Business 2.0, Sustainability

The circular economy

Explaining concepts like Product Service Systems and “service dominant logic” can be tricky, so it’s always great to come across good resources like the video below from the Ellen Macarthur Foundation (via Good.is):

The video uses the term “circular economy” to explain one of the aspects of Collaborative Consumption (product service systems). It strikes me as a great introduction to the key concepts and benefits.

Business 2.0, Design, Government 2.0

Richard Buchanan on service design

Just finished watching Richard Buchanan’s keynote at the Service Design Conference 2011 (via @pennyhagen).

There were lots of points that were interesting to me, but a couple stood out. One was the purpose of an organisation not being profit, but instead the delivery of goods and services. The second was three key areas that he highlights where service design is of particular interest: health care, community design and public services design. The third was the need to extend service design into the culture of an organisation.

Overall a thought provoking talk very much aligned with my perspective of service design and Zumio’s approach/purpose.

Business 2.0, Social media & networking, Sustainability

Platforms for shared value creation (redux)

I’ve just completed 3rd semester of my masters degree, and I wanted to share one of the papers I wrote on the concept of Platforms for shared value creation, that builds on the model that I outlined in my Web Directions South 2010 talk.

Diagram outlining the 'Platform for shared value creation' concept

The paper, which is provided under a Creative Commons license:

…proposes a model of service delivery that has the potential to create shared value (Porter & Kramer 2011), addressing pressing societal and environmental needs while delivering commercial returns. The aim of this paper is to introduce the model — the “platform for shared value creation” (PSVC) — as a first step towards further exploration in the future. The model is not yet fully-formed and as such this paper should be considered more as “thinking in draft” for further discussion and refinement.

While the nature of these things means it takes an academic tone, I hope that it provides some value as a contribution to discussions around shared value, Collaborative Consumption, and social innovation. I would love to know any feedback you might have, so please drop me a note in the comments if you find it useful, or want to challenge or probe any of its assertions.

Business 2.0, Design, Sustainability

Mind the gap

In the time I’ve been actively engaged in business sustainability, I’ve noticed that report after study after survey that shows that a majority of customers have environmental and social considerations at the forefront of their mind when making purchases. For example, this 2008 McKinsey report (free registration required to read article) highlights that “87% of consumers worry about the environmental and social impact of the products they buy”. In the Australian context, research carried out by NetBalance for the Australian Food and Grocery Council (AFGC) reports “80% consider sustainability issues when putting products in their shopping trolleys”.

Diagram outlining intention vs. action

Yet this latent desire to make ethical choices in purchasing is also shown to be missing in action, outside of a significant minority. The same McKinsey report suggests 33% make such purchase decisions (which is similar to other reports I’ve read) and the AFGC finds that only 13% of Australians buy environmentally-sustainable food and groceries from the supermarket (as an aside: this figure seems low — I’ve seen other statistics that show organic produce as being much more prevalent than this, and that these purchases would be considered “environmentally-sustainable” — something to look into further).  Trendwatching place these figures at 40% and 4% respectively (based on Journal of Marketing data).

In considering this gap, we find many stated reasons as to why intention isn’t translating into action. Most commonly cited is price — reports I’ve read (coupled with my own experience) suggest that customers aren’t willing to spend more than a 5-10% premium for “green” products, if they are willing to spend more at all. And of course products with a price premium were much more likely to feel the pinch of changing economic circumstances.

But there is more to it than that — performance is another, where “green” products are seen as inferior to mainstream products. As Joel Makower asks, why does “green” not equal “better”?  Convenience is another factor, with limited availability of green options through mainstream channels (e.g. mainstream retailers, such as Coles or Woolworths here in Australia). Each of these is noted in both the McKinsey and AFGC summaries — and each is weighted against the environmental or social benefits of the product when making a decision. The AFGC report notes that only a small number will compromise on cost or convenience for environmental factors.

So what to do? We could try to change people’s priorities, to get them to change the weighting the put on each of these factors. I suspect this won’t get very far though… As I noted in my Web Directions South presentation, a lot of successful social innovations aim to actually flip the equation — to make the more sustainable option also cheaper, or more convenient, or have better performance, rather than forcing this kind of trade-off.  Companies leading in the Collaborative Consumption space often fit this category.  Trendwatching call such products Eco-superior or Eco-easy.

Bridging the gap

But why aren’t more companies doing this? Why aren’t there more products like this in the market? I think part of the challenge is that when companies are considering sustainability factors in their products, they focus on specific attributes of products, rather than thinking more holistically. What this means is that their consideration only extends as far as lessening the impact of certain ingredients — e.g. substituting an eco-friendly alternative as a key material or ingredient in a product.

Often this results in a more expensive product that doesn’t perform as well as the mainstream alternative. But more importantly, I think it misses the bigger opportunities of taking a sustainable approach to business – the kind of opportunities outlined by leading thinkers like Makower, Gil Friend, Paul Hawken and William McDonough.

These opportunities require a more holistic approach that considers the broader context in which a product or service exists. In Natural Capitalism, Hawken, Lovins & Lovins call this “whole of systems thinking”.

For those familiar with design thinking or service design approaches, this will be a familiar theme — core to these practices is assembling multi-disciplinary teams that take a broader contextual view (informed by design research) to uncover opportunities for rethinking the role of organisations and the products and services they provide that can create whole new classes of products (or, perhaps more accurately, product service systems).

Diagram outlining how design thinking/service design can connect intention with action

The iPod/iTunes ecosystem is an oft-cited example of the possibilities of rethinking the system, rather than innovating purely on product attributes (while this isn’t explicitly for sustainability benefits, it does demonstrate the concept in practice).

In Blue Ocean Strategy, authors Kim and Mauborgne suggest a similar approach in their guide to formulating a successful product/business strategy. They reference this as an opportunity for innovation — without considering sustainability as a factor. However, it seems clear to me that the same principles are at work in books like Cradle to Cradle and Natural Capitalism, and are also cited in papers on design thinking in business (as I covered in more detail in my paper on Design Thinking and Sustainability).

This, I believe, is where design thinking and service design can play an enormously positive role in progressing sustainability. As it inherently takes an innovation frame, it is appealing to business. However, the opportunities for including the building of social capital and environmental benefits in the broader contextual frame of reference are huge — creating significant wins for business and society simultaneously.

Business 2.0, Social media & networking

Design we can all live with

I caught this video from Worrell Design (via @metarand) last week and I wanted to post it here because I think it is a great overview of the value of user research and collaborative design, with a specific focus on health care.

A lot of what’s covered in the video applies in a multitude of sectors and circumstances. While some of the video hints at some great technology ideas, these are only made possible by understanding the social aspects of the provision of health care — that is the relationship between practitioner and patient, and the other challenges, motivations, needs and wants that revolve around managing health.

I also think it highlights the challenges that many organisations and sectors face as the people formerly known as “consumers” are wresting back control using social and personal technologies, becoming active participants in the process.

In any case, well worth a watch…