Meeting with Ricardo Young – Can the BRICS really evolve as FUTURE economies?

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“Brazil has all the conditions to evolve in the new world” (Ricardo Young) but will it evolve or will it continue grow the old [economic] way?

I was lucky to get over an hour of time with Ricardo Young the ex Founder and President of Ethos Institute, Brazil’s leading sustainability think tank, and now leader of Instituto Democracia e Sustentabilidade. Ricardo himself ran for Senate representing the Green Party in São Paulo. As I understand it he gained 4 million votes [unconfirmed] on the promise of prosperity and sustainable growth for all. He is a key advisor to Marina Silva, Brazil’s ex Environment Minister, who ran for presidential elections in the 2010 elections winning 19% of the first round votes (nearly 20 millions Brazilians). Together they are championing a new political movement in Brazil.

Ricardo is straight talking; he’s tight on time and he’s a man with a mission to make Brazil a true 21st Century economic leader, building a sustainable economy working and championing capitalism 2.0. Yes, now is certainly the BRICS’ time. Europe and America have run into the ground on free market capitalism, industrialization of everything, and debt-driven consumer culture. The evidence is apparent; the ‘old way’ is no longer serving society or planet well. The future, which we are in already, needs to be different not least because the old paradigm is not financially sustainable, as we have seen with European and US market collapse. Nor is it environmentally viable over the longer term.

Ricardo talked of a Brazilian government that had for the last 30 years aimed to be one of the worlds leading economies; with the ambition that Brazil would indeed be the future economy. Brazil’s time has now indeed come. But, as Ricardo observed, much like other BRIC countries Brazil is building its leadership on an outdated model of capitalism and the majority current world view. There is nothing ‘future’ about the dominant approach to growth in Brazil despite how successful it may appear by building on the new middle classes spending power. Read More…

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It’s Not The 1% Who Create The Jobs, It’s The Customers

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Ha. So “Finally, A Rich American Destroys The Fiction That Rich People Create The Jobs” published on Business Insider. (Thank you Nat Billington for sharing this).

Successful advertising entrepreneur Nick Hanauer suggests that it is not the 1% of wealth generating and low tax paying entrepreneurs that drive economic value. It is the gigantic mass of middle classes, the customer base of which enterprise depends on, which bring the vast economic power. But these guys have been pummeled, all over the world, by taxes that reward the 1% at their expense. I would add that the middle classes have also been pummeled by the fallacy of debt-driven consumerism. This group have been encouraged to overspend by spending money that is not actually theirs, in order to keep the economy growing and the 1% getting richer.

I have suggested a need for a Shared Value Academy that makes use of the vast economic and human capital that is the ‘expanding middle class’. Nick Hanauer is right to suggest that it is this segment of society that economies depend. It is very evident here in Brazil. But there is a third way that does not only depend only on the purchasing power of middle classes but that includes them in the value chain, so that they too can share the value created through enterprise. Apple has been hugely successful at enabling this with the iPhone/IPad application revolution, albeit to a wealthy / upper middle class base who can afford its products and to invest in the application development cycle. IBM have recognised the need to integrate its customers within its supply chain. It is incubating ‘customer-entrepreneurs’ all over the world working on clean tech solutions that align with IBM’s Smater Planet vision. IBM ensure their technology is embedding within their customer’s solutions, so that overtime, both parties share the value together. On a completely different scale AirBnB has created a platform that enables its customers to become entrepreneurs – renting our spare capacity in the home and connecting people all over the world.

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The Shared Value Academy

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November-December 2011

There are four years between now and the Brazil Olympics in 2016, which is enough time to prototype and then scale at least 10 new social ventures with shared value potential…

I have talked a lot (below) about the need for business to shift from the current economic paradigm – corporate-consumer-capitalism – to one that seeks to create shared value through solving social/environmental/economic problems together with untapped ‘entrepreneurs’ or the new generations of ‘leaders’ in the communities that face them. I believe that global business, and in particular consumer brands, are a strong platform to enable this shared value approach because of their vast and sophisticated supply and value chains and their wide consumer reach. In this context, corporate-consumer business becomes a template to unlock value in others and share the benefits. There are, after all, a lot of people – and a lot of changemakers – on this planet.

 

There are increasing examples of this model framed as ‘Inclusive Business’, ‘Enterprise Development’ and ‘Hybrid Value Chain’. All of these approaches were on the basis of a blended value chain, enabling collaborative entrepreneurship and value to be shared between producer and consumer. But more evidence is needed. As global consumer businesses seek growth in emerging markets where planetary, social challenges and corrupt government is most felt, this new frontier of wealth creation needs to expand and be legitimised within the global economy.

In talks with the world’s largest consumer goods company this week in response to Paul Polman’s latest rhetoric on long-term growth in emerging markets, I suggested the need for an ‘academy’ for social business and shared value models. The ‘Shared Value Academy’ would be run and placed geographically in an area where there are social challenges to address and innovation and human potential to unlock. Read More…

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Who I’ve met in Brazil

November-December 2011

I’ve spent five weeks exploring the country of Brazil and its people and undertaking meetings with key social business and sustainability leaders. The core purpose of my meetings with leaders was to uncover insights about Brazil and business, sustainability leadership, and impact ventures; it was also to make business connections and to develop a Brazil-UK ‘bridge’ on sustainable business and social ventures. With the support of Lucy O’Shea, CEO of Futerra, and Jimmy Greer, sustainability leader and new economics thinker, both from the UK, I was able to connect to the following Brazil leaders:

Rio de Janeiro

Anderson Fraça, Founder Dharma Comunicaçao, and Jessica Lagotta

Amy Casterton, Culture and Innovation, British Consul, Rio

Carlos Alberto Messeder, Academic Director, ESPM (school of marketing, advertising, design)

Damian Platt, MBE and Founder of Culture Is Your Weapon

Florencia Estrade, Founding Partner, Cria Global

Isa and Paolo Giordino, Founders and Partners of Cielo Ambiental

Marcelo Alexander, Sustainability Director, Isolux Corsan

Salvador

Leticia Menger, Host of TEDxPelourinho (Salvador)

Sao Paulo

Ana Maria Melo, ex Ethos Institute, social innovator and connector

Chris Hori, Science and Innovation, British Consul

Fabio Interaminense, Founding Partner, Grupo Eco

Fernando Monteiro, LEAD and founder of Evoluir – sustainability education

Lincoln Paiva, Green Mobility

Marcelo Pedro, Head of Operations Latam, Olam International

Mark Hillary and Angelica Mari, IT Decisions

Renato Raposo, Head of Communication, Ethos Institute

Rodrigo Bandeira, founder of Cicade Democratica

Ricardo Young, Diretor of Instituto Democracia e Sustentabilidade, leader on sustainable development

Shigueo Watanabe, Director, IBOPE Ambiental – measuring ecosystem services and carbon impacts

José Bueno, Founder Rios e Ruas, Rivers and Streets (experiential learning working with the hidden rivers of São Paulo)

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A Spirit of Enterprise and Acceptance

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November-December 2011

I have met and connected to some extraordinary people on my five week exploration of Brazil. I came to Brazil to uncover insights about the country, its economy, society, culture and history; and insights on sustainable business and social innovation. I also of course came to enjoy Brazil’s diverse culture and stunning landscape. The following posts are my reflections on what I’ve come to understand about the country; my words are just one lens on this country from someone who is new to it.

This is a country that welcomes people without prejudice but with pleasure in ones interest in it. Without much effort I have met, spent time with, and made important connections with social entrepreneurs, heads of sustainability think tanks, corporate leaders, ex NGO people now working in the Favelas on enterprise models for solving social issues, consultancies, agencies and academia. I have stayed with families, friends of friends, or those who are now my friends. Wherever I have been I have been helped and supported along my journey – largely by Brazilians but sometimes expats. (See the full list here).

A spirit of enterprise and of passion sits within the heart of the people of Brazil. This is coupled with extraordinary warmth and a deep-rooted creative culture – the music, dance, Capoeira, Afro-influence, the food, and the colour of beach life etc. Brazil is like nowhere and everywhere mixed together. It has a taste of the American values of acceptance and freedom; but it has humanity and passion and a strong sense of community rooted in the Latin culture. It is happily multicultural, diverse and integrated, yet socially divided by class. The class divisions are made of fences not brick walls – there is both curiousity and in some directions aspirations with the other class but there is also a fear of each other. The rich are terrified of the poor and the poor live under the command and by the pocket of the rich. Some describe this as a ‘C21st slave trade society’ and talked of the motivation to keep the poor uneducated in order to maintain low cost labour and a seemingly apathetic (to corruption) society. Read More…

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Hungry for English! English, get hungry

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November-December 2011

I arrived in Brazil with very little knowledge of the language but a huge appetite to learn it. I have been taking lessons (now over Skype) with a teacher in Rio. Contrary to a Brit’s usual experience abroad most Brazilians speak very little English, which is tough but good news when you are trying to learn a language. As a culture the Brazilians are fantastically open-minded and accepting, so even a poor attempt to speak in their language is welcomed and celebrated – think the total opposite to the experience of attempting to speak French as a novice speaker visiting France.

But I noticed a real hunger here for people to learn English. As Brazil has become an emerging economic power and visible global player, its people yearn to be able to connect more globally and to be able to attract the sort of talent Brazil requires while it struggles to overcome the challenges of an under-skilled population. My friends at IT Decs have written extensively on the need to skill-up and import talent into the IT industry. Their recommendation is that that the IT industry needs to embrace the English language. Note that I also think English speakers need to embrace a wider language set, now more than ever before due to the shifting economic powers and globally connected cultures.

Contrary to what I had been informed about, quite a few professionals in São Paulo and Rio speak English. But the appetite to connect with my work, my language and me has been overwhelming and very flattering.

 

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Beyond BIG

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November-December 2011

I expected Brazil to be big. I’ve read about Brazil’s economic power, its vast natural resource capacity and its mega cities; and I’ve read about the super power businesses in Brazil such as Petrobas, Vale, Itau, and Brandesco, and their regularly quoted sustainability stories.

Brazil feels big. It is big. It is the fifth largest countries in the world by population and geography according to Wikipedia. And it is blessed with huge amounts of natural capital, not least the ‘Pre-Salt region’ of oil reserve that has gained so much publicity recently

What is lesser known or understood to the outside world at large (myself included) is that Brazil’s wealth creation is of course beyond the preserve of few powerful businesses. 95% of Brazil’s economy is made up of SMEs (Microempresa (microbusiness); Empresa de Pequeno Porte (small business)). In a country with a population of 192 million, that is a vast scale of enterprise. I’m assuming then that many of the Expanding Middle classes in Brazil and other emerging markets make up this vast portion of the business community. Read More…

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Brazil’s Global Identity in the C21st

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November-December 2011

Could Brazil identify and champion 200 sustainability champions – microbusiness, small, or large – and present to them world between now and Rio +20?

I spoke at length with Renato Raposo who is Head of Communication for the Ethos Institute – Brazil’s leading sustainability think tank – about the need to communicate an identity for Brazil business in the global economy that goes beyond mining, oil and big agriculture.

Renato’s position at Ethos is fairly new; his task is to communicate the Institute’s work (internally and to the world) and present a picture to the world of sustainable business leadership coming from Brazil. The challenge is also to communicate Brazil’s point of view on the future of business in the C21st and in particular sustainable business.

While here I have heard a lot that ‘Brazil’s time is now’. Brazil’s time now is also an opportunity to take a leadership role in shaping what business looks like in this century, given the planetary challenges and technological revolution underway. Other emerging markets are vying for a position here (e.g. China’s clean energy revolution; mobile tech and empowerment in parts of Africa; technology and social change in India etc.). And all eyes are on the emerging markets. The World Economic Forum states that by 2025, Brazil, China, India, Indonesia, the Russian Federation and South Korea, will account for 50% of the world’s economic growth. Read More…

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Social Prosperity and Growth?

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November-December 2011

Could one brand commit to the success of 10 new radically innovative social ventures, in market and delivering high impact results, by 2016 Olympics?

‘Social prosperity’ and ‘growth’ in Brazil are two concepts that don’t currently sit well amid the Capitalist economy. Indeed they are two things that don’t sit that well together in large parts of the global economy, which of we are seeing today. There is considerable buzz in Brazil, in almost every conversation I have had, about the ‘consumption potential’ of the Expanding Middle (as classified by Goldman Sachs) in Brazil. In other words Brazil’s classified “E” and “D” consumer segments moving up through the class hierarchy with more potential to purchase (in many cases debt-based purchases).

Nor does the term ‘Green Economy’ sit well with social prosperity. A term that is being bandied around with Rio +20, the World Cup, Rio Olympics 2016, Brazil’s growth in sugarcane ethanol production in mind. All eyes are on Brazil in the next few years. NGOs and world leaders are gathering here next year in 2012 to present their concepts and push the ‘Clean Revolution’ (the Climate Group’s key message) or ‘Green Economy’ (Rio +20 official message) i.e., environment and green growth at the intersection of economies and job creation. Read More…

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Favela Pride?

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November-December 2011

Interesting. The Favelas, certainly in Rio anyway, have a sort of mystique and value to them that is rarely portrayed to the outside world. Nor is it portrayed in the Brazilian media. There is an element of pride that Rio holds about these communities as well as the obvious fear and prejudice held amongst the extreme wealthy segments. I met many people who talked about the music, the creative output, the community, the parties, the art and more produced by communities living in Faveles. Indeed the Saturday night I was in Rio was the night of the third anniversary of one of Rio’s best ‘Favela parties’ in Rochinha which has recently been ‘pacified’ by the police. I heard about this party from my Portuguese language teacher; I heard about it from my AirBnB hosts; I heard about it from my Brit / ex-Pat friends in Rio – all of them the ‘upper middle classes’.

So I can’t help thinking there is massive potential within these communities to be unlocked and importantly to be celebrated. There seems to be a space for the Favelas in the heart of many Cariocas (Rio people) and Brazilians. And clearly the Fevalas are a part of the identity of Rio and Brazil.

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Expanding Capitalism with the Expanding Middle in mind?

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November-December 2011

How can businesses help citizens across the globe bridge challenges posed by environmental, economic and social pressures to become responsible consumers? (Paul Polman, CEO Unilever)

I spent the day with Anderson França otherwise know as Dinho (@Dinho_Rio), who I was introduced to by Jimmy Greer – the man behind a lot of great knowledge about Brazil, social business and currently writing a book with Umair Haque on post-consumerism.

Anderson and his smart and sassy colleague Jessica took first took me to the infamous Café Columbo in Centro Rio, and then to a Favela, where we spent hours discussing the next model of enterprise for Brazil and behind-NGO models. Anderson spent five plus years working with Afro Reggae in the Favelas; before that he spent time teaching music in the Favela communities. He talks of the ‘myth of Favelas’, referring to the untouchable and helpless image of the Favelas portrayed to the outside world, which he feels the many NGOs play to.

Today he is the founder of Dharma Comunicação (@DharmaAgencia). Dharma’s mission is to leapfrog government and NGO intervention in the Favelas and to champion social change agents inside the communities. He wants to create a social venture accelerator inside the Fevalas and to promote a true image of the human potential within these communities.

Dharma’s core asset is the relationships Anderson has with the communities and his ability to mobilize members of Favela, civil society and brands, to get to truly understood needs and opportunities. Dharma recently brought together a significant group of stakeholders for Telefonica to explore the role of mobile tech and social innovation. He says brands struggle to understand these communities too; they just do not have the embedded relationships required to understand the needs and arrive at high impact solutions that will be embraced and owned.

Anderson and Jessica took me to Complexo do Alemão, one of Rio’s many Favelas, with nearing 100,000 inhabitants. Read More…

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The Expanding Middle class – Can IKEA serve this demographic with sustainable solutions?

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November-December 2011

Brazil usually relies on social demographic to segment the market, classified as classes A, B, C, D, and E. A classification referenced a lot in general conversation in Brazil.

In Brazil, the ‘Expanding Middle’, as defined by Goldman Sachs, might be described as classes E and D moving into C. These are people who typically have not finished high school (often semi-educated) and in low paid jobs such as housemaids, bartenders etc. but are increasingly moving out of this situation. Andréa Novais has written a clear definition on Brazil’s social classes in The Brazil Business. (It is striking to me how much class, and these distinct classifications, are used to describe civil society in every conversation). READ MORE… Read More…

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What Are You Feeling?

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November-December 2011

After a couple of hours walking and talking to community members and feeling my way through the Favela, with Anderson França Dharma Comunicação, he asked me “What are you feeling?” We were hanging above the community in the red cable car I describe above when he asked me this question.

What did I feel? I felt that the community is a community of people, of humans, and of potential. And that in some respects, drug problems aside, it functions well as a community given the extreme lack of resource and support provided to it and the totally inadequate access to education. These are resilient and resourceful people, working hard to function. I said that I felt like I was hanging over 100,000 people’s worth of untapped human potential and that I could feel the potential. This is only one of the many other communities in Rio and then beyond, across Brazil. The UN predict that by 2020 55 million people will be living in Favelas in Brazil according to the Rio Times. The potential is absolutely vast. Read More…

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What is your purpose in life? / Qual a proposito da sua vida?

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November-December 2011

I have faced this question three or four times recently.

In Brazil I met with Dharma Agencia, who work with this question everyday. It is also their strapline. We discussed purpose together. I was asked what my purpose here in Brazil is.

I spent at least three hours in conversation with the Ashoka Ireland team, covering my background and the meaning of being an entrepreneur. This question was at the heart of our conversation.

And before I left for Brazil I spent some time in talks with Leaders Quest. Unusually, both my meetings with LQ started with this question on purpose. I look forward to the founder of Leaders Quest Lindsay Levin’s book on her purpose and working with purpose.

So what is my purpose in life? And what is the significance of this question today, for myself and for others around me?

It is a question I have grappled with since being a child. I was uncomfortably obsessed with this question at a young age when most were content with what each day brought. It is a question that I’ve worked with through my twenties and early thirties – the latter triggered by a near death experience in a major house fire in London.

The last few months have brought me back to this question again.

I feel that my purpose is to ensure the world and the engine of economics evolves for the better. I am here to be a driving force for impact innovation and enterprise and the possibility that man can live happily and in harmony with nature.

I’m intent on enabling innovation as well as driving it myself because I believe that there is potential in every human to become a changemaker and to flourish in doing so. My sense is that the future of business and civil society will be built on ‘Shared Value’ models, where everyone benefits from co-owning the challenges and opportunity. I believe that autonomy and ownership of the world’s challenges – sharing the global commons – will unlock an abundance of value for many and address the issues.

Nothing less than the next industrial revolution is required to meet the needs of exponential growth in population with a finite amount of natural resource and climate capacity. This is already happening. Business-as-usual is being turned inside out by increasing autonomy and citizen power enable by social technology.

I am drawn to global challenges such as climate change, peak resources, market failure, social inequality and poverty. And I am fed each day by the enabling possibility of network technology. I am here to innovate and unlock innovation in others.

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