Interview with Eric Lowitt
Posted: 4:16PM June 2nd, 2014 | Comments
Intern Andrea Slinde interviews sustainability expert and author of The Collaboration Economy, Eric Lowitt.
As an everyday consumer, with a millennial's consternation over our current environmental issues, I found The Collaboration Economy to be a compelling analysis of an impactful collaborative business model. The collaboration economy model uses cross-sector collaboration to create a competitive advantage and maximize economic development while simultaneously allowing companies to become environmentally responsible. Lowitt presents case studies of larger companies, like Unilever and GE, to show how positive outcomes arise when companies begin to use cross-sector collaboration to internalize their external costs to the environment.
The Collaboration Economy discusses concepts that companies of any type and size can utilize and scale to fit their specific sustainability goals. The Golden Triangle, which Eric Lowitt refers to as the collaboration between public, private, and civil sectors, can solve some of our most vexing environmental and social issues if done strategically and with transparency. Each sector of the Golden Triangle has something to gain from The Collaboration Economy. I was lucky enough to chat with Eric Lowitt, author of The Future of Value and The Collaboration Economy to get his take on cross-sector collaboration and its impact on businesses and the environment.
Tell me a little about your role at Nexus Global Advisors and what you do for companies who are eager to become environmentally responsible.
I am the CEO and Managing Director at Nexus Global Advisors, and as our name implies, we are global advisors who work with companies large and small, domestic and abroad to enable these organizations to go through transformational change. We help companies find their purpose – their reason for existing – and then help these companies change who they are, how they operate, and how they partner with stakeholders. So for example, a well-known company recently realized that, ‘If we can’t get access to water, we won’t have products, we won’t have revenue, and ultimately we won’t have a company unless we change.’ So the only way we can get access to water in perpetuity is by realizing that communities own water. So we have to change how we view communities--from looking at communities as a source of materials, to looking at communities as partners. We also have to change how we look at rivals--from rivals against whom we compete for water, or energy, or food, or raw materials, and instead look at rivals as, ‘You have the same problems that we do, so if we were to work together, perhaps we could solve a big issue like water scarcity, so that we both have plenty water with which to work’.
That’s Transformational Change. Transformational change is hard because because it requires two things. One is to get a company to actually realize, ‘We can’t do it alone. We have to work with others’. And then the second piece to that is to figure out who the right partners are for that company. So what we do, is we connect companies and lay out the potential solution or solution sets that we can bring to the table by working together as a set of companies. We help our partners figure out how to transform into companies that are for profit, but that are also helping to solve environmental and social issues as a means to accelerate their growth. So I created Nexus Global Advisors to enable companies to go through Transformational Change, centered on nurturing deep partnerships with other companies, and governments, and civil sectors, to affect the type of change that they want, to truly live their purpose, AND become more profitable at the same time.
Who inspired you along the way to become an expert in sustainability?
While working for Accenture, I joined the company’s think tank, and I was asked at to build a Sustainability Research Program. The first question I was asked was to define what “Sustainability” means. For Accenture. For its clients.
And that was cool, because what it meant was that I had this responsibility to figure something out that I had never heard of before. And I started from a basis of humility, which was, ‘I don’t know a thing about this topic, I have nothing of interest to say because I don’t even know what the topic means. So instead, what I’m going to do is use the budget I am given is find one or two or three true leaders in this space who would be willing to put me under their wing and teach me’. And I did that. And there was a gentleman named Andy Hoffmann who is a professor at the University of Michigan Ross School of Business. And he became a mentor to me.
So over three or four years he and I and some other folks worked together to figure out what sustainability means in big business--how do we get these companies to actually care? And how do we break this faulty assumption that sustainability costs a lot of money, and therefore, sustainability is altruism. And break that into, if you embrace sustainability you can actually grow revenue, grow profit, have more employees, and have happier relationships with the community in the process. That inspired me to push forward in sustainability.
Your book focuses on several case studies of private corporations and their experiences with collaboration, but what are individuals from the public and civil sectors able to gain from The Collaboration Economy?
The message that I want government officials to take is, read my book, borrow a page from the private sector’s playbook, seek to collaborate, seek authenticity. Don’t just try to get a CEO on stage with you for some campaign rally, EARN that person’s presence by working with them behind the scenes and invite them into your regulatory conversation. Go directly to the CEOs of small and mid-sized companies in your constituency, and say, ‘What are the biggest challenges that you see and how can we work together?’ That’s the public sector message.
The civil sector message is even simpler than that. Two-thirds of our economy is based on what consumers spend as individuals. And we have more ability now than ever before, because of social media, to use our wallet for impact. Because we can also use our fingers for impact. We can type messages and go back and forth on Twitter and Instagram and sixteen other places and say, ‘You know, I’m never doing business with company X again’, or ‘I’m going to continue to buy from Zappos because their customer service is amazing!’ So for the civil sector--for you and me--for individuals, I’d say that my message for the book is, you CAN have an impact. You have more power than you give yourself credit for, have confidence to believe in your faith and have confidence to act on it.
How do you suggest that companies engage their employees in sustainability?
They’re employees, but they’re also people who are talking to their friends, and their spouses and planning vacations or dealing with a sick child, they’re on Amazon and surfing the web and doing sixteen other things. Why not engage or encourage that? Why not encourage your people to think about your company in the context of the sixteen different roles that they’re playing during the course of their workday? Employees are representative slices of civil society. These people live in the same communities that we have businesses, so if we ask them what their community issues are, then we can have better community relations. Your employees are people who play so many different roles in their lives, and every role they play can have a positive or adverse impact on your business’s performance. It’s engaging employees as people and talking about things like health and how to keep not only employees healthy, but their families healthy too. If [companies] can have an impact on people so that they’re not dreading getting out of bed in the morning to go to work, but instead are going and looking forward to partner with a company that they can have a social impact, everybody wins.
How should private sector businesses select civil sector partners? How can a business differentiate good partners from bad partners? And currently, are there any metrics that businesses can use to help determine this?
My advice to companies when it comes to figuring out who their civil sector partners should be, whether it’s NGOs or individual people, is to start with where you can have the greatest influence. So you’re looking for those people with huge clusters of followers. Because those are people who either have some sort of name cache or more likely have developed those followers because they are on Facebook or Instagram or LinkedIn or Twitter every day talking about something that people care about. So let’s respect that and let’s try to earn their partnership and trust, not just buy it. You have to find out who the influential social media folks are because those folks can very well not only become your best civil sector partners, but they’ve already left a trail of evidence through their Tweets and through their Facebook messages that show what they believe in. And you start by looking at this by seeing that this [civil sector organization] believes in our message or these people believe in a message that’s tangential to ours, let’s see if we can’t get their attention. And I think that’s what makes the opportunity for the civil sector and public sector partnerships so much stronger today than it has ever been before. We couldn’t do this 20 years ago.
How can companies like General Electric (GE) work to become leaders, collaborators, and facilitators in the field of sustainable energy?
GE, like any other publicly traded company, is under pressure to grow from shareholders. What I propose to GE, is why don’t you reach out to your most fiercest rival to collectively build a Smart Grid? Seek to co-fund the development of a Federal (or at least a state by state, region by region) Smart Grid that would dramatically increase our energy efficiency and prepare us for a future based on the usage of renewable energy. If the financials aren’t compelling enough, talk to the DOE (Department of Energy) for additional support in exploring the idea of privatizing the energy grid (and therefore be responsible for its maintenance). Now the FTC might balk at such a strong partnership with your largest rival, so proactively engage the FTC (Federal Trade Commission) from an antitrust perspective.
How can small businesses of 100 employees or less, or even 10 employees or less start to tap into sustainable business practices right now?
This is going to sound corny, but absolute size doesn’t matter nearly as much as absolute intent. Our smallest companies, of which Nexus Global Advisors is one, can start to tap into sustainable business practices right now by figuring out your PURPOSE. Why are you in business, beyond to make money? What social or environmental cause are you trying to resolve?
Then don’t be afraid to publicize what you are doing and, more importantly, what your purpose is. Let social media help you amplify your impact. Make the world be the size that you need to be in order to give you confidence. Realize that you don’t have to affect how the world spins on your own. Focus on your little quarter of the world. Focus on your local community in which you operate. The families that you serve by employing them.
In your book you discuss the concept of the Extended Producers Responsibility (EPR), a system where responsibility for recycling post consumer-use materials is put on the shoulders of brand owners who manufacture and bottle beverages. A large PET-reliant corporation like Nestlé Waters North America has become a leading implementer of EPR, but how do smaller companies integrate this system into their business?
No one company can reset how recycling works in Wisconsin let alone across the country. There is a great story that happened just a few days ago about recycling and coalitions. Walmart pulled together Pepsi, Unilever, and P&G, and some other massive companies, to co-invest with them in the form of loans. Money will go to cities and counties, not to the federal government, but to cities and counties across the country, to rebuild recycling infrastructure, with the ultimate goal being that this new investment in recycling will get back much more material. Only 20% of plastic is recycled here in the States compared with 99% in places like Finland. The rest of plastic that gets sent to the landfill costs our GDP something like $20B and that’s in the form of lost wages, lost jobs, raw materials have to be sourced elsewhere, the recycled materials could be used in a way that could lower costs, so on and so forth. And so EPR was the first attempt to build the coalition that Walmart ultimately brought to the table a couple of days ago. I’m delighted for us as US citizens to know that we’re actually going to be able to have companies use more of the materials that we’ve finished using, more of that post-consumer waste, and as a result lower [Walmart’s] costs, lower their environmental footprint, and lower our environmental footprints in the process.
What does that mean for small businesses? Small companies have two choices when it comes to sourcing plastic. You either source it from virgin (first time use) plastic, or you say you really want to have an environmental impact. Plastic, when sent to landfills takes 1000 years to degrade and when it does it spoils the soil. Right now, recycled products will cost something like 15-17% more per unit than virgin plastic. That’s very tough if you’re making 20% on your product. You have to start to reach out to same-size or larger-size companies and say, ‘How do we get more plastics recycled, and how do we, as small and mid-size companies get access to buy that plastic so that we can actually lower the price--so that we can actually continue to offer customers our product, but do so in a way that has no impact on the environment or has a positive impact on the environment’. And so what Walmart is doing with closed-loop (big companies working together), will trickle down to small companies as well. EPR has the same promise. Unfortunately for the EPR folks, the Walmart folks just got there faster.
Why is it important for the private sector to have complete trust and transparency when striving for sustainability? How can businesses turn trust and transparency into a competitive advantage and economic development?
I want a company that has humility. And frankly, that’s one of the reasons why I’m so happy and so comfortable talking with Unilever so often is that I hear humility from the company-- I had the CEO of the company tell us that ‘I don’t have enough confidence in ourselves to have an impact’. And it brought together inside employees and outside advisors that talked to us. [Tell us] what are we going right, but more importantly, tell us what we’re doing wrong. That’s humility. That conversation then leads me to go on the radio this morning and talk about them. I trust that company. That company has demonstrated authenticity and humility to me. And that in turn will, maybe or maybe not, have a listener or a reader to mention Unilever, which will then decide that Unilever is a trustworthy company and buy from them. And there is that trickle down effect. And that’s what I look for in companies. And that’s what other consumers look for in companies. They want companies that they can associate with, and they want companies that they can see themselves in.
It is resources like The Collaboration Economy that can stimulate talk of sustainability initiatives within companies. Companies in Madison also have some unique resources and opportunities that can help put sustainability efforts into action. Sustain Dane has created a Sustainable Business Network to help local businesses integrate social and environmental responsibility into their business practices and to encourage collaboration with other businesses in the Madison region. Sustain Dane’s Sustainable Business Network offers resources and assists with creating connections and partnerships with others who are struggling with similar issues.
Madison is also lucky to host the Leadership for a Better World Global Summit on June 17-18. The Summit, hosted by UW-Extension and the Center for Inclusive and Engaged Leadership is an opportunity for local businesses to connect and create partnerships with others in the Madison community. Companies will gain leadership skills, effective practices, and knowledge needed to generate sustainable business practices through collaboration. To hear more from Eric Lowitt, you can attend the Global Summit to hear him speak about the role of leadership in cross-sector collaboration. Companies in Madison have a chance to use these resources to create economic growth while simultaneously decreasing their environmental footprint. There is no better time to act and inspire others to do the same.