Clean Technology,
Rapid Deployment,
Better World
The Cornell Global Forum on Sustainable Enterprise brought together 100 of the world’s leading practitioners of disruptive innovation in clean technology and base-of-the-pyramid enterprise development. Their objective: to accelerate the commercialization of clean technology innovations in the developing world, improving living conditions for the poor, creating new business opportunities, and optimistically acting to heal the planet.
When the 100 delegates to the Cornell Global Forum convened in New York City on June 2, 2009, they got down to the business of generating ideas and initiatives aimed at driving the “Great Convergence,” the intersection of clean technology and business development among the world’s four billion poor at the Base of the income Pyramid (BoP), a concept introduced by the Johnson School’s Stuart Hart. In a series of task-team meetings over two days, delegates generated ideas to accelerate the rate of commercialization of clean technology enterprises in the developing world. They brought with them diverse perspectives, from the areas of alternative fuels, renewable energy, social investing, wireless communication, consumer products manufacturing, and sustainable agriculture — even bioplastics.
“The great convergence is a tremendous challenge and an opportunity to actually start meeting the needs of some of the poorest people in the world with some of the most advanced technologies that are being developed today,” said Sagun Saxena, chairman of CleanStar Energy, a company that has created a process to turn seeds and hulls into fuel to power conventional diesel generators, without using the chemicals and processing needed to produce biodiesel fuel.
Hart, the Samuel C. Johnson Professor in Sustainable Global Enterprise, asked delegates in his opening remarks to consider alternatives to the “green giant” model of commercializing new technology. These rollouts typically take place at the top of the income pyramid, are backed by big investment dollars, and are scaled out to a broader market as quickly as possible to reduce costs. They rely on existing infrastructures and centralized distribution systems, such as the U.S. power grid, for quick viability.
Most new technologies do, in fact, enter the market at the top of the pyramid, Hart said, because that’s where the investment and consumer dollars are to support them. Yet, to use solar energy as an example, it’s clear that these technologies must come to market at a premium price, compete with existing “old” technologies, and eventually hit a “hard stopping place,” Hart said. That stopping place is a barrier almost universally experienced by new, “disruptive” technologies — technologies that challenge entrenched companies, business models, and consumer behavior patterns. Point-of-use energy generation — such as those offered by small-scale solar, wind, and fuel-cell technologies — simply have not gotten a toehold in the U.S., with its well-established and –maintained centralized power grid.
The very lack of such infrastructures in the developing world may make it an ideal place to commercialize clean technologies, because there are fewer barriers to the disruption they cause, Hart said. Pairing fewer barriers to disruptive advances with low-investment, small-scale, locally based rollouts — what Hart terms the “little green” model — may significantly advance both clean technology and the living standards of the world’s poor.
“The base of the pyramid is the best place to commercialize many of these clean technologies, precisely because of their disruptive quality,” Hart said. “As you get traction, you can migrate your product up, adding features and cost.”
In his keynote address at the forum’s opening session, H. Fisk Johnson, ’79, MEng ’80, MS ’82, MBA ’84, PhD ’86, chairman and CEO of S. C. Johnson & Son, Inc., shared his company’s experiences with disruptive technologies, noting that disruption in all its forms is the antidote to the incrementalism that characterizes most approaches to sustainable enterprise today. “If the business community continues to use incrementalism in its sustainable business practices, we will run out of time.” Johnson said. “The alternative to incrementalism is disruption.”
An advocate for disruptive leadership in business, in government, and among consumers, Johnson argued that government must lead not only in identifying critical priorities and creating an action plan, but must also engage Americans in it. As he noted: “A plan is not leadership. Leadership is getting people to act on that plan.”
DELEGATES ON TASK
The ideas for converging clean technology and base-of-the-pyramid enterprise development developed by delegates to the Cornell Global Forum took two forms: concrete action plans for initiatives in the field; and data collection, mapping, or “best practices” projects to lay the groundwork in advance of launching specific projects.
Spurred by Cleanstar’s Saxena and another team member whose company has the technology in place to create biofuels, the alternative fuels task team proposed demonstration projects at the base of the pyramid that would use existing tree seeds and seed and hull waste — known as “feed stock” in the biofuels domain — for biodiesel and non-diesel fuel production. This initiative appealed to delegates, because it relies on existing technology, and it leverages available seed and oil stocks, rather than converting food-production land to oil seed propagation. This practice, termed “opportunistic deployment of existing feed stock,” also provides clean power generation without contributing to the deforestation caused by converting forest land to crop production. “Most of the technology is already there — we can start with what we have,” said Rod McLaughlin, founder of Indigenous Energy Systems. “The projects would really focus on the needs of base-of-the-pyramid consumers and identify the local assets we can build upon for this ‘little green’ solution.”
McLaughlin’s company is negotiating with the island nation of Fiji to manufacture biodiesel fuel on site to power its centralized electric plant. Coconut oil, a by-product of coconut processing on the islands, would serve as the primary material for the fuel. The biomaterials task team also plans to put a project on the ground, this one based on the “cradle to cradle” model of systems and product development promoted by William McDonough and Michael Braungart in their 2002 book, Cradle to Cradle: Remaking the Way We Make Things. The cradle-to-cradle approach is one that seeks to create systems that are efficient and essentially waste-free.
As a result of their participation on the biomaterials task team, delegates from Nike, Inc., and the Brazil-based cosmetics maker Natura teamed up to find new materials for their respective manufacturing processes. For Nike, this may include using local microentreprenurs to produce the initial fiber used in its products, and innovating ways to reduce the water used in its intensive dying processes, said Nike’s Kelly Lauber. “Natura and Nike are going to have a pilot project in Brazil to start to look at cradle-to-cradle products and using non-traditional partners in that model,” he said. “And create a new market,” added Marcelo Cardoso of Natura.
Faced with the complexities of delivering health care at the base of the pyramid, the health task team proposed an initiative to develop and share a protocol aimed at enabling companies and entrepreneurs to effectively and efficiently launch health-care services in communities in the developing world.
“Given the regulatory environment, the need for clear engagement of ministries of health, and the complexity of clinical environments in health care, we’re going to launch an initiative to design a health-specific BoP protocol,” said health task team member Rex Widmer, marketing leader for rural health at GE Healthcare Systems.
The initial framework for a BoP Protocol process was developed in 2004, and the first edition of the BoP Protocol was released in March 2005. It specifies a process for building new, locally embedded businesses and catalyzing the local market in a progressive, evolutionary manner. The Center for Sustainable Global Enterprise has partnered with two corporations to implement the BoP Protocol: SC Johnson, in Kenya, and the Solae Co., a subsidiary of DuPont, in India.
GLOBAL CRISIS, BUSINESS SOLUTIONS
The closing session of the Cornell Global Forum, hosted by the 92nd Street Y, featured a panel of notable thinkers and leaders in sustainability, including former Vice President Al Gore, H. Fisk Johnson, Ratan Tata ’59, chairman of India’s Tata Group, and Stuart Hart, moderated by PBS’s Charlie Rose. They discussed the magnitude of the global crises of climate change and endemic poverty, and the urgency of engaging the developing world in slowing and reversing environmental and climate degradation. They spoke as advocates for commercializing clean technology in the developing world, an idea they see as essential to slowing, and ultimately reversing, the rate of global environmental degradation and climate change, while simultaneously improving the living conditions of the world’s poor.
Charlie Rose commenced the roundtable discussion by asking Gore: “You said 2009 will be the Gettysburg of the environment; why is this year so crucial?”
“It’s another kind of great convergence,” Gore responded, referring to the combined crises of environmental degradation and extreme poverty and disease. “The phrase sounds shrill to my ears, but it’s dead-on accurate.” Gore issued a call for the U.S. to lead the entire world to an agreement to curb CO2 emissions — from emerging markets, where the greatest increase in emissions is occurring, and from the industrialized countries that created the problem in the first place.
Emphasizing the importance or reaching a global agreement, Gore noted that “If the U.S. and every wealthy country cut greenhouse gas emissions to zero, and there was no change in the developing world, the crisis would still overtake us.”
Hart agreed, saying “The rapid transformation to a more sustainable way of living is a global proposition — no single country can take it on.”
The companies run by CEOs Johnson and Tata exemplify a few ways conventional technologies can be adapted to help ease the crisis, and, in some cases, improve the quality of life for the world’s poor. Tata Motors’ Nano car, for instance, uses an internal combustion engine, powered by fossil fuels. Yet it does so with astonishing fuel efficiency — 65 miles per gallon — and sells in India at the unprecedented low price of about $2,300.
“Indians travel with a family of four or five on a two-wheeler, through rain and through the night,” said Ratan Tata, chairman and CEO of the Tata Group, parent of Tata Motors. “It occurred to me that there ought to be a safer means of a family traveling at an affordable price.”
The innovation that brought India the Nano will benefit the U.S. within two years, Tata promised, when Tata Motors introduces an all-electric car here.
SC Johnson aims not only to reduce its CO2 impact but to help heal the planet both by adapting conventional technologies and integrating newer ones, said Johnson. On the operations side, the company powers its plant in Indonesia entirely with biofuels, and another overseas plant runs on landfill gasses. Smaller-scale initiatives include helping farmers in Rwanda to enhance their production of pyrethrum, a natural insecticide extracted from the dried flower heads of chrysanthemums. SC Johnson is a key purchaser of pyrethrum, used in making its well-known, biodegradable insecticide products like Raid.
Efforts like these drew a resounding endorsement from Gore, who said his company, Generation Investments, would invest in SC Johnson “in a nanosecond” if the firm were publicly traded. “SC Johnson is one of the most sustainable companies in the entire world,” Gore said.
THE TYRANNY OF SHORT-TERM HORIZONS
Even as SC Johnson draws the praise of the former vice president, the company is largely unique in its deep commitment to sustainable business. The reason may lie in what Gore terms the “tyranny of the quarterly
earnings report.” Because of the pressure to meet quarterly projections, CEOs and CFOs frequently turn down investment opportunities that would make their firms stronger in the longer term, but cause them to miss short-term quarterly estimates.
“It is a tyranny, and it does weigh heavily on a company’s stock price,” Tata said. “All of us can feel that if we were free of that, we could be much better managers of our shareholders’ interest in the long term.” “You describe
these initiatives that are so incredible,” Gore said, addressing Johnson. “Could you do them if you were a publicly traded company?”
Johnson acknowledged that, as a privately held company, SC Johnson may have an advantage over publicly
traded competitors in its ability to make decisions in support of sustainability, without fear of negative market response in the short term. “We can think about what will be happening in the next 20 years, and we don’t have to worry about next quarter’s earnings,” Johnson said.
A case in point: As good stewards of the environment, SC Johnson decided to remove chlorine from Saran Wrap, a venerable household product. But consumers didn’t like the resulting product. Rather than put the chlorine back in, Johnson said, “We walked away from that business.” A publicly traded company would be hard pressed to do the same.
— Al Gore, on the importance of reaching a global agreement to curb CO2 emissions
A CALL FOR ACTION
Throughout the Global Forum, delegates and speakers discussed the immense complexity of the problems humanity faces, the difficulties and necessity of solving them, and the key role business could play in addressing them. For instance, distributive generation — non-centralized, point-of-use power generation — appears to pose an excellent alternative to the loud, smelly, polluting diesel generators found throughout the developing world, including India, where they power cell phone towers. Actually deploying fuel cells or windmills across the vast Indian continent, however, represents a monumental undertaking. Nevertheless, urgency demands that commerce and the community of nations unite quickly to place projects like these on the ground.
“We’ve got to get out in the field and we’ve got to prototype things,” said delegate Beto Lopez, design project lead for IDEO, a global design consultancy. “We’ve got to do something that’s rough, rapid, and right for the appropriate market.
“Gore shared an ancient proverb to illustrate his agreement. “There’s an old African proverb that says, ‘If you want to go quickly, go alone; if you want to go far, go together,’” he said. “We need to go fast and far.”
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