A day of tear down and design up for the circular economy

Circular-Economy-ConceptAs part of the Disruptive Innovation Festival, SustainRCA, the Royal College of Art’s sustainability hub, hosted two events exploring innovation and the circular economy, practically and conceptually.  The hands on workshop, Business Modelling for a Circular Economy, was the perfect complement to the evening’s panel discussion, Peering into the Next Wave of Innovation. The phrase ‘circular economy’ is increasingly used by business, media and academia as a generic term for an economy that is regenerative by design.  As Ken Webster, Head of Innovation at the Ellen MacArthur Foundation, described during the panel discussion, the circular economy is defined by a set of principles: two, separate cycles (pictured left): biological materials, designed to re-enter the biosphere, and technical materials, designed to circulate with minimal loss of quality; diversity provides strength and resilience; the shift towards an economy ultimately powered by renewable energy; embracing systems thinking, to reflect the real-world where systems are non-linear, feedback-rich, and interdependent; and thinking of cascades, as products are repaired, reused, remanufactured and recycled realising more value, and managing resources with less waste.

The conventional, linear ‘take, make, dispose’ model has relied on large quantities of easily accessible resources and energy.  We live in a diffiernt paradigm, bound by legacy systems and resource constraints.  Input prices, which declined for most of the 20th century, are rising and increasingly volatile, driven by physical, and, as Mark Shayler, director of agencies, Ape, and TicketyBoo, noted, by political access.  Rapid consumption patterns are losing a lot of value to landfill:  around $2.7trillion of the $3.2 trillion created by the FMCG industry each year, according to Jamie Butterworth, Ellen MacArthur Foundation speaking at another DIF event.  With 3 billion more middle class consumers by 2030 and a finite planet, we have to do things differently.  Not just more efficiently, but more effectively.

Hugo Spowers of Riversimple began the panel discussion with a complete circular economy vision for car use, from ownership to mobility, a redesign of the car, business model and corporate governance.  Citing Joanna Macy, Spowers called for a simultaneous shift in method, methodology and mindset.  A service dominant logic places the user at its centre, as in We All Design‘s Circular Business Board which was presented by founder Rob Maslin, as a framework for the business modelling workshop.  At its heart are the ‘User Profile’, and the ‘Function’ (the problem or user need such as washing, rather than the machine), and ‘Solution’, how can we effectively, or optimally, meet the need. bm1

Against this backdrop, our first enquiry was a product ‘tear down’.  We huddled round an Apple MacBook with tiny screw drivers.  ‘Tear down’ suggests a heady abandonment, this was a more precise and forensic exercise.  Carefully teasing the tiny screws passed battery, RAM, circuit boards, and disk-drive, (its intricacy perhaps a clue to their redundancy) until ultimately a mucky keyboard.  Well-versed in product design, my colleagues were focused on the device’s limitations for repair and disassembly.  Many of the environmental challenges device manufacturers face are around resource scarcity and price volatility, yet these challenges are often missing from the designer’s brief, says Shayler.  The post-mortem revealed death by latte on keyboard, so our method imagined a keyboard that could be readily replaced, repaired or personalised.

We sketched out a tiered service (methodology) and pricing plan.  A confident and engaged user would buy their device outright, and any parts for repair or upgrade from the manufacturer or a reseller such as iFixit.or Restart Project.  A second profile, a fashion-conscious, brand-lover, desiring the latest device would pay a premium to customise their keyboard, laser-etch the case, and be one of the first 1000 automatic upgrades for new releases.  A third user profile, someone for whom their laptop is a service platform, predominantly for email and the internet.  This user would own their device for longer, and buy a service contract without either the confidence or inclination to tinker themselves.  This service-based model minimises the environmental, social and governance issues in the supply chain (using less raw materials); remodels delivery logistics to provide for the return of the physical asset; provides a tiered service plan, where the level of engagement or contract matched their service need. Barry Waddilove, Home Product Design, and team designed a network of technology clubs in charity shops for kids and young adults, making use of the ‘waste’ electronics they are given to create educational workshops and with an electronics brand as strategic partner, others kettles, hairdryers and other small electronics.Hugo-new
In leasing or buy-back model, product recovery is key to retaining valuable material resources.  The opportunities are greatest for durables.  The manufacturer has every incentive to design for product disassembly and material recovery, rather than obsolescence.   If Riversimple‘s car design is revolutionary, emitting only a tiny amount of water, and more than the equivalent of 200 mpg., then its business service model is even more so.  Based around a subscription, with a fixed element, and a variable element reflecting usage, Riversimple aims to maximise life-cycle profitability.  The user buys an ongoing service where the product is refurbished, upgraded and replaced as required, made from higher quality materials.

The potential scope is much greater than decoupling product design from raw materials.   As we are five years away from losing key skills into retirement, Shayler argues, there are compelling reasons to boost innovation and engineering enterprise in the UK.  There are barriers, but the mindset is shifting, with a Government report, arguing there are, “potentially billions of pounds of benefits for UK businesses in becoming more resource efficient.”, and calling for producer responsibility regulations and lower VAT on recycled goods.  Spowers called for a more sustainable financial system, and also on the podium, Andy James, Founder and Managing Director of Six Degree People, described the need for greater collabbm2oration and advisory boards to support CEOs embarking on disruptive innovation strategies.  A few days later Andy’s comments were echoed by Professor Vlatka Hlupic at the launch of her new book, The Management Shift.  Her research demonstrates that a collaborative culture is central to developing organisations that are more resilient, more innovative and generate better returns for all stakeholders.  Innovation is joyful!

Image credits: Ellen MacArthur Foundation; Riversimple
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Joining the Dots in the supply chain

pp_1The first talk of the SustainRCA 2014/15 year, Joining the Dots, drew quite a crowd.  Held in collaboration with the People’s Parliament the event was held in a House of Commons committee room.  A fitting location as transparency, accountability and human rights are at the heart of the push to join the dots on the supply chain.  Baroness Lola Young introduced the speakers, and the evening, in the context of the Modern Slavery Bill.  The Bill, due for its second reading in the House of Lords on 17th November 2014, will compel large companies to annually disclose what they have done to ensure their supply chains are “slavery free”.  As well as regulatory pressure, customers increasingly expect businesses to delivery great products and services responsibly.  The demand for greater transparency is matched with growing interest in the narrative behind products, a desire for authenticity, the result of a centrifugal force driving remote, homogenous, global brands at one extreme, and a revival of artisan, heritage and craft at the other.

logo@2Celebrating materials, maker and method gives meaning to a product, in fact the object derives greater meaning from the sum of these stories, and here lies the rationale for Provenance, a new online retail proposition from RCA graduate Jess Baker.  Every product has a story in its supply chain, and “not all products are created equal”.  Baker felt that retail experiences where look and price are the only metrics available are missing something and she suggested customers would pay up to 70% more if they knew that the benefits were going to the local community.  Observation made, Baker, with a PhD in computer science, is optimistic that technology can help us be better citizens, redressing the informational asymmetry that currently defines the retail experience.  Provenance tells the story of the people, places, processes and materials behind products.  Oh joy to discover I live a stone’s throw away from where Prestat, chocolate purveyor to H.M. The Queen is making dark salted caramel truffles!  The Provenance  API offers makers a host of smart perks, such as the ability to serve stories on other sites, but essentially it is the products’ stories that provide the marketing clout.
The second speaker, Leah Borromeo took us to the other end of the spectrum with the trailer for her documentary, “The Cotton Film: Dirty White Gold”.  The film shines a light on the cotton industry in India, where around 300,000 cotton farmers have committed suicide to escape debt.  The political, social, cultural and economic context is such that 28.5% of the Indian population (343.5mn) are destitute and the estimated net worth of the top ten was $102.1 bn, around 5.5% of GDP in 2013.  The plight of cotton farmers is part of a web of relationships and pressures more complex than can be tackled in this film, but it poses some tough questions.
Cotton is just one commodity at the base of complex, dynamic, global supply chains increasingly under scrutiny.  Tim Wilson, Historic Futures, works with a range of multinational firms to map the value-chains (a term Wilson prefers to supply chain) from where raw materials are sourced to the retail distribution of products in a format that can be rapidly updated.  80% of social and environmental impact is in the value chain, and typically organisations have limited tools to measure this accurately.  We know deforestation, climate change and biodiversity loss are increasingly cause for concern, and that the rates of change of going up.  Yet lack of accurate, complete information undermines an organisation’s ability to make informed and reliable sourcing decisions.  Without the ability to convey their best practice to management or buyers, participants in the value chain can not differentiate themselves from less responsible competitors, and justify what may be a higher cost or investment.
We should not underestimate the complexity of these relationships.  For example, working with Marks & Spencer, Historic Futures, mapped 12.5 million items over 15 months, from more than 700 third party suppliers, and more than 6,500 retail points of sale.  It can be done with accuracy and precision.  Historic Future’s String 3 is working on a platform that is verifiable but does not reveal the suppliers, so enabling companies to share information, and preserve their competitive advantage.
Demand for this data is growing.  Earlier this year, PricewaterhouseCoopers bought Geo-Traceability, a company that uses GPS mapping, Geographic Information System (GIS) technology and mobile phone and bar coding systems to track products from origin to shop floor.   GeoTraceability has collected data from 113,000 small holder farmers in developing countries and is developing new approaches to trace conflict minerals, and monitor of key biodiversity indicators. Ian Powell, Chairman and Senior Partner, said: “Resource scarcity and supply chain management are significant issues for our clients. The acquisition of GeoTraceability is another example of how we are investing in innovative technologies and services that enable our clients to make better business decisions, establish trust and reduce their risk.”  For the smallholders the platform provides information to help improve their production, farming practices and build a more sustainable livelihood.
6114_pcThe final speaker, Bruno Pieters, designer and founder of Honest by, is striving to be the first company in the world to offer customers price transparency.  Pieters is an entrepreneur, fashion designer and art director well-known for his sharp tailoring developed while working with designers such as Martin Margiela, Thimister and Christian Lacroix.  Pieters returned from a sabbatical in India, with a deep-seated concern for the environment, and wider impact of fashion industry.  His vision brings radical transparency to the entire supply chain.  Click on an item that catches your eye and, in addition, to conventional information about the garment’s size and care, scroll down for details of the material, manufacture, carbon footprint, and price calculation: with 0.5 euros of thread, and the retail mark-up.  What a fascinating exercise!
Many of these ESG (environmental, social and governance) impacts materialise in the medium or longer term, beyond the horizons of quarterly returns or short-term profitability.  Momentum supporting a culture of long-termism, transparency and accountability in business, and the finance industry, is developing on several fronts.  Following the Kay Review of UK Equity Markets and Long–Term Decision Making, the recent establishment of the Investor Forum, is the latest in a series of initiatives that will drive demand for integrated analysis incorporating ESG factors into standard financial valuations.  These developments reflect a wider discussion about the role of business, and banks, as corporate citizens, such as the Blueprint for Better Business, Aviva’s Roadmap for sustainable capital markets and the Banking Standards Review.  In a survey of 30,000 consumers across twenty countries in five continents carried out by the UN Global Compact-Accenture Study on Sustainability, in collaboration with Havas Media, found “72% of people globally say business is failing to take care of the planet and society as a whole”.
Joining the dots on the supply chain is only the first part of a linear model of manufacture and consumption, characterised by “take, make, consume and throw away”.  Measuring and valuing resources reveals the real business benefits opportunities of using them more efficiently, and effectively.  The Disruptive Innovation Festival, was a virtual festival ideas from leading thinkers, entrepreneurs and businesses sharing knowledge about the circular economy, an economic model that is restorative by design.  Environmental scientists have long urged us to recognised that we live in a closed system or biosphere.  Mapping impacts is the beginning of better decisions, to borrow the words of Maya Angelou, “I did then what I knew how to do. Now that I know better, I do better.”
P.S. Andrew Hill will interview Honest By Founder & CEO Bruno Pieters at 12pm GMT on Day 2 of the FT Innovate 2014 conference in London, ” The Digital Big Bang, how digital technologies and practices are transforming the way companies innovate and do business.”
Related links:
 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/253457/bis-12-1188-equity-markets-support-growth-response-to-kay-review.pdf

Nesta’s CIO on nurturing impact investment

Nesta_Impact_Investments_WHITE_bg_RGB_v2In London’s heartland of private equity a group of finance’s bright young things gathered for a glass of wine and reflections on impact investing from Nesta’s CIO, Matt Mead, at one of a series of Happy Hours organised by Finance Matters, a community of finance professionals in London with a strong interest in helping the financial industry drive social change, and put sustainability at the heart of their careers (a version of this article was originally published in the Finance Matters Weekly).

Matt gave us a brief history of his career from chartered accountancy, by way of corporate recovery and a life time of lessons in dealing with owner-managed businesses to leading 3i‘s technology practice through the turbulence that followed the dot-com bubble. From 2007, 3i focused its business on private equity and growth capital, and, after managing the disposal of the early stage portfolio, Matt joined Nesta in 2010.
Nesta, the National Endowment for Science, Technology and the Arts, was formed in 1998 as an innovation agency.  Shortly after Matt joined, Nesta was reformed as a charitable foundation, funded by a £350mn trust and its activities include grant making (through the Innovation Lab) and the investments business.  Matt and his colleague Joe Ludlow began talking to a series of wealth managers and angel investors to better understand perceptions of social investment (now know as social impact investment) as an asset class.  When Big Society Capital (BSC) was set up in 2012, Matt and Joe saw the opportunity to combine Nesta’s expertise in grant-making and early stage investment and create Nesta Investment Management LLP (NIM is a wholly owned subsidiary of Nesta) to raise a social impact investment fund.  The fund was closed in December 2012., with £18mn: £8mn from Nesta matched by £8mn from Big Society Capital, and the Omidyar Network providing £2mn.  The fund targets ventures addressing major social needs in the UK, around three broad themes: the needs of an ageing population; the learning and employability needs of younger people; and efficient use of resources by households and communities, each of which has four impact goals attached to them.
Social investment used to mean loans to a charitable organisation, but NIM are neutral on the legal form of organisation they invest in.  Matt is clear that to broaden social impact sector, it is important to enable companies limited by shares to deliver impact.  There are constraints, for example, NIM look very closely at organisations’ object clause, dividends and remuneration policy.
Out of the roughly 600 projects that came across Matt and Joe’s desks over these years, 7 made it through to investment so far, not an unusual ratio.  These investments, currently all in companies limited by shares, are a mix of equity and debt, typically around £0.5 m ticket.
Investment decisions are impact first, and organisations must have a theory of change addressing one of NIM’s target outcomes that is clear, measurable and at the core of its business.  The investment criteria include “scalable approach; delivering impact and public benefit in the UK by providing products or services that are inclusive, accessible and affordable; with strong business models that are able to generate reasonable, sustainable returns on capital”.  One of the most talked about of NIM’s investments is in Oomph!Wellness Ltd which runs exercise classes in around 500 residential care homes.  The founder wanted to shift to a “train the trainer” model training care homes’ activities co-ordinator and providing mushome_graphicic, materials and equipment.  Oomph’s theory of change is based on exercise improving physical and mental health, reducing accident rates, and enabling care homes to provide a better quality of service addressed NIM’s ageing outcome.  Oomph and NIM worked together to develop an impact evaluation plan around targets to develop evidence proving a correlation between Oomph’s growth and the target outcome.  This is typical of NIM’s involvement, coupled with board support.
Alongside their own impact evaluation framework, NIM is keeping a close eye on measurement frameworks emerging within the industry.  The debate around measurement is lively, and far-reaching.  Calls for the adoption of standard metrics around corporate social responsibility are growing, with Mark Wilson, CEO Aviva commenting: “There is a clear need for a global mandate and a globally coordinated approach to corporate sustainability reporting, which is clearly understood and consistently applied” referring to a recent report showing that only three per cent of the world’s largest listed companies report on all basic sustainability metrics.
When talking about the differences between running an impact investment fund and a conventional venture fund, Matt candidly confessed “It is harder“.  The financial returns have to be matched with impact measurement.  The two are not always in close alignment in periods of difficult trading.  If an organisation seeks to scale back its impact, NIM, as an equity investor could be left with an equity investment that is no longer delivering on its proscribed outcome.
As always, the FM audience participants had quite a few questions, including around target financial returns. Along with a measurable impact, there is the expectation of a “reasonable, sustainable return on capital” with a net target rate and an envisaged range around it, depending on the investment and its structure.
NIM is charting new territory.  Interest in impact investing is growing in age of growing societal challenges, and government austerity.  Ronald Cohen, chair of the Social Impact Investment Taskforce, writes, “It harnesses the forces of entrepreneurship, innovation and capital and the power of markets to do good. One might with justification say that it brings the invisible heart of markets to guide their invisible hand.”
An enjoyable evening and a unique opportunity to gain invaluable insights from a pioneer of the social impact investing space in the UK.

New Craftsmen celebrating the art of swilling

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While working in Manchester, Lorna Singleton  yearned to return home to South Cumbria to do something practical, creative and to spend more time outdoors. WWoof-ing’ confirmed her desire to reconnect with the landscape of her childhood.  ‘WWOOF’ stands for World Wide Opportunities on Organic Farms, and while on the farm, Lorna was introduced to greenwood crafts.  Today she is one of only a handful of remaining swillers in the country.

Lorna began an apprenticeship with the Bill Hogarth (MBE) Memorial Apprenticeship Trust for three years of intensive tuition in coppicing and greenwood crafts.  Bill Hogarth started working with wood in mid-1940s, aged 14, dressing and tying hazel for ships fenders.  As traditional markets for coppiced hazel dried up, Hogarth was the last coppice merchant in the Lake District by the 1980s.  He dedicated himself to sharing his skills, stories and knowledge of woodland management.  In 2000, a trust was set up to continue sharing knowledge of traditional coppice woodland management.

Coppicing, a traditional form of woodland management, is the practice of cutting young tree stems close to ground level.  New shoots emerge, and, after a few years the coppiced tree, or stool, is ready to be harvested, and the cycle begins again.  Opening the canopy and increasing light to the woodland floor allows plants to thrive, and as sections of woodland, or coups, are coppiced in rotation the practice creates a variety of habitats.

Lorna’s passion for weaving oak swills, traditional baskets unique to the Lakeland grew.  Willow, a more familiar basket material does not thrive in the bracing climate and rugged terrain of Cumbria, so the population had to work with the materials they had to hand, oak.  The oak is hand-coppiced when it is about twenty-five years, much later than other woods are coppiced, but early in the life of oak.

ls_4Lorna cleaves, or splits, the green wood, along its grain into strips.  The strips, or spells, are boiled overnight and soaked in water until they becomes supple (see right).  Splitting the wood along its grain, keepls_5s the fibres together retaining the strength of the tree.  Pieces of hazel are steamed over the boiling oak, and bent into the frame of the basket. Once softened, the cleft wood is riven into even thinner strips, around 2-3mm, before it is hand-woven into baskets. A single swill basket takes about a day to weave.  The strong, hard-wearing swill baskets were often used to collect potatoes and other crops, but their uses are not limited to the garden, making fine washing baskets, storage for root vegetables and carrots in a larder, logs, newspapers, or toys.
Through working with the coppiced wood, Lorna has become intimately familiar the material’s properties and limitations.  She describes how, in time, the craft becomes a familiar, almost meditative, ritual, with the tools feeling an extension of the hand, and the craftsman’s body moving unconsciously to make and mold the material.2014-09-17 17.41.02
I caught up with Lorna during the London Design Festival where she was maker-in-residence at the New Craftsmen gallery, surrounded by new pieces from a collaboration with Sebastian Cox.  The two met at a National Coppicing Federation workshop.  Sebastian’s experience of re-interpreting traditional crafts and products, and with a contemporary twist provided invaluable insights for Lorna as she grows her retail offering.  In turn, Lorna introduced Sebastian to the practice of swilling, and a collaboration was born.
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The resulting ‘Swill’ ceiling lights, made of oak swill skilfully woven into cylinders cast a cross-hatch light when illuminated.  The lights can be clustered into groups of three, five or seven, priced from £195 for the trio (9cm (w) x 9cm (d) x 12cm (h)).
The ‘Swill’ bench and stools pair silver grey swilled oak spells with a glue-less ash frame on fine, tapered legs for an elegant, strong seat.  The bench, £595, and the stool, £355 are both available from the New Craftsmen (pictured above in situ).  The seat of each bench or stool has a unique pattern reflecting the texture, colour and width of the individual spells.
swill-shelves-sebastian-cox-the-new-craftsmen-003-418x646The ‘Swill Hanging Shelves’ also combine ash and oak swill in a harmonious pair  (priced from £75 for a small shelf, 10cm (w) x 30cm (d) x 2cm (h)).  Lengths of swill are spilt, wrapped through an ash shelf and pinned with copper rivets. The shelves are exceptionally lightweight and strong and can be hung in tessellation or alone.  The shelves do equire a slight DIY intervention, as you have to soak the swill coil in water for 15 minutes, then hang the shelf on the rail with some books to weigh it down, to ensure the swill dries straight.  What better introduction to this timeless craft.
Image credits: New Craftsmen Gallery where not my own.