on 9 October 2013
*A full executive summary of this book is available at newbooksinbrief dot com.
The main argument: Prior to the 19th century, public goods and social goals such as sanitation, health, affordable housing, education, and environmental protection were largely left up to individuals to sort out for themselves. Beginning in the 19th century, though, more and more governments--particularly in the industrialized, democratized world--began taking these responsibilities on themselves. In the latter half of the 20th century, the promotion of public goods and social goals expanded as governments in the developed world intensified their efforts at home and began spreading their attention to the developing parts of the planet, and large non-profits and NGOs started cropping up to help with the issues both domestically and abroad.
Recently, we have seen a new trend develop, as in the past two decades businesses and corporations have themselves increasingly entered the fray. Now, this may seem odd, given that business is often seen as indifferent--if not downright hostile--to public goods and social goals. However, several developments have occurred in recent years that have flipped this logic on its head.
To begin with, many consumers have begun to demand that companies display real concern and commitment towards the issues that mean something to them--and have begun to shun companies that fail to show a sense of social responsibility. This trend has caused businesses to respond in several ways. First off, most companies now assess the social and environmental impact of their business practices, and have taken measures to ameliorate them under a Corporate Social Responsibility report (CSR). Even more impressively, corporate philanthropy has skyrocketed in recent years; and, what's more, companies are increasingly moving beyond donating, and are instead using their peculiar expertise to help directly with social projects and development efforts.
Business involvement with public goods and social goals goes well beyond just brand-building, though. Indeed, it turns out that big profits are also at stake. To begin with, many companies have come to realize that there is a fortune to be made by entering non-traditional markets and catering to the unmet needs of the world's poorest people--and in helping them bootstrap themselves out of poverty. For though the so-called `bottom of the pyramid' may not have much, they do have some, and collectively they represent an enormous business opportunity. Indeed, the bottom of the pyramid has been estimated to represent a $5 trillion market.
Still other businesses in the social economy are organizing themselves from the beginning around a particular public problem (such as traffic congestion or waste control), and then cleverly designing a business model that helps solve the problem--all while turning a profit.
Aside from these self-starting enterprises, other companies have been lured into the social economy by governments or non-profits who are looking to exploit their expertise--or who are looking to capture the benefits of competitive organizations more broadly (specifically increased innovation and efficiency)--and who are willing to pay top dollar to do so.
These types of collaborations (between governments, non-profits and businesses [and other types of groups]) have actually become quite a theme in addressing public goods and social goals--and author William D. Eggers makes a special point of addressing it in his book. The beauty of the arrangement comes from the fact that each type of organization has access to a special class of information, expertise, and resources, which, when brought together, can help yield solutions that are particularly effective.
As you might expect, many of the developments spoken of here have been made possible by recent innovations--everything from social networking, to crowd-funding, to crowd-sourcing, to micro-financing, to prize and pay-for-success exchanges, to socially-responsible and impact investing etc.--and the author is sure to touch on all these as well.
On the bright side, it is certainly nice to see a book-length discussion about a very timely and important topic. On the not-so-bright-side, the reading experience of the book leaves much to be desired. The biggest issue here is with the examples. Many of the examples are touched on only briefly, and in passing--some of them receiving but a single sentence in a paragraph. It would have been much better to see fewer examples explored in greater detail. Still, there is much to be learned here, and the book is a valuable read. A full executive summary of the book is available at newbooksinbrief dot com; a podcast discussion of the book will be available shortly.
As I indicate in my review of another book, Gary Klein's Seeing What Others Don't: The Remarkable Ways We Gain Insights, I realized long ago that the true value of most (if not all) breakthrough insights is best determined by the nature and extent of the disruptive impact they have on the given status quo. That has certainly proven true of analytics, cloud computing, mobile phones, and social media. As William Eggers and Paul Macmillan observe, "The defining feature of Western-style government -- its success in catering to a wide variety of citizen needs -- has become its greatest liability. Governments are going broke while contorting themselves into ever-stranger positions to satisfy often contradictory constituent demands." In the United States, that is true of many municipalities, counties, and even states in which legitimate citizen needs far exceed the resources available to meet therm. "Fortunately, government is no longer the only game in town when it comes to societal problem solving. Society is witnessing a step change in how it deals with its own problems -- a shift from a government-dominated model to one in which the government is just one player among many."
I agree with Eggers and Macmillan that a new economy -- what they characterize as "the solution economy" -- is emerging and it trades in social outcomes. Its currencies include public data, reputation, credibility, and social impact. "The business models are unusual, and the motivations range from new notions of public accountability to moral obligation to even shareholder value." This is indeed a "new game" and the information, insights, and counsel that Eggers and Macmillan provide in abundance will help their reader to understand the new "rules" as well as terms and conditions that may determine initiatives' success or failure.
In their opinion, trillions of dollars in value potentially lies largely untapped at the new intersections of the public, private, and non-profit sectors. They explain in this timely book "how to unlock this value." These are among the passages of greatest interest and value to me:
o The Economy in Eliminating Problems (Pages 3-6)
o Table 1-1: Sample Initiatives of multirational multinationals (31)
o The Innovators: Private Enterprise, Public Benefit (35-42)
o The Wavemakers: In a Nutshell (49)
o Creating the ability to mobilize massive resources (51-56)
o Platforms (90-93)
o Business Models That Scale: In a Nutshell (105-106)
o New Models of Exchange (141-144)
o Crowdfunding (147-151)
o Pay for Success (159-163 & 166)
o Revolutionizing Education: An Innovation Ecosystem (177-181)
o Complementary Capabilities and Effective Ecosystem (192-197)
o Strategies to Grow the Solution Economy: For Government, Business, and Investors (229-237)
Essentially, "Wavemakers" from all three societal sectors solve problems with disruptive technologies, using business models that scale, funded and sustained by impact currencies during public value exchanges, within solution ecosystems. There must be a revolution rather than a process of incremental collaboration that, until now, has exacerbated rather than resolved problems clearly beyond the capabilities and resources of any one sector.
Long ago, Albert Einstein observed that "We can't solve problems by using the same kind of thinking we used when we created them," and, that it is "insanity" to keep thinking and doing what we have done thus far and expect different results.
Obviously William Eggers and Paul Macmillan agree but when concluding this book, they are confident that technologies and business models will prove sufficient to the challenges we now face. "New problems will emerge. Luckily, the fundamental strength of the solution economy is that challenges become opportunities for progress." I hope they are right.
Why the title of "dangerous read," because a lot of the facts are not really facts and a lot of the inferences are "wish it were so's" said the few things that you're not familiar with may or may not be correct.
The premise is a nice idea however I think that the authors, William D. Eggers and Paul McMillan needed to do a little more research before publishing this book.
To go through everything that needed to be looked at I would have to write a book. However right from the beginning they state that the government is subsidizing sugar which is incorrect; the government has high tariffs on sugar and is supplementing corn products including ethanol.
It is nice to have companies donating products in time to projects. The question is who is paying enough for the products and the company's infrastructure? Could it possibly be the consumer?
Now before I totally discount this book, I must say that every economic solution even if it only works on paper is worth being aware of. So you do not have to believe the book or the lacquer research to gain insight that these authors are promoting. I I am actually glad to see that they are being promoted by the Harvard Business Review Press.
on 9 November 2014
A readable tour of how the Solution Economy is generating new ecosystems and exchanges that are collectively creating new forms of economic organization, while moves away from the traditional government driven model of problem solving. Includes a wide range of case studies including Recyclebank, Unilever, Reward Ride and LivingGoods. Should be read by anyone concerned with how these new organisational forms are likely to increasingly deliver useful results in the future.