Tag Archives: social capital

Dear Carrotmob: Tips on Social Movements for Social Entrepreneurs

Earlier today I gave a presentation to Steve Newcomb of Virgance and got a fascinating peek into his world. In amongst a wave of articulate critiques of a business plan I put together with some friends, he made an off the cuff comment that we should “start a social movement” to assist with our marketing efforts. Fascinating.

As the world of sustainable business puts more and more toes in the pool of collective social action I’m hearing the word social movement get thrown around more and more, generally with little regard for what it takes to actually get one going or the complicated ecosystems that make them tick. There’s well intentioned excitement about merging business and social organizing, but a widespread misconception that a social movement is basically just a  participatory values-based marketing campaign. As someone who’s actually started a social movement, I’d like to set the record straight.

Social Movements Don’t Happen Just Because There’s A Good Cause– There are too many good causes in the world and people are too busy.

Social Movements Don’t Happen Just Because People Get Fired Up- When people are fired up they do whatever action is in front of them then go home and talk to their friends about it. The action and the conversations are great, but they won’t come back.

Social Movements Don’t Happen Just Because People Are Empowered To Make Change– Empower people to make change and they’ll do it, feel great and then wander off. They won’t build on the experience and self organize.

What makes social movements happen?

In my experience, social movements happen when people make friends impacting a cause that is related to a personal struggle. Feminism and the civil rights movement are fantastic for tapping into national and international struggles that mirror intrapersonal ones. There’s a reason it’s “Students for a Free Tibet” and not “Suburban Housewives for a Free Tibet”, Tibet is only a powerful personal metaphor for a certain demographic.

The “making friends” part is what gives movements their self-organizing properties. A movement has to be a way to work on yourself AND on your relationships AND a cause, otherwise people won’t consistently put in the time. Movements can evolve new tactics and strategies only when the process of evolving those tactics and strategies is also a way for people to do meaningful work on themselves and form stronger connections with their friends.

Carrotmob is a fascinating example of when social movements work and when they don’t. They’ve been wildly successful as a specific tactic and hit a wall trying to evolve into anything more.

As a tactic they’re all checkmarks. They’re pushing for sustainable business- a cause that’s personally relevant to anyone trying to reconcile their desire to live their values and their desire to have a financially successful career. Organizers essentially plan parties at local businesses that are going green, flooding them with business as a sustainability incentive.

It would be great if this could translate from targeting small, local businesses to targeting large ones (Steve Newcomb talks about Carrotmobbing Coke and Pepsi), but there’s a big problem. In order to do that you have to switch from a series of one-off tactics to a self-organizing social movement. All of those Carrotmob organizers in all of those cities will have to start sitting down and strategizing, hitting up conferences together and thinking about how to make that giant Carrotmob happen.

That means getting people who’ve been using Carrotmobs as a way to deepen their connections with their existing social networks to spend time away from those social networks making new friends on the internet. If MySpace proved anything, it’s that people generally aren’t in the market for new friends on the internet, especially  people who have enough offline friends to organize massive parties. You also lose the personal significance. Carrotmobbers are attracted to the idea of sustainable business because they want to save the world and get paid doing it, and they won’t spend time and energy organizing a sustainable business-oriented social movement unless there are sheckles down the line.

Dear Carrotmob,

Here’s what it would take to make that Pepsi/Coke Carrotmob a reality:

1. Make Relationships Between Organizers Attractive

Ask yourself: What can a Carrotmob organizer get from being online friends with another Carrotmob organizer that they can’t get from all of their offline friends? The big answer is respect and recognition from their peers. Their friends will congratulate them, but may not really get the work that went in to what they’ve accomplished.

The way that many communities do this is by creating a system to welcome and mentor new members. When a new carrotmobber comes on the scene, create a way for them to publicly voice their questions and insecurities. This will make some existing carrotmobbers feel wise and experienced, and will get them engaging online to address the questions. Once they begin to recognize and respect one another for the answers that they’re giving they’ll start discussing tactical issues, complimenting one another, and forming the relationships that will take things to the next level.

2. Show Them the Sustainable Money

In order to put serious time and energy into Carrotmob, organizers will have to feel like they’re saving the planet while advancing their own careers. They don’t have to get all of them jobs, they just have to know that whatever they’re doing is legit enough to get put on a resume.

A strategic partnership or two with big name marketing firms could deliver this sense of professional credibility. It’s an appealing play- edgy, sustainable and socially networked. Create an aspirational class of paid professionals (NOT on your staff, out in the “real world”) who get to live their values making Carrotmobs all day, and make them visible to organizers looking for a career path.

Now you’ve got an excuse for people to take time out of their lives for Carrotmob and a set of relationships where innovation can happen. The rest is just gardening. Listen to the community, give it what it needs and then help it evolve to fulfill that need itself. You may not wind up squaring off Pepsi and Coke, because that’s your idea and movements (like gardens) aren’t built to follow orders. But you’ll wind up going somewhere interesting.



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Hot Trends in Social Venture Finance

The world of social capital is small, but it’s hot. With rising uncertainty about both the moral and economic underpinnings of the traditional financial sector, finance for socially conscious enterprises has become a destination for those looking to put their morals behind their money and those who see good social and environmental stewardship as hallmarks of success in tomorrow’s economy.

At the Presidio School of Management we were lucky to sit down and talk with three leaders in this space: Joe Glorfield of TBL Capital, Esther Park of RSF Social Finance and Deb Parsons of Investors’ Circle. Here are some trends they identified in social venture finance:

Premiums for aligned capital– Increasingly, entrepreneurs are willing to pass up numerically better financing deals for capital which respects and collaborates around their underlying values and mission.

Patient Capital– Typically, venture funds can require that a company be sold after a certain amount of time in order to return cash to investors. This can be hard on companies whose social missions may not survive the merger/acquisition process. Social capital with a patient approach makes it easier for entrepreneurs to maintain control of mission-driven companies until buyers can be found who will value and scale companies’ social impacts.

Face-to-face Finance– There may be unrealized risks to soulless, computer-driven financial transactions based on ROI alone. That’s why RSF has been experimenting with having borrowers and investors meet face to face to discuss rates. By building a network of long term relationships and direct, personal conversations they hope to develop their own base rate and prime rate that are community-based, rather than based on LIBOR.

Smaller is Better– Groups of accredited investors like Investors’ Circle are frequently contacted by small, non-accredited investors who want in. There are opportunities, but legal complications, for investment options which can serve this demographic. Newer, smaller financial instruments in the social space are making this easier while allowing large players to better diversify.

Exiting with a Mission– Right now, even the most patient groups investing in social ventures are looking to make an exit, or sell their investments after a number of years. There is a big need for “evergreen” investors, people who will buy mature, stable social ventures and hold them in perpetuity. These funds don’t exist yet, but they are beginning to come together. When they do, mission-aligned funding will be available from a company’s startup phase through it’s maturity.

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The Business Case for Social Justice

Was anyone else inspired by “Milk”? More than any movie I’ve seen, it celebrates the raw, complicated deeply complicated process of fighting for social equity. It captures the real pain and overwhelming empowerment that are stirring on the flipside of so many of the issues talked about in this program. It’s also the story of people with toxins in their water, of Arundhati Roy, of people already suffering the impacts of climate change. For me it gets at the human side of sustainability, and that means it comes with a business case.

To construct that business case I couldn’t ask for a better template than The Next Sustainability Wave. Willard maps not only a compelling business case for environmental sustainability but a practical guide for overcoming the objections to that case (in a photocopy-friendly format no less!) His core point was this: environmental sustainability isn’t a new objective, it’s a means to accomplish existing business objectives more effectively. Sustainability is about revenue, market share, efficiency, productivity and innovation. The discussion about sustainability isn’t just about how companies eliminate waste, it’s about how they do those things now and how they can be done better.

I took Willard’s crisp business case in my head and tried to hold it up next to that image of Market Street flooded with candles after Harvey Milk was shot. All of those little points of light represented a community, one that had been tirelessly nurtured and encouraged with years of hard work. Without any economic incentives to speak of or any marketing dollars that community continued to expand and grow and have more than a few real economic impacts. Willard makes a compelling case for why businesses should get the environment, and it seems like there is an equally compelling case for businesses to get those kinds of social movements and the issues behind them.

When constructing his case, Willard focused on a set of key constituencies that executives must deal with: employees, customers, suppliers, investors/insurers, government, and civil society. These constituencies provide the drivers for environmental sustainability. Across the board sustainable strategies lead to more productive relationships with these key constituencies, which results in better business. It’s that simple.

Here’s a shot at how social sustainability can do the same thing:

Unsustainable model– Employees are viewed in terms of a single metric (hours worked, ROI created, etc.) All other components of the employee experience are ignored.

Driver– Literature on effective management shows time and again that investing in people pays off. Major companies like Southwest take great pains to construct the ideal environment for their employees to do work in, and gleaning competitive advantage as a result.

Sustainable model– Employees have direct ownership of their work, an environment which allows them to do that work effectively and happily, and the flexibility to innovate improvements. All employees feel that they are part of a small to mid-sized group which supports one another, communicates effectively and makes many key decisions democratically.

Positive Impact– Satisfied, ownership-motivated employees work harder and innovate constantly. A focus on team decisionmaking creates a culture of open dialog, honest communication and innovative collaboration which greatly multiplies the impact of increased productivity.

Unsustainable model– Company sees sales numbers as its primary measure of success and interacts with customers to maximize those numbers in the short term. Products are either designed to minimize price (under the assumption that that is the only information the customer cares about) or designed and marketed not to improve customers’ lives but to manufacture demand where none existed. 

Driver– Ultimately, consumerism is bad capitalism. Customers would rather own products that make them happy, and happy people don’t need to buy as much. Companies that seek to genuinely improve the lives of their customers- both directly through products and indirectly through social service- will build a competitive advantage over those that do not.

Sustainable model– The marketing dept transforms from a loudspeaker for one-way communication about selling to a telephone for two-way communication about effectively solving customer’s problems. Open communication with customers allows the company to make genuine improvements in customer’s lives. In appropriate contexts costumers can support and network with one another. They know and are excited by the company’s mission, and this excitement translates to brand loyalty and word of mouth marketing.

Positive Impact– Increased efficiency and employee productivity will drive products down in price while a greatly improved, direct relationship with customers will revolutionize the design process. Businesses can become a little more like Harvey Milk- deeply tapped into the problems that their community of customers is facing and able to design real solutions that make dramatic change in people’s lives. This kind of relationship is the ultimate advantage in market share, it’s impossible to mimic or outprice.

Civil Society
Unsustainable model– Company analyzes community in terms of its potential backlash to externalization of company costs. Community engagement is about maintaining brand integrity, avoiding tort liability and removing barriers to company projects by any means necessary. 

Driver– A major court case or PR disaster scares the company into action. Realizing that they are spending significant resources responding to threats, companies decide to be proactive.

Sustainable Model– Company enriches community institutions valued by employees and customers, building brand equity and increasing employee effectiveness. Company adopts a mission of community service based on its core strengths, it looks to civil society for it’s reason to exist.

Positive Impact-A solid company mission galvanizes employees, customers, and other core constituencies, serving as the foundation for the good relationships described above. By remaining sensitive around and connected to issues in the local community company can avoid being blindsided by unforeseen changes in its business environment. Excellent brand equity pays off in top-line sales, hiring, and public relations.

Unsustainable model-Company follows legal regulations only when enforcement cannot be avoided and when the cost of fines exceeds profits from illegal behavior. If this is the case, company partners with others in the industry to lobby for such regulations to be removed. 

Drivers– Changes in regulation and enforcement can drive up the cost of noncompliance. Flares of internet-fueled activism is making government bodies increasingly difficult to predict and outmaneuver, and thanks to the recent financial crisis the idea that government should just “get out of the way” of business is hugely unpopular.

Sustainable model– Company respects all legal regulations relevant to its industry and clearly communicates that respect to its staff. Company maintains good government relations underpinned by its good community relations. Company seeks to enhance its competitive advantage by supporting legislation which aggressively pushes for the environmental and social sustainability that it already embodies. Company participates as a sustainable voice in industry lobbying groups.

Positive Impact– Company receives a competitive advantage from good governance. Less corrupt governments with staricter regulations around issues such as worker’s rights weaken the company’s competitors and expand market share.

Unsustainable model– Company engages vendors based solely on price. 

Drivers– NGOs target the company because of issues in their supply chain, leading to one or more PR disasters. Company seeks supply chain reform to address the issue. 

Sustainable model– Company seeks to replicate the integrated bottom line benefits of sustainability across its supply chain by demanding sustainability from its vendors (when it has the leverage to do so) and offering expertise and resources which allow vendors to mirror its success. Company actively explores supply chain sustainability and takes ownership of major social and environmental supply-chain problems. 

Positive Impact– Respect for human rights in the company’s supply chain creates brand equity. In assisting suppliers the company builds relationships which result in better communication and more innovative supplier/company relations. Ultimately more sustainable suppliers are able to increase efficiency and productivity. 

Unsustainable model– Company assumes that investors care only about short-term ROE, and make all decisions to maximize this metric.

Drivers– Increasing investor interest in off-balance sheet measures like social sustainability forces companies to expand their communication with investors about social issues. Shareholder activism and SRI make social sustainability questions a standard at shareholder’s meetings, managers had better have answers.

Sustainable model– Company works to create an investor-approved social mission that can drive the company. Governance structure is expanded to include employees, customers and other key stakeholder groups. Sustainability reporting is fully integrated into investor communications.

Positive Impact– As company gains access to socially-aimed funds the cost of capital decreases. Improved governance allows for a fuller set of perspectives to be “at the table”, leading to more diversity of opinion and a more stable long-term strategy for the company.

That’s it for now- a rough sketch of a bunch of ideas I hope to explore further in the coming semesters. Some of these (workplace democracy and anti-consumerist marketing) I’ve spent a good deal of time thinking about already. I’d love to discuss these still-rough and hole filled ideas if anyone is interested, or hear some of yours around this issue!

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Social Capital:The Bottleneck for Biomimicry?

I’m still on my major social capital kick from last week. Watching Benyus and reading Worldwatch I kept asking myself: what factors control how quickly these ideas get explored and adopted? As excited as I am about the design ideas talked about in our reading, it seems like these ideas may be facing barriers to widespread adoption. Every time I hear biomimicry discussed it seems like the same examples come up: spider’s silk, eggshells, saltwater self assembly and a few others. With all of the exciting opportunities out there there should be a community of researchers developing new ideas every day and a community of engineers figuring out cool new applications, the relatively slow flow of new biomimicry anecdotes suggests that there isn’t. As Benyus said, “it’s not a lack of information, it’s for lack of integration.” The limiting factor isn’t resources or cool ideas, it’s relationships. The faster that Benyus and other biomimicrites can help people with design problems form relationships with solutions in the natural world (and with the silohed-off experts that understand them) the faster the principles of biomimicry can get turned into action.

This points to another interesting question: how do you effectively farm relationships? A little googling indicates that Benyus seems to be using two strategies. The first is broadcast- literally throwing seeds on to fertile-seeming earth and hoping that something edible grows. Through books and active lecture circuits she puts the idea of biomimicry out there, hoping that someone will get excited enough about it to go out and form the necessary relationships of their own accord. Benyus’ “Biomimicry Institute” seems to focus on this strategy- creating resources and disseminating them widely to the public. This is a great way to cover a lot of ground, but the yields tend to be very low and hard to find. Relationships take a lot more than exciting ideas to come to fruition, they take patience, dedication, community support, conceptual clarity, a bunch of other factors not available in a video or a book. There’s also no good mechanism for feedback- it’s difficult for Benyus to know what the relationship-building impact of her lectures have been so that she can tweak them. 

For this reason, Benyus appears to be doing something akin to hands-on agriculture. She’s partnering with companies like HOK to personally provide the patience, dedication, supportive environment and conceptual guidance necessary to build relationships that achieve results. When she’s there on the beach holding their hands, those wastewater engineers can get to their “aha” moment. Trouble is, there’s only one of her and she can only hold so many hands at a time. There’s a business model in there, which may be what she’s going for. She can hire a bunch of “relationship farmers,” train them and send them out into the world as paid consultants. Under this model her capacity to create change will grow steadily as her business grows, but she’ll be tied to serious financial limitations. The “Biomimicry Guild” mentioned on her website seems to take this strategy, offering hands-on services to businesses inspired by these ideas.

I’d be curious what it would look like to apply biomimicry to this “relationship farming” problem. How does nature quickly and efficiently create connections, and can those principles be applied here? Fungal systems distribute spores (ideas) that are designed to shoot out roots (actively seek connections) that find one another and interlock (build community). This might also be a a great opportunity for some of the sociomimicry that we talked about in class. How have cultures throughout the world and throughout history dealt with similar challenges? Looking at the way that social movements have leveraged personally empowering relationships to rapidly mobilize millions might also be interesting.

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The Business Case for Social Capital

The past several days have been a whirlwind of inspiration around the idea of social capital. On Sunday our Effective Management, Communication and Action class stated world cafe style that the structure of a sustainable, socially just organization looks less like a triangle and more like a molecule, with ownership and authority distributed locally rather than concentrated hierarchically. Then yesterday I got into an energetic hour-long discussion with Jim Hartzfeld of Interface Raise about the overlap between the “green” of environmental sustainability and the “blue” of social sustainability. We struggled to articulate a business case for the social side that is as powerful as the business case for the environmental side, orbiting around idea that people in socially sustainable organizations are more engaged, more creative, and therefore considerably more productive. Today I sat down to finish the last pages of Natural Capitalism, and couldn’t shake the incredible similarities between Chapter 13, which is on markets and Chapter 14, which is on social capital. It goes a little like this:

Chapter 14 answered the question that has been burning in my for the entire book: if profitable environmental solutions abound, why hasn’t the market bothered to implement them yet? Aren’t capitalist markets supposed to automatically do things that make money? No no no, says chapter 14. Markets only make money when the right people REALIZE that they can make money. Markets do their job to the extent that people have the information that they need to make good decisions; the skill to interpret that information and the authority to make those decisions. Hunter Lovins dropped a term in class which sums those three things (information, skill and authority) up beautifully: “management capacity.”

The exact sentence that she used was something like, “In a collapse, the number of problems exceed the management capacity to deal with them.” Yikes. Management capacity is the ability of an organization or society to effectively realize opportunities, which makes it important whether you’re looking for opportunities to mitigate a crisis or opportunities to green an economy. We aren’t going green because we don’t have enough management capacity focused on going green. We can expect organizations with a high management capacity to outperform organizations with a low one, since they’ll be recognizing and acting on opportunities as a much faster rate. 

So how do we get more of this magic stuff? Just build systems where information, skill, and authority are combined as efficiently as possible. Strict hierarchies, like the ones we dismissed in EMCA, do this very poorly. Authority is placed way up the chain where a small group of executives have an extremely limited ability to digest information and often lack the specialized skill required to interpret that information effectively. If you find innovative ways to break up that authority and ship it off to the places where people have localized skill and information then the management capacity of the organization improves dramatically. Opportunities to increase efficiency and move towards sustainable operations can start quickly churning through (provided the necessary information about them is communicated.)

So increased management capacity=organizational effectiveness=going green, but that’s not all. There’s another word for distributing power broadly across an organization or a society: equity. It just so happens that systems with high management capacity are also socially just. If I have the information, skill and authority to make decisions then you could say that I’m empowered, and widespread empowerment is the hallmark of a just society. Effectively, social capital IS management capacity, and vice versa. When we degrade indigenous cultures, we eliminate an important body of skill, diminishing social capital and our collective management capacity. When we fight heterosexism we give queer people greater authority over their lives, increasing social capital and our collective management capacity.

How’s this for an equation: Natural capital determines the number of opportunities that we, as a species, have available. Social capital determines our ability to realize those opportunities, and financial capital determines our ability to act on those opportunities. By focusing exclusively on financial capital we have greatly enhanced our ability to act while gutting our social ability to act intelligently and our natural options for action. We’re becoming all muscle, no brain and no food. Companies that focus exclusively on their fiscal bottom line are passing up the opportunities of today (realized by the untapped social capital in their employees, customers and other stakeholders) and killing the opportunities of tomorrow (by killing the natural systems that produce them.) Companies that balance the three are destined to succeed.

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How is a market a social institution?

Personally, I see relationships as the fundamental unit of economics, and have always been a little shocked that they don’t seem to seem to come up explicitly in economic theory.

Say I have some bacon (mmm…. bacon.) In order for anyone else to get access to my bacon, the two of us have to form a relationship. There are tons of ways that this could happen: a family member could have free access to my bacon, a friend could ask to borrow my bacon, I could invest my bacon in a corporation and use it for some project, I could sell my bacon or someone could use a gun as leverage to take my bacon. Though they generally aren’t talked about in economics (that I’ve seen) there are rules to how these sorts of relationships are formed. In order for a relationship (friend, business partner, buyer/seller) to form, there has to be a model for that relationship which is known by both parties. The two of them then have to negotiate the application of that model to the situation they’re in (if you’re figuring out how to be married this is hard, if you’re figuring out how to be a buyer and seller it is sometimes easy), then build trust, then finally start exchanging your bacon.

I like this model because it expands economics outside of the marketplace, and points out the ridiculousness of a free market system. A free market is really just saying that to keep things simple everyone should form the exact same kind of relationship. (A particular nuance of buyer/seller developed by some rich fuddy duddys.) This makes about as much sense as telling everyone to exchange goods exclusively through heterosexual nuclear families. Relationships are, by their very nature, diverse. They step in and out of marketplaces with ease, and insisting that they don’t requires extraordinary sacrifices in our relationships with our communities and our planet. 

This kind of relational economics also suggests a strategy for creating sustainable social change. Remember, in order to form a relationship there first has to be a model for that relationship known by both parties. That means that by constructing new, useful relationship models and making them widely known you can radically alter the way that economic activity takes place. 

(This model gets even crazier when you say that you don’t actually HAVE the bacon, you just have a relationship with the bacon, and that relationship is also subject to new models and change.)


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