Screen Shot 2017-02-26 at 1.40.48 PM.png

"In the philosophy of Heraclitus, enantiodromia is used to designate the play of opposites in the course of events--the view that everything that exists turns into its opposite..." - Carl Jung (1949)


The Swiss psychiatrist Carl Jung drew heavily upon the ancient Greek Philosophers in formulating his groundbreaking theories in analytical psychology.  Among his most important insights was the Karmic tendency of human emotions to metamorphose into their opposites--Enantiodromia.

In his Collected Works, Jung described his use of the term as "...the emergence of the unconscious opposite in the course of time."  Jung observed that the emergence of unconscious ideas occurs when an extreme one-sided tendency dominates conscious life; eventually an equally strong countervailing tendency builds:  Euphoria becomes melancholy; valued becomes worthless; and good becomes bad.  

And so it may be that Enantiodromia can help us better understand the current trajectory of the World:  Brexit in Europe and the rise of Donald Trump in the US have signaled an accelerating global trend toward economic nationalism, protectionism, and xenophobia.  Failing states, mass migration, and fear of terrorism are driving a world-wide shift toward isolationism replete with Border Walls and Travel Bans in the US.  Automation and artificial intelligence are widening the gap between the Haves and Have Nots, resulting in a swell of dislocated communities, people left behind, and a shrinking middle class.  A nostalgic desire to return to the high-paying factory jobs and mass consumption of old are fueling a roll-back in environmental protection, resurgence of fossil fuel investment, and a denial of global climate change.

The Trump Administration in the US has appointed an EPA Administrator that wants to eliminate the agency, an Education Secretary that does not believe in public education, an Energy Secretary that thinks the main job is to lobby for the fossil fuel industry, and a chief strategist that advocates for closing the borders and turning the clock back on civil rights.  Many now legitimately fear that these accelerating global trends will inevitably lead to rising religious and ethnic intolerance, trade wars, military conflicts, climate crisis, environmental meltdown, and a new authoritarianism.  

But what if all these recent trends were a blessing in disguise?  What if they represent the last gasp of a dying system?  What if we are on the verge of a major shift in World View that will catapult us into a sustainable future?  Remember that the principle of Enantiodromia teaches us that extreme one-sidedness builds up a tension, and the more extreme the position, the more easily it can shift to its opposite.

A Hillary Clinton Presidency would probably not have created such an extreme; on the contrary, it would in all likelihood have resulted in slow death rather than deep change.  What if the world-wide protests, grassroots activism, and town hall engagement that have been spawned in the past few months are just the tip of the iceberg?  What if this is just the start of a giant pendulum swing in the opposite direction?  What if we are on the cusp of a new age characterized by tolerance, social inclusion, regeneration, and environmental sustainability?  Remember: It's always darkest just before the dawn.
In their book, Blue Ocean Strategy, Chan Kim and Renee Mauborgne, emphasize the strategic move (or initiative) as the key to innovation strategy, with the majority of corporate growth (and later, profits) coming from new strategic initiatives rather than from the continuing development and improvement of existing businesses.

Consistent with this view (and a previous piece, "The Folly of Corporate Sustainability Ratings"),  I believe that refocusing attention on new, Transformational Strategic Initiatives holds the key to driving (and evaluating) corporate sustainability:  Rather than chasing the fantasy of rating entire corporations as to their "sustainability" let us instead shift the "unit of analysis" and spend more time fostering new strategic initiatives within corporations focused on leapfrog, clean technology and disruptive new business models that serve and lift the poor.  

While we will no longer be able to rely so heavily on secondary data and a consistent set of parameters (as we have increasingly with existing Sustainability Ratings), identifying and evaluating Transformational Sustainability Initiatives (both within existing companies, and as new ventures) is more consistent with our aim to recognize and reward what we aim to create--environmentally sustainable and inclusive business for the 21st century.
Remember that buying cialis 20 mg without prescription is not legal in the US, read more here. Impotence as a side effect of meds is a common problem among men.

Screen Shot 2016-05-21 at 1.22.33 AM.png
This is exactly the focus of our new Sustainable Entrepreneurship MBA (SEMBA) Program at the University of Vermont.  SEMBA seeks to fundamentally reinvent business education and the MBA degree to address the daunting challenges we face in the 21st century--environment, climate change, poverty, inequality, ethics and entrepreneurship.  Experience-based learning is a central component of the SEMBA curriculum, with the Practicum Project forming the backbone of the program.  

The Practicum Project is a 3 month, full-time, hands-on experiential engagement with either existing companies or new ventures focused on launching transformational sustainability initiatives.  I briefly describe below a few of the transformational Practicum Projects that form the backbone of the SEMBA program.

Initiative:  Terragraph Business Model
Screen Shot 2016-06-17 at 3.44.40 AM.png
Facebook Connectivity Lab's mission is to do the fundamental research to connect the 4.2 billion people who are without access to the Internet or underserved with limited connections to the Internet. Using new technologies built by Facebook's Connectivity Lab, the company seeks to leapfrog traditional methods for connectivity and offer disruptive, innovative projects to connect the "last mile." 

The SEMBA practicum project will work with the Facebook team on project Terragraph; one of the Connectivity Lab's terrestrial internet solutions. The focus of the project will be on exploring the ecosystem in dense urban slums in India to better understand the value proposition of Terragraph technology. SEMBA students will be conducting on the ground interviews to uncover challenges and solutions associated with the use and implementation of the technology. These findings will assist Facebook in determining a viable business model for project Terragraph in India ad a framework for the rest of the world.  The goal of the project overall is to create mutual value for businesses and the communities they operate in, creating a truly sustainable venture. 

Initiative: Affordable & Sustainable Portfolio for the Underserved
Screen Shot 2016-06-17 at 3.47.10 AM.png
Low income consumers are greatly underserved in the green products marketplace. Due to the current reality of higher costs in development, sourcing materials, production and compliance, green products cost more than conventional products of similar efficacy. As a result, many families cannot afford high quality green products. As a mission-driven company, Seventh Generation believes that everyone should be able to clean safely, sustainably and effectively.  

The request to the SEMBA team is to develop a comprehensive go to market and long-term strategy to address the clothes laundering or other household cleaning needs of low income communities in an affordable and environmentally sustainable way. The team will identify options for new products or services and business models. The team will focus on understanding the target consumers' preferences and cleaning habits, identifying barriers to use of green products by these consumers, defining attributes that will appeal to the target consumer, and developing a value proposition uniquely suited to low income consumers while avoiding cannibalization of current products. 

Initiative: Hydraid Business for Base of the Pyramid in Africa
Screen Shot 2016-06-17 at 3.53.14 AM.png
NativeEnergy recently acquired the Hydraid® Biosand water filter technology to supply its Help Build™ clean water programs in developing countries. Utilizing NativeEnergy's impact investment model to seed-fund initial placement of filters could provide a powerful boost to establishing a profitable business that helps to meet the critical need for safe drinking water.  

The SEMBA project team will assess the potential for a water filter business and create a business plan for a venture to support under-served, low-income populations in one or more countries.  The team will utilize prior research conducted by TripleQuest and NativeEnergy on filter technologies and current experience across projects that were funded by NativeEnergy to install these filters in Ghana, Kenya, Ethiopia, India, Honduras, and Haiti. The SEMBA team and their findings will be central to NativeEnergy's strategy on investing in the Hydraid® Biosand business.

Initiative: China Recyling Strategy
Screen Shot 2016-06-17 at 3.55.21 AM.png
With Novelis' global recycling footprint, we want to have the capabilities to take and process scrap from anywhere.  Novelis has built an automotive finishing plant in China, but with rising volumes of aluminum scrap in China due to a growing middle-class and increasing levels of consumption, it seems like an obvious move for Novelis to next put a recycling center there. 

But there is an effective export ban on scrap leaving China and perhaps a very difficult scrap market to break into with many challenges.  How can Novelis develop a strategy to purchase and reprocess scrap from China?  What should be the immediate next steps to move the company forward toward a long-term, sustainable strategy for closed loop aluminum in China?  What are the risks?  How can they be dealt with?  This project would require a few meetings in Atlanta and trip(s) to China.

Initiative: Sustainable Entrepreneurship in Latin America
Screen Shot 2016-06-17 at 3.57.32 AM.png
An initiative has been launched to assess Pepsico's capabilities and readiness undertake Base of the Pyramid (BoP) business development.  The next step will be to launch an actual sustainable entreprneurship initiative to develop a new venture in Latin America focused on the underserved.  

This effort is focused on the creation and development of a new business focused on affordable nutrition, starting in Latin America.  The practicum project will engage students in the process of co-creating the value proposition and business model for a new venture in Latin America focused on the BoP.  It will involve travel to both Latin America and Miami.

Join us to help spawn the Transformational Sustainability Initiatives that will move us toward a more sustainable world in the years ahead.  

For more information about this completely new and redesigned MBA program, visit SEMBA >>

Screen Shot 2016-05-20 at 11.24.21 PM.png

Forty years ago, in 1975, Steven Kerr published a now infamous paper in the field of organizational behavior entitled "On the Folly of Rewarding for A, While Hoping for B."  The article drew attention to the fact that reward systems in organizations are often well-intended but misguided in that "behaviors which are rewarded are those which the rewarder is trying to discourage, while the behavior he desires is not being rewarded at all."  Tragically, over forty years later, the same unfortunate quality can be ascribed to the now burgeoning industry of corporate sustainability reporting and ratings.
 
Today, there are literally hundreds of corporate sustainability and ESG (Environment, Social and Governance) rating and ranking indices.  Some have achieved a high level of visibility and companies compete to be listed among the leaders on these lists, e.g. Dow Jones Sustainability Index, EIRIS Index, FTSE4Good ESG Ratings, and the Newsweek Green Rankings, to name just a few.  Like their sister industry of Corporate Sustainability Reporting, most ratings systems examine criteria at the corporate or company level--energy use, water use, waste generation, and greenhouse gas emissions, along with risk management, corporate governance, human capital development, labor practices, diversity, and expenditures on CSR projects and community relations.  The objective is to have a set of criteria with which to evaluate and rate all companies against each other.
 
To be clear, these corporate sustainability ratings serve an important function and have gone a long way toward continuously improving the social and environmental performance of corporations throughout the world.  But they have also inadvertently rewarded A, while hoping for B.  How?  In their quest to be consistent, comparable, and easily measureable, the Sustainability Raters have defaulted to quantitative metrics that can be easily aggregated and reported for the entire company.  Recognizing this, companies have staffed up to ensure that they can report healthy improvements in all the key dimensions that make up the rating indices.
 
But in so doing, we have inadvertently put most of our chips on continuous improvement in current businesses and largely forgotten about the critical importance of disruption, innovation and transformational change to corporate sustainability.  Large incumbents in unsustainable industries can rack up big rating points by focusing on incremental reductions in negative impacts from current operations and making positive social contributions through improved labor practices and CSR projects.  Lost in the shuffle are the harder to see and more nascent initiatives to commercialize new, sustainable technologies or develop more inclusive business models that may ultimately disrupt or even replace today's core business.  Yet, it is these more transformational initiatives that hold the key to moving us toward a more sustainable world:  We are, in other words, rewarding for A, while hoping for B.
 
What can we do about it?  In their book, Blue Ocean Strategy, Chan Kim and Renee Mauborgne, emphasize the strategic move (or initiative) as the key to innovation strategy, with the majority of corporate growth (and later, profits) coming from new strategic initiatives rather than from the continuing development and improvement of existing businesses.
 
Consistent with this view, I believe that refocusing our attention on new, transformational strategic moves (or initiatives) holds the key to evaluating corporate sustainability:  Rather than chasing the fantasy of rating entire corporations as to their "sustainability" let us instead shift the "unit of analysis" and spend more time understanding (and driving) new strategic initiatives within corporations focused on leapfrog, clean technology and disruptive new business models that serve and lift the poor. 
 
While we will no longer be able to rely so heavily on secondary data and a consistent set of parameters (as we have increasingly with existing Sustainability Ratings), identifying and evaluating Transformational Sustainability Initiatives (both within existing companies, and as new ventures) is more consistent with our aim to recognize and reward what we aim to create--environmentally sustainable and inclusive business for the 21st century.
 
Screen Shot 2016-05-21 at 1.22.33 AM.png
This is exactly the focus of our new Sustainable Entrepreneurship MBA (SEMBA) Program at the University of Vermont, where we aim to launch a new SEMBA Transformational Sustainability Award in the coming year.  For a better idea of the types of high-leverage strategic initiatives that we aim to catalyze, read more about the Practicum Projects that form the backbone of the program.  These include new, transformational initiatives with companies like Pepsico, Novelis, Facebook, CEMEX, Seventh Generation, Novozymes, Interface and Native Energy.
 
Transformative change is also the aim of the Base of the Pyramid Global Network, and you will be learning more about the up-coming events and Summits associated with the BoP Global Network. 

Let us end the folly of Rewarding for A (incremental improvement to existing businesses) while hoping for B (transformational change to inherent sustainability and regeneration) by focusing our attention, once and for all, on the new business initiatives and strategic moves that actually have a chance of moving us toward a more sustainable world.
As we witness growing inequality and accelerating environmental degradation around the world, commercial attention in the years ahead will inevitably come to focus more on breakthrough and disruptive innovations that directly confront these challenges.  Increasingly, competitive advantage will hinge on innovations incubated at the base of the pyramid (BoP)—the ability to create tomorrow’s sustainable enterprises from the bottom up, by commercializing new, disruptive technologies through innovative business models focused on the underserved at the base of the world income pyramid. 


Screen Shot 2015-06-25 at 1.19.58 AM.png

With this theme in mind, Enterprise for a Sustainable World (ESW) and The University of Vermont’s School of Business Administration, in collaboration with the BoP Global Network, are organizing the second BoP Global Network Summit. The event will be held July 16th and 17st, 2015 at the UVM Davis Center in Burlington, VM - USA.

Screen Shot 2015-06-25 at 1.22.03 AM.png
The 2015 Summit’s main objectives will be to provoke, discuss, and then act. This will not be your typical conference filled with talking heads and plenary presentations.  Instead, the focus will  be on Challenge sessions (e.g. financing,  scaling, assessing impact) and action-oriented Domain sessions focused on Food & Agriculture, Materials, Inclusive Health, Housing, Mobility, Energy, and ICT.  The Summit will also bring together entrepreneurs, executives, financiers, change agents, and the BoP Global Network Lab leaders representing more than 20 countries from around the world and will engage leading edge examples of bottom-up innovation from around the world, including some right here at home in the US.

Three “Provocation Plenaries” will aim to jog creative thinking around the following themes:

BoP Innovation: Where Will the Disruptive and Leapfrog Technologies Come From?  Significant attention has been paid to the challenges of business model innovation, co-creation, and organizational innovation in facilitating BoP business venturing.  Less attention has been paid to where the technologies and innovations that drive such ventures come from and how they might be best developed.  This session focuses on the three primary sources of new technology for driving inclusive and sustainable business development and how they are best driven from the bottom up:  Exponential technology, shelf technology, and grassroots/indigenous technology.

Can BoP Business Logic Be Applied to the Developed World?  For the past decade the primary focus has been on the challenges of building successful BoP businesses in the impoverished rural areas and megacity slums of the developing world. Comparatively little attention, however, has been paid to how innovation from the bottom up might create opportunity and better serve the growing underclass in the US, Europe and other parts of the Rich World.  This session focuses on some innovative new “homegrown” models from Vermont and the US, with potential for applicability around the world.

Beyond Silos: Systems Thinking for BoP Sustainability.  Most BoP ventures to date have been focused on the sectors and industries that define business at the top of the pyramid: water, energy, transportation, telecommunications, food, housing, health, and education, to name just a few.  Yet increasingly we see that the world’s challenges, particularly those at the base of the pyramid, do not fit neatly into traditional sectoral or industry compartments. Instead, they cross boundaries and require broader ecosystems of partners to succeed. This session focuses on the challenges and opportunities of systems thinking, boundary spanning, ecosystems and interconnections in creating and scaling BoP innovations.

Join us in Burlington for the 2nd BoP Global Network Summit!

dummies.jpg

The recent release of the 5th Assessment Report from the Intergovernmental Panel on Climate Change (IPPC), and last month's shattering of the 400 parts per million carbon dioxide milestone in the northern hemisphere reminded me once again of the perilous times that we live in.   The data reveal that the process of change in our climate system is happening even faster than predicted five years ago in the last IPCC assessment report:  more rapid melting of ocean ice in the arctic, accelerating loss of the Greenland and West Antarctic ice sheets, faster melting of the permafrost and mountain glaciers, rising ocean levels, dying coral reefs, more extreme storms and floods, more severe droughts, and longer and more intense wildfires.  

And we should keep in mind that, despite claims to the contrary, the scientific process is inherently conservative--it takes strong evidence for any results to be statistically significant and replication by others in order for any single study to stand up to scrutiny.  At the end of the day, science is really about rejecting competing hypotheses that might explain a particular phenomenon--a sophisticated game of "Last Man Standing," so to speak.

In a strange way then, science is a competitive process. Biased or poorly designed studies do not make it through the peer review process. Only the strong survive. As a Ph.D. who has spent most of the past three decades in academia, I can attest to this!  So, the claims made by some that the thousands of climate scientists from around the world involved in the IPCC process are either: 1. conspiring together; or 2. swayed by their left-left leaning political or ideological persuasions (a hypothesis yet to be tested), are simply preposterous: the scientific process itself mitigates against such tendencies.  This realization makes the most recent IPCC report even more foreboding.

Yet with a few notable exceptions (e.g. the current initiative in the US to issue carbon dioxide regulations for coal-fired power plants under the Clean Air Act), the release of this report has generated barely a whisper among the political leaders, policy makers and corporate executives around the world in a position to take real action.  The periodic issuance of these assessment reports from the IPCC has become the scientific equivalent of Chicken Little proclaiming that the "sky is falling."  Few still outright deny that the climate is changing.  Instead, the art of denial has now morphed into assertions that such changes are either: 1. Part of a natural cycle (i.e. not caused by human activity); 2. Not very significant; or 3. Potentially "beneficial" for humanity (see below for further explanation).

The first assertion simply does not hold up to scientific scrutiny.  Suffice it to say that the evidence is overwhelming that human activity is driving the bulk of the greenhouse gas loading of the atmosphere that we are experiencing.  Combustion of fossil fuels, emissions of methane from leaking natural gas pipes and wells, livestock, and melting permafrost, and deforestation (land clearing) for agriculture are clearly the culprits.

The second and third assertions simply reflect a lack of proper time perspective.  The problem is akin to the proverbial crash test dummies that we have all witnessed on television:  Seen in slow motion, as the car gradually crashes into the test wall, the dummies appear to be gently and peacefully moving forward into the steering wheel, airbags, and windshield as the front end of the car is gradually turned into an accordion.  It all seems innocuous enough to make one think that perhaps such a crash isn't so bad after all--until you see it in real time.  Viewed regular speed, the crash appears to be the abrupt and violent event that it really is--sudden, jolting, and catastrophic, for the car and the dummies!  

Given our short tenure on this planet, we humans are a bit like the crash test dummies in slow motion:  The changes that we see around us seem gradual enough that they do not seem particularly out of the ordinary--we've always had hurricanes, tornadoes, floods, droughts, and wildfires.  So, maybe we are just in a bad stretch.  Or even if this is the new normal, perhaps it won't be that bad:  warmer temperatures means longer growing seasons...etc.

But when we view this video in "real time"--that is in geologic time--then the changes that are happening are occurring in the blink of an eye, like the actual crash of the dummies.  As far as we can tell, the atmosphere and the climate of the earth have never changed this quickly before, in the history of the planet.  Not even close.  Sure, the climate has fluctuated wildly over the billions of years that life has thrived on our planet.  But the changes took place over millennia, not decades.  There was time for life to adapt.  We, unfortunately, are driving ourselves into the proverbial wall, but we can only see it happening in slow motion.  Time to clean out the head gear, humanity, or the next generation of dummies will not like how this crash video turns out.
For some time now I've been advocating ways for businesses, institutions, and individuals to heed the "Voice of the Planet."  Indeed, the future depends on it. Here's what we said a while back:

How do profit-seeking companies listen to the Voice of the Planet?  As my colleague, Sanjay Sharma and I suggest, start by drawing a clear distinction between "core" stakeholders--those visible and readily identifiable parties (like current customers and suppliers) with a stake in the firm's existing operations--and "fringe," or peripheral stakeholders.  Core stakeholders encourage us only to continuously improve what we already do.  Yet, answering the question of our time calls for disruptive, leapfrog innovation, which requires divergent thinking.  This means reversing the traditional stakeholder management model by learning to actively engage previously excluded voices from  the fringe-- the rural poor, urban slum dwellers, and advocates for nature's rights, just to name a few.

As I've explained before, the dominant model of business education and entrepreneurial development is broken.

Now, I'm happy to announce that I've joined forces with the University of Vermont to create a new Sustainable Entrepreneurship MBA  program (SEMBA). In essence, we're doing something about the "saddlebag" approach to sustainability that has permeated academic world for so long. Together with my colleague and friend Dean Sanjay Sharma, who I first met more than 15 years ago, we're taking action on our article, "Beyond 'Saddle Bag' Sustainability for Business Education" (Organization & Environment). It chronicles the history of how business schools have incrementally added courses in sustainability, corporate social responsibility and ethics in response to evolving societal demands.  What we're doing represents a bold new venture where a major university has sought to fundamentally reinvent business education and the MBA degree by addressing the environment, ethics, entrepreneurship, poverty and inequality.

SEMBA Director Willy Cats-Baril redesigned the traditional MBA program by focusing the new 45-hour credit program on sustainable business and entrepreneurship-focused curriculum. SEMBA consists of five modules: Foundations of Management; Building a Sustainable Enterprise; Managing Growth; Focusing on Sustainability; and a practicum on Sustainable Entrepreneurship in Action. We've called it the Sustainable Entrepreneurship MBA and, it's different - not an MBA-as-usual.  Here's why:

Accelerated: A one year program designed to get students back out there, inventing or reinventing their BoP enterprise as soon as possible.

Vermont DNA: Learn from, and develop relationships with, leaders from a master class of sustainable enterprises, including Ben & Jerry's to Burton Snowboards, Cabot, Green Mountain Coffee Roasters and Seventh Generation.

Global Access: Students will enjoy access to business and entrepreneurs around the world through our connection to the BoP Global Network.  The BoP Global Network includes Enterprise for a Sustainable World, India's Emergent Institute, and the BoP Global Network - a  vibrant community of academics and practitioners in 18 countries that engage in knowledge creation and dissemination about the theory and practice of creating sustainable businesses at the base of the economic pyramid.

Real World Immersion: Do meaningful, high-impact work with international partners that have on-the-ground access in emerging markets and the developing world. For example you can spend your practicum experience in India working with our partner The Emergent Institute in Bangalore, India. You will also be working with the Office of Technology Commercialization to bring the latest clean technologies to market.

Cutting-Edge Thinking and Practice: You'll be interacting with some of the leading thinkers and doers in the field of sustainable enterprise including professor Stuart Hart, Gustave Speth, and the Dean of the school Sanjay Sharma among others.

Multi-disciplinary: We've designed a unique curriculum delivered by passionate faculty from our School of Business, Department of Community Development and Applied Economics, and nationally ranked Rubenstein School of Natural Resources as well as the Gund Institute and Vermont Law School

Affordable, High-Value Investment: We're offering substantial scholarships to increase accessibility and opportunity at UVM, a school Bloomberg BusinessWeek calls "a top school for high salary grads."

Our aim is to build a global, action-learning ecosystem, enabling us to develop the next generation of leaders who will build, disrupt, innovate and reinvent sustainable businesses and enterprises in a world that demands it. 

sustainabilityecosystem.jpg
Will you join us?
Screen Shot 2014-03-05 at 9.38.20 PM.pngIt has now been more than a decade since C.K. Prahalad and I first published the article "The Fortune at the Bottom of thePyramid" which launched the "BoP" business movement.  Over the past decade, there have been fits and starts: many BoP ventures have failed; others have been converted to philanthropic programs; but only a few have taken root and gathered significant commercial momentum.
This has led some to conclude that the whole concept of enterprise-based solutions to poverty was flawed in the first place-- pronouncing variously BoP business as the latest form of corporate imperialism--focused merely on profiting from the poor; or a quixotic quest for the impossible--a misallocation of valuable investment capital.  

In reality, however, rumors of BoP's demise have been greatly exaggerated (to paraphrase Mark Twain).  Indeed, much has been learned over the 
past ten years and I believe that we are on the verge of taking the BoP business movement to the next level in the coming decade--a BoP 2.0 revolution.

One area of important learning has been the potential for incubating disruptive innovations and business models starting in the underserved space at the base of the pyramid and later having some of these innovations move up-market.  

Clay Christensen and I wrote about this over a decade ago (2002) in an article entitled "The Great Leap: Driving Innovation from the Base of the Pyramid."  The idea has caught on.  Over the past decade, a whole slew of new terms and buzzwords have arisen to describe this phenomenon, including trickle-up innovation, frugal innovation, and the latest incarnation--reverse innovation.  Vijay Govindarajan and his colleagues have led the way in developing the strategic logic for reverse innovation and documented a growing number of cases illustrating this approach from the corporate sector, beginning with GEs development of a low-cost, hand-held ultrasound device in rural India and China.

A key difference between reverse innovation and the earlier work on base of the pyramid strategy is the promise--even expectation--of large and profitable up-market migration for the innovations incubated in the underserved space:  GE's hand-held ultrasound device, for example, has "trickled up" to the US and other developed markets and now constitutes one of the fastest growing and profitable businesses for GE's Healthcare business.  

There is some good news and some bad news regarding this trend.  First the good news:  Reverse innovation provides an attractive internal logic for undertaking such innovation initiatives within large corporations:  Rather than simply focusing on the possibility of opening up new markets among the world's poor and underserved, reverse innovation offers the potential for having your cake and eating it too--by incubating innovations in the underserved space that can migrate up-market bringing new, disruptive,  affordable, and (potentially) more environmentally sustainable products and services.  Witness the growing "trickle-up" success in point-of-care medical devices, mobile telephony, and distributed energy technologies, for example.  Exciting stuff, to say the least.

But now for the bad news--there is a potential dark side as well:  The risk that corporations gradually come to view the world's slums and rural villages primarily as laboratories for incubating innovations for the rich.  The poor, in other words, come to be seen more as guinea pigs than as underserved people and communities with special needs and requirements--a place for corporations to force cost constraints on their innovation process enabling even higher returns in the eventual (ultimate) market at the top of the pyramid.

Should this scenario come to pass, it would represent a double tragedy.  Not only would this damage corporations' reputation and continuing right to operate, but the evidence is also mounting that few innovations incubated in the base of the pyramid space can easily travel up-market without significant modification, threat of imitation, or competitive reaction:  Frugal designs must be upgraded to appeal to the wealthy; low-cost innovations can often be easily imitated, and competitors with lower cost structures can enter as fast seconds after the pioneers have incurred all the development costs.  

Allow this to serve as a cautionary tale to all those large, incumbent corporations thinking reverse innovation is the magic bullet:  Focus on first things first--better serving and lifting those underserved at the base of the income pyramid.  Should some of these disruptive, lower cost, or environmentally sustainable innovations eventually lend themselves to application in the up-market, that is great news for the Corporations and the World.  But let us not look back in ten years and view reverse innovation as yet another classic example of the Law of Unintended Consequences.
The Corporate Sustainability Advisory Council (SAC) is now part of the standard apparatus for most major corporations. 

The first SACs were launched in the 1990s; and with a few notable exceptions, they were used primarily as PR tools to curry favor with increasingly vocal environmentalists and other troublesome social stakeholders.  Back in the day, members of SACs (myself included), were typically engaged to review (what were then new) Corporate Responsibility/Sustainability Reports, serve as judges for staff sustainability awards,  and provide advice on specific CSR or environmental initiatives by the company.

SACs typically met once or twice a year and members were almost always prominently featured on the corporate website, but seldom compensated, other than covering travel expenses and accommodations.  This was presumably done to avoid the appearance that members were being "bought" but in reality, it was a statement about the perceived value of these councils: Meetings were usually run by CSR or environmental management staff.  The CEO might make a symbolic appearance at the beginning or end of the meeting, but generally no senior executives or business leaders were engaged in the work of the SAC.  It was a largely symbolic initiative convened for external appearances and social legitimacy.  That was then.

This is now: The days of the Symbolic SAC are rapidly coming to an end:  As social and environmental challenges become increasingly material, gaining serious advice on these matters is no longer a luxury. Increasingly corporations are seeking to elevate the SAC--to make it an integral part of the strategic process of the company. 

In my experience, there are five keys to taking the SAC to the next level:

1.    Encourage Free Speech.  Include only the highest quality people from diverse backgrounds with stellar reputations and strong views.  And then encourage them to speak their minds.  The last thing you need is a polite group of advisors willing to rubber stamp CSR initiatives.  SAC members should be encouraged to ask hard questions and introduce variety, not provide cover for existing practices and strategies.

2.    Make it Real.   Don't waste valuable time on peripheral activities like Sustainability Reports, Websites, and Staff Awards.  Instead, engage the SAC in the real stuff--the strategic and operating challenges that are most significant to the company's future.  If SAC members have not signed NDAs there is something wrong.

3.    Engage the C-Suite.  Cameo appearances by the Chief Executive no longer cut it.  If the SAC is tackling serious strategic issues, then the CEO and other key C-Suite Executives need to be active participants in the deliberations.  Deep dialogue and mutual learning can only happen when people spend time together and get to know each other.

4.    Interact with the Board.  The past separation between the SAC and the Board of Directors must come to an end.  In tomorrow's world where sustainability and strategy are joined at the hip, the Board cannot govern effectively without access to the SAC's expertise, and the SAC cannot gain the necessary perspective without knowledge of the Board's concerns and priorities.  Hold at least one joint meeting (or overlap the two meetings) each year.

5.    Compensate Appropriately. Members of the Board of Directors are paid serious money for their year-round engagement in the company's governance.  Nothing less should be expected from SAC members.  This means that pro-bono appointments and token honoraria must give way to compensation commensurate with the new expectations.  Bottom line: Don't skimp on SAC member compensation if you expect them to prioritize SAC work over the myriad of other opportunities and obligations on their plates.

We have come a long way since I began my academic career as a business school faculty member nearly 30 years ago.  In fact, as an assistant professor in the mid-1980s, I was told by most of my more senior colleagues to forget about my interests in environmental and social issues--that pursuing such a path would effectively kill my chances for promotion and tenure in top tier business schools. 

Despite some bumps in the road, my decision to focus the rest of my profession life on this connection, while seemingly risky at the time, proved to be the best move I ever made:  Over the past 25 years, most major business school in the world have added some kind of initiative, center, or institute focused on sustainability, corporate citizenship, or social entrepreneurship.  I myself have been involved in creating three such centers over the past 25 years--at the University of Michigan's Ross School and School of  Natural Resources & Environment (The Erb Institute), at the University of North Carolina's Kenan-Flagler Business School (Center for Sustainable Enterprise), and at Cornell University's Johnson School (Center for Sustainable Global Enterprise).

The problem is that virtually all of these initiatives, centers, or institutes continue to merely hang off the side of the existing business school edifice.  Like the proverbial "saddle bag" on a horse, the issues are contained within separate compartments that are readily visible from the outside, but have little impact on the behavior of the animal itself.  Sustainability has joined other business school "saddle bag" issues such as ethics, entrepreneurship, and emerging economies, as a way to recognize, but stop short of fully integrating them into the core DNA of the institutions.

Indeed, save for cosmetic changes, the MBA curriculum at top-tier business schools remains startlingly unchanged from what it was when I started 30 years ago:  Functional core courses in finance, accounting, marketing, operations, OB, and strategy still rule, with the "saddle bag" issues addressed as elective courses or "immersions" after students have completed the "real" content.   Tenured faculty are typically researchers focused on the established functions and disciplines, not on the challenges contained in the saddle bags (which are more unruly and difficult to study).  Faculty focused on the saddle bags are therefore typically untenured adjuncts, lecturers, or clinical professors with little say in the governance of the schools.  As a result, institutional inertia reigns supreme.

And so, it is high time to move beyond saddle bag sustainability in business education.  Not unexpectedly, the few pioneers that have thus far sought to integrate the "saddle bag" challenges into a new MBA model have been independent players with no prior baggage such as the Bainbridge Institute and Presidio Graduate Institute.  Unfortunately, these up-starts also lack the institutional legitimacy and reputation to mount a serious challenge to the status quo.

That is why the University of Vermont Business School's new Sustainable Entrepreneurship MBA Program (SEMBA)  represents such an important milestone:  It represents the first time (to my knowledge) a major University has sought to fundamentally reinvent business education and the MBA degree to address the challenges we face in the 21st century--environment, ethics, entrepreneurship, poverty, and inequality. 

Bottom line for the established top twenty:  Ignore this new program at your peril.
The world confronts us with the challenge of accelerating radical, leapfrog innovation.

Whether in the form of disruptive, frugal, trickle-up, clean-tech, exponential, blue ocean, inclusive, reverse, or base of the pyramid (BoP), it is becoming clear that we are in the midst of one of those transformational times when innovation alters the fundamental fabric of civilization-and competitive success. Schumpeterian creative destruction increasingly reigns supreme: Entrepreneurs thrive, new entrants emerge, and incumbents fall...or so we are told.

Yet such times need not spell doom for large, incumbent corporations. Indeed, it is possible for these titans of the 20th century to lead the process of transformation toward a sustainable future--but only if they focus conscious attention on building the necessary organizational infrastructure--the "white space"-- as a complement to the existing corporate structure.

Let's face it: current corporate organizational structures are designed for self-replication--producing more of the same, or at best, continuously improving/adapting current products and processes. Yet growing social inequality and environmental degradation steadily render self-replication and continuous improvement obsolete. Not surprisingly, leapfrog innovation calls for a fundamentally different structure since the existing corporate "immune system" is very strong--any project that deviates too far from the norm is quickly surrounded by "antibodies" and rendered harmless!

So what does it take to build an effective corporate innovation "white space?" My colleagues and I have written extensively about the importance of creating a separate unit focused on co-creating solutions appropriate to the new social or environmental realities. Vijay Govindarajan and his colleagues have spelled out a similar logic for what they call "Local Growth Teams"--innovation teams with a timeline, set of metrics, and deliverables that are appropriate to the task of driving leapfrog innovation. Such a unit must also have the power to develop its own strategy, organization, products, and ultimately, its own P&L responsibility.

Let's be clear: We are not talking about a completely separate "skunkworks" which seeks to separate itself from the mother company. Instead, leapfrog innovation needs to link to corporate-level resources and capabilities while at the same time maintaining sufficient independence from the routines that govern the existing core business. It is therefore crucial to have the support and protection of the CEO to create the protected space for such units to exist and to provide them with the necessary level of autonomy, resources, and connections.

But even CEO-level support is not enough. I have learned this the hard way in my own work focused on BoP innovation in corporations. Indeed, depending solely on the goodwill and support of the CEO, or any other single senior executive can be risky. The "white space" can come crashing down if this person changes positions, leaves the company, or is replaced. It is for this reason that I strongly recommend the creation of a White Space Innovation Leadership Team consisting of 8-10 key executives that span the company--business heads, functional heads, and heads of staff organizations such as R&D, HR, Strategy, and Sustainability. The Leadership Team provides legitimacy, oversight, and much-needed protection for the White Space. By recruiting a diverse team of executives from across the company, the probability that the whole thing collapses with the departure of a single key individual is greatly reduced. Such a Leadership Team can even withstand CEO succession if it has been thoughtfully constructed and nurtured.

Often the biggest challenge to leapfrog innovation is internal: We have met the enemy and it is us. But by combining a "top-down" corporate strategic support system with a "bottom up" business co-creation capability, the prospect for success in this new and exciting innovation space is greatly enhanced. Leapfrog innovators must thus seek to develop multifaceted relationships with all the corporate stakeholders and partners to better realize their core purpose--accelerating the number and success of new "leapfrog" ventures and initiatives that have a chance of moving us toward a more socially inclusive and environmentally sustainable world.

Recent Comments

  • RalfLippold: Thanks a lot Stuart for this (to be honest until read more
  • Santosh K Deshmukh: Dear Stuart, I fully agree with you, and never ever read more
  • Jayna Sheats: Maybe you should call it the "gush-up" model instead of read more
  • Richard Wells: Stu, I really like what you have to say and read more
  • Phillip Bell: Stu - This is a very compelling analogy. The parallel read more
  • Auren Kaplan: These disruptive technologies can be incubated in the developing world, read more
  • Jun: This is very insightful. I will definitely ponder on and read more
  • Hewson Baltzell: Stu, Glad to see some excellent blogs here. I agree read more
  • Green Reserve: Hello Stuart, I read your book, Capitalism at the Crossroads, read more

Recent Assets

  • Screen Shot 2017-02-26 at 1.40.48 PM.png
  • Screen Shot 2016-06-17 at 3.57.32 AM.png
  • Screen Shot 2016-06-17 at 3.55.21 AM.png
  • Screen Shot 2016-06-17 at 3.53.14 AM.png
  • Screen Shot 2016-06-17 at 3.47.10 AM.png
  • Screen Shot 2016-06-17 at 3.44.40 AM.png
  • Screen Shot 2016-05-21 at 1.22.33 AM.png
  • Screen Shot 2016-05-20 at 11.24.21 PM.png
  • Screen Shot 2015-06-25 at 1.22.03 AM.png
  • Screen Shot 2015-06-25 at 1.19.58 AM.png