Thursday, February 3, 2011

How does the ghost turn the mill?

There is an old saying in China: money can make even the ghost turn the mill. To my American brain - money makes the world turn.

I’ve had some people ask recently what is “sustainability” and why do I run a for-profit business under the scope of this new fad. The obvious implication is that for-profit ventures are just looking to squeeze dollars from the consumers cheated into believing that they are “buying their way to progress.” If I was serious about doing some good for society, I should have started a non-profit.

I respectfully disagree. I’ve worked in the non-profit sector for a few years. I’ve learned that there is an inherent failure in the non-profit operating model that prevents them from acting quickly and exposes their projects to risk of lack of long term funding. Therefore, non-profits are prone to short term visions and insufficient or misplaced investments into the wrong channels of the economy. They may be devoting millions of dollars on a “Organic” label or fighting a court case about surfacing mining restorations, but these non-profits rarely address our long term grassroots concerns since what matters to a small community is rarely important enough for a national organization to pick up on its PAC agenda. Non-profits are also most often driven by existing interests and funds that are closely associated with either government agencies or industries. Therefore, non-profits, at least the larger ones with stable funding, cannot effectively make significant and meaningful impacts at the market place that drives our social evolution. It is inconsistent with its serving purpose – to help remedy the effects of its for-profit counterparts.

I’m not discounting the efforts and impacts of non-profits, however. In fact, I think the non-profit sector is a critical piece of the whole puzzle. The market-place where transactions take place is where the direct impact of over-consumption is felt. The secondary impacts are the social problem manifested in the forms of health issues, social and environmental injustice, symptoms of industrialization, etc. Non-profits exist as a way for us to tell lies to ourselves that we are at least doing something about the situation and in return, our collective conscious makes a point to let a few success advance just so we continue to buy the same things from the same vendors who are destroying our environment and laughing at our ignorance.

When I was certified with a Six Sigma Blackbelt, I realized that there is so much we can do in the for-profit sector to directly impact this sustainability movement. Often plant managers will say there is no way they can improve efficiency, increase production, and be sustainable at the same time. I’ve always asked the question: can a business employ sustainability concepts into an existing product without increasing cost? If not, can we adopt a new design and process standard to improve sustainability and profit.

From working with production cycles, product design, and process improvement, I’ve learned that about 80% of the time, effort, and investment were usually committed to the design phase. If we can incorporate process improvement methods with sustainability in mind, we can hope to create products and market processes that makes more green sense than what we have right now.

The market usually reacts quickly to demand changes. One of the creative way to influence demand is by introducing a new thinking to the market process and directly participate in the market under the sustainability incentive. If we compare original green product pricing with the evolved green product pricing of today, we invariably notice a downward trend. This may be a combination of growing eco awareness, increased competition, and increase application of sustainably design methods.
So while my good friends continue to make important impacts in the non-profit sector and continue their hard work within the reactionary mentality, I prefer to work from the other end – by facilitating sustainable thinking in the market process and employing technology to connect the consumer base with this new product design mentality and influence the market buying habits to match the sustainability model.

There is a happy alternative to the non-profit model called "low profit" limited liability corporations. Illinois passed a law last year allowing companies to incorporate as a L3C. B-Corps have existed for quite a while as well. You can learn more about these things here: Things You Need To Know . While I am waiting for Indiana to pass its own L3C legislation, in the mean time, I have incorporated myself as a for-profit provisioned to give back part of our profit to either the non-profit sector or other social causes. This is to ensure that we make some meaningful and direct impact in the market place. Believe me, no one is getting rich doing this, but we are all hopeful that we will make a difference.

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