By September 22, 2013 Read More →

Book Review: The Collaboration Economy

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“If you want to go fast, go alone. If you want to go far, go with others.” — African proverb

As our world gets smaller and competition cuts deeper, how can companies survive?  More precisely, how can they compete for scarce resources?

Compete using collaboration.

I finished reading The Collaboration Economy: How To Meet Business, Social, and Environmental Needs and Gain Competitive Advantage, by Eric Lowitt.  It’s a book for leaders young and old about how to enable the world to achieve a state of sustainable development.

It’s the kind of book that makes you think.  With the ideas in this book, you can take you or your company to new places.  Better yet, you can change the world, or at least, YOUR world.

Eric Lowitt is a strategy and sustainability advisor to CEOs and corporations worldwide.   He is the best selling author of The Future of Value, and he writes regular columns for The Guardian and HBR.org.

In The Collaboration Economy, Lowitt explains simply how companies won’t survive – they’ll run out of resources, or consumers won’t want things that kill the planet (especially their local stomping grounds.)

So rather than compete for the non-renewable resources, companies can collaborate and innovate to find sustainable solutions for the long-haul.

In this new economic paradigm, private, public, and civil sectors collaborate to strengthen the global systems we rely on daily for survival, including water, food, and energy.

Sustainability is the new advantage.  Visionary CEOs are embracing sustainability, not because it’s politically correct, but because their businesses depend on it for revenue, innovation, and competitive differentiation.

With that in mind, let’s dive into The Collaboration Economy

Contents at a Glance

  • Introduction
  • Chapter 1 – The Collaboration Economy: Prosperity and Social Dimensions Aligned
  • Chapter 2 – Renewing the Global Energy Sector
  • Chapter 3 – Turning Packaging Materials Into Capital
  • Chapter 4 – Renewing the Global Food System
  • Chapter 5 – Responsibility as Profitability: Toward Responsible Shipbreaking
  • Chapter 6 – Renewing Consumerism
  • Chapter 7 – Connecting the Water Drops
  • Chapter 8 – Becoming a Collaborative Leader
  • Chapter 9 – Winning in the Collaboration Economy
  • Chapter 10 – Where Do We Go from Here?

What’s In It For You

Here is a sampling of some of the challenges that The Collaboration Economy helps you with:

  • 6 skills for baking sustainability into strategy
  • How to embrace sustainability and use it as a competitive advantage
  • How to shape your business operations into a more sustainable development model
  • How to collaborate more effectively across public, private, and civil sectors
  • How to lower and manage external costs by changing operations activities
  • How to inspire innovation in ways that serve the common good

Key Features

  • Actionable.   At the end of every chapter, Lowitt includes a “Call to Action.”  It’s easy for a topic like this to turn to pie in the sky, but Lowitt has his head in the clouds and his feet on the ground.  As such, he effectively bridges big picture thinking with pragmatic action.
  • Case studies.   To make this real, Lowitt includes case studies from the leaders of the Collaboration Economy including Unilever, Coca-Cola, GE, Nestle Waters North America, Grieg Green, and the European Parliament.
  • Data and statistics.   Throughout the book there is interesting data and useful statistics to help put some thing sin perspective.
  • Framework.  It’s more than a book.  It’s mental models and a conceptual framework to help you launch a sustainability coalition.
  • Real-world experience.  Because Lowitt lives and breathes this domain, he has real-world experience that he shares throughout the book.

Here are some of my favorite nuggets from the book …

3 Reasons Why Collaboration is King

Collaboration takes time, but it’s a strategy tool to win for the long run.

Lowitt writes:

“You make decisions faster when you are the sole decision maker.  Collaborations consume time.  There is no way around this fact.  With collaborations come discussion, debate, and compromise.  The time involved is outweighed by the benefits of working in tandem.  The reduction of external costs, the improvement of necessary infrastructure, and the better-assured access to finite resources are three reasons why collaboration is becoming an effective strategic tool for the smartest of companies.”

What Does a Collaboration Economy Look Like?

If we work backwards from the end in mind, is it worth it?  What does a Collaboration Economy actually look like?

According to Paul Polman, here is a taste of what the Collaboration Economy looks like:

“Business like ours no longer have a choice.  Sustainable, equitable growth is the only acceptable model of growth.  It is also a very effective one.  Growth and sustainability are not in conflict.  There is no inherent contradiction between the two.  In fact, in our experience, sustainability drives growth.  That is why we are putting ‘sustainable living’ at the heart of everything we do.  We have found that once you start looking at product development, sourcing and manufacturing through a sustainability lens, it opens up great opportunities for innovation and cost reduction.”

Two Shifts Toward a Collaboration Economy

In a Collaboration Economy, it won’t be OK to create value, while leaving a trail of waste behind you.  Companies will find ways to turn waste into resources, and they’ll solve shared problems in cooperative ways.

Lowitt writes:

“As companies internalize their external costs, two things will happen.  First, the global economy will shift from an economic model in which waste is waste and in which zero-sum game competition is the norm, to the Collaboration Economy, where business and social dimensions are combining both to place a recognized and fungible value on waste in all its forms and, ultimate, to change what is considered by stakeholders to be acceptable value creation by companies.

As the private sector begins to embrace the ethos of the Collaboration Economy, it will evaluate the rules of engagement with competitors.  Said simply, problems held in common will require solutions developed and agreed on in common.  This is the second aspect of business activity that will change as companies grasp, embrace, and internalize the enormity of their external costs.”

Collaboration Economy Framework

At the heart of the Collaboration Economy Framework is “Prosperity and Sustainable Development.”   Revolving around the heart are 7 key parts.  According to Lowitt, the 7 key parts are:

  1. Adopt a Collaboration Mindset.  Accept that your future performance depends on an interdependent group of shareholders, stakeholders, competitors, and employees.”
  2. Focus on What Matters Most.   Identity at least one natural resource without which it cannot survive — food to a foods company, water to a beverage company, energy to an energy services company, and the like.
  3. Develop and Nurture Relationships.  Build a reliable portfolio of partners.
  4. Organize Your Coalition.  Create two coalitions, one to work globally, and the other to act locally.
  5. Commit to Precise Coalition Goals.  Each member of the coalition must commit to precise goals, and  your company, acting as the orchestrator must commit to operate transparently.
  6. Execute Through Your Coalition.  Assign specific tasks to specific coalition members to accomplish your goals.
  7. Renew Your Coalition’s Plans.  Document and share lessons learned as you complete projects, and bake a commitment to learning into your coalition’s governing principles.

Focus on What Matters Most

If you pick a goal that matters to the people involved, it’s easier to rally them around it.

Lowitt writes:

“The next step in the Collaboration Economy framework is to commit to achieving one overarching goal that is in the interest of both the commons and your company — for example, water stewardship, global food security, or a healthy energy system that balances economic, and environmental needs.”

Solve the Global Pursuit of Sustainability

How do you move beyond zero-sum competition?  You solve the global pursuit of sustainability.

Lowitt writes:

“Zero-sum competition is a fierce enemy of sustainability for at least two reasons.  One is the pressure ultimately placed on suppliers by manufacturers (and their customers) to find ways to constantly lower their costs so that the companies selling these products can continue to lower their prices to attract and retain customers.  Suppliers, often located in developing countries, managed by teams with rudimentary management skills, and barely breaking even, will find ways to lower their costs, often at the expense of the environment, society, or both.  If you were one of these suppliers, would you make long-term investments to retrofit your factories to use renewable energy when fossil fuel energy is available and cheaper per unit of energy consumed? “

The second reason zero sum is the enemy of sustainability is that it reduces the sharing of best practices among competitors.  If one competitor, focused on lowering costs, found a way to do so, what incentive does it have to share this new way with its competitors?  Some will argue that this lack of sharing among competitors fuels innovation, ultimately leading to lower prices; in turn, this innovation produces a stream of new products, often making products sold last year obsolete.  But where these unwanted products land? All too often, they are throw into landfills.  Where’s the innovation in that?

So how does industry move beyond zero-sum competition?  I believe that one step is to agree on the  destination before we design the journey.  I propose the following as a destination for industry:  endeavor to find a way to simultaneously grow and provide solutions to enable the global pursuit of sustainability.”

When to Compete and When to Collaborate

If there’s all this collaboration, but you’re not one big, happy, company, where do you compete?  Lowitt shares guidelines for when to compete and when to collaborate:

  • Engage in cross-sector collaboration on natural resources.
  • Compete when getting goods on and off the shelf.
  • Collaborate again to get materials back into the manufacturing cycle.
  • Compete for these materials once they are reprocessed.

Collaborative Partnerships will Make or Break You

If you have the right collaborative partnerships, you have a competitive advantage.  Similarly, if you lack collaborative partnerships where it counts, you’ll be at a disadvantage.

Lowitt writes:

“But how you develop, nurture, and employ your portfolio of competitive advantages will differ in the Collaboration Economy.  In particular, there is one ‘new’ type of competitive advantage to which you should pay special attention: your portfolio of collaborative partnerships.  The converse also holds true: a lack of collaborative partnerships will expose a weakness in your ability to outperform the competition.”

What Makes the Difference Between Visionary Strategy and Realized Growth and Prosperity?

It all comes down to how a company changes their operations.

Lowitt writes:

“In the Collaboration Economy, the most effective strategies are those that integrate social dimensions into competitive calculations and are carried out by companies that are culturally adept at working in tandem with others.  But even in this scenario, the company’s alterations to their operations will make the difference between visionary strategy and realized growth and prosperity.”

The Core of Cultural Change

The way we frame things changes how we see things.  If you want cultural change, change the frame.
According to Michael Washburn, VP of sustainability at NWNA:

“Thinking in terms of value creation for all stakeholders is heavily reliant on psychology.  A lot of the people I’m dealing with have been in their jobs for twenty years.  My dad used to talk about teachers and he’d say, ‘There are teachers that have thirty years of experience, and there are teachers that have one year of experience thirty times.’  The latter frame is not useful anymore; it’s obsolete.  And teaching people to reset their frame is exactly what’s at the core of cultural change.”

8 Leadership Traits in the Collaboration Economy

What are the attributes of true leaders in the Collaboration Economy?   According to Lowitt, the key leadership traits are:

  1. Seeing your leadership position as a privilege, not a right
  2. Nurturing an unwavering commitment to a true purpose
  3. Serving as activist-in-chief for your constituents
  4. Operating in a time frame, longer than tenure
  5. Believing in and relying on partnerships
  6. Acting with integrity, guided by an ethical compass
  7. Having an iron stomach … and patience
  8. Feeding constructive discontent

Influencing Great Change, Entails Great Effort

It takes a lot of work.  It takes a lot of people.  If you expect that going in, then it’s a great reminder that you’re really doing stakeholder management at a grand scale.

Lowitt writes:

“Influencing great change entails great effort.  Common sense dictates that the more entities there are that support change, the more likely it is that change will occur.  In the Collaboration Economy, every industry that is or will undergo change effects a minimum of thousands of stakeholders.”

The Golden Triangle for Sustainable Systems

If you really want to create a sustainable system, then you need to bring together business, government, and civil society around a common goal.

Lowitt writes:

“Muhtar Kent, Coca-Cola’s chairman and CEO, believes that the time is now for the three sectors to work together in the journey toward water stewardship and sustainable development: ‘Until now, government and NGOs have been doing the heavy lifting when it comes to sustainability, with business playing more of a supporting role.  For the future, we need to bring the three together in what I like to call the Golden Triangle.  Business, government, and civil society, each doing what it does best, all working as one.  Creating through collaboration and cooperation what none could achieve alone.”

The New Age of Innovation

The best people want to make a dent in the world.  They want to change the world and they want to leave it a better place than they found it.

Lowitt writes:

“Indeed, we are on the cusp of a new age of innovation.  We have to be; the extent of our challenges has far exceeded the capacity of our conventional approaches and existing technologies.  Many of the younger generations’ best thinkers and doers aspire to work with companies that serve the common good.  They want to have as large an impact as possible as quickly as possible.”

The Future of Non-Profit

Non-profits can spin up for-profit entities that help them both self-fund their activities, as well as deliver more value to those they serve.

Lowitt writes:

“He is a leading indicator of what a Collaboration Economy future looks like.  A veteran of numerous fundraising campaigns, he is now focused on enabling the Perkins School and many other nonprofits to become self-funding institutions.  In particular, he is helping these organizations create for-profit entities within their nonprofit organizations.  Who better to serve the needs of the blind by developing products for the blind than organizations that specialize in working with the blind?”

Innovative Organizational Structure

Businesses can re-imagine their organizational structures to create innovative, collaborative hybrids from government, profit, and nonprofit entities.

Lowitt writes:

“Imagine the kinds of new structures that could emerge if companies were to enter true partnerships with the local communities in which they operate.  The joint pursuit of such shared value could give rise to a structure owned by a for-profit (the company) and a nonprofit (the local community), through which the financial fruits of their joint labor were proportionately shared among all partners of the created entity.  Replace local communities with local government agencies in that scenario, and yet another innovative organizational structure could emerge.”

Environmental P&L

Would an Environmental P&L be a viable addition to a business?

Lowitt writes:

“The inclusion of a new environmental impact valuation in GDP would send a signal to the private and civil  sectors that public sector truly values sustainable development.  This idea is already being explored in parts of the world.  I’ve heard about at least one government in North America that plans to develop and test an environmental profit-and-loss account (Environmental P&L), similar to Puma’s, that is would publish alongside its financial accounts.”

The Peloton Strategy

Can you combine business and social dimensions for financial success.   Some companies are testing that the Peleton way.

Lowitt writes:

“Demos Helsinki has worked with hundreds of professionals from over thirty leading Finnish companies to test a new approach to combining business and social dimensions for financial success.  It calls its approach the Peloton strategy.  (A peloton is the group that rides together to save energy during a bicycle race; it also means ‘fearless’ in Finish.)  Peleton aims to change consumer behavior: to create new choices, new products and services, new alternatives that are not based on efficiency and niches.”

As I read the book, I couldn’t help but remember a comment by Bill Gates long ago.  Bill Gates made the statement that the market doesn’t always do the right thing.  Now I wonder, what if it did, or at least tried to, or made some significant steps in a more meaningful and collaborative direction?

I want to point out that the book is not an easy read, but it’s a thoughtful read.   The stories and real-world examples help bring the information to life.   Mostly, it’s the kind of book that gives you both a jump start into a complicated topic, as well as practical advice and guidance.

The big upside here is that this book is a peek into the future.  You get to see what some big companies are already doing to make a Collaboration Economy a reality.

Get the Book

The Collaboration Economy: How To Meet Business, Social, and Environmental Needs and Gain Competitive Advantage, by Eric Lowitt, is available on Amazon:

The Collaboration Economy: How To Meet Business, Social, and Environmental Needs and Gain Competitive Advantage, by Eric Lowitt

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