I came across this post on Airbnb via the Collaborative Consumption email newsletter. This quote in particular struck me:

Airbnb should be a modern day case study for a new kind of 21st Century business–a company that creates immensely more value than it extracts from customers. They are adding value to their users’ lives in multiple dimensions all at the same time.

Business models like Airbnb’s are based on value that is co-created with customers. Airbnb creates “immensely more value” by providing the enabling platform for value to be generated, and is rewarded for its contribution to the community.

Michael’s post goes on to discuss the importance of a clear purpose as the foundation stone to build an organisation culture capable of disruptive innovation. I would go further to suggest that for a business like Airbnb, where there traditional models of value-exchange are blurred, that purpose needs to look beyond the financial bottom line – “adding value to their users’ lives in multiple dimensions” is a great way to express that sentiment.

In addition to a clear purpose, there is also a need for trust, a point that Peter Merholtz picks up in this recent post.

Netflix, Nordstrom, Southwest, Zappos, USAA — these are all companies renowned for great customer experience. And they provide remarkable latitude to both customers and employees, a latitude that suggests trust.

As Peter notes, such trust extends beyond employees, it also requires trust in customers — including not punishing the majority of your customers to avoid problems with the minority (Zappos’ liberal return policy, for example). Airbnb is, of course, also a great example of this kind of trust (as are ventures like Kiva and Zopa).

To my mind, these concepts — Purpose, Trust, Co-created value, Platform — represent keystones for socially innovative business.

I’ve been doing a lot of thinking (but clearly not a lot of blog writing!) about the idea of social innovation in a business context.  This ties into some previous thoughts I’ve posted about values and sustainability as a lens for innovation.

Two articles that I’ve come across recently expand on this concept.  The first is from Tim Draimin and focuses on shifting from Corporate Social Responsibility to Corporate Social Innovation.

In the article Tim references Michael Porter’s thoughts:

Michael Porter suggests that CSR has evolved.  He speaks about a concept he calls “shared value” or “corporate policies and practices that enhance the competitiveness of the company while simultaneously advancing economic and social conditions in the communities in which it operates.”

The thinking goes that while traditional CSR programs are often viewed as an adjunct to the core business, something that happens “to the side”, the idea of CSI is that the benefit comes from the core business itself.  (While I do have reservations about the Corporate Social Innovation moniker, I do think the concept has merit.)

This is akin to what Adam Werbach outlines in his book Strategy for Sustainability when he talks about North Star goals and aligning sustainability goals with core business activity.  To my mind this also very much aligns with the concept of “betterness models” as put forward by Umair Haque.

I was reminded of this article (which I read quite a few weeks ago now) when I came across Dan Gray’s post on delivering short-term “quick wins” for sustainability within the context of a longer-term sustainability agenda.

In his post he says:

The authenticity of your commitment stems from the materiality of your actions – i.e. beyond the thin veneer of charitable giving, cause-related marketing etc., that commitment should be self-evident in the very products and services you provide, and the manner in which you conduct your daily business.

And goes on to quote Jonathon Porritt:

In an ideal world, all actions taken by a company to enhance its own commercial success should simultaneously generate benefits for society, over and above those that come directly through the use of that company’s products and services.

There are, of course, a number of cultural drivers that make consideration along these lines important for businesses moving forward, and I think they tie into the shift we’re also seeing in relation to social technologies (social networks etc.).  A quick summary of my current thinking is that people are seeking:

• Human connection: as organisations have grown in size and become more and more depersonalised, people are wanting more human interactions and personal response.
• Authenticity and transparency: from greenwashing to the GFC, the market’s trust has been eroded.  People are looking for organisations to say what they mean and mean what they say.
• Co-creation and collaboration: people are taking a more active role in developing the products and services that they use.  And if they don’t find what they’re looking for, they will often create it themselves.
• Environmental and social responsibility: global warming, looming limits to natural resource consumption, pollution and waste; respect for human dignity with fair wages and conditions — people want to support organisations that take these issues seriously, not just as something “to the side”.

Building a business (or service/product/brand) that resonates in this new “economy of meaning” requires a rethinking of an organisation’s role in more than “market” or financial terms.  But also, I think, a re-evaluation of an organisation’s relationship with customers/constituents, stakeholders, and the environment.

And I believe that it is in this rethinking that significant opportunities for innovation can be found.

Just a quick note to mentioned I’ve posted the slides from my presentation today at the Enviro 2010 conference over at Slideshare. I’ve uploaded with associated notes as a document to provide a bit more context for each slide.

In the presentation I mention Clay Shirky’s concept of the “cognitive surplus” – for those that are interested, he provides a great introduction to this concept in his recent TED talk (embedded below for quick reference):

Next Wednesday is the opening of the Enviro 2010 conference at the Melbourne Exhibition and Conference Centre.

I’m presenting there Thursday in the 4:00pm – 5:30pm session, on the topic of Social Design for Sustainability. In the presentation I’ll be looking at online social networks, the underlying trends that they represent, the importance of these networks in moving towards sustainability, and how “social design” (design thinking) provides a great toolset for organisations wanting to benefit through engagement within the context of these trends.

It’s been an interesting process pulling together the presentation, which ties together a number of the threads I’ve explored previously here in the blog, so I’m looking forward to seeing how it all goes on Thursday.

It’s also perhaps serendipitous that the conference coincides with the State of Design festival which has the theme of “Change by Design”. Hopefully my contribution to the Enviro 2010 conference will provide a nice tie-in between the two events.

Dan Pink, animated by the RSA, on what motivates us. Turns out meaning is better than money, and perhaps more surprisingly, that more money may actually result in worse performance.

Via the Nudge blog.

I’ve been thinking about how the techniques we use at Zumio suit organisations looking to become more sustainable. Sustainability, of course, is a social challenge as much as a technical one – while eco-efficiency (making products using more sustainable materials and processes) is a critical aspect, many of the barriers to more sustainable practice have social aspects.

Today I’ve been thinking about two areas in particular that can benefit from research and social design methods – they are Product Service Systems (PSS) and organisational capabilities building and communication.

PSS

While PSS in and of itself is not a panacea, the concept will no doubt play an important role in our shift towards a sustainable economy.

Qualitative research methods are very well suited to understanding the broader context of user needs and motivations, an essential component of defining and identifying opportunities for PSS.

Many of the benefits from service design principles (including prototyping and user testing) can then be applied to the development of the PSS to help increase uptake, among other things. An example of this can be seen in live|work’s work with Streetcar.

Organisational capacity building and communications

BSR and IDEO’s Aligned for Sustainability (PDF) report outlines a number of factors required for building sustainable thinking within an organisation. The report suggests that cross-functional communications, sharing learnings, and collaborative problem solving with people throughout an organisation are all important facets of building such capacity.

Social technologies, or “Enterprise 2.0″ approaches, can clearly play an important role here. But design approaches such as stakeholder workshops, personas, customer journey mapping, prototyping – especially when collaboratively generated – can all help with both building capacity (through better sharing of learnings and incorporating more diverse input in the design process) and communicating concepts and learning.

So it seems to me that the same tools that we can apply to generate opportunities for innovation can also be applied to achieve sustainable outcomes. In this model, far from sustainability being an “added cost” over an above standard operations, we can instead frame sustainability thinking as a lever for innovation. To me, this is a very exciting prospect, and something I’m looking forward to exploring further…

On Friday morning (before I had to dash to Melbourne) I was lucky enough to attend an excellent session organised by ASIX with Charles Leadbeater – Collaboration by Design – on design and social innovation.

I hope to document some thoughts and notes from the workshop proper soon, but I just quickly wanted to note an insight born of the conversation with some of the folks I was lucky enough to share a table with. I was able to put my finger on something I’ve been thinking on for a while, and wanted to put “pen to paper”, as it were, for future reflection.

In thinking about EMSs (for my recent Masters assignment) and the trajectory that Zumio is on, the idea of Triple Bottom Line (TBL) has come up as a potential path forward. While I appreciate the importance and value of TBL approaches, it hasn’t had the same resonance as some other ideas (such as Cradle to Cradle) and I think I’ve worked out why.

My perception of TBL is that it is a method of accounting for financial, social and environmental activities. While this is important, and in the context of environmental reporting can uncover specific opportunities for waste reduction and cost savings (among other things), ultimately it in principle isn’t aimed at driving business value.

I say this for a few reasons: firstly, the concept of 3 bottom lines implies a segregation of concerns. While I concede that some practitioners likely take a more holistic approach, the underlying framing, or lense, does not lend itself to such an approach.

By considering each in isolation there is a risk that opportunities will be considered only in relation to each pillar, missing opportunities that cross 2 or more pillars.

The second is that TBL seems primarily concerned with measurement, whereas I see the value in a sustainability as a means of creating “thick” value.

If you use your financials as the lense by which to view your business to create value, you are going to focus primarily on cost cutting and methods of incrementing revenue (i.e. raising prices for small improvements or using emotional/branding drivers to create a premium, without necessarily increasing real value to customers).

In a similar way, using such a lense on social and environmental factors alone is likely to lead to similar outcomes – primarily internally and operationally focused, rather than achieving innovation outcomes.

In this sense, a TBL approach feels a little bit like the tail wagging the dog.

It is clear that operational considerations are essential to successful service delivery and can sometimes result in innovation, but I think a conception of sustainability that is embedded within a deeper consideration of value creation is a more constructive frame of reference.

A lot of the work we do at Zumio focuses on achieving clarity of brand and business objectives. One of the phrases that’s popping up in my conversations is “values-based branding” and I wanted to just drop a short note here expanding a little more about what I mean by that.

To me, this phrase has a dual meaning. The first: in order to deliver a great experience to the people you are serving, you need to be clear about the type of experience you are are trying to create – not just in terms of the detail (i.e. what you do), but the overall feeling that you are intending people to experience when they interact with your organisation.

The second aspect can be summarised by this cartoon by Hugh Macleod (inspired the Hughtrain manifesto):

Instilling a deeper purpose and mission when conceiving the brand (and I’m talking about more than lip service here – I mean truly engendering the values across an organisation through action, and not just “tacked on” as an afterthought) can have a big impact. First inside, then outside an organisation.

This is related to the concept of “thick” value that I mentioned the other day in reference to Umair Haque’s post.

I’m not saying you have to have a “save the world” clause in your brand values (although if you can authentically embed such a mission, all power to you). Just some sense of a deeper purpose that people can draw on and rally around when they need that extra inspiration to deliver a great experience.

I was thinking this morning about all of the hype surrounding the release of the iPad in the US and iPhone OS 4.0 beta from Apple. I agree with many commentators that it’s over the top, and that it would be great if some of that energy was channeled to more positive outcomes.

I’m not sure why this is, but I’m impressed by how Apple inspires so much creativity in others. This is despite Apple playing catch-up (with the iPhone OS 4.0) to many other mobile manufacturers. And how disproportionate the emphasis from developers is on developing sites and applications for the platform (given marketshare), despite the well documented issues with the walled garden approach from Apple.

I think this is a reflection of the “experience-driven organisation”, as Jesse James Garrett calls it, that Apple has cultivated. This culture of design inside the organisation expands beyond it’s boundaries, inspiring those outside the organisation to contribute to it. And it’s not just developers – I think this resonates with many customers. They too want to be part of this culture.

It’s a positive feedback loop. And this, I think, is one of the key drivers of Apple’s success, and some degree of the hype…

Umair Haque’s post From Social Media to Social Strategy in the Harvard Business review (hat-tip: Michelle Williams) resonated with me, as I’ve been thinking along similar lines about building a more robust definition of “value” in a business context, beyond the financial bottom line:

… from Wall Street to Detroit to Big Pharma to Big Food to Big Energy. Our research suggests that 95% of organizations are unable to offer socially useful stuff that creates meaningful value for people, communities, and tomorrow’s generations.

Yet, most “social media” strategies have one or more of three goals: to “push product,” “build buzz,” or “engage consumers.” None of these lives up to the Internet’s promise of meaning. They’re just slightly cleverer ways to sell more of the same old junk. But the great challenge of the 21st century is making stuff radically better in the first place — stuff that creates what I’ve been calling thicker value.

I like the idea of “thicker” value – and I’ve also been wrestling with finding the right language to describe this concept. He goes on to say “Organizations don’t need ‘social media’ strategies. They need social strategies: strategies that turn antisocial behavior on its head to maximize meaning.”

This idea of “anti-social behaviour” is an interesting perspective on business attitudes and approaches. But that’s just a taste – the rest of Umair’s post is well worth the read also. Check it out…