Another Dispatch From Pop!Tech

A couple of months ago, I got captivated by the notion of the $100 laptop currently being developed by MIT's famed Media Lab headed by legendary technologist Nicholas Negroponte. He's a guy I started to track after reading his book Being Digital when I was a way wet behind the ears techie wannabe nearly two decades ago. Today at Pop!Tech, Negroponte outlined the details of the device and its intended effect on the developing world.

He pointed out that personal computer costs breakdown into essentially three categories: sales, marketing, distribution, and profit -- 50%, display -- 25%, and everything else -- 25% (75% of which is used just to store and maintain the operating system). By focusing on a low-cost, low-power display, a self-generated power supply, and emphasizing connectivity and an open source architecture, the device could potentially connect 100 million people a year (if Negroponte has his way) to the rest of the world. A workable model is to be presented to the U.N. in November with production prototypes due early next year.

However, Negroponte failed to address at least a couple of important issues. First, he proposes that all of the "know it exists, get it to those who want it" costs (i.e., sales, marketing, distribution) will be eliminated. One way or another, someone will have to pick up the tab here, particularly for logistics and support ... hope it's not just shifting the accounting of costs from the "laptop" account to the "U.N. (or some other nonprofit)" account. Second, and a big question in my mind, is how much of the laptop is recyclable, reusable, or remanufacturable? Does the world really need to produce 100 million a year more of anything that doesn't have a pre-defined, designed-in sustainability cycle, particularly in the developing world where sanitation infrastructures are primitive at best?

Just goes to show that even a "wow!" idea is just the first step in the lifecycle of a social innovation with impact.

Dispatch from Pop!Tech

In yesterday's sessions at Pop!Tech, we were enveloped by a tone of almost unfathomable optimism and ambition. Technological genius, indescribable integration of art and engineering, the exploration of space and oceans. Heady stuff, indeed ...

In contrast, this morning so far has been way more sobering and, in a way, a welcome grounding. The effects of global warming presented by author Mark Lynas literally stopped my brain in its tracks. In a synthesis of scientific investigation on the subject, Lynas made me believe a quote I read in the local paper: "Climate change is nuclear war in slow motion." The implications of even single degree increases in ocean temperature have vast implications on the physical, geographic, and social structures that provide a precarious equilibrium for citizens around the world.

Finally, I haven't gotten through all of Suketu Mehta's book Maximum City: Bombay Lost and Found but if his excerpt reading is any indication, it's a must read. Cities now make up 1/2 the world's population and in the developing world, the migration of people from rural areas to cities (driven by what appears to be a universal lure, dependable income and the potential for a "better life") will fundamentally change our very notion of what constitutes "acceptable living standards."

The Influence of One Social Entrepreneur: Bill Strickland, MCG

Bidwell CEO to Advise Louisiana on Tourism
Founder & CEO of the boundery-busting Manchester Craftsmans Guild is tapped to help the New Orleans music and culture scene in its recovery.
Pittsburgh Post-Gazette | Saturday, October 08, 2005

What One Man Can Do
Bill Strickland is in the business of saving lives. After almost 40 years of teaching kids, training adults, and telling his story, he's looking to "franchise" his brand of hope.
Inc. Magazine, September 2005 | Page 144 By: John Brant Photographs by: Graham MacIndoe
See slideshow and hear a soundclip of Bill's presentation

(Annie O'Neill, Post-Gazette photos)

What Price Culture?

An OpEd article in this past weekend's edition of the Wall Street Journal by Douglas McLennan, editor of artsjournal.com questions whether the current financial model of arts organizations, increasingly focusing on "business-like" activities such as charging admissions fees, courting underwriters, and running retail shops is artistically appropriate and fiscally sustainable. He contends that the current system is "broken" and a new "model" must be invented.

It's clear that many arts and cultural institutions are stuggling. In my hometown, an institution as world renowned as the Pittsburgh Symphony continues to stuggle even after earning a majority of its operating budget through earned income and garnering salary concessions from its musicians.

However, what Mr. McLennan doesn't do in his article is suggest what a new model for arts and cultural organizations should look like, contending that we're "stretching traditional nonprofit status to the point of breaking". Although I'm not sure that there's is an obvious "answer", I do know that going back to the way the arts were "funded" a generation ago is not a viable solution. For example, patrons in the past had fewer choices on which to spend their entertainment dollars and the exodus out of many urban areas (including my own) over the years has reduced the size of the customer base. The bottom line is that arts and cultural institutions are exposed to market forces like never before and have no choice but to respond in ways that more closely resemble businesses.

Earned income activities not tied to the core mission of the organization, like a coffee shop run by a museum, is not likely to ever generate significant profits. They are mostly stopgap measures. However, social enterprise initiatives intimately linked to mission and run with the intent to make money (like all businesses, there is no guarantee) can not only effectively compete and grow but can also build organizational capacity, supplement other objectives of the organization (e.g., grow membership), and open up new revenue-generating opportunties.

One of the ventures in the Accelerator's portfolio is the Westmoreland Museum of American Art in Greensburg, PA. Like the organizations described by Mr. McLennan, the WMAA struggles to maintain a preeminent status among regional museums in the U.S. while ensuring its financial sustainability.
Its earned income initiatives, fully supporting the museum's mission to educate people about the art and history of their country, have not only generated increasing financial returns but has resulted in a variety of exciting (and potentially profit-making) partnerships.

For example, the Westmoreland was the premier show in the Visionaries eleventh season of profiling socially innovative individuals and organizations around the world for PBS and the Wisdom Channel. Entitled American Art-Alive and Well the episode is described as:

Bonded by an extraordinary personal event, a small group of people transform a stodgy old museum into a vibrant place pulsating with the energy of young people discovering art, history and music for the first time. The music of the NewLanders a group of Pittsburgh area musicians and songwriters who have researched and rediscovered songs written by, and about, the people of southwestern Pennsylvania is part of that story.

The business model for arts and cultural institutions may have outlived its usefulness but I would contend that the future still looks a lot like the present, with more of the very best and most relevant practices of the private, public, and citizen sector injecting life into a critical aspect of society.

The New Philanthropy

Used to be that when entrepreneurs hit it big, they'd put their loot into a venture capital fund to have an excuse to stay in the start-up game or into a philanthropic foundation to "give back", providing funds to worthwhile non-profit programs. But some of the savviest tech entrepreneurs of the last decade, most recently the founders of Google as described in today's USA Today, and the founders of eBay, Pierre Omidyar and Jeff Skoll, are using their wealth to invest in non-profits pursuing businesses in support of mission and "socially progressive" companies formed as for-profits.

If the traditional sources of funding for both the non-profit and private sector began to dedicate even a small fraction of their vast holdings to social innovators, regardless of the legal designation of their enterprises, we might be forced to come up with a whole new definition of "shareholder value" and a new name for these "hybrid" endeavors.

Do well and do good may never have been mutally exclusive but we may very be at a "tipping point" at the interection of business and societal impact where only the savviest entrepreneurs need apply.

The Unintended Crossover of Innovation

A few years ago, the famed inventor Dean Kamen unveiled a product that he claimed would literally change the world. His invention, the Segway Human Transporter, is a self-balancing, electric-powered transportation device that uses gyroscopes and other mechanical innovations to allow people to travel farther and move quicker -- up to 12.5 mph. Many pundits envisioned the Segway as an enabler of "new urbanism", a way to arrest the pace of sprawl and make cities more livable. Public sector organizations like the U.S. Postal Service piloted the device to deliver the mail and police forces tried it out as a 21st century version of walking the beat.

While the Segway hasn't become quite as ubiquitous as originally touted, it's been described in a recent article as having "an unsought market." The market? People with disabilities!

In some ways, this should come as no surprise. Kamen was a card-carrying social entrepreneur long before he and his team invented the integrated technologies underlying the Segway. After all, he invented the first portable infusion pump capable of delivering drugs (such as insulin) to patients who had previously required round-the-clock monitoring, a phone book-sized dialysis machine, and a six-wheeled robotic "mobility system" for the disabled that can climb stairs, traverse sandy and rocky terrain, and raise its user to eye-level with a standing person.

But if you were a spunky MBA student helping Kamen write the Segway's business plan, you probably wouldn't suggest selling into the "disabled market". Too small. Too distributed. Too diverse. And, apparently, a real beneficiary of innovation's crossover effect.

So Many Books, So Little Time

As far back as I can remember, I've operated in a gray area of acceptable societal norms: the jock who can't keep his nose out of a book. Ahh, books! I've always been fascinated by every aspect of the industry -- how do authors get their brilliant ideas on paper in a coherent way, how are the army of supporters (like editors, photographers, cover artists) coordinated, how are books manufactured and marketed, how cool is it to get royalty checks in the mail?

But the whole idea of becoming an "author" is both daunting and frustrating. How do the seemingly limitless number of book ideas rummaging around my head and written down on sticky notes and the backs of napkins jive with a long-cycle, high overhead industry? I recently ran across a model that may provide an answer and at the same time make the whole book publishing industry increasingly irrelevant.

More Space is a book project that:

"...presents nine current business bloggers writing in their own unique styles. Each author challenges the premise that places of business can only be cold and uninspiring. By sharing their own experiences they offer up ways for you to re-ignite passion and enthusiasm in your work."

Can't diss the premise and topic for sure but what I really like about the project is the intent to offer a variety of formats (pdf, html, mp3, hardcover), license the works using Creative Commons, provide an initial run of the hardcover version with stuff you can't get in the free versions, and find a "business model" that fits consumer needs and pays for itself including compensation for the authors (prominent bloggers in this case).

Hmm, now where did I put all of those napkins and sticky notes ...?

SROI: Heart, Mind and Bottom Line

So, what is the ROI on SRI? Can we truly measure SROI?

And, by the way, what the heck are we even talking about?

With SROI, one measures the increasing social effects of an investment; with SRI one measures the increasing financial returns of a socially-oriented investment.

So what's the difference? Is there one?

Namely, we are talking about two different, but related creatures:

1. Social return on investment (SROI): the quantitative and subjective measure of social effects of a program (ex. higher test scores, lower mortality, cleaner neighborhoods, etc.)
   
2. Socially responsible investments (SRI) -- or "doing well by doing good" -- integrates personal and social values into investment decisions.
   

This synthesis of "investment" with "social" ventures is on the rise as more and more investors take responsibility for their own 401(k) and SEP plans.

They begin to think about the effects of that wealth and worry that their investment may be part of the problem, instead of part of the cure. But these investors still want to retire someday and are far from looking at these investments as handouts. Instead, they want to know that the business models of the organizations and the leadership teams have been duly vetted and approved.

It seems quite logical: we worry about what activities our money is going towards funding, in terms of both the activities those investments fuel and the return on that capital.

But what about that Social Return on Investment? As stock market volatility rattles the coffers of large foundations, more boards of non-profits and grantmaking organizations are asking for proof as to the effectiveness of their largesse.

In an interview with Accelerator president Tim Zak on Globeshakers, author David Bornstein, an expert on social enterprise says:

Right now you have companies with big foundations: Companies that give away thirty, forty, fifty, eighty million dollars a year. They have process that is shameful in terms of thinking through how they do it. They hire maybe five people who do minimal due diligence.

In some cases, it is merely word-of-mouth kind of things; they go to a couple of meetings and they give the money away.

It is nothing near the way it would be if they were actually investing seventy million dollars in a business. In that case, they would spend close to a year talking to everyone who has ever dealt with that business.

Towards this end, the skillsets of venture capitalists are being drawn into the social sector to provide such due diligence.

More than 500 "socially responsible investment" professionals gathered in Snowbird Utah last week for the 16th annual SRI in the Rockies conference.

Gil Friend of Worldchanging.com was there to report on the evolution of the field, described in Social Investment, Social Capital and Social Action:

There was some debate in the room over whether, and why, companies care about their SRI rankings. Some maintained that companies could care less; others noted that many public traded companies respond to extensive questionnaires (at 100 hours a pop) from multiple SRI analysts (sometimes dozens) -- the reason OneReport was developed -- while some approach the analysts and rating services (like the DowJones Sustainability Index, FTSE4Good, KLD, Innovest, and others) for advice on what they need to do to move onto the good list. That seems like an indicator of perceived value to me. As does the presence of a former Goldman Sachs CEO at the helm of Al Gore's new firm, Generation Investment Management LLP.
Perception is key to the investment game, of course. The profit opportunity lives in the value gradients between how different people evaluate risk and opportunity, and hence the value of securities. If I think global warming, toxic products and human rights are likely to be big deals, and you don't, we're going to place very different financial bets. Because SRI is a movement as well as an industry, the investors want to move markets -- like LEED has done in the building industry -- as well as profit from them.

One thing is for certain, when companies perceive that their financial well-being is directly tied to the stockholders' idea that their capital is invested in a social investment, then companies will need to make damn sure there is a healthy return.

We're talking SROI investors can take to heart, and ROI they can take to the bank.

Decaf Healthcare

The social pressure on healthcare rises. But when the Big Boys of commerce go to the Hill to ask for a little relief, will the pullers of the purse-strings listen?
Starbucks will spend more on healthcare than on coffee; for car makers, they'll spend more on that line item than on steel.

Thursday, September 15, 2005
Starbucks, others try to balance worker health care with expenses
By CHARLES POPE, SEATTLE POST-INTELLIGENCER CAPITOL CORRESPONDENT

WASHINGTON -- Starbucks Chairman Howard Schultz didn't mention Wal-Mart by name Wednesday as he took part in several Capitol Hill events designed to draw attention to the nation's health care "crisis."
But the implication, in both words and actions, was clear. Schultz was part of a group that included CEOs from Verizon, Costco, Honeywell and Pitney Bowes who came to Congress to jump-start efforts to control health care costs. Each of the companies offers health insurance to virtually all of its employees, even in the face of sharply rising costs. READ FULL ARTICLE>>