The Ecosystems
Converging around big, hairy, audacious problems
In traditional business thinking, a company discovers an unmet demand and brings a solution to market. But what if there were no demand? And no market? And your potential customers were literally dirt poor? Traditional thinking would tell you to give up.
In the solution economy, the winning approach is to capitalize on your role in a broader ecosystem. If a problem exists, the answer is to create an environment in which the solution can organically, sustainably, profitably be brought to bear—even if there is no market demand in the traditional sense. Sound impossible? Well, that’s exactly what Unilever did in India to address a critical public sanitation problem. How the company did it demonstrates the role that ecosystems play in the solution revolution.
Sometimes the best solution is as simple as a bar of soap. Diarrhea kills 1.5 million children a year worldwide, making it the second-most common cause of death for children under five. Yet the remedy has been known for centuries: basic sanitation practices such as hand washing cut the risk of contracting the disease in half. The usefulness of soap in this regard was understood as far back as in ancient Babylon.1
Remarkably, though, perhaps a billion of the world’s poorest inhabitants do without this most basic of essentials. For many, soap doesn’t fit their budget (about 1.2 billion people earn less than $1 a day), and many others are unaware of soap’s sanitizing properties and critical role in hygiene.2
These consumers occupy what business strategists C. K. Prahalad and Stuart L. Hart call the bottom, or base, of the global economic pyramid.3 As discussed earlier, conventional businesses historically neglected the needs of those at the base of the pyramid, unless the companies were selling supplies to humanitarian relief organizations. It was considered impossible to serve remote, impoverished regions without taking a sharp financial loss. In many cases, the basic market features wealthier societies take for granted—grocery stores, pharmacies, and other retail outlets for hygiene products—simply don’t exist. In addition, the special needs of this consumer population had never been researched by the marketing department.
Into this market void stepped HUL, Unilever’s subsidiary in India (hereafter known simply as Unilever). Over the years, Unilever has become one of the most sophisticated companies in the world in selling to the poor, employing a host of strategies in many countries to reach this very hard-to-reach market segment. In the case of providing soap in India’s rural villages, Unilever recognized a blue-ocean opportunity, that is, an opportunity to serve a huge, untapped market. In 2000, the company revamped its business strategy to accommodate this opportunity. To reach the potential market of more than 600 million low-income Indians, Unilever would have to create an entire ecosystem. Because its product would address a serious public health issue, it was able to partner with NGOs, banks, and schools to create a market for cleaning products in rural India—while lifting women from poverty with microloans and jobs, improving public health and sanitation, and enhancing public health awareness through educational campaigns—all while turning a profit.
Unilever’s initiative began small, in the rural hinterlands of India, by tapping into organic networks of local female entrepreneurs. The company worked with microlending institutions to open lines of credit for these women. Once a woman could obtain a microloan to buy Unilever soaps, she could provide this essential resource to her entire village. She would typically charge a 7 percent markup, which allowed her to pay off the loan and draw a steady income. “When my husband left me I had nothing but my daughters,” said Rojamma, one of the new entrepreneurs. “Now everyone knows me. I am someone.”4
Unilever’s program equipped women like Rojamma with a job, met a basic sanitation need, and gave Unilever access to a remote region it couldn’t affordably reach otherwise. What began with seventeen women expanded within a decade to forty-five thousand saleswomen, who in turn reached more than three million households. Similar programs are flourishing for Unilever in Sri Lanka, Bangladesh, and some African nations.5
Prahalad and Hart contend that multinational corporations “must build an organizational infrastructure to address opportunity at the bottom of the pyramid.” Unilever put this insight into practice. In addition to a specially tailored, nontraditional sales force, Unilever also created a new specially tailored soap brand, Wheel. To protect the environment, the company made Wheel with a lower oil content, because the poor often wash in rivers. In addition, Wheel is sold in small quantities at very low prices, because customers cannot afford to buy more than a few days’ worth at a time. Unilever “decentralized the production, marketing, and distribution of the product to leverage the abundant labor pool in rural India,” explain Prahalad and Hart.6
To market the products, Unilever’s Lifebuoy brand sponsored Swasthya Chetna (Health Awakening), at the time the world’s largest private hygiene education program.7 In 2008, a Unilever-backed NGO sponsored the first of a now annual Global Hand Washing Day in more than a hundred countries and coordinated with more than fifty organizations in nineteen countries for the event.8 Schoolchildren learned soap jingles and made hand-washing pledges. Many continue to do so every morning of the school year.
The Swasthya Chetna program began with a goal of educating 20 percent of India’s population—200 million Indians—to wash their hands after going to the bathroom. About 150 outreach teams speaking seven dialects spent two years travelling to eighteen thousand villages, where the team members shared lessons, posters, and literature on sanitation. To emphasize the message, they revisited each village, applauding good hygiene practices and offering additional instruction as needed.
Their visits often included dramatic performances, hand-washing demonstrations, and the introduction of the concept of germs. Children rubbed their hands with powder, which simulated dirt and germs, and the kids then washed it off using plain water. But under a black light, their hands still showed traces of the powder, which glowed under the light. They then repeated the experiment, this time washing with soap. The glow was now gone, dispelling the myth that clean-looking hands are clean hands. The Swasthya Chetna marketing campaign cost Unilever only $2.7 million.
Unilever’s research partners in the academic and scientific community tested the effectiveness of these campaigns, even planting sensors inside bars of soap to see how often control groups washed. They also tested the effectiveness of hand washing itself, finding a 48 percent reduction in diarrhea cases and a 46 percent reduction in eye infections among participants.9
About six thousand children worldwide—most of them under the age of five—die from diarrhea each day. Unilever is well aware that its work helps to reduce this suffering.10 Even so, says Unilever’s Harpreet-Singh Tibb, the effort is still a business undertaking.
“Swasthya Chetna is not about philanthropy,” he says. “It’s a marketing program with social benefits. We recognize that the health of our business is totally interconnected with the health of the communities we serve.”11 The business challenge was immense. Unilever had to sell soap to people who didn’t know they needed it, who couldn’t afford it, and who had nowhere to buy it. To succeed, Unilever had to change its business model drastically to adjust to local customs and market challenges and to engage with a multitude of nontraditional partners. It succeeded by thinking beyond the simple seller-buyer paradigm and creating an entire ecosystem that enabled supply and encouraged demand. NGOs contributed their cultural expertise to the program design and gave Unilever’s efforts legitimacy. Scientists researched the effectiveness of public health campaigns. Banks and NGOs provided the microloans. Local village entrepreneurs became the sales and marketing engine. Government agencies introduced Unilever’s programs to schools and sponsored public health messages. In return, Unilever delivered engaging health instruction at a scale the government wouldn’t have provided otherwise, and the firm left a lasting example that could be used to hone future public education campaigns.
In building this solution-economy ecosystem, Unilever also planted the seeds for future wavemakers. “It is not only my own prosperity that means so much to me,” says Feroza, an entrepreneur from Joyeeta, Unilever’s sister project in Bangladesh. “People get inspiration from me. They say, ‘If Feroza can do it, why not me?’ I’m more than a representative of Unilever; I’m an ambassador of life, hope and dreams.”12
From Silos and Sectors to Ecosystems
In the solution economy, various factors combine to create a new problem-solving environment. New organizational models, new currencies, new applications of technology, and a new generation of wavemakers are attacking some of society’s toughest challenges. It’s an economy built on more than money, where the old definitions around commerce, profit, nonprofit versus for-profit, and public value are being challenged regularly. Breaking through the traditional ways of thinking allows for the development of solution ecosystems.
Wavemakers begin by seeing a problem (such as preventable deaths from poor sanitation) and ask, “What would it look like to really make a difference? What can I do to get there?” They form relationships to work together effectively, regardless of their specific sectors, silos, and roles. Why shouldn’t a multi-billion-dollar company take the lead in educating rural Indians about sanitation?
The rigid silos of traditional industry, government—and even many foundations—run directly against the disruptive thinking of the solution economy. Rather than navigating fragmented hierarchies to advance an agenda, social entrepreneurs and organization “intrapreneurs” begin with the problem itself. Why can’t an inventor better known for robotic limbs and souped-up scooters create a device that purifies water, as Dean Kamen did (see chapter 1), and enlist a company like Coca-Cola to distribute it throughout developing countries?
A core issue or objective, such as fighting malaria or revolutionizing higher education, becomes the center of an ecosystem. As connected citizens share their concerns about, and interest in, the topic (in a conversation now made easier with the advent of social media and the internet), market demand grows and enterprising contributors converge to meet the gap in the market.
In biology, ecosystems represent a community of living organisms interacting as a system. Likewise in solution ecosystems, partner organizations gain when one organization evolves its distinct role to complement the other’s contributions. (Both public schools and Unilever had a shared interest in getting kids to wash their hands, but the traditional roles of these two players would never link them up.) Together, various groups can move toward their goal much more productively than if each group pursued it separately. These dynamics are replicated across the ecosystem. The larger the mixture of players, the more opportunities for partnerships that serve all parties.13
Consider d.light, the scrappy start-up focused on a huge, largely unknown problem: access to lighting in the home. The company targets the one in four people globally who live without electricity. Although d.light had some innovative designs that caught the interest of the Omidyar Network, enormous distribution challenges stood between the promising design and the billions of people who needed it. The individuals most in need were scattered across remote regions at the base of the pyramid.
To address this concern, the Omidyar Network drew on its tight network of international development organizations. At an Omidyar Network party, the CEO of d.light was introduced to a representative of BRAC, the largest, most mature service provider in Bangladesh. Ten days later, the two companies were meeting in Dakar, negotiating a pilot project to bring d.light’s products to five BRAC communities.
“BRAC has unparalleled distribution, so the impact on volume was incredible,” says Susan Phillips of the Omidyar Network. “BRAC is in 110 countries. The potential for collaboration within the network can be staggering.”14 Today, d.light has reached ten million people in more than thirty countries.15
Some ecosystems benefit from a backbone organization that serves as a central organizer, a source of accountability, and a convener. In some ecosystems, this role is played by a “connector” company and its platform. In the business world, this is best illustrated by platforms such as eBay or Amazon.com, which create simple market conditions and a user culture that facilitates interactions between buyers, sellers, and package shippers. In the social sector, the connector role is taking shape through clever public-private partnerships where there is often an integrator pulling the ecosystem together. As will be discussed later in this chapter, the role has been pioneered by large academic institutions like MIT and Harvard in the online education market and by Ashoka in the affordable housing ecosystem.
Another example is what the Global Alliance for Vaccines and Immunizations (GAVI) has done to increase access to immunizations in the world’s poorest countries. In 2000, a plethora of new technologies and medicines was coming out or already available for children in the West, but other regions—where the medical innovations were needed most—were relative deserts. The discrepancy was a textbook market failure. Not until the World Health Organization, UNICEF, academics, pharmaceutical companies, and funders converged at the World Economic Forum in Davos was the need addressed and ground broken on a solution space. GAVI is that space, and its achievements are the sum of its partners. Like a field-specific version of Davos, GAVI brings together under one roof the vaccine industry and various NGOs, donor countries, and developing countries to reshape the vaccine market. By pooling demand from developing countries for vaccines and matching it with reliable, long-term financing, GAVI delivers massive impact—370 million additional children have been immunized, preventing 5.5 million future deaths with its support—without any of its own boots on the ground.16 It simply connects existing major players.
Many of the market innovators operating in developing countries must create an ecosystem to serve previously unmet needs. Take Husk Power Systems, whose mission is to electrify the poorest villages in India by building radically affordable, thirty-kilowatt power plants. Husk’s biggest challenge is not necessarily building power plants cheap enough to serve a population whose annual salary is less than $200, but the lack of low-cost suppliers to build the plants and maintain the systems in these areas. This meant that Husk also has to invest in metering, a sales force, electrical engineers, training, and education.
“Why is it so hard for many of these entrepreneurs?” asks Sasha Dichter of Acumen, one of Husk’s investors. “It’s because they are literally creating markets. There often is no market. No ecosystem to draw from. They’re building it from scratch.”17
Much like the unique, converging causes of a problem, the resulting problem-solving ecosystem emerges and expands through its own distinct process. Certain versatile elements are adapted, technologies are leveraged, and currencies gain new context. Existing exchanges and business models may find fresh relevance in the budding ecosystem, and participants, often playing nontraditional roles, contribute to the flow of both resources and ideas, allowing new self-sustaining solution markets to thrive. In the examples that follow, we will show how the foundational elements of the solution economy discussed from chapters 1 through 5 can be traced across ecosystems.
Revolutionizing Education: An Innovation Ecosystem
Disruptive innovations force entire industries to adapt or become obsolete. Netflix adapted to the digital revolution; Blockbuster didn’t. IBM adapted; Wang didn’t. Apple thrived in the era of digital images; Kodak disappeared. UPS and FedEx have boomed along with online shopping, while many postal services, with their monopolies on mail, struggle. Indeed, the very insulation provided by monopoly status, traditionally viewed as a boon, has been a challenge to public institutions that must adapt to changing ecosystems.
Nowhere is this more the case than in education. While many public schools are still locked in a student-teacher, brick-and-mortar mind-set, new participants in the education marketplace are exhibiting all the characteristics of an emerging ecosystem. A horde of new entrants is scratching at the margins, finding niches and refining the offerings (figure 6-1). Some rise to prominence, and others die out, their best ideas swiped and incorporated into stronger competitors. Far-reaching shifts in the education ecosystem are radically changing higher education, private schools, online learning, adult learning, and indeed the very idea of what it means to be a teacher, a student, or a school.
For students of all ages, education already has evolved significantly. Now anyone with an internet connection can learn, with top-quality lessons available 24/7. Whether it’s taking a refresher on linear algebra through Khan Academy; mastering the basics of computer programming with CodeAcademy; or pursuing actual course credit from online, for-profit institutions such as StraighterLine or the University of Phoenix, millions now draw from a rich array of educational resources. Academic Earth, Udemy, Coursera, and more than 250 other institutions now offer open courseware, granting free access to acclaimed university courses. The resources now available in the educational ecosystem allow teachers and students to personalize education and connect in unprecedented ways.
FIGURE 6-1
Consider an internet-equipped sixteen-year-old. Perhaps her own high school doesn’t offer a macroeconomics course she wants to take. She can study from home in a virtual school for credit during her off hours. Or she can take a free macroeconomics course from EdX, joining 100 million others who have taken courses from MIT, Harvard, and a growing number of other elite universities online. At the end of the year, if she takes an AP macroeconomics exam and scores well, she can place out of the course in college or place into a more advanced economics seminar.
The impact on online learning is magnified when multiple tools are used in combination. Since the macroeconomics exam is sure to have problem sets, our sixteen-year-old would-be economist can gain an advantage if she practices the problems on the website DreamBox, which adapts to her responses by altering the level of difficulty and the type of hints given. And just because no one in her school is taking the class doesn’t mean it has to be a solitary activity. She can find study groups and peer-to-peer support via platforms such as Students of Fortune and WizIQ, since after all, the best person to teach you something is often someone who just learned it. And best of all, it doesn’t matter whether this sixteen-year-old lives in an Upper West Side apartment, an urban slum in Lahore, or a hut in the Himalayas. Internet access now means educational access—for students of all ages.
Educators call the fast-growing combination of online and classroom resources blended learning. The 2011 Sloan Survey of Online Learning concluded that more than 6 million students took at least one web-based class in the fall 2010 semester, an increase of 560,000 from the year before.18 Tom Vander Ark, CEO of Open Education Solutions, predicts that at least two-thirds of US students will do most of their learning online by 2020.
While some teachers in traditional schools may be fearful of what blended learning means for them, many recognize that these new tools can radically increase the quality of education a teacher can deliver and that many of these new resources are designed specifically for teachers. The distribution of class grades, cleanly displayed on a graph, can indicate if an exam may have been too challenging or too easy, for example. Teachers can swap tips and lesson plans on sites such as Better-Lesson or TeachersPayTeachers. And as explained in chapter 2, some tech-savvy teachers so embrace blended learning that they teach with a flipped-classroom mentality.
What if a teacher is concerned that part of a student’s paper seems uncharacteristic of his or her writing style? A teacher can run the essay through a software program like Turnitin or SafeAssign that picks up evidence of plagiarism; such software is an essential tool in an era of near-unlimited online information. Instead of scrawling “See me after class” in red ink on returned work, teachers can contact students and parents through platforms such as Edmodo. As these examples show, educational support is being developed for teachers as well as students.
Rapid technological advances in education are shaking up the system. For instance, brick-and-mortar schools often struggle to present math and science coursework effectively. Educators have long recognized that children learn in a variety of styles, particularly in these subjects. Unfortunately, one bad experience in grade school may lead to lasting resistance to these topics, creating a permanent disadvantage in a job market in which science and math majors are in high demand. Today, however, the education ecosystem offers numerous educational options to find the right fit for each student, personalizing the experience. Checkpoints built into certain online courses indicate how the material is being absorbed in real time or what needs to be explained differently. In this way, a student progresses on a personalized learning path, at a pace that maximizes content mastery and retention.
As demonstrated in chapter 5, adults too can gain a competitive edge or pursue an interest through online lectures, free courses, and discussion forums, in the adult analog to blended learning. The future seems to offer opportunities to acquire valuable skills that are limited only by the individual’s curiosity, dedication, and time.
The technological leapfrogging in developing countries, such as bypassing landlines in favor of mobile phones, is extending into education as well. Areas in which millions lack access to traditional schools are now drawing on online educational resources. In the first decade of the twenty-first century, Asia experienced the greatest growth in online learning. In China, 10 percent of all university learning takes place online. Meanwhile, online classrooms provide a way for women in Saudi Arabia to obtain an education without violating societal rules against being in a classroom with male instructors.19
The next area ripe for solutions in the education ecosystem is the bridging of the digital and physical learning worlds to replicate the serendipitous sense of community of a bricks-and-mortar school, which a computer alone can’t provide. The technical and analytical skills learned online aren’t everything; the psychological benefits and soft-skills development of direct interaction matter too, as most schoolchildren will attest. Providing a compelling social component to the online education experience, whether through meet-up groups or team projects, will encourage broader participation in the education ecosystem.
Affordable Housing: An Ecosystem for the Base of the Pyramid
Nearly a billion people live in slums—roughly half of all city dwellers in the developing world. They lack access to basic sanitation and share overcrowded, ramshackle structures. Beyond their general unpleasantness, slums foster disease, sabotage education, and are vulnerable to fires and natural disasters. Globally, at least 100 million people lack housing altogether.20
If current trends continue, the number of people living in slums will rise to 2 billion in 2030 and 3 billion in 2050.21 That’s because virtually all the world population growth will be in the cities of developing countries, concentrated in the informal settlements of the poor. To supply shelter for the 40 percent of the world’s population that will need affordable housing by 2030 will require the building of 96,150 new housing units every day.22
Creating shelter for the poorest citizens doesn’t come easy. Not only do these slum dwellers lack money, but they also often live in a form of shadow economy—which discourages mechanisms like the traditional thirty-year mortgage or even rental arrangements. “Housing projects require many different partners, may not have one clear entrepreneur at the helm, often rely on subsidy to be truly affordable, and don’t see a finished product on the ground until many months or even years later,” writes Acumen’s Aden Van Noppen.23
Safely housing large numbers of the urban poor in a radically new way requires multiple players to converge in an ecosystem of finance, skilled labor, and legal understanding. The first challenge, however, is simply designing a cheap home. That engineering and business feat demanded its own ecosystem of skilled professionals.
To inspire the necessary collaboration, Vijay Govindarajan and Christian Sarkar, professors at Dartmouth’s Tuck School of Business, used an exchange model. They proposed a contest: design a $300 house. And cost wasn’t the only constraint. To transform slums, the designs needed to be adaptable to local conditions and simple to construct from available materials. Hardware and construction conglomerate Ingersoll Rand offered prize money for the best designs.
Govindarajan and Sarkar realized the project would require the best minds in business, design, architecture, and academia, as well as feedback from business experts, architects, and nonprofit pros who possessed a rubble-level intimacy with the world’s slums.
Open information fed the design process. As the teams prepared their entries, the contestants compared proposals online, and anyone on the internet could critique the plans. Experts were invited to describe the obstacles, both financial and environmental, that the designers would face.
The six winning teams participated in a weeklong prototyping workshop at Dartmouth. One winner designed a house that cut costs through economies of scale. “We realized that by analyzing just one house, we were never going to achieve the goal of $300 per house,” says Eric Ho from the Architecture Commons team. “Because of the cost of labor, it’s just not possible. So to circumvent it, we had to create a community.”24 This community would need to tap into the principles of the solution revolution, including new forms of investing and finance.
In this model, a hundred families together would apply for $30,000 of microfinance loans. Thus a village would invest in machines to build compressed-earth bricks and special roof tiles, two microenterprise projects that could employ villagers while it created housing for them. At Dartmouth, the Architecture Commons team learned that a working prototype would be customized for a trial run in Haiti, merging the best elements of the winning designs.25
Meanwhile, Tata Group, an Indian company known for its $2,500 car, is testing three designs for a $700 house in West Bengal. The prefabricated kit constructs a 215-square-foot home that can be assembled in a week. Though potentially still beyond the reach of the poorest, the design should provide a welcome alternative for the Indian middle and lower-middle classes and should simplify the cost of government housing. Other architects are observing Tata’s effort closely to find elements of the design that might scale.
The next layer of the low-cost housing ecosystem is finance and administration. Slum dwellers often lack the legal rights to their homes. Potential builders must consider actual owners as well as the government departments that enforce building codes, fight fires, and must provide shelter for relocated residents. Builders also must coordinate with NGOs, contractors, financiers, and other players, such as academic advisers or volunteer architects. Figure 6-2 shows how all these players and innovations contribute to create affordable housing for people at the base of the pyramid in various countries.
FIGURE 6-2
Ashoka Egypt is attempting to entice private investors with the potential of a trillion-dollar housing market for the base of the pyramid. It’s a hard task. Plenty of businesspeople have been burned in lowest-income housing before.
Ashoka’s Rochelle Beck describes the challenges: “Some builders and developers see significant potential profits, but they do not have accurate market information about what their new customers—slum dwellers—need, want, currently spend or can afford for housing. Their traditional marketing and sales forces have little or no experience in slums, nor trusted working relationships with those who do. If a barrier such as ambiguous land title or too few or too expensive home mortgage products [appears,] the perceived risk often is enough to sink their interest.”26
To protect the enterprise, Ashoka assembles market research to ensure that its housing goes to those who are truly eligible. Tablet technology simplifies a sample census, and census takers photograph families for future reference. Such proof of residency helps prevent latecomer fraud.27 It also ensures that historic problems of misunderstanding the customer, particularly at the base of the pyramid, are avoided by capturing their wants and needs on the front lines.
Ashoka also acts as a broker, sourcing high-quality construction materials from local builders, assembling potential homeowners into groups to better negotiate with microfinance institutions, and consulting university engineers. One such initiative through Ashoka Egypt has yielded more than ten thousand new housing units.28
Ashoka has also been actively trying to create a market for affordable housing in India. Currently, the country’s swelling urban populations face a shortage of 24.7 million homes. In India, a pay stub is a standard requirement to finance a home, but 86 percent of the urban population have no proof of income, because they work in the informal economy.29 The ingrained assumption, of course, is that without a pay stub, a person can’t be creditworthy. All the various businesses involved in the housing project have more or less adhered to the rule, sticking to what they knew: the builders focused on building, and the financiers focused on funding those who met the criteria.
To convince everyone of the shared benefit of housing the poor, Ashoka had to develop relationships between the mortgage companies, for-profit housing developers, and local community organizations. The ecosystem for affordable housing works like this: community organizations act as demand aggregators, bringing groups of consumers to for-profit developers, and as design and investment partners. So far, ten thousand homes have been built, representing at least $100 million in sales.30 And the building continues. Ashoka founder Bill Drayton now considers it “a $340 million market failure that went away.”31 In addition to housing projects in Egypt, Ashoka’s ecosystem-building activities for services for the very poor run the gamut from health to agriculture to education.
One community’s solution, of course, may not be suited for another. Thailand’s Community Organizations Development Institute (CODI) scales a general approach rather than a specific solution. CODI carefully connects the elements a housing ecosystem needs to survive—legal representation, interested developers, and land rights—and then lets the ecosystem operate on its own. Local communities take ownership, and CODI facilitates the processes.
As with Ashoka, CODI begins with intelligence. Recruits identify influential individuals in the community who can share local insights. One case study describes the process: “In the city of Uttaradit, the initiative started with survey mapping of all the slums and small pockets of squatters, identifying those slums that could stay and those that needed to be relocated. This helped link community organizations and began building a community network supported by young architects, a group of monks and the mayor.”32
Like the funding approach that Govindarajan and Sarkar recommended in Dartmouth’s challenge to design a $300 house, the Uttaradit community pools money and labor resources under the control of trusted elders. In this way, the whole community has a stake in the outcome. By becoming a legal entity, the slum community can negotiate with property owners and buy land or secure long-term leases, either collectively or as individuals.
Residents of the Charoenchai Nimitmai community in Bangkok pooled their resources to buy land, while residents in a neighboring community used their new legal status to negotiate a long-term lease. Another community, Kolok Village, stretches along a railroad company’s property. The slum dwellers agreed to keep their homes twenty meters from the track in exchange for long-term tenure.33
The beauty of this ecosystem is that with proper incentives and formal status under the law, communities begin to develop their own innovations, and solutions emerge from within. By 2012, CODI had housed more than 80,200 households in 745 projects in 249 cities.34 It’s doubtful that anyone sleeping under a proper roof by the train in Kolok understands how much effort went into constructing their homes.
Ending Human Trafficking: An Ecosystem That Saves Lives
Close to twenty-one million people worldwide, a growing share of them children, are trapped in contemporary forms of slavery collectively called human trafficking. Besides child labor, such slavery includes forced labor and sex slavery. Globally, human trafficking is a $32 billion industry.35
Modern slavery often begins with the phrase “Want a job?” says Kevin Bales, cofounder of Free the Slaves, a nonprofit working in the modern antitrafficking ecosystem.36 Trafficking rings recruit marginalized, desperate people, luring them with the hope of work or passage to another country, and then separate them from their support networks. The more marginalized the person, the shorter the reach of those who care. Once at the mercy of their captors—working in an African tin mine far from honest law enforcement or turning tricks in Los Angeles without a passport—victims often feel powerless to find a way out.
Trafficking requires many participants. Recruiters and transporters move humans. Bribed officials turn a blind eye or provide faked documents. Guides transport humans past law enforcement. Informants spy on police. Deep-pocketed investors fund trafficking ventures. “Launderers” clean dirty money. It’s an entire black-market ecosystem.37
Antonio José dos Santos Filho, a rural Brazilian down on his luck, is typical of the persons who find themselves enslaved in the twenty-first century. He was recruited by an acquaintance who flashed some cash and offered work. Soon Filho rode a bus for two days to the Brazilian state of Parás. There, armed guards stood watch as he and others cleared rain forest land for cattle grazing. He guessed he was in trouble, but learned for sure when he asked for his paycheck. His bosses told him he owed money for purchases made at the “company store.”38 He would work until he repaid them.
Filho was a slave. He drank the same muddy water the cattle drank. Each night, he slept under a tarp, prey to insects and inclement weather. Luckily for him, authorities found and freed him. Although Brazilian law permits such forced laborers to demand back pay from their former slaveholders, the legal system is complex and frustrating, often causing the victims to give up. But this time the Pastoral Land Commission, in partnership with Catholic Relief Services, a leader in antislavery work, organized forty-two families affected to demand restitution. After a five-year legal battle that the victims could never have afforded on their own, they won 2,670 acres of land and material to build thirty houses.39
Sadly, these triumphs are still too few and far between. The lack of coordination across anti-human-trafficking groups does not help. David Rogers of the US Federal Bureau of Investigation admits that “many of us share the goal of eliminating human trafficking, but there are misunderstandings about roles. We need to better understand how to augment—not compete with—each other.”40 The multitude of NGOs focused on the issue brings added complexity. It wasn’t until 2009 that a few leaders in this area cofounded an online public database, the Freedom Registry, which now lists more than eight hundred advocate groups active in the United States alone.41 The registry’s success in driving collaboration on anti-human-trafficking work led to the creation of another advocate network in Canada.
Yet even when separate organizations engage, their approaches are sometimes at odds. Some groups attempt legal action, while others maintain a low profile and focus solely on rescuing captives; still others document the horrors with video or photos to raise awareness of the issue.
Groups can fight human trafficking on four fronts, commonly called the four Ps: prevention, protection, prosecution, and partnerships (figure 6-3). Prevention includes both warning potential migrants about the dangers of human trafficking, and shaming those who might benefit from it. Protection focuses on helping victims escape and rehabilitating them. Prosecution encompasses the investigations of trafficking networks. A growing number of countries—134 in 2012—recognize trafficking as an offense that merits legal criminalization; the number of countries lacking such legislation shrank by half between 2008 and 2012. Unfortunately, according to the most recent UN estimate, global law enforcement averages only one conviction for every eight hundred people enslaved.42
FIGURE 6-3
Partnership is common among nations but a relatively new phenomenon in the world of grassroots antislavery work. The US State Department, for instance, has stepped up its antitrafficking partnerships in recent years, in 2005 alone supporting more than 265 international programs in about one hundred countries.43 The European Union also has a vigorous multinational antitrafficking agency. The EU Anti-Trafficking Coordinator is directly responsible for ensuring that EU nations take complementary approaches in fighting traffickers working routes between Eastern and Western Europe, Africa and Spain, and through Albania into Italy.44
Most antitrafficking organizations, whether they focus on prevention, protection, or prosecution, are small groups with deep experience in the red-light districts of places such as Kolkata or Haiti. Some, such as Cambodia’s Somaly Mam Foundation, are run by former victims.45 Their personal experience helps them gain the trust of trafficked women, identify trustworthy authorities (as opposed to corrupt police), and cope with local mafias in their efforts to protect women from trafficking. They run women’s shelters and use their local contacts to help trafficking victims find work and to head off the desperation that drives some victims to try their luck abroad again or, worse, become recruiters. Because these groups lack legislative clout and other resources, they are often vulnerable to corrupt officials and trafficking networks. These antitrafficking groups are nevertheless bringing good ideas to bear on a daunting problem, but often without a supportive ecosystem.
Consequently, partnership can benefit these small groups as much as, if not more than, partnerships between nations. Larger organizations such as End Slavery Now convene a variety of players and allow grassroots organizations to collaborate and find trustworthy partners in this dangerous business. End Slavery Now also operates the New Underground Railroad, the world’s largest network of antislavery activists and organizations.46
Private companies are joining the fight, and in ways that go beyond feel-good CSR campaigns. “Why do I care?” asks Genevieve Taft-Vazquez of Coca-Cola. “If 68 percent of forced labor connects with global supply chains, and we operate in over 200 countries, we know it’s in communities where we are, so we have to be vigilant.” She adds that her job as global manager of workplace accountability would be made easier with a registry of good and bad labor recruiters, to bring greater transparency to labor sourcing.47
The supply chain isn’t the only way companies wage battle directly against human trafficking. Companies like Palantir bring technical expertise to tracing networks of traffickers. Palantir techies developed software that stitches together numerous data sources—filed police reports and investigations, citizen-submitted tips, subpoenaed phone logs—across geospatial maps and network diagrams to help prosecutors spot instances of trafficking faster.48 For the contingent of Palantir programmers who used to work for PayPal, the process bears a striking resemblance to the fraud-detection practices of their former employer. In 2012 the company donated the software to the International Consortium of Investigative Journalists to help journalists analyze the illicit markets for human tissue.49
Coordinated, multisector attempts to fight trafficking are growing at the national and international level, from Brazil’s National Pact for the Eradication of Slave Labor to the Global Business Coalition Against Human Trafficking. Signatories of the Brazilian pact agree not to buy from suppliers on the government’s “dirty” list and to submit to independent audits, to reduce the amount of goods produced with slave labor.50
Consumers have also joined the fight, demanding reliable sourcing information. At best, clothing labels once gave you little more than “100% cotton” and “Made in China.” Now, consumers can scan QR codes (those little black-and-white squares seen on everything, from magazines to ketchup bottles) to see an item’s provenance and care instructions and perhaps to even watch videos of the people who made it. iPhone apps such as Free2Work grade companies on their forced-labor risk factor, and Slavery Footprint, which allows consumers to learn how many “slaves” potentially work for them, also play an important role in raising awareness of the issue. This is both a moral and marketing opportunity, one that many companies have come to recognize. Anvil Knitwear’s customers can follow its products through the supply chain via trackmy-T.com. Swiss textile company Switcher has similar labels.
As actress and UN ambassador for human trafficking Mira Sorvino points out, eradicating human trafficking requires enduring effort. “Child labor issues in the chocolate industry were a big deal a decade ago. Consumers pushed companies, companies made commitments to avoid suppliers that used child labor, and many thought that because it was acknowledged, it was solved. Yet there are still 200,000 children forced to work in the chocolate industry.”51 In short, rendering issues of slavery and trafficking obsolete requires persistent action and coordination from all sides.
Complementary Capabilities and the Effective Ecosystem
The issues just raised—modernizing education, providing affordable housing, and eliminating human trafficking—may seem to have little in common. Little, that is, except that societies worldwide have sought to address them for years or centuries—mostly unsuccessfully.
The approaches discussed in this book, however, can yield significant improvements in a wide variety of arenas: new players emerge, partnerships develop, and technologies are harnessed and form the basis for new business models. As markets for solutions grow more diverse and sophisticated, new currencies enable the wider pool of players to benefit from this blossoming of choice, perhaps providing citizen capital instead of money for a service. Exchanges that maximize social outcomes evolve, generating the types of solution ecosystems profiled earlier in this chapter and throughout the book, from the waste reduction ecosystems curated by Recyclebank and Waste Ventures to the emerging car-sharing and ridesharing ecosystems fueled by market innovators like Zipcar and Zimride.
However, these ecosystems are not static. As in nature, the strength and endurance of a solution ecosystem are influenced by diversity and constant adaptation. When Ashoka steps in to clarify land title holdings, it is opening up the flow of information critical to the housing infrastructure, in this case the financing function. When a beaver builds a dam, it alters the ecological environment, allowing new plants and animals to thrive. In the same way, small but critical changes by the convener of a solution ecosystem create new opportunities for other players, encouraging them to evolve and build a new market in the process. (See figure 6-4 for a description of how ecosystems develop.) What wasn’t viable before can now thrive, profitably and sustainably.
The natural world is full of such examples. Cheeky clownfish, for instance, score protection in the barbed tentacles of sea anemones. In return for the shelter, anemones snack on the fish’s leftovers or on the prey their striped guests attract. When alligators in the Florida Everglades let certain species of birds clean the meat from their teeth, the reptiles can get a better grip on their next meal. And in Copenhagen, some four million honeybees pollinate the city’s flowers and plants producing honey, enabling the city’s flora to bear fruit and flourish.
While this last example might seem natural, it is actually the result of a human-made social business—one of many positive outcomes in a stunning system of mutual benefit. The City Bee Project, known as Bybi (Danish for “city bee”), is British social entrepreneur Oliver Maxwell’s idea to bring millions of honeybees to Copenhagen to create a sustainable honey industry. Working with the city, social organizations, and Danish businesses, the project trains the former homeless and the long-term unemployed to become independent beekeepers. The model benefits at least two groups. The city’s disadvantaged gain meaningful work (maintaining beehives on the rooftops of local businesses), and honeybees get safe, urban spaces to pollinate and prosper. Beekeepers own and operate the business, while profits from the honey are reinvested into Bybi’s social and environmental activities.52
FIGURE 6-4
This noble, if unusual, experiment aims at a surprisingly sticky problem: honeybees pollinate 70 percent of all plants, representing a third of the food we eat. But because of climate change, new agricultural practices, and mysterious bee diseases, honeybees are dying off in droves across Europe. According to one estimate, bees in England could go extinct as early as 2018 if they continue to decline at the current rate.53 Their survival, and much of our food, increasingly relies on beekeepers. Meanwhile, an aging workforce threatens to sink traditional beekeeping.
For Maxwell, who has a background in sociology, not beekeeping, it was a problem occurring behind his back. That is, he was little aware of it until the winter of 2009, when he spied a stack of beehives one night while driving home from work and pulled over to talk to the beekeeper. Maxwell was working in Copenhagen developing social enterprises at the time. But after talking with this local beekeeper and discovering the enormity of the problem, the entrepreneur’s mind started buzzing with a new idea.
He started meeting with beekeepers and biologists and learning more about the issues. He learned that more bees were needed in the city, that cities offered bees refuge from pesticides, that the next generation of beekeepers were not being adequately trained, and that the demand for local and traditional honey needed to be increased.54 The solution lay before him in pieces. It just needed to be assembled. So Maxwell brought together development workers from local businesses, city leaders, housing associations, employment projects, and the beekeepers. Each group had knowledge that the others lacked and needs that the others could satisfy working together.
With the diverse groups on board, Maxwell convinced the city to seed-fund the project. Local businesses can now partner with Bybi and “adopt” beehives, providing a workspace for beekeepers and bees on their rooftops. Social organizations, such as Urbanplanen, one of Denmark’s largest housing estates, help source the labor. And Bybi provides the bees, the training, and the tools to equip the disadvantaged with new careers as beekeepers. What’s more, Maxwell’s organization creates a marketing machine for the local honey industry and good business. At the end of each season, Bybi and its business partners produce CSR reports that businesses can use to court investors and customers. They also get their own brand of honey to sweeten their reputation even further.
Within Bybi’s ecosystem, bees have a safe harbor, the former homeless and disadvantaged have employment, social organizations meet their goals, top businesses bolster their brands, the city is lusher than ever, and taxpayers don’t have to pay a cent for the army of beekeepers working on their behalf. Problem solved.
While each group—the beekeepers with the knowledge, the social organizations with the labor funnel, and the businesses with the vacant rooftops—were integral to the final solution, Maxwell deserves most of the credit. He had the vision and drive to turn a grave problem into everyone’s advantage. “I knew there was a story and an opportunity in the problem,” he said. “The challenge was to get the right people to meet.”55
Beekeeping is a centuries-old occupation given a new twist by Maxwell. Other ecosystems, such as the one centered on educational reform, are being refined and redefined by new technologies and business models that public-value innovators are applying in novel, productive ways. But technology is impartial. Human traffickers, for example, use online access and social networks to scale their own destructive operations as well. The same holds true for terrorist and cybercrime networks. It isn’t the technology per se that matters; it is the enabling role that technology can play in a solution ecosystem.
Hunger, poverty, and disease thrive on their own. Outpacing the destructive forces that corrode social progress requires a new model. No single enterprise can tackle all the facets of a fast-changing issue. The most effective contributors in an ecosystem are intimately aware of what they can and likewise cannot do well, and they wisely seek out partners with complementary capabilities. Unilever, for example, recognized its role in putting Wheel soap into action, but also where it would need partners.
With health and sanitation, shelter, and even hunger, the solution economy is rewriting the way humans can grapple with the most daunting problems in the world. The technology revolution is enabling new organizations, new currencies, and new solution ecosystems. A new generation of wavemakers is challenging traditional approaches. Coupled with new attitudes among corporate, academic, and governmental thought leaders, they are also producing dramatic results.
But unfortunately the solution economy isn’t developing evenly around the globe. In the final chapter, we will examine what government, business, investors, and individuals can do to accelerate the development of the solution economy.
THE ECOSYSTEMS: IN A NUTSHELL
THE BIG IDEA
The solution economy tears down silos to create ecosystems with a single core issue at their center. In these ecosystems, wavemakers connect with one another in pursuit of a common goal.
TYPES OF SOLUTION ECOSYSTEMS
• Innovation: an ecosystem that capitalizes on advances in technology and business practices to deliver novel solutions. For example, far-reaching shifts in the education ecosystem are changing how we learn and who we learn from.
• Base-of-the-pyramid: an ecosystem that serves poorer populations typically ignored as consumer markets. For example, safely housing the billions of people who live in slums requires multiple players to converge.
• Life-saving: an ecosystem that focuses on interventions and other actions that prevent life-threatening situations. An important life-saving ecosystem in today’s solution economy battles human trafficking. This modern form of slavery involves many participants in the crime; fighting it successfully requires an integrated ecosystem.
ECOSYSTEM ACCELERATORS
• A backbone organization oft en serves as a central organizer or convener.
• Connectors bring together ecosystem members; these members support one another while maintaining substantial autonomy.
• Platforms create simple market conditions and a user culture that facilitates interactions between players.
INNOVATORS
• The social enterprise d.light, which provides access to lighting for the base of the pyramid, teamed up with BRAC to provide a distribution mechanism and now has reached ten million people.
• Udacity offers open, interactive courseware online as well as traditional brick-and-mortar college services, such as career counseling.
• Ashoka Egypt brings private investors to the potentially trillion-dollar housing market for the base of the pyramid. The organization eases the way by sourcing construction materials locally and identifying eligible potential homeowners and sources of microfinancing.
• Tata Group is testing three designs for a $700 house. The prefabricated kit constructs a 215-square-foot home that can be assembled in a week.
• Cambodia’s Somaly Mam Foundation is staffed by former victims and draws on their experience to battle human trafficking locally.
CHALLENGES TO SOLUTION ECOSYSTEMS
• Making connections over certain issues is difficult simply because no ecosystem exists. Wavemakers oft en have to create an ecosystem from scratch.
• While technology can enable some ecosystems to address social ills, it can also contribute to the ills themselves; wavemakers need to recognize the scope and impact of technology and work to outpace its destructive potential.
QUESTIONS FOR THOUGHT
What ecosystems do you feel that you currently have visibility into? Have your experiences working on one specific challenge provided any lessons that were transferable across ecosystems? What common themes have you observed?
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