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Monday, March 28, 2011

THIS IS AFRICA & A Social Enterprise Debate

Let's Drop the Word "Social"

On Saturday I attended re:Vision 2011, YSEC's second annual conference on social entrepreneurship.  There was a unique spirit in the room,  a buzz of excitement throughout the day as young social entrepreneurs (or those to-be) got hyped up by the inspiring speakers, networking with each other, and bouncing great ideas off one another. 

Throughout the day, however, I couldn't help but think back to another conference I attended just a few weeks ago, where a man who is making some serious change in Africa claimed his opposition to the concept of social entrepreneurship and social enterprise.

He has a very interesting opinion, and it is an important one to share as this field continues to flourish:

Tal Dehtiar, founder of Oliberté Footwear, caught my interest not only with his system-changing business model, but also with his heated opinions on aid and what a social enterprise really means.

Tal believes that aid does not provide sustainable solutions to major issues in developing countries (aside from natural disasters). Like I do, he believes that building businesses (and therefore creating jobs) fosters natural economic growth and empowerment.  We both developed some of our opinions on aid from a book I highly recommend called "Dead Aid", by economist Dambisa Moyo

Tal's belief in how to eradicate poverty and trigger growth in developing countries forms the basis of the Oliberté business model.

Oliberté Footwear is a shoe manufacturer.  Like the other big shoe companies out there, it has designers, suppliers, manufacturers, distribution systems, etc..

So what is the key difference between Oliberté and the Nikes of the world?

Oliberté's supply chain operates fully in Africa.  It is the first company to have a fully-operated shoe company based out of Africa and sold in the West... most of the big players in the shoe industry shift but one step in their manufacturing process overseas and call it CSR (corporate social responsibility).

Amidst the major challenges and constraints of building an entire business in many countries in Africa, Tal and his team found a way to make well-designed, fashionable shoes that are sold at price-points comparable to other high-end brands, at the stores we all know and love.  Oh yes, AND they are creating jobs, empowering individuals, and fostering growth in communities that are often perceived to be desperate (and might I add that women comprise approximately 50% of the workforce!).  

You ready to head to the mall yet?

Here's the way Oliberté explains their concept:
When we first shared the idea of manufacturing our footwear in Africa, many thought why? Why or how could anyone want to make shoes in a place full of so much poverty and corruption?
The answer was simple – we never have and still don't see an Africa that's categorised by negative generalizations. Oliberté believes that with the right partners, each country within Africa has the means to grow and support its people. So that's what we do – Oliberté partners with factories, suppliers, farmers and workers to produce premium footwear in Africa, but we do more than that. We work create fair jobs, with the goal of contributing to the development of a thriving middle class.
It is generally accepted that a thriving middle class is a key component to the success of any country. In Africa the middle class is increasing in size and one of Oliberté's goals is to support that growing middle class by building a world class footwear brand that can create thousands of jobs and also encourages manufacturers from other industries to work in Africa.Currently Oliberté operates in Ethiopia, Liberia and Kenya with the goal of expanding to Cameroon, Congo, Uganda and Zambia in the coming years.
So I'm sitting in the audience in awe, thinking "Wow! What an incredible social entrepreneur!"

But according to Tal, he is not a social entrepreneur, he is simply an entrepreneur.  

In Tal's opinion, he is running a shoe company that just happens to be having a huge impact in developing countries.  He thinks that every business should be treating its employees fairly and operating through sustainable supply chains, so to designate a separate concept to those businesses who happen to be operating the right way seems almost silly. It leads people to mentally separate ethics and business, when really, this is how business should intrinsically run anyway.  Of course, I agree with this, and value his opinion very much.

Tal said his parents immigrated to Canada and grew a business that employed many people. And according to most of us, they would not be considered social entrepreneurs despite the fact that creating jobs most definitely solves a social issue.  And because almost every company hires people, wouldn't, then everyone be a social entrepreneur?

Interesting opinion, and he almost had me sold.

But here's the the thing.  Ideally, yes, we all envision a world one day where businesses are run completely sustainably and ethically.  Unfortunately, that's not reality...YET.  But that's what the members of the social enterprise movement are working towards.  And we're going to need to coin this as a movement until the socially and environmentally detrimental companies change their values and practices.

So in my opinion, there IS a definite difference, and right now there needs to be one.  The social entrepreneurs and social enterprises (click here for my take on the difference between these two terms) are actively shifting mindsets of consumers and corporations. These are the innovators, the change leaders, the ones who are going to help us battle climate change and poverty.  And until our marketplace becomes fully ethical and serving people the way it was originally designed to, the "social" piece of the concept must remain.  There is a clear difference between an entrepreneur and a social entrepreneur...and Tal is a concrete example of the latter.  His business principles are leading by example.

My hope is that very soon, the concepts of social entrepreneurship and social enterprise cease to exist so that these organizations and companies that are driving system-change become the main-stream enterprises.  Let us all aspire to create a world where the word "social" is dropped...where instead, "social" implies the norm.

Until then, we have a lot of work to do my friends.

Tuesday, March 15, 2011

Green Tea Party, UNITE!

Why the Canadian government must listen to our voices on climate change

My head is exploding with new knowledge I gained this past week at two different conferences, both focused on social enterprise, sustainability, and all the other great conversations I like to cover here on Kaizen Crossroad.  With lots of different ideas and  opinions wafting inside, I will break the next few posts into themes I hope you will find both relateable and interesting.

I will begin with a feeling that has been irking in my gut for the last few weeks:

As an informed Canadian voter, I feel there is little I can do to make a large-scale impact on mitigating climate change.  I believe the change has to come from the government, and the government is simply not making climate change a priority despite the overwhelming and frightening proof of its importance.  Canada has the potential to make a significant difference; we have the potential to become a global leader on this issue.  But we're not, and I feel frustrated, scared, and to some degree, helpless.

I have expressed this uneasiness to several Canadian experts on the topic and have become increasingly heated by some astounding information.  In this post, I'd like to share 5 of my learnings from both Ivey's Innovation Day and Schulich's Net Impact GreenEdge Conference:

1. China plans to cut its emissions by 17% between 2011-2015, and 40% by 2020. The US military views climate change as  the #1 security threat, Saudia Arabia is building four new zero-footprint cities, India is providing tax incentives for green car purchases, and Canada falls in last place in the G20 on this issue.  Why aren't we taking leadership?

2. The solution to clean energy will come through a combination of wind, water, and solar energy (WWS).  However, as citizens we must realize that it's not just our sources of power that require reformation, it is our every-day, taken-for-granted behaviours toward food, mobility, and industry that will also need to shift.

3. Ron Dembo, founder of Zero-footprint, said that governments don't use appropriate decision-making tools when making decisions.  For example, we know that CO2 is at its highest level ever, but we don't know how exactly it will take effect.  So, the rational government would choose to err on the side of caution and invest in the worst-case scenario.  The rational government would hedge against the uncertain outcomes of CO2 emissions.

So, It's not whether we can live with the effects of climate change, the question is how much can we live with?  And in making these decisions, Ron says you must always hedge the impending risks (Bankers, I know you master the hedging craft...).

4. We are choosing to be energy inefficient in North America.  According to Jim Harris, one of North America's leading management consultants and former leader of the Green Party of Canada, if you add the total market cap. of GM, Ford, and Chrysler and multiply that number by 3, Toyota has a larger market capitalization and is the world's leader by far in energy efficiency.

(GM + Ford + Chrysler) * 3 < TOYOTA

Toyota Prius
5. There is an economic argument for mitigating climate change. While Jim Harris had a lot to say about this, I will share a couple of examples that stood out to me:

As you might know, most vending machines have a light that brightens up the front to make them look super flashy.   Well, I learned that the heat from that light necessitates the use of more energy to cool the drinks.  Walmart has several of these vending machines in each of their 9000 stores globally. So what did they decide to do to cut energy usage and costs?

Walmart decided to take out the lights of their vending machines and saved $1 million dollars.  Maybe just a small ripple for Walmart, but think about the cumulative potential of this by corporations globally! 

And just to prove the economic argument a little further, when GM went bankrupt a few years ago, they actually turned off the escalators at night to save costs. And I think we can all assume now that GM is back hot and heavy, those escalators are rollin' all night long. 

So let me get this straight. GM saved energy during difficult financial times in order to save money, but the second they are out of the red the energy waste begins again.  Unbelievable.

Alright, I will stop the facts there.  

When Nicholas Parker, co-founder of Cleantech Group and sustainability guru in North America, addressed my question of, "What can we, Canadian citizens, do to get our voices heard in the government", his answer had the whole crowd laughing:

"We need a Green Tea Party." 

No, not the ever-so-popular Japanese drink, and not the Boston Tea Party-like revolution... I don't even think he means a political party.  The point I took away was simply that we need a stronger and larger group of people to vocalize their concerns about climate change. The more people we have on board, the more tea we can throw off the boat.  (That's my terrible metaphor for "the bigger our chances are of getting heard and changing policy").

I've been taught recently the importance of leaving an optimistic tone when concluding a presentation or composition.  And so, I will say that we are reaching some positive milestones provincially.  

From a personal perspective, I have seen examples of progress both in British Columbia while on the Social Finance Tour and here at home in Ontario with the Green Energy Act.  And while I do see climate change as a responsibility and absolute priority at the federal level, I am encouraged by the advances of these two provinces.  Let's keep building this momentum.

I welcome your thoughts on how we can get our voices heard.  For now, I encourage you to fill out this survey to contribute your values and priorities to the Declaration for Change.

Sunday, March 6, 2011

Adding Value: An Enlightening Analogy

"We're going to make it in time, we're just going to have to change how we live our lives."

A couple of weeks ago, I was fortunate enough to have coffee with Tim Stoate, Associate Director of Toronto Atmospheric Fund (TAF).  For 20 years, TAF has been providing air pollution, energy use, and climate solutions to institutions around Toronto.  They have saved the city millions of dollars on energy costs and helped citizens live greener, healthier lives.

Basically, TAF was impact investing before I learned to speak.

I expressed my concerns to Tim about the cross-generational apathy toward the threat of climate change.  In my mind, there is only a finite amount of resources on earth, and without serious behavioural changes we are going to deplete them, ultimately killing ourselves.  Quite a cynical view for someone who is such an optimist!

Tim's response had a more hopeful yet realistic conclusion: "We're going to make it in time, we're just going to have to change how we live our lives.  It won't be perfect, we're just going to learn to adapt."

Then Tim presented what I see as a brilliant analogy.

He asked: In the three words, what is business really about?  What are the three things a business cannot live without?

Answer: Sales. Profits. Cash. 

He said, "Think about it.  When you peel off all the layers, what in business is not about sales, profits, and cash?"  Consistently working on each of these three things is how to keep your business model sustainable.

Then Tim asked me, "What value have we added to the earth, land, and water?"

I hesitated for a few moments, because I really was trying to think of something positive humans could have done.  But nothing came, and I answered, "None".  We do not add any value to the three very components that keep us alive.

And so there is a parallel between business and the environment. In business, we are so focused on adding value to procure sales, profits, and cash to keep the business sustainable.  And if you would never sacrifice the sales, the profits, and the cash, why would you sacrifice the earth, land, and water if these are the fundamentals that sustain our very being?

I think the problem is that the sales, profits, and cash are short term wins which is a huge motivator for companies.  People (mainly those in developed countries) do not yet see the consequences of climate change and so there is no motivation to change behaviours.  I look to the future generations and am very concerned that my kids will not enjoy the same opportunities my parents, grandparents, and I have had.  The proof is there, and the numbers aren't lying.

So what is Tim's conclusion?
  Add value to the earth, land, water, or one of them, because that's what will matter to people in 30 years. And it's the long-term goals that ultimately maintain sustainability, be it a business or the environment.