Matter/Anti-Matter

I just returned from Barcelona (where every tourist now seems to be tracking the path of Woody Allen's Vicky and Christina...), attending a few sessions of the Doing Good and Doing Well Conference organized by IESE Business School and Net Impact, an organization that connects MBA students interested in social responsibility.

That a leading business school is dedicating an entire student-run conference to the topic of responsible business is remarkable (HEC Paris will do the same soon in May, also in collaboration with Net Impact) but not an isolated phenomenon. In the past few years, several top business schools, such as Yale, Duke, Harvard, and Stanford, as well as pioneers such as the Presidio School of Management in San Francisco and the Bainbridge Graduate Institute in Washington State have begun to offer tailored programs to MBAs who want to marry traditional business skills with innovative approaches to solving social problems. Different from nonprofit curricula, which typically provide the fundamentals of fundraising and grant writing, these specific business school programs combine the finance and management training of a traditional MBA with electives that address topics such as venture capital and investing in emerging markets. But conferences like IESE's indicate that social entrepreneurship is not yet fully integrated into all business school curricula and that it still needs the extra limelight. As long as not all business is social business, business that is not social will still find a safe harbor.

Business and ethics have of course been intertwined since the days of the Greek polis. Adam Smith, the spiritual father of the homo oeconomicus, wrote a "Theory of Moral Sentiments" before he wrote "The Wealth of Nations." And yet, business that is good for society has always been in need of being extrapolated through catchy labels (business ethics, CSR, corporate citizenship, social innovation, social entrepreneurship, etc.), invariably heralded as the Next Big Thing and slowly moving up the food chain from a window-dressing PR tool to a truly integral strategy driver. Recently, Fast Company coined the new, chic term "Ethonomics" and even made it one of the key pillars of its relaunched web site:

"We live in a world that's resource-constrained but ingenuity-rich. So an upstart generation of entrepreneurs - and innovators within the world's biggest companies - are founding businesses that are good for the world as well as the bottom line. They are practicing social change through urban revitalization, sustainable agriculture, green IT, alternative energy and online community-powered investing. Any business that claims to be truly sustainable and innovative should be increasingly efficient with energy and natural resources, transparent and accountable, and good on balance for people and other living things. Ethonomics is a hybrid of technology, design, and social responsibility, and at Fast Company we believe it is the future of business."

In Barcelona, this young upstart generation of entrepreneurs and innovators shared its ideas, seeking advice from those who had been in the field for some years. For example from Kyle Zimmer, the president and co-founder of First Book:

"Whenever you hit a point at which you feel you have no idea what you're doing (and if you don't reach that point quickly, you're not moving fast enough), make a list with the ten most acclaimed experts able to answer your questions. And then call them one by one even if you have never met them or your list includes Bill Gates. It doesn't matter. Tell them your story and ask them for help. Some won't call you back. In fact, I can pride myself with not having been called back by some of the most accomplished people in the world. But you'd be surprised how many will."

Jessica Jackley Flannery, co-founder and chief marketing officer of micro-lending marketplace Kiva, was another one of the veterans present, and her talk made most of the MBA students in the audience beam. Social entrepreneurs are simpaticos, of course, and you'd be hard pressed to find a MBA student these days who would not want to be a social innovator. Wall Street fame is so yesterday. Flannery epitomized the case for a new 'meaning' and emphasized the power of storytelling: "If we all understood each other's stories, the world would be a better place." Stories create empathy, and empathy breeds the solidarity needed for taking action. In light of the dire economic situation in developed countries, Flannery half-jokingly said she wouldn't be surprised if a young entrepreneur in Uganda were soon to lend money to a job-less banker in Manhattan. Globalization in reverse. In any case, innovative banking such as Kiva's is no longer only focused on helping developing economies. New web-enabled finance 2.0 models and infrastructures attempt to overcome the financial crisis in the US.

Entrepreneurs and innovators may be much needed these days, but "how can you be doing good when we are not doing so well?" the conference asked. With almost 14% unemployment in Spain, it was brutally aware of the need to discuss the creation of "Sustainable Value in a Downturn." Aside from the assumption that recessions can hold tremendous opportunity for any entrepreneur (as Christopher Gergen and Gregg Vanourek point out), social entrepreneurs in particular seem to weather the current investment pullback rather well. The Skoll Foundation is currently conducting a survey, to be presented at the Skoll World Forum in March. Preliminary results indicate that most of the social entrepreneurs have been affected by the economic downturn in some way or other, but only 10% of the respondents say that they have been severely affected.

"A crisis is a terrible thing to waste," Paul Romer (now famously) said, and hopefully the current recession will not lead to a Great Depression but a "Great Disruption" (Paul Gilding) that requires us to build the foundation of our economy from the ground up. In his brilliant post on "How To Be a 21st Century Capitalist," Umar Haique writes that "Capital deepening is the foundation of next-generation value creation." By that he means "assets with intrinsic, durable, human value - not the lemons Wall Street was in the business of hawking. It is only by capitalizing the things we really value that the spark of value creation can be lit again." He predicts that "next-generation businesses will be built on next-generation assets:" "Yesterday's businesses were built on cash, factories, and IP - financial, physical, and intellectual capital. Next-generation businesses are built, instead, on human, social, natural, and cultural capital - to name just a few."

Doreen Lorenzo, president of frog design, attended the recent Fortune Brainstorm Green and the Milken Global Conference and identified a common theme:

"In the past two weeks, I had the opportunity to attend two very interesting conferences. The first one was Fortune's Brainstorm Green, followed by the Milken Institute's Global Conference. Both of these conferences attract the who's who in the financial and business world. What struck me at both events was the rallying cry that innovation is key in solving many of the world's problems. I continued to hear that change is needed for people to think and behave differently.

The Fortune conference featured the usual suspects who have championed the environment long before it became a cause célèbre. One surprise twist was the number of investors in attendance. I met more financiers who had funds to invest in sustainability-related areas than I thought possible. There were also a large number of CEOs in attendance. Their interest in sustainability largely stemmed from the pressures they felt from their employees and customers. Will there finally be new green products and services that will meet the increasing demand? Will they be adopted by a larger segment of the population? It's clear that there is enough money ready to be spent and corporations ready to commit to finally make a significant impact in green innovation.

From a personal perspective, the best part of the conference was a short speech delivered by a 16-year-old high school sophomore, Avery Hairston. Avery has started a foundation called ReLightNY that raises money from individuals and corporate sponsors. He uses the money to buy low wattage CFL light bulbs that he then distributes to those in need. Everyone is a winner. People use less power and it also saves them money. A double whammy winning strategy. The closing line of Avery's speech was poignant: "Most of you probably will not be here in 2060, but I will, and I need to do something now." Young people like Avery will not let complacency and comfort get in the way of solving problems.

At the Milken conference, the message calling for innovative ideas to solve problems was much the same. Panel topics were diverse and covered the fate of the newspaper and music industries, the environment, world hunger, poverty, mobility and healthcare to name a few. It seems that a conference such as this one, filled with so many powerful people in the financial and business world, would easily embrace and fund innovation as a means of helping to solve many of the issues that were so hotly debated. I talked with several "idea" people and heard consistently that although there was no lack of enthusiasm for great ideas, it had been difficult to move forward and secure commitments.

This lack of definite progress is likely due to one familiar symptom related to innovation: it usually makes people sick to their stomachs. It is unfamiliar, unknown and untested. It is a risk. This thought was echoed in what I felt was the most enjoyable panel of the conference which featured the 2006 winner of the Nobel Peace Prize, Muhammad Yunus, currently Managing Director of Grameen Bank based in Bangladesh. He is recognized worldwide for his successful application for the concept of microcredit, the extension of small loans to entrepreneurs too poor to qualify for traditional bank loans. His hard work has lifted millions of families out of poverty. He was awarded the Nobel Peace Prize "for efforts to create economic and social development from below." His idea was so simple and so humble, yet when people initially heard it, they told him that it would never work. Muhammad used $27 of his own money to fund the first loan. Clearly the naysayers were wrong and his success has changed an entire country. My take-away from his speech was that innovation takes courage.

I hope that a year from now, I can return to both of these conferences and see how the changes that were proposed have been implemented. We need to give innovation a chance to be nurtured and to flourish. To make this happen, we all need to get over our fears and follow our heart."

Here's an innovative approach to facilitating social innovation: a "collaborative competition" leveraging sports.

Ashoka's Changemakers and Nike have partnered to open a worldwide search for projects that use the transformative power of sport to promote social change. Ashoka is a citizen-sector support system for social entrepreneurs. Changemakers is building the world's first global online "open source" community competing to surface the best social solutions, and then collaborating to refine, enrich, and implement those solutions.

Changemakers invited users worldwide to submit innovations to what it calls a "collaborative competition" -- an "interactive solicitation to identify and develop innovative, workable solutions to the world's most entrenched social problems." Competition entries were posted online and made available for anyone to view and collaborate with by providing new ideas, asking insightful questions, and providing connections to new resources. Pro bono crowdsourcing!

Out of 382 submissions, the finalists have now been chosen by a high-profile jury, including Nawal El Moutawakel, member of the International Olympic Committee; Joan Laporta, president of F.C. Barcelona; Ann Veneman, executive director of UNICEF; Mel Young, founder of the Homeless World Cup; Mark Parker, president & CEO of Nike, Inc.; and Sheila Johnson, businesswoman, philanthropist, and CARE ambassador.

The final winners, however, will be determined by you.

You have until March 3 to vote for your three favorite social projects.

Last weekend I spoke at the first University of Texas at Austin Sustainable Business Summit. It was an interesting and stimulating event that brought together a diverse group of speakers and audience members to think about different aspects of environmental sustainability, social responsibility, and business. It was put on by the McCombs School of Business and largely organized by students, who did a great job.

One of the first panels had to do with computers, waste reduction, and energy usage. It had a bit of tension to it as one of the panelists was from Dell, and another was an environmental activist who has been pressuring Dell for several years on energy reduction, take-back schemes, and overall sustainability issues. They handled it professionally, but you could tell there was some history there!

The other panelists were from IBM, which is working on low power CPUs for servers, and from a company called Verdiem, which makes software to centrally manage large, installed bases of PCs in corporate environments. Such installations use massive amounts of electricity for prolonged unnecessary periods (such as at night), creating part of the big draw of "phantom" or "vampire" energy. The software allows central control of shutting down unnecessary machines while still allowing maintenance upgrades.

There was discussion of options for renewable energy sources for large data centers, and in fact an article in Wednesday's USA Today illustrates the attention being paid to this issue:

Intel is now the largest corporate user of renewable energy in the USA, the Environmental Protection Agency said this week. The chip giant plans to purchase more than 1.3 million kilowatt hours in wind, solar and other types of green power each year. That's enough energy to power about 133,000 households.

Intel won't say how much extra the green power costs. But the company considers the purchase an "investment in the renewable energy market," spokesman Bill Calder says.

This article also highlights one of the other themes that came up in the panel: business will be an earlier large adopter of green technologies than consumers, because the business case is easier to make and corporations are more familiar with thinking about total cost of ownership rather than up-front costs, which dominate in a consumer retail world. Companies are comfortable with the concept of amortizing capital costs over several years and can easily roll that into their tax calculations. Consumers, not so much.

The other theme that came up was that so goes Europe, so goes the rest of the world. Europe, and in particular Scandinavia, is really driving the legislation on curbing energy, forcing take-back schemes, and in general prodding industry to be more responsible. (The U.S. laws are very weak in most regards in this area, California being a common exception.) But since manufacturers like Dell, Hewlett-Packard and IBM have global supply chains and distribution channels, it doesn't make economic sense to make different models for different markets. So they go with the high bar set by Europe and the U.S. benefits.

But this is just a cop-out on the part of U.S. government. In fact, according to one of the summit panelists, the U.S. is one of only three countries not to sign the Basel treaty on international hazardous waste trafficking (where toxic waste is just dumped on another country's shore). Who are the other two? Haiti and Afghanistan.

We should be matching the European legislation to show commitment and to avoid things falling through the cracks. If we match it (as opposed to creating slightly different rules as we do with car crash tests for example), it will make everything easier and do more to encourage sustainable practices.

In an article for In These Times magazine, Alix Rule injects some fresh thinking into the realm of "design thinking," which has traditionally been mainly affiliated with parties like Bruce Nussbaum, associate editor of BusinessWeek, and the Hasso Plattner Institute of Design at Stanford (also known as the d-school). Rule is skeptical about design thinkers' self-acclaimed world-changing mandate: "As we look beyond housing solutions to urban poverty, good design is enjoying a second coming as the cure for what ails us." She feels that designers overburden themselves with these universal goals, and she asks for realism rather than naive "progressivism:" "The revolution will not be designed." She explains why: "'Design thinking' describes a moment in the pursuit of social good that hardly ever arrives: when all the hearts are in the right place, all opinions have been brought into line and all that needs to happen is the change itself. If the model has intellectual benefits, it's doubtful they outweigh the deficiencies of ignoring the long process by which consensus is built -- a.k.a. politics."

That's quite a statement. From Apple to Target -- the understanding of design as holistic innovation driver and change agent has long become business mainstream. Notwithstanding the debate about whether designers should think like business people or business people should think like designers -- nowadays most business executives and designers will readily agree on the importance of design as an interdisciplinary vanguard that has the ability to address major societal and political problems: "Stop drunk-driving. Build better elementary schools. Develop environmentally sustainable offerings. (...) We use design thinking to tackle hard social problems," states the d-school's mission statement. And it seems as if there's a secret band between the school's founder, Hasso Plattner ("Design has to start with the user"), and Plato ("The good is the beautiful").

Now, of course you can have some valid reservations against "design thinking." The first one is semantic. As a marketer I understand the benefits of branding, but nonetheless I have always found the term "design thinking" somewhat unfortunate because it is essentially a pleonasm. If you define design as the "transformation of existing conditions into preferred ones," as Herbert Simon did, design is inherently an act of thinking. In other words: How can you design without thinking? Design is by definition transformational and has always been. But that's just a semantic reservation.

The second one is more substantial. The main pillars of design thinking -- systemic view; interdisciplinary approach; human-centric, ethnographic research; democratization of creativity; and a pragmatic can-do attitude -- can without doubt offer a valuable tool set for many businesses that want to ideate off the beaten path in their product and service innovations. But despite the high level of sophistication that many design firms (and corporations) have reached in employing these methodologies, jazzing up design as the world's foremost problem solver may indeed not do the discipline a favor. I, for my part, am the first to admit to feel a certain relief when the New York Times Magazine features design that is simply "good" (lower case) but, sorry, lacks the ambition to change the world.

All that being pointed out though, Alix Rule's article does have one major shortcoming: Her judgment itself lacks the very modesty that she finds missing in "design thinking." It disregards the impact of incrementalism, of those baby-steps and micro-innovations which may not quite fulfill the lofty ambitions of the most vocal design thinkers, but may, nonetheless, instigate change on a mundane, practical level. By improving product and service experiences through more participatory, human-centered, and integrated design (and business!) decisions, designers are playing a pivotal role in transforming individual and collective attitudes and behaviors. Whether it can be credited to the hype around a maybe overbearing "design thinking" or not, this brand of "good" design is already a de facto political force: and given its power to constantly evolve things and affect people in their daily lives -- isn't it ultimately a revolutionary one?

In fin d'année mood, saving the world is en vogue -- and asking the "one thing" question obviously, too.

Inspired by Leonardo DiCaprio's gloom and doom documentary "The 11th Hour," OnEarth magazine asked a panel of leading scientists and activists to "move beyond bleak diagnoses and offer concrete proposals for a sustainable future:"

"Which one thing would you do to save the world?"

You can view it on YouTube or read a transcript of the entire conversation here.

In a similar vein, but slightly modifying OnEarth's impetus (and oddly phrasing it), The World Economic Forum (WEF) asks the "Davos Question:"

"What one thing do you think that countries, companies or individuals must do to make the world a better place in 2008?"

Unlike OnEarth, however, the WEF does not seek the advice of experts and instead relies on the crowd. Everyone can upload suggestions on YouTube and make his/her "voice heard in Davos." The highest rated videos will be screened on January 23-27 during the Forum. The world leaders will then be asked to video-respond on YouTube.

America's consumers offer a warning to business leaders and marketers looking to ride the green wave: either back your eco-friendly words with socially responsible actions or risk a backlash.

The first major study to combine field observations with a national survey on purchasing behavior and social values has found increasingly conscious consumers who are demanding that companies be transparent about their practices and accountable for their impact on people and the planet.

According to the inaugural BBMG Conscious Consumer Report, nearly 9 in 10 Americans say that the words "conscious consumer" describe them well and that they are more likely to buy from companies that manufacture energy-efficient products (90 percent), promote health and safety benefits (88 percent), support fair labor and trade practices (87 percent), and commit to environment-friendly practices (87 percent), if products are of equal quality and price.

Conducted by branding and marketing agency BBMG, in conjunction with research partners Global Strategy Group and Bagatto, the report combines ethnographic research in three U.S. markets with a national survey of 2,007 adults to reveal how companies can reach, inspire, and motivate today's savvy and values-driven consumers.

In a world of green clutter, conscious consumers expect companies to do more than make eco-friendly claims. They demand transparency and accountability across every level of business practice. Avoiding the green trap means authentically backing your words with socially responsible actions, says Raphael Bemporad, founding partner of BBMG.

Other findings from the report:

• Personal issues are most important. Consumers' most important issues are the ones that affect their health and wellness most directly, such as safe drinking water (90 percent), clean air (86 percent) and finding cures for diseases like cancer, AIDS and Alzheimers (84 percent). By comparison, only 63 percent describe global warming as the most or a very important issue.

• Greater than green. Americans readily self-identify as "conscious consumers" (88 percent well, 37 percent very well), "socially responsible" (88 percent well, 39 percent very well) and "environmentally friendly" (86 percent well, 34 percent very well). By contrast, fewer respondents self-identify as "green" (65 percent well, 18 percent very well), which is viewed as more exclusive.

• Beyond convenience. While price (58 percent very important) and quality (66 percent very important) are paramount, convenience (34 percent very important) has been edged out by more socially relevant attributes: where a product is made (44 percent very important), how energy efficient it is (41 percent very important) and its health benefits (36 percent very important) are all integral to consumers' purchasing decisions.

• Most socially responsible companies? Whole Foods Market (22 percent) tops the list, followed by Newman's Own (19 percent), Wal-Mart (18 percent), Burt's Bees (17 percent), and General Electric, Johnson & Johnson, and Ben & Jerry's (all 16 percent).