Not-so-Big Not-so-Wacky Ideas

It took me 30-some-odd years to become more comfortable with expressing my opinions, standing up for things I believed in and against things I felt could be challenged.  In this time of uncertainty and significant change in our environment, communities, and the economy, speaking the unspoken felt to me to be more important than ever.  So in the Spring of 2011, I started this blog – intentionally named Be Openionated – to have one’s opinions and be open to those of others as well.  We need this sort of open expression of ideas and open dialogue if we’re going to solve the problems the global population is facing and take advantage of the opportunities in front of us.   At times I am still quite apprehensive about posting my ideas and opinions.  I know we won’t always agree.  But I’ll do what was always intended for this blog – extend the invitation to whomever is reading this to post a comment, to ask me questions, to challenge me openly in this forum, to take the opportunity to express alternative opinions.  Be direct, but be polite.  Be courageous.

The following is a post that was originally published on June 23, 2011.  I have updated and edited it and invite you to comment.

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Here are some ideas that could change the financial services and investment sector, that could create positive social impact as a result of their implementation.

1. Healthier Risk-Taking.  People in the “impact investment” sector are already in the business of taking risks on investee companies, however, sometimes I feel conservatism and a lack of understanding of risk and healthy risk-taking holds some people back from investing in innovative, potentially game-changing social enterprise ideas.  (Speculation and self-serving risk-taking in the past decade has turned “risk” into a nasty four-letter word.)   Perhaps there is a way we can invest more in potential, rather than just performance and do so in a way that is healthy and has benefitting other people, communities, and society as whole in mind.

2. More Intuition in Investment Decision-Making.  Some people may view this idea as the same as seed capital, but I mean something subtlely different.  With seed investments there is the semblance of something on which analysis could be based, such as a prototype, a business model, or potential customer segment.  I meant something based on little analysis (a case where there is little empirical data to analyse) and based more so on intuition.  This might sound like reckless gambling – certainly for people whose decisions are based primarily on logical analysis.  However, there is undoubtedly a role played by intuition in decision-making (more on this in a future post).   Rather than more intuition, I believe an integrated investment decision-making approach – one that encompasses analysis, emotions, and intuition – is needed for effective impact investing.  Sometimes feelings and even analysis (in the form of a familiar habit) can be mistaken for intuition.  There is something to be said for quieting the mind and really understanding to what decision our core spirit, our intuition, leads us.

3.  Activist Shareholding for Social Change.  The Children’s Investment Fund does it, but for private-profit-seeking motives.  Fair Pensions mobilises folks who have invested in companies through their pension funds, but this happens after money has already been invested and it is unclear exactly who has what invested where.  I’m talking about intentionally aggregating investment into a publicly traded company, having an influential shareholding, and voting at AGMs to effect positive change.  I’ve heard some people query why put money into a company that was creating negative social impact.  However, I have been speaking with other people who also feel the need to to affect decision-making in large publicly traded companies and that by mobilising influencing shareholdings, we could effect change.

4.  Greater Transparency/ Opensource Finance.  This would be a major step for the financial services and investment industries – to become more transparent about pricing of loans and investment products, what kind of return they expect, and the costs of making investments available.  Financial institutions may become concerned about client privacy issues and litigation, but there is a movement towards improving financial literacy and making financing less opaque.   This might cause a bit of discomfort in the room, but I think many people are curious of the positive impact greater transparency may have.  Opensource happens in the tech world – Wikipedia’s code is publicly available.   People use it, modify it, improve it, share it.  But no one else created another wikipedia.  Opensource comes from a place of abundance – an assumption that there is enough to go around and that no one will copy a thing exactly, that at the end of the day there are differentiators (implying, we must differentiate on a basis other than price).  In response to the discomfort, I simply invite people to imagine what the world would look like if we had full transparency about true cost and therefore pricing and that this kind of re-imagining of the world was necessary for innovation and positive change to happen.

In the past, I felt like a mad scientist.  It wasn’t so much that I was concerned, but rather that I felt alone.  On the one hand, I must be in the right place because the environment in which I work is reasonably conducive to change and innovation, yet I felt really alone at the time of responding to a request for Big Ideas.  Looking back on this post, re-reading and re-writing it, I realise that these ideas are not-so-big and not-so-wacky.  They are fathomable.  They are within reach.  And I am not alone in contemplating them.

Natural Systems: Lessons for the Business World

I just finished reading Paul Hawken’s book – the Ecology of Commerce (a recommended read for all!)   I thought it appropriate to re-publish the following post which I originally published in November 2011 (exactly 3 months to the day!  And very closely to the hour!)  Here’s the updated post.

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Back in November 2011, my husband and I spent a long weekend on Vancouver Island – arriving in Nanaimo, then driving across the island to Tofino.  We picked up some things from the Old Country Market in Coombs, better know for its goats on the roof.

One of the things we bought was Fireweed honey from the Cowichan Valley.  As I studied the honey one evening, I thought about where it comes from.  Bees make honey of course, but the original ingredient is the nectar they collect from flowers.  Producing nectar isn’t the main objective of flowers.  Their aim is to reproduce by spreading its pollen – this is achieved most effectively by pollen attaching itself to visiting bees, which in turn spread the pollen from flower to flower as they go in search of sweet nectar.  Clever.  Naturally.

What could businesses learn from this?  Businesses, like flowers, aim to grow.  Perhaps they need to think about what activity is needed for them to grow and offer something – a sweet nectar – to make it easy and natural for the activity that supports growth to happen.

Here’s another example of natural systems and the parallel that can be drawn to business.  My husband and I were walking around the beautiful, temperate rainforest in the Pacific Rim National Park, on the west coast of Vancouver Island near Tofino.  The ground is very acidic and only certain plants and fungi thrive in that type of soil structure.  However, these ground-hugging plants create a foundation for other plants and trees to grow.   The trees grow tall, providing shelter as well as shedding leaves or needles which in turn nurture the plant life on the rainforest floor.  It’s a cycle, a system – and it starts with the small, basic plant life and fungi.  In my work, as an impact financier, I got a lot of inquiries from young businesses and start-ups seeking small amounts of financing, generally under $200,000.  Others in the impact finance sector were frequently seeking out larger businesses, to whom they could lend or invest at least $1 million in one transaction.  However, I’m wondering – perhaps in the world of social enterprises and social purpose businesses, the large social purpose businesses – the tall trees of the sector – have not yet grown and do not yet have the foundation.  And that start-up, fledgling young social enterprises – the small plants and fungi of the sector – are the ones that need the support to flourish and prepare the land for bigger growth.  Once those businesses grow tall, they provide shelter and recycle resources so that the businesses at the ground level can thrive and continue.

As with things in nature, in business they must start small, be part of a system, and small and big entities are interconnected and must help each other.

Hibernation & Early Spring

It’s winter, so isn’t that a good time to hibernate?  It’s certainly not yet spring, but it’s time to come out of hibernation.

Just under one month ago, I took this blog off-line, I removed the posts, bar one and went on hiatus.  After a period of reflection, I am resurrecting the posts.  It’s a long story, one that I might publish one day, but in the meantime I have returned three previous posts and the others may appear either here or in their new form on my new website which will be announced in the New Year.  It is a personal website – one that will reflect me and the ideas and opportunities that I feel are important enough to share in the public domain.  In the past, I created blogs around topics of interest, but never did I create one that reflected the whole person.  So here we go.  I’m spending some time reviewing and editing posts that previously appeared on this blog and some will re-emerge on the new site, some may remain unpublished, and some might return here – you never know.

Much of life is an experiment.  We put stuff out there and see what feedback comes back.  From that feedback we learn.  I have learnt a lot in the last four weeks – I have learnt about leadership and about moving forward through conflict with grace.  I have learnt these lessons from living them, from taking action and being the good leader I would like to be.  I didn’t learn these lessons from following or waiting.  I learnt by doing.  I hope some of you will join me in this early spring.

Turn of the Tide

Back in my early years in London in the early 2000s, I used to row on the River Thames around Chiswick and Richmond on the tidal part of the river. The most dangerous time to be on the river was at the turn of the tide. This was when the flow of the current switched from incoming to outgoing or vice versa. Boats frequently rowed with the current down the middle where there was least resistent and against the flow on the sides nearest the banks. Although we had tide timetables, at the turn of the tide we often encountered boats in near collisions because they differed in opinion as to when exactly the tide turned.

And that’s where I feel like we are at the moment, with respect to the economy and patterns of living, consuming, working, and playing. There was a flow of the current for many years, even decades, of mass expansion, automation, industrialisation, the bigger the better. We saw the increase in retail outlets and car-dependent shopping centres and mass development of ever smaller homes and apartments. But there appears to be a movement growing – people wanting to be within walking or cycling distance of shops, their work, and places of leisure. People are seeking out community and neighbourhoods instead of subdivisions, business parks, retail parks, parks which are anything, but parks. But this movement seems a bit unclear. The mass developers insist – bigger is better and most cost efficient. The community builders persist – it’s about relationships, local, knowing your neighbours not hiding from them.

It’s like being at the turn of the tide – not sure which way the tide is going. It’s already turned at some part of the river. One of these boats is heading in the right direction.

Decision-Making: Washable, Re-usable Pads vs. Disposables

I have been thinking about making the switch from plastic, disposable menstrual pads to washable, re-usable cloth pads for a while now. I was first introduced to them in May this year, when I met Madeleine Shaw and Suzanne Siemens, the founders of Lunapads, based in Vancouver, BC. Now, I don’t normally write about clients (disclaimer: Lunapads was one of my clients and Madeleine and Suzanne remain good friends of mine), but I’ve been thinking a lot about decision-making lately and here was a live example of the long, complex process involved in making a choice.

I was familiar with cloth nappies/ diapers from yesteryear, but I didn’t even think about cloth pads until I met Madeleine and Suzanne. Madeleine kindly gave me a sample panty liner to try out. Admittedly, another two months would pass before I even opened the package. I had questions. I probably should have called Lunapads and asked them, but perhaps part of me wasn’t comfortable with asking or part of me felt like I should know better and figure it out.

My first concern was about how to care for them and wash them. That was easily answered by looking on the Lunapads website – there is readily available information (and now also videos!) about how to care for cloth pads.

My second concern – and this delayed me from making my first purchase – was what to do with soiled pads when I was at work, on the go, and not at home where I could soak them and care for them immediately. All I had to do was spend a bit of time looking on the website some more. It was a video how-to that provided me with the answers (Lunapads in fact sells a waterproof carrying bag with two zipped pockets – one for clean pads and one for soiled pads). But the truth is, part of me probably didn’t want to know the answer. Part of me felt prohibited by the extra effort and care required and admittedly thought it would be too gross and inconvenient to deal with soiled pads in inconvenient locations.

The Tipping Point

The thing that made a difference, that finally spurred me into action, to get on the internet, finish my research on cloth pads was this. It is the culmination of all the nasty stuff that is going into our food, our clothes, and our environment. I already try to make better consumer choices – from my coffee cup made from food grade 100% recycled plastic, to my second-hand vintage engagement ring, to my wedding rings made from recycled white gold, to my wedding dress made from vintage and off-cut fabrics. I try to shop vintage and consignment (and my partner is encouraging me to try thrift). We try to buy local food and when our budget allows we shop organic. We are disgusted by the chemicals, steroids, and antibiotics that are pumped into farmed chicken and fish. We cringe at the chemicals that go into processed cotton (my partner buys organic, Fair Trade cotton t-shirts when he can). And with all this in mind, I thought about the plastic and chemicals that get pressed next to my most intimate parts every month – let alone the huge amount of non-biodegradable plastic that goes into landfill. The choice seemed obvious!

I did some further research, out of curiosity, into who else in the whole was making cloth menstrual pads. Quite a few businesses as it turns out. But frankly, Lunapads are beautiful and cute. They are shaped to be comfortable and stay put with wings and snaps. The fabric from my sample panty liner is a wonderfully soft cotton flannel and fleece, which is blue and pink with cupcakes. The fabric choices online probably change from time to time, but I’m looking forward to receiving my new Lunapads in a midnight mushroom print.

All in all it took me four months to make the decision to switch. I only wish I had known about Lunapads earlier, had the chance to speak more openly about it with other cloth pad users, and make the switch sooner. Better late than never!

Imagine the “Business Model Canvas” of Life

I find the Business Model Canvas to be a useful tool for entrepreneurs and business owners to explain the different components of their business model and how they relate to each other.

I thought I’d take it a step further.  I wondered what it would look like if we thought of the world, or more appropriately life, as having a “business model”.  By that I mean, make an attempt to explain the components of our lives and how they relate and interact with each other.  And so I tried to imagine the “Business Model Canvas” of life.  This is by no means complete or an accurate representation.  It was an experiment.  I have excluded the role of investment, financial returns on investment and savings because it would have become quite complicated.

Why Impact Investment Is Not An Asset Class

I have been reading JP Morgan’s research paper on impact investment and their hypothesis that impact investment is an asset class.

I propose that impact investment is NOT an asset class. JP Morgan’s indicators of an asset class are as follows, along with my argument, why impact investment does not fit into their definition.

Unique set of investment/risk management skills

JP Morgan suggest that “the impact investor must be skilled in both investment management and the management of socially/ environmentally-driven endeavours.” They begin by saying that initial participants often have a financial background or a non-profit/ grant-making background. I disagree. Rather, often people with a financial background are arriving later in the game. The early innovators and adopters are systems-thinkers, designers, activists, and entrepreneurially-minded people. They are people who could bring together a diverse set of resources and motivate a group of people with diverse skills to make something happen and bring about change. The investment is rooted in resources – natural and people-powered – not money or finance. I think folks with a financial background are too quick to forget that money is not the ends or the lubricant or even the means. It is the currency, the common denominator, a measurable tool. The means are natural resources, energy, technology, workers, leaders, and time.

I also believe that impact investment affects on many different levels and requires looking at investment in a fundamentally different way – viewing customers, community, suppliers, teachers, grant-makers, people with specific skills and experience all as investors. They invest by buying products and services, taking an interest in the producer/ service provider, sharing knowledge, skills and time, not just money. In order to achieve the outcomes and positive social change we want in the world, we cannot be so narrow as to think that money and deploying financial capital is the only resource, solution, and stimulant.

Organisational structures to accommodate this skillset

There is going to be diversity in the structures that facilitate positive social change and investment therein. I have already witnessed it – from foundations and grant-making institutions, to design and innovation firms, and other conduits of resources. Many of these, especially in the design and facilitation areas, have been very successful in stimulating economies, organising communities, and creating new opportunities for people, businesses, enterprises, and not-for-profit organisations.

Industry organisations, associations, and education

This is the one indicator I might agree with, but this alone does not mean an asset class. It strongly characterises a movement is forming and building momentum. The organisations and associations existed well before the financial institutions started participating. The education is happening everywhere, not just in the business schools – it is happening formally in schools, in subject areas of design, environmental studies, and social sciences and informally within communities and on the ground. If anything the business and finance schools are lagging behind.

Development of standardized metrics, benchmarks and/or ratings

If by this JP Morgan means a Zagat guide to impact investment, well then I wonder if they are on to something. People have become attached to the idea of measuring and assessing impact. If they continue on this path they will limit themselves to measuring the measurable (which in some ways is what has happened in the green and energy efficiency space). At least some people working towards positive social impact are mature enough to recognise that story-telling and sharing is a vital part, in particular in communicating the more subjective and qualitative areas of impact. Measuring and benchmarking for good is tantamount to rating your friends and definitively stating what good service, good ambience, and good food is. Zagat uses a numbered rating systems as well as anecdotal comments, recognising that people simply have different ideas and tolerances of what makes a good restaurant. And if that is true for a fairly understandable concept as restaurant dining, stop for a moment and imagine what that looks like for a complex thing such as enterprise and social/ environmental impact. Behavioural change has happened in the past, over time, not on the basis of just metrics. It has happened because of many factors including public policy, style mavens, local heroes, communities, and inspiring and inspired people. Financial investors in impact are but a piece of the puzzle and really need to pay attention to the other, sometimes more effective forms of investment and intervention.

So is impact investment an asset class? I beg to differ. What is it? Does it matter? If anything I feel I am part of a movement, one in which I surround myself not only with financial investors and entrepreneurs, but also with policy makers, activists and radicals, innovators, designers and creators, and my community. I feel I’m in good company.

References:  JP Morgan, Impact Investments