance, piston-powered propeller airplanes began as rather simple machines and performed well for short flights.  But when these planes began to fly at higher speeds at higher altitudes, their limitations became evident.  To address them, engineers began making a series of increasingly complicated modifications until, finally, an entirely new means of powering a plane appeared:  the first jet-engine.  This invention was not further evolution of the piston-propeller arrangement but, instead, was based on entirely different principles.  It was much simpler too, the original prototype of the jet engine having just one moving part!

 

In my book, Design Your Life, Change the World: Your Path as a Social Entrepreneur, I have examined how similar ideas apply to social enterprises.  Often, social enterprises evolve gradually, becoming increasingly effective as they become ever more complex.   As an illustration:  Once, local banks were as much fixtures of communities as mom and pop grocery stores (been to one of those recently?).  Over time, they began to add remote branches and, as regulation allowed, expanded their reach to increasingly distant locales.  These changes were intended to create more efficiency, more competition, and more choice.

 

Overseas, a similar evolution began to include poorer and poorer customers as first, nonprofit organizations and later, for-profit banks began to offer microcredit and other microfinance offerings.  Still, microfinance excludes ten times as many customers as it serves.  Poor clients are expensive to serve, even more so when they are at a distance.  Branches are too expensive in many parts of the world.

 

Yet in Kenya, an invention has dramatically changed the situation.  Much like the jet-engine, which overcame the deficiencies of propeller planes by incorporating a completely new principle, M-Pesa overcame financial exclusion, especially created by distance, by creating an alternative form of money.  Kenyans buy this currency, which is installed on their cell phones.   This e-currency can then be safely, conveniently, and affordably transferred to someone else by sending a financially secure text message.  Urban workers can remit money to relatives in the countryside.  Micro-entrepreneurs can buy trinkets or agricultural products to resell without the insecurity of relying on bus drivers to transport their payments or the inconvenience of taking the bus to make payments themselves.


 

 

 

How successful is M-Pesa?  Over half of all Kenyans use it, nearly three times as many as have bank accounts.  M-Pesa has created similar services in Tanzania, Afghanistan, and South Africa.  It recently created a partnership with Western Union that allows funds transfers to Kenyan M-Pesa customers from 45 countries. 

 

Is this a "one-off," relevant only to citizens without ready access to banking services?  Not at all.  Mobile wallets (as they are known) are moving "up market" to the United States and the rest of the developed world.  Tech stalwarts (Apple, Google, and others), mobile carriers (including Deutsche Telecom, China Unicom, Verizon), and financial institutions and credit card companies (among them Chase and Visa) are all exploring how they can capture this huge, potential market.

 

What was created by the invention of alternative currency has begun to evolve.

 

Let's consider this illustration from an evolutionary perspective.

 

The banking system changed in ways that resemble biological evolution.  New variations (say, bank branches) are tested for their performance (would people use them?) and, when successful, they proliferate. 

 

Producing societal-level change isn't under the control of any single organization.  Consider the environment.  No company or government, of course, "controls" efforts to address climate change.  Yet there are many ways organizations play roles in striving to stem our environmental problems. 

 

How can we stack the odds so that they are successful?

 

By encouraging variation, creating fair and effective tests, and ensuring that winning ideas truly proliferate.  These are not abstract ideas without application.  For instance, the tests performed in the marketplace (profit, sales) give distorted results that fail to account for environmental (mis-)behavior.  As the adage goes, you get what you measure, and we are measuring the wrong things.  Similarly, proliferation can come from replication, but exposing winning ideas to others provides another means to increase their scale.

 

But we must be cognizant, too, that invention is sometimes necessary to spark progress when we are at an impasse.  Methods like recycling, just like propeller-powered planes, can't evolve far enough to achieve our environmental ambitions.  Recycling is better than tossing, but as a practice it still fails to promote better, inherently green methods of creating products in the first place.  That is where invention becomes critical, to create "jumps" in evolution rather smooth, gradual refinements.  Markets in carbon avoidance, for instance, are built on the premise that you can buy the benefits of others' good behavior.  From this new premise various ways to create and operate these markets emerge, themselves subject to variation, testing, and proliferation.  Invention begets evolution.

 

These two forms of change - gradual, continuous; and radical; discontinuous - operate by creating and re-organizing building blocks.  We can think of building blocks as fundamental elements that underlie the process of creating change.  To be architects of change, we must learn to recognize and harness them.  I intend this blog entry itself to be a conceptual building block which we return to, and build on, as we understand how to improve society.

 

 

 

 

 

 

 




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