Tag: Sustainability

The Power of Purposeful Innovation

The Herman Miller company became one of the world’s first manufacturers of sustainably-produced furniture almost by accident. Back in the 1950s, as the company became one of the biggest furniture manufacturers in the US selling now iconic designs from Charles and Ray Eames, George Nelson, and Alexander Girard. At the time, DJ de Pree, the founder of the company, made a couple of key decisions that still influence the way the firm operates today.

The first is that he believed that the company should make the most of the unique talents held by each of their employees. This is embodied today in their value for inclusion and diversity, which says “We’re all extraordinary.” In practical terms, this value led de Pree and subsequent CEOs to implement a participative management structure within the firm. This meant distributing decision-making authority much further down the corporate power hierarchy than normal. It also involved giving all employees an ownership stake in the company.

These moves support a second company value – ensuring quality. This is done through a unique decision-making structure where many important actions and strategies are initiated by teams of ordinary workers and mid-level managers, who DJ’s son Hugh referred to as Roving Leaders.

The final two company values at Herman Miller are Doing Good Well, which sets corporate targets for community service from the firm’s employees, and We’re All in This Together, which includes a pledge that the company will be an environmental sustainability leader. DJ de Pree said in the 1950s that the company “will be a good corporate neighbor by being a good steward of the environment.” Today, the actions that the firm takes to act on this value are impressive.

It started in the late 1980s, when a small group of Roving Leaders formed to support their shared commitment to environmental sustainability. The group quickly ended up playing a bigger role in the firm than they expected when they discovered a very unsustainable process in building one of their most popular products. Bill Birchard tells the story in his book Merchants of Virtue: Herman Miller and the Making of a Sustainable Company:

Charles and Ray Eames sitting on their classic Lounge Chair & Ottoman

“Rosewood was the object of particular reverence. It adorned the celebrated Eames Lounge Chair a product so loved by designers and high-end furniture buyers that it still sold steadily after 45 years. A cradle of molded rosewood lined with irresistibly soft calfskin cushions, the chair was the company’s signature product. Though [expensive], its appeal luxuriousness, and iconic status – synonymous with Herman Miller – made changing its wood almost unthinkable.”

But the team of Roving Leaders did have to think about it. The rosewood came from trees that were becoming critically endangered in the rapidly dwindling Brazilian rainforest. It took several years, but the Roving Leaders Environmental team convinced first the CEO, then the Board, then the rest of the company that sourcing something other than rosewood was the right thing to do – even if it wasn’t required by legislation or a ban. If you buy an Eames Lounge Chair today from Herman Miller, or any of the other classic Eames designs that use wood, your choices in wood veneer are sustainably harvested cherry or walnut.

When the firm made the switch, they were concerned that it could kill the market for the Eames products. After all, they had been protecting these designs and manufacturing to them faithfully for more than 50 years – authenticity was a big part of what they were selling. The commercial results ended up surprising Herman Miller. Sales went up. A lot.

It turns out that a lot of their customers also care for the environment, and many of them will go out of their way to make sure that their purchases reflect not just style, and comfort, but the value of sustainability as well.

Over the next 25 years, Herman Miller continued to move towards more sustainable manufacturing. The first version of their famous Aeron Office Chair was made from 2/3 recycled materials. The proportion went up substantially in the second version of the Aeron, and this version was also 90% recyclable at the end of its lifespan – Herman Miller had instituted cradle to cradle manufacturing. Other environmental initiatives included eliminating solvent emissions, converting to 100% renewable energy, and the implementation of the Design for the Environment scorecard used to evaluate the sustainability of all of their products.

The drivers of this change were unusual, as Birchard points out:

“Surprisingly, the journey to sustainability at Herman Miller did not take root because a single top manager or the CEO demanded it. At Herman Miller, people like [the Roving Leaders], who worked deep within the organization, desired it. Because the company had a culture of giving its employees the power to make change – an approach it called “participative management” – the change emerged all over. Mid-level leaders, not just hot-shot bosses, led the campaign to bridge the sustainability gap.”

As they’ve done this, this devotion to their organizational values has led to great financial reward for Herman Miller. The company has continued to grow, even surviving the Global Financial Crisis more effectively than their competitors, in large part because they defend their values even more fiercely than the defend the legacy of Charles and Ray Eames.

Mary Parker Follett was one of the world’s first organizational theorists in a business school, and back in the 1920s she wrote:

“Leader and followers are both following the invisible leader – the common purpose. The best executives put this common purpose clearly before their group. While leadership depends on depth of conviction and the power coming therefrom, there must also be the ability to share that conviction with others, the ability to make purpose articulate. And then that common purpose becomes the leader. And I believe that we are coming more and more to act, whatever our theories, on our faith in the power of this invisible leader. Loyalty to the invisible leader gives us the strongest possible bond of union, establishes a sympathy which is not a sentimental but a dynamic sympathy.”

If we are trying to make our organizations more creative, and more innovative, shared purpose is essential. It is this that enables us to operate flatter hierarchies – and this empowerment of lower level employees is a key driver of innovation. Along with cognitive diversity, value-driven business isn’t just the right thing to do, it’s the best way to excel.

Purpose-driven Innovation from Tim Kastelle on Vimeo.

The video is from an online course I made that is currently one of the three that the University of Queensland Business School is offering as close to free as we could make it. I know there’s a lot going on right now, but if you have the bandwidth and desire to build your skills, all three courses are worth checking out.

17 May 2020
Are You Working On the World’s To-Do List?
There are a number of major challenges facing the world today. Poverty, climate risk, war – the list goes on. In 2015, the United Nations released a list they called the Sustainable Development Goals, or SDGs. It was an agenda of actions and targets to reach by 2030.

In announcing the SDGs, the UN said:

This Agenda is a plan of action for people, planet and prosperity. It also seeks to strengthen universal peace in larger freedom. We recognise that eradicating poverty in all its forms and dimensions, including extreme poverty, is the greatest global challenge and an indispensable requirement for sustainable development. All countries and all stakeholders, acting in collaborative partnership, will implement this plan. We are resolved to free the human race from the tyranny of poverty and want and to heal and secure our planet. We are determined to take the bold and transformative steps which are urgently needed to shift the world onto a sustainable and resilient path. As we embark on this collective journey, we pledge that no one will be left behind.
https://sustainabledevelopment.un.org/sdgs

Pretty hard to argue with that. So hard, in fact, that all 193 UN Member nations have signed on to the goals – it’s one of the most truly global initiatives in history.

There are seventeen goals in the Agenda, with 169 targets, which include specific measures of progress. Vicki Saunders, the founder of an organisation called SheEO, calls the SDGs “the world’s to-do list.”

All of the goals are simple to state, but challenging to achieve. For example, the first goal is “No Poverty – End poverty in all its forms everywhere.” For this goal, there are seven targets, and eleven indicators, or measures of progress. The first target is:

By 2030, eradicate extreme poverty for all people everywhere, currently measured as people living on less than $1.25 a day.

And the target is for this is:

Proportion of population below the international poverty line, by sex, age, employment status and geographical location (urban/rural)

Each year the UN reports on progress against the indicators. In the 2018 report, they say:

The proportion of the world’s workers living with their families on less than $1.90 per person a day declined significantly over the past two decades, falling from 26.9 per cent in 2000 to 9.2 per cent in 2017.

Each of the remaining sixteen SDGs has a similar set of targets and indicators, as well as reports on progress. The seventeen SDGs are:
1. No Poverty
2. Zero Hunger
3. Good Health and Well Being
4. Quality Education
5. Gender Equality
6. Clean Water and Sanitation
7. Affordable and Clean Energy
8. Decent Work and Economic Growth
9. Industry, Innovation and Infrastructure
10. Reduced Inequalities
11. Sustainable Cities and Communities
12. Responsible Consumption and Production
13. Climate Action
14. Life Below Water
15. Life on Land
16. Peace, Justice and Strong Institutions
17. Partnerships for the Goals
It’s an ambitious set of goals, to say the least. But if we can meet them, the world will unquestionably be a better place – for all of us.

Which raises an important question. If innovation is making new ideas real, to create value – then shouldn’t an important measure of the value we create be the contributions of our ideas to making the SDGs real?

This is an objective that Saunders and SheEO take seriously. SheEO was started to address some of the Gender Equity issues raised in SDG number 5. The program is designed to support female entrepreneurs – specifically, to support women that are developing ventures designed to address some of the other SDGs.

Here’s how it works:

SheEO is a radically redesigned ecosystem that supports, finances, and celebrates female innovators.
Rather than trying to fit women into the existing models and systems and level the playing field, we are creating an entirely new field.
The model brings together 500 women (called Activators) in each year’s cohort, who contribute $1100 in CAN, US, NZ and AU, and £850 in the UK, each as an Act of Radical Generosity. The money is pooled together and loaned out at zero percent interest to five women-led Ventures selected by the Activators. All Ventures are revenue generating with export potential and are creating a better world through their business model or their product and service. The loans are paid back over five years and then loaned out again, creating a perpetual fund which we will pass on to our daughters, nieces and granddaughters. The 500 women Activators in each cohort become the de-facto ‘team’ of the five selected Ventures bringing their buying power as early customers, their expertise and advice and their vast networks to help grow the businesses.
https://sheeo.world/about-us/

To me, this is one of the most interesting new business models for venture funding that I’ve seen in a long time. Since their launch in 2015, SheEO has signed up over 4000 Activators, and made over $4 million in loans to 53 new ventures. These ventures have on average grown very rapidly, and over 70% have gotten further impact venture funding – an incredibly high hit rate.

Overall, SheEO-funded ventures are addressing all seventeen of the SDGs! The goals of Good Health and Well-Being, Decent Work and Economic Growth, and Responsible Consumption and Production are all spaces where lots of SheEO-funded ventures are working.

This quite substantially expands our set of stakeholders. And it’s not a completely new idea. People have been talking about triple bottom line accounting for many years now. This business approach includes specific objectives for achieving social, environmental and financial outcomes. More recently, the idea of a For Benefit, or B Corporation was developed. These are corporations that have triple bottom line objectives formally written into their articles of incorporation. Many of the SheEO ventures are following this route.

Value creation is at the heart of innovation. If we are going to innovate responsibly, we have an obligation to take things like the Sustainable Development Goals very seriously – I’m not sure we’re innovating at all if we don’t.

Doing this makes building our new business models even harder. But it also greatly increases the rewards and impacts we achieve if we’re successful.

Note: If you’re in Australia and interested in the SheEO program, the deadline to sign up to be an Activator or a Venture is December 3rd. And if, like me, you can’t join up yourself, you can still encourage and support the women you know in joining the program!
17 November 2019
Do You Really Know What Business You’re In?
Stop and think about the computer you’re carrying around with you right now. Not your laptop, your phone. Actually, maybe calling it a computer is selling it a bit short.

Check this out:

The picture is from here, and it raises several important innovation points:
1. Your market is never stable. Did phone makers think they were in the camera business in 1993? What about camera makers? We’ve seen an incredible collapse in categories as many different industries become increasingly IT-based. When something like this is happening, you need to be thinking about your business model. As your market changes, it opens up new opportunities for collaboration and value creation, as well as new threats. There is a pretty good chance that your business model will need to change as the boundaries of your market shift.
2. We’re all in the knowledge business now. The control room for a mine looks identical to the control room for a space shuttle launch. Construction companies now are more concerned with getting the right data to the right people at the right time than they are with traditional logistics. Again, this means that you need to be thinking about your business model. It’s getting increasingly difficult to build a competitive advantage based on keeping your customers ignorant (think of the way cars were sold pre-2000 or so). Even if you’re making stuff, knowledge flows are really important.
3. It’s pretty cool! I don’t know about you, but I think it’s pretty cool to have all that capability packed into one device. Yes, it has downsides. It’s dumb to be checking email right when you wake up like I nearly always do. But that’s also part of figuring out the best way to use new tools – do dumb stuff until you find the best applications. Even though some say that we’ve run out of big ideas, I think that we live in pretty amazing times.
The transition from brick-sized handsets to palm-sized supercomputers would have been unimaginable for most of us in 1993. On the other hand, as William Gibson said, the future is already here, it’s just not evenly distributed.

So what ideas that will be transformational by 2033 are here already? What impact will these ideas have on the business that you’re in right now?

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17 April 2013