Volans Blog

On 18 September, I helped launch the ITT watermark initiative at World Water Week, Stockholm.  In headlines, ITT is committing $3 million over the next three years to bring safe water, sanitation and hygiene education to 300 schools in water-stressed regions of the developing world – a pledge that should ultimately help improve the lives of more than 100,000 children and their families.  The initiative is being developed jointly with Water For People, with the work kicking off in 40 schools in West Bengal, India; Quiche, Guatemala and Yoro, Honduras.  A video of the launch event, including the panel debate in which I took part, can be found on the ITT watermark site.

This week’s issue of Business Week (August 11) included an interesting article by Alison Damast entitled ‘American Express Nurtures Nonprofit Execs’.  The piece reported on an initiative spearheaded by the company to work with selected nonprofit employees to improve their leadership skills.  The initiative is a response to the growing concern in the US that by 2016, more than half a million new senior managers will be needed for these charities — and AmEx is not alone in doing something about this.  Others include IBM and Bank of America.

There is no doubt that the non-profit sector all over the world needs the kind of expertise that is  readily available in the business world, including general management, market research, strategic and financial planning, human resource management, internal and external monitoring and evaluation systems, marketing and communications, legal advice, accounting and auditing, information systems,  to name a few.  In fact, Volans offers to match corporate employees with specific business-related skills with high impact social enterprises needing such skills for a specific period of engagement. And so we applaud the initiative taken by AmEx in that regard.

But let’s be clear.  What AmEx is doing is more about management and business skill development than leadership.  In fact, we posit that Fortune 500 companies would be much better served in the area of staff leadership development by sending their middle and senior staff to spend some time working with social entrepreneurs and their organizations than by shuttling them to off-site leadership seminars run by expensive consulting firms equipped with batteries of tests and games of dubious medium and long term impact.

As Kouzes and Posner have noted, “Contrary to the myth that only a lucky few can ever decipher the mystery of leadership, our research has shown us that leadership is an observable, learnable set of practices” (The Leadership Challenge, Jossey-Bass, 2007, p. 16.)   But to observe leadership, you have to be with leaders and be exposed to circumstances that call upon you to draw upon your own leadership capacities. You need to have a safe environment to practice these new skills and approaches.

And the need for leadership at all levels of a company is as urgent as the need for management skills in nonprofits. In fact, in the 2008 survey of CEOs by PricewaterhouseCoopers (PWC), the top qualities sought in employees after business and technical expertise are experience of overseas and global markets followed by leadership capabilities and creative thinking. Where are those opportunities to develop leadership and creative thinking plus lean about new market opportunities?

Based on our extensive evidence, we strongly believe they lie in the world of social enterprise.   Indeed, we have found that those corporate professionals who have had their personal and professional skills tested in the complex and challenging world of social enterprise have gained considerably more self-confidence, self-mastery and new insights than had they attended a host of well designed leadership workshops in cloistered conference settings.   The benefits of developing leaders through secondments to social enterprises will echo throughout the company as these leaders bring their learning back into the organization.

CRO Magazine has published its list of ’CEO of the Year’ awards nominees 2008, designed to spotlight and celebrate the achievements of the CEOs in Corporate Responsibility.  The nominees range from Lloyd Blankfein of Goldman Sachs & Co., and Jeffrey R. Immelt of GE, among the nine nominees in the Large category, to Dr. Larry Brilliant of Google.org and Stan Litow of the IBM Foundation, among the four nominees in the ‘Corporate Foundation’ category.

Among the categories this year is one for social entrepreneurs — who must fit ”one of the three social entrepreneurship venture type definitions established by the book The Power of Unreasonable People by John Elkington, Pamela Hartigan and Klaus Schwab: type 1 (leveraged non-profit), type 2 (hybrid non-profit) or type 3 (social business).”

The nominees in this category are:

With Volans Connects focusing on building exchanges of talent between social enterprises and mainstream business, we are scanning the talent landscape with even greater interest.  Spotted today on the CRO (Corporate Responsibility Officer) website, an item on an emerging skills shortage — this time for sustainability talent.

“For decades,” the CRO argument runs, ”U.S. and European corporations have been importing talent–programmers from India, researchers from China, and many other permutations of competence and geography. But in sustainability, Western-trained talent will reverse the tide, as individuals increasingly seek opportunities to work in the BRIC (Brazil, Russia, India, China) countries and other developing nations. To win the war for this increasingly valuable human resource, Chief Responsibility Officers (CROs) of multinationals and domestic companies operating in those countries must understand the dynamics of this movement of environmental talent–and they must act strategically to tap into it.”  More on the CRO website.

The Volans team is cranking up to a survey on the extent to which the private equity and venture capital sectors internationally are engaging our issues.  We are keen to hear from anyone else working in this field.

Meanwhile, there is a steady backbeat of announcements of key players moving into at least some areas of the sustainability agenda.  For example, a few days back private equity firm Blackstone Group announced that it is launching a new business group to focus on investments in the cleantech energy sector.  The group, which will also provide advice on renewable energy strategies across Blackstone’s asset base, is led by James Kiggen, who has joined the firm’s corporate private equity group as a senior managing director.

Garrett Moran, Senior Managing Director of The Blackstone Group, explained: “Jamie and his team’s understanding of rapidly evolving technology applications in solar and wind power generation, carbon sequestration, next generation ethanol, and other renewables will be a key input in Blackstone’s investment decisions. We look forward to working with the new team across both conventional energy investments and new developments, including those at our portfolio company Sithe Global Power, as well as several other sizeable investments that we are currently evaluating.”

Was very struck by an article by Rohini Nilekani in The Hindu about the future of philanthropy.  She recalled the recent observation that “foundations are the new Ferraris – everyone must have one!”  And she declared an interest: among other things Rohini is chairperson of Bangalore-based Arghyam, whose motto is “safe, sustainable water for all.”  I was very impressed by their portfolio of projects when I visited them recently.

Among other things she said in the piece that resonated forcefully: “For all the recent hype, I believe philanthropy can only play a limited role in society. Indeed, it should play only a limited role. Just societies cannot be built merely by the wilful distribution of surplus wealth. We need government to responsibly enable social provisioning and we need deep rooted social movements, working with the last citizen and the most oppressed, in a spirit of voluntarism. We need committed leaders, men and women of integrity and vision to keep government honest.”

Volans (through SustainAbility) is highly privileged to be grant-aided by The Skoll Foundation, without which much of our work would be much harder - or even impossible.  But Rohini’s short column is well worth reading - and reflecting upon. 

Over the past month, I have sat down with a dozen social entrepreneurs in order to gain a better understanding of how they think about partnerships with the private-sector. The spectrum of views was wide, but most basically boiled down to an interest in obtaining more funding from wealthy corporations.
 
In each interview, I tried asking an unusual question: “Is there anything that your organization does better than businesses in your sector that could help them be more profitable?” I discovered a large untapped opportunity for social entrepreneurs to form deeper partnerships with businesses by commercializing the core competencies of their organization.
 
Most social entrepreneurs continue to take a limited view of relationships with the private sector. They follow a traditional formula: the nonprofit receives financial support and in-kind assistance in exchange for a company’s good image and employee morale. This belief is especially true of social entrepreneurs helping disadvantaged groups, such as the homeless or disabled, who now fear that their existing relationships are being threatened by economic pressures of the economic downturn.
 
Other social entrepreneurs, though, view deep partnerships with corporations as critical to the success of their mission. This is especially true when the social enterprise operates in sectors closely tied to business markets, such as SME financing or training in organic agriculture. It is also true for larger youth and education organizations, two communities traditionally supported by local businesses. These social entrepreneurs are comfortable making a business case to corporations about why they should form a partnership, and often find creative ways to benefit their business partners.
 
Once the brainstorming started, I heard a number of exciting ideas of how social entrepreneurs can transform their expertise into a service that businesses in their sector would want to pay for. For example, one social enterprise that offers after-school education to minority youth excels in multicultural readers, a product that would be very valuable to textbook companies looking to expand into urban markets. Another organization that incubates small businesses in Latin America proposed offering technological and cultural expertise to industrial firms looking to tap base-of-the-pyramid customers in emerging markets. Even a foster youth organization, traditionally distant from the business world, identified the potential to provide training and counseling services to corporate employees looking to become foster parents.
 
Social entrepreneurs – with a belief in strong accountability and rapid growth – are a natural fit for business partnerships. The most successful ones have moved beyond volunteerism and public relations to offer a new value proposition to potential funders. They recognize that they often have a better understanding of underserved markets, training, or leadership that their corporate counterparts. With this mindset, social entrepreneurs can unlock deeper resources – whether financial, human capital or expertise – from businesses. By thinking more like a business, social entrepreneurs ultimately are often better able to fulfill their mission.

For more discussion on this topic, check out www.socialedge.org/discussions/social-entrepreneurship/social-entrepreneurship-and-the-corporate-world
 
–Adam Rein

One thing I have long believed is that if successive waves of creative destruction and then creative reconstruction roil around the world, as I projected in 2001’s The Chrysalis Economy, the rate of business failures - including among people and initiatives we would dearly like to see as champions of a better future - will likely go off the scale.  Most prototypes bite the dust, some more spectacularly than others.

I also have long argued that the best thing when confronted with such failures would be to spotlight and investigate them, rather than turning a blind eye, to ensure we learn and share the relevant lessons.  Well, it looks as if we soon may have to apply our forensic skills to a recent but already semi-iconic venture in the microfinance space, at Morgan Stanley.  For more see http://www.portfolio.com/views/blogs/daily-brief/2008/06/19/morgan-stanleys-incredibly-shrinking-microfinance-group. 

Over time, Volans plans to work on a broader front with the venture capital sector, something we already do via advisory board memberships with three funds: 2 Degrees Venture Partners in Palo Alto, Physic Ventures in San Francisco and zouk ventures in London.  Physic has justannounced the closing of Physic Ventures, LP, a $159 million venture capital fund that invests in science-based, consumer-directed health and sustainable living companies. 

Physic Ventures, which ”invests in keeping people healthy” and provides capital and expertise to early-stage companies that develop enabling technologies, branded products and innovative distribution channels, has made five investments since its first close in April 2007, including Pharmaca Integrative Pharmacy Inc., Expresso Fitness, Elixir Pharmaceuticals (www.elixirpharm.com, Dreamerz Foods, and Novomer. Each company reflects the firm’s strategy to invest in technology-driven businesses that enable prevention, prediction, performance, and personalization of personal and planetary health solutions in the consumer market.

Physic Managing Director Dion Madsen explains that.”There are pressing challenges in today’s health and sustainability climate that require scientific discovery and entrepreneurial innovation and an ability to bring new technologies to an increasingly consumer-centric market. We believe this presents opportunities and a wave of emerging, burgeoning markets for the development of technologies, products and services that address these issues and, therefore, can result in substantial returns for our investors.” The firm plans to deploy $7-12 million per company and will develop a portfolio of 14-16 companies with this fund.

One thing we are planning to do at Volans is to map out some of the great market opportunity spaces that could be created by successful attempts to bridge the 10 Great Divides we spotlighted in The Power of Unreasonable People.  Clearly, the nature, scale and pace of emergence of those opportunity spaces will very much depend on how the political dimension plays out, which is a key reason why The Environment Foundation (which I chair), SustainAbility and Volans have been focusing growing attention on the links between democracy and sustainability. 

The dysfunctions of democracy are among the issues covered in yesterday’s extraordinary speech by Al Gore, ’A Generational Challenge to Repower America.’  The speech chimes in very powerfully with some of my reading these two weeks that I have been on ‘holiday’ at home. One of the books I bought a few days ago is The Marshall Plan - and the Reconstruction of Post-War Europe, by Greg Behrman (Aurum Press, 2007).  Have long felt that the vision of George C. Marshall is exactly what we need again today - and if we were able to stretch Gore’s vision for America to the wider world, that is exactly what we would have.

Some highlights of the Gore speech follow, though it really is worth reading it in its entirety.  More from WeCanSolveIt.org. 

“There are times in the history of our nation when our very way of life depends upon dispelling illusions and awakening to the challenge of a present danger. In such moments, we are called upon to move quickly and boldly to shake off complacency, throw aside old habits and rise, clear-eyed and alert, to the necessity of big changes. Those who, for whatever reason, refuse to do their part must either be persuaded to join the effort or asked to step aside. This is such a moment. The survival of the United States of America as we know it is at risk. And even more - if more should be required - the future of human civilization is at stake.

“I don’t remember a time in our country when so many things seemed to be going so wrong simultaneously. Our economy is in terrible shape and getting worse, gasoline prices are increasing dramatically, and so are electricity rates. Jobs are being outsourced. Home mortgages are in trouble. Banks, automobile companies and other institutions we depend upon are under growing pressure. Distinguished senior business leaders are telling us that this is just the beginning unless we find the courage to make some major changes quickly.

“The climate crisis, in particular, is getting a lot worse - much more quickly than predicted. Scientists with access to data from Navy submarines traversing underneath the North polar ice cap have warned that there is now a 75 percent chance that within five years the entire ice cap will completely disappear during the summer months. This will further increase the melting pressure on Greenland. According to experts, the Jakobshavn glacier, one of Greenland’s largest, is moving at a faster rate than ever before, losing 20 million tons of ice every day, equivalent to the amount of water used every year by the residents of New York City.

“Two major studies from military intelligence experts have warned our leaders about the dangerous national security implications of the climate crisis, including the possibility of hundreds of millions of climate refugees destabilizing nations around the world.

“Just two days ago, 27 senior statesmen and retired military leaders warned of the national security threat from an “energy tsunami” that would be triggered by a loss of our access to foreign oil. Meanwhile, the war in Iraq continues, and now the war in Afghanistan appears to be getting worse.

“And by the way, our weather sure is getting strange, isn’t it? There seem to be more tornadoes than in living memory, longer droughts, bigger downpours and record floods. Unprecedented fires are burning in California and elsewhere in the American West. Higher temperatures lead to drier vegetation that makes kindling for mega-fires of the kind that have been raging in Canada, Greece, Russia, China, South America, Australia and Africa. Scientists in the Department of Geophysics and Planetary Science at Tel Aviv University tell us that for every one degree increase in temperature, lightning strikes will go up another 10 percent. And it is lightning, after all, that is principally responsible for igniting the conflagration in California today.

“Like a lot of people, it seems to me that all these problems are bigger than any of the solutions that have thus far been proposed for them, and that’s been worrying me.  I’m convinced that one reason we’ve seemed paralyzed in the face of these crises is our tendency to offer old solutions to each crisis separately - without taking the others into account. And these outdated proposals have not only been ineffective - they almost always make the other crises even worse.

“Yet when we look at all three of these seemingly intractable challenges at the same time, we can see the common thread running through them, deeply ironic in its simplicity: our dangerous over-reliance on carbon-based fuels is at the core of all three of these challenges - the economic, environmental and national security crises.

“We’re borrowing money from China to buy oil from the Persian Gulf to burn it in ways that destroy the planet. Every bit of that’s got to change.”

[…..]

“That’s why I’m proposing today a strategic initiative designed to free us from the crises that are holding us down and to regain control of our own destiny. It’s not the only thing we need to do. But this strategic challenge is the lynchpin of a bold new strategy needed to re-power America.  Today I challenge our nation to commit to producing 100 percent of our electricity from renewable energy and truly clean carbon-free sources within 10 years.

“This goal is achievable, affordable and transformative. It represents a challenge to all Americans - in every walk of life: to our political leaders, entrepreneurs, innovators, engineers, and to every citizen.”

[…..]

“Some of our greatest accomplishments as a nation have resulted from commitments to reach a goal that fell well beyond the next election: the Marshall Plan, Social Security, the interstate highway system. But a political promise to do something 40 years from now is universally ignored because everyone knows that it’s meaningless. Ten years is about the maximum time that we as a nation can hold a steady aim and hit our target.

“When President John F. Kennedy challenged our nation to land a man on the moon and bring him back safely in 10 years, many people doubted we could accomplish that goal. But 8 years and 2 months later, Neil Armstrong and Buzz Aldrin walked on the surface of the moon. 

“To be sure, reaching the goal of 100 percent renewable and truly clean electricity within 10 years will require us to overcome many obstacles. At present, for example, we do not have a unified national grid that is sufficiently advanced to link the areas where the sun shines and the wind blows to the cities in the East and the West that need the electricity. Our national electric grid is critical infrastructure, as vital to the health and security of our economy as our highways and telecommunication networks. Today, our grids are antiquated, fragile, and vulnerable to cascading failure. Power outages and defects in the current grid system cost US businesses more than $120 billion dollars a year. It has to be upgraded anyway.

“We could further increase the value and efficiency of a Unified National Grid by helping our struggling auto giants switch to the manufacture of plug-in electric cars. An electric vehicle fleet would sharply reduce the cost of driving a car, reduce pollution, and increase the flexibility of our electricity grid.”

[…..]

“Of course the greatest obstacle to meeting the challenge of 100 percent renewable electricity in 10 years may be the deep dysfunction of our politics and our self-governing system as it exists today. In recent years, our politics has tended toward incremental proposals made up of small policies designed to avoid offending special interests, alternating with occasional baby steps in the right direction. Our democracy has become sclerotic at a time when these crises require boldness.”

[…..]

“So I ask you to join with me to call on every candidate, at every level, to accept this challenge - for America to be running on 100 percent zero-carbon electricity in 10 years. It’s time for us to move beyond empty rhetoric. We need to act now.

“This is a generational moment. A moment when we decide our own path and our collective fate. I’m asking you - each of you - to join me and build this future. Please join the WE campaign at wecansolveit.org.We need you. And we need you now. We’re committed to changing not just light bulbs, but laws. And laws will only change with leadership.

“On July 16, 1969, the United States of America was finally ready to meet President Kennedy’s challenge of landing Americans on the moon. I will never forget standing beside my father a few miles from the launch site, waiting for the giant Saturn 5 rocket to lift Apollo 11 into the sky. I was a young man, 21 years old, who had graduated from college a month before and was enlisting in the United States Army three weeks later.

“I will never forget the inspiration of those minutes. The power and the vibration of the giant rocket’s engines shook my entire body. As I watched the rocket rise, slowly at first and then with great speed, the sound was deafening. We craned our necks to follow its path until we were looking straight up into the air. And then four days later, I watched along with hundreds of millions of others around the world as Neil Armstrong took one small step to the surface of the moon and changed the history of the human race.

“We must now lift our nation to reach another goal that will change history. Our entire civilization depends upon us now embarking on a new journey of exploration and discovery. Our success depends on our willingness as a people to undertake this journey and to complete it within 10 years. Once again, we have an opportunity to take a giant leap for humankind.”