innovating in search of sustainability: citizens, companies and entrepreneurs

INNOVATING IN SEARCH OF SUSTAINABILITY: CITIZENS, COMPANIES AND ENTREPRENEURS

1

This project has received funding from the European

Union’s Seventh Framework Programme for research,

technological development and demonstration under

grant agreement no 613194.

INNOVATING IN SEARCH OF SUSTAINABILITY:

CITIZENS, COMPANIES AND ENTREPRENEURS

AUTHORS

SÒNIA RUIZ

DANIEL ARENAS

JENNIFER GOODMAN

SOLANGE HAI

Barcelona, December 2016


2

CONTENTS

INTRODUCTION 05

FINAL REMARKS 51

CASES 15

UNILEVER 16

VERITAS 20

VÉLIB’ JCDECAUX 24

KARD ARCHITECTS 29

SOCIAL CAR 34

SOM ENERGIA 39

FOOD ASSEMBLY (La Ruche qui dit Oui!) 43

NOEM 47

PART 1

PART 2

PART 3


3

We would like to thank the following people for their contribution and time in the preparation of the cases and this publication.

FROM THE EU INNOVATE PROJECT TEAM:Frank Belz, TUM (Technical University of Munich).Julia Binder, TUM (Technical University of Munich).Minna Halme, Aalto University.Angelina Korsunova, Aalto University.Henrike Purtik, TUM (Technical University of Munich).Louise Armstrong, Forum for the Future.James Goodman, Forum for the Future.Laia Lagunas, ESADE Business School.Laura Reinón, ESADE Business School.

INTERVIEWS FOR THE CASES:Unilever: Ana Palencia , Miguel Martí, Marina Jarque.Veritas: Silvio Elías, Eva Villamayor, Aida Reina, Marc Puig, Juanjo Jiménez.

Vélib´: Laurent Galais, Vincent Guibert, Albert Asséraf, Eric Callé, Anthonin Darbon, Julien Schweickardt.Kard Architects: Alexandros Kouloukouris, Christos Kouloukouris, A. Petras. P. Kanellis, A. Barbas.Social Car: Mar Alarcón, Francesc Queralt.Som Energia: Gijsbert Huijink, Nuri Palmada, Marc Roselló, Dolors Clavell. Food Assembly (La Ruche qui dit Oui!): Marc-David Choukroun, Guilhem Cheron, Marc Roulin, Justine Cattacin.Noem: Rosa Vilasarau.

COLLABORATORS:Pablo Sánchez and Petra Frent for their support in the data collection and case reporting of Social Car, Noem and Vélib´.

ACKNOWLEDGEMENTS

PART 1

INTRODUCTION


5

INTRODUCTION

Sustainability has in recent years become a mainstream concept. Since the introduction of the ‘triple bottom line’ principle in the late 1990s by John Elkington,1 more companies are integrating social and environmental issues into their business models and core strategies. New entrepreneurship ventures, created with an explicit social and environmental mission, are also becoming more widespread. At the same time, we are witnessing an increasing role of citizens as end users, consumers, entrepreneurs or activists, in co-creating sustainability innovations. Either as participants in companies’ open innovation processes, initiating and implementing their own business ideas, or forming cooperatives with like-minded individuals, the fact is that citizen-led innovation towards sustainability is gradually becoming an emerging reality in Europe.

This publication aims at showcasing some of the most interesting cases in three European countries (Spain, France and Greece) of sustainability innovation and entrepreneurship engaging citizens in four key industry domains (food, living, mobility and energy). The cases were analysed at ESADE Business School, as part of a broader study: the three-year European Commission-funded project ‘EU-InnovatE. Sustainable Lifestyles 2.0: End User Integration, Innovation and Entrepreneurship’, a groundbreaking project aimed at accelerating the shift towards more sustainable lifestyles and a green economy in Europe.

The sustainable innovations presented here represent different management structures and sizes: multinationals, small and medium-sized companies, startups and cooperatives. Their sustainability innovations range from new product development (e.g. sustainable modular houses or zero-waste food products) to hybrid distribution chains (e.g. to foster social inclusion and fight youth unemployment), public–private partnerships in sustainable municipal transportation, community-based innovation models, and citizen cooperatives for alternative energy production and distribution.

In the eight cases presented, we focus on the characteristics of the main sustainability innovation described, the internal process followed by the company or the founders of the venture, the role of the main stakeholders involved, the main drivers and enablers that made the innovation possible, as well as the impact they are achieving and the challenges and opportunities they are facing. The cases also offer some key lessons to raise awareness

and provide ideas amongst companies, entrepreneurs or citizens willing to find new approaches to sustainable innovation models and contribute to more sustainable lifestyles.

This is an emerging research field. There are very few studies to date that attempt to assess how users and citizens are part of companies’ sustainable innovation strategies or form their own new sustainable innovation ventures. Thus, conceptual frameworks for citizen-driven innovation are insufficient so far. We offer here some preliminary findings as first steps in a long and exciting journey.

For that reason, and in the spirit of co-learning and co-creation, we invite readers (companies, entrepreneurs, consumers, researchers, students, academia, policy makers) to be part of the debate and to continue exploring the drivers of citizen involvement in innovation for sustainability in Europe and elsewhere.

1. Elkington, J. (1997). Cannibals with forks. The triple bottom line of 21st century. Oxford: Capstone. The Triple Bottom Line (TBL), a concept developed by John Elkington, describes the three main characteristics

that organisations and companies should adopt in order to develop a more sustainable business: social (People) impact, environmental (Planet) impact and financial (Profit) performance. Financial performance is typically measured through indicators such as revenue, margins, and employment. Environmental performance is largely based on resource efficiency, waste management, renewable energy, emissions, recycling and land use. Social performance includes issues such as community relations, employee relations, fair trade, ethics, access to health care and education and governance.

FOREWORD


6

2. Nidumolu, R., Prahalad, C. K., & Rangaswami, M. R. (2009). Why sustainability is now the key driver of innovation. Harvard Business Review, 87 (9); 57-643.

3. Cañigueral, A. (2015). The citizen producer at the epicenter of the P2P revolution. Open Thoughts Blog. UOC (Open University of Catalonia)

In the context of an increasingly volatile, uncertain, complex and ambiguous (VUCA) world, sustainable innovation seems to be an imperative for business survival. The notion that no business can succeed in a failed society, or in a world where natural resources are exhausted, is increasingly shaping the sustainability and business agendas. Disassociating growth from environmental footprint, while at the same time increasing positive social impact, is key to guaranteeing that present and future societies and ecosystems thrive.

In 2030, the planet will be short of the resources required to power an economy that will have two billion more consumers. Poverty, food insecurity, climate change, biodiversity loss, water scarcity and environmental degradation are some of the significant global challenges facing the world today. A multiplicity of stakeholders is advocating for more inclusive and sustainable economic growth. Global commitments to tackle climate change and limit global warming below 2oC (COP 21 and recent COP 22) and the adoption of the Sustainable Development Goals (SDGs) by the United Nations and the rise of a more conscious consumer are clear signs that a new context is emerging. Companies, citizens and entrepreneurs are increasingly questioning their roles in this transition towards more sustainable lifestyles and a greener economy. In their search for a value proposition aligned with social and environmental sustainability, companies have gone through several stages2: from a more conservative legal compliance stance, to redesigning operations to foster more sustainable value chains, to offering more sustainable products and services as well as creating business models that will enable those offerings. A collaborative and multi-stakeholder approach, where each of the partners leverages its expertise and its access to networks, has been traditionally perceived as a major driver in this process.

However, the role of citizens in actively shaping this process seems to be less understood. In fact, the opportunities and challenges associated with encouraging citizens to take part in the sustainability innovation process as a key dimension throughout the value chain have not been properly addressed so far.

A sustainable future depends largely on citizens, users and consumers not only making sustainable choices, but also actively engaging with established business, brands and governments (sometimes taking a stand, others voicing concerns, and in others also participating in elaborating alternatives). The rise of the collaborative economy, where ‘people are empowered to get directly what they need from each other’,3 means that traditional businesses are being disrupted by the collaboration of their former ‘customers’ and that ‘business as usual’ is no longer the only option.

The EU-InnovatE project (Sustainable Lifestyles 2.0: End User Integration, Innovation and Entrepreneurship) aimed at filling this research gap. The key goals of the project have been to:

▪ Investigate the creative, innovative and entrepreneurial roles of individuals—as citizens, consumers, end users or entrepreneurs—in developing sustainable products, services and systems

▪ Analyse the citizens’ potential contribution to sustainability-driven innovation

processes, both within and outside corporate value chains;

▪Determine which policy mechanisms and corporate approaches can best enable the creation of new enterprises that create jobs and enhance competitiveness in Europe.

SUSTAINABILITY INNOVATION AND THE ROLE OF THE CITIZEN, USER AND CONSUMER: EU-INNOVATE

01


7

Harnessing the expertise of 14 leading academic, think tank and network partners 4 (ESADE Business School being one of them), EU-InnovatE has focused on four different geographical areas (Northern, Central, Eastern and Southern Europe) and four key domains: food, living, mobility, energy. These domains are considered to be responsible for the highest environmental impacts related to final consumption, and for shaping sustainable lifestyles in Europe.

The project has addressed several areas: from understanding what a sustainable society is, to exploring pathways to future scenarios for a greener Europe; from gathering and analysing pioneering practices in corporate sustainability innovation involving citizen participation, to identifying cutting-edge sustainability ventures all over Europe. In Figure 1 the five main areas of the project are depicted.

Figure 1 | EU InnovatE, five pillars of research and action

UNDERSTANDconsumers’ values

and behaviour in Europe

INVESTIGATEnew business

models

ANALYSE short- and

long- teerm obstacles and opportunities

ASSESSthe political dimension

of the evolution in sustain-able lifestyles in Europe

MEASURE prospects

End User Integration, Innovation and Entrepreneurship

FIVE AREAS OF INQUIRY AND ACTION FOR SUSTAINABLE LIFESTYLES AND GREEN ECONOMY IN EUROPE:

“Towards more sustainable lifestyles and greener economy in Europe”

4. Project coordination by Technische Universität München, Germany; Management and dissemination support offered by ABIS. Partners: Aalto University, Aarhus Universitet, Akademia Leona Kozminskiego, Copenhagen Business School, Cranfield University, Forum for the Future, Katholische Universität Eichstätt- Ingolstadt, Politecnico di Milano, Technische Universiteit Eindhoven, ESADE Business School, Università Cattolica del Sacro Cuore, and Universiteit van Amsterdam.

1

2

3

4

5


8

In total, the EU-InnovatE research team gathered an inventory of more than 300 sustainability innovation and sustainable entrepreneurship initiatives in four key domains (food, living, mobility, energy) and four geographical areas (Northern, Southern, Central and Eastern Europe). From the initial inventory, 38 in-depth case reports from 12 countries were elaborated. In this publication, we analyse the 8 cases researched by ESADE Business School in the South of Europe.

The research was based on a qualitative method using primary and secondary data. Each case relies on three to seven extensive semi-structured interviews as primary data; interviewees included company representatives, end users, and at least one other stakeholder involved in the innovation process for each case. In addition, corporate annual and sustainability reports, websites, and documentation were examined, as secondary data. The data collection period went from January 2014 to April 2015, while case writing, workshops and questionnaires took place until summer 2016. The final case reports ranged from 30 to 50 pages. The cases here presented are a summary of the longer versions, including key points and lessons learned.

The overall framework that emerges from the analysis of the project cases has three main components: first, the new role of citizens in driving sustainability innovation and entrepreneurship; second, the role of companies and entrepreneurs as agents of change; and third, the role of policy in shaping more sustainable lifestyles and favoring sustainability innovation and entrepreneurship.

3.1 THE NEW ROLE OF THE CITIZEN

In the case of sustainable innovation, the citizen-user-consumer plays different roles. This new ‘citizumer’ or ‘prosumer’ is not a passive recipient of goods and services, but also an active player in open innovation processes, a potential sustainable entrepreneur, unleashing new opportunities and envisaging new business solutions to environmental or social problems, or a member of a community that fosters change or creates alternative models of production and consumption (as shown in Figure 2).

EU-INNOVATERESEARCH METHODOLOGY02 ASSUMPTIONS

AND FRAMEWORK03

INDIVIDUAL USERS

PASSIVE USERS (CO-) PRODUCING USERS

COMMUNITY INNOVATION

DEMOCRATISATIONOF INNOVATION

COLLABORATIVECONSUMPTION

‘CLASSIC’CONSUMERISM

COLLECTIVE USERS

Figure 2 | The role of the citizen-consumer.

The arrow shows the direction of travel for innovators in possible future scenarios.

Source: Forum for the Future.


9

The involvement of the citizen —whether as part of the open sustainability innovation process of the firm, or as an entrepreneur or member of a broader community or cooperative creating new sustainable business models— has become decisive in achieving innovative products and services.

While the social and environmental value added by the sustainable innovation outcome can be observable in both cases (company-driven and entrepreneur-driven innovation), there are clear differences as well. Entrepreneurial sustainable innovation projects have their origin in citizens’ own interests, inner drive, and idealistic passion to change the world. By contrast, sustainable innovation facilitated by companies, even if it engages citizens, operates within a market-driven framework guided by the interests of the company.5 Perhaps for this reason, company-driven sustainable innovation might tend to be more incremental in its approach, while entrepreneurs often look for more systemic change and offer more breakthrough sustainable innovations.

THE ROLE OF COMPANIES AND ENTREPRENEURS AS

3.2 AGENTS FOR SUSTAINABLE AND DISRUPTIVE CHANGE

Can traditional companies be considered sustainability change agents? Are their sustainable innovations really disruptive? It seems that eco-entrepreneurs are ahead in the sustainability innovation journey and their approach is more breakthrough in the way they manage their ventures as well as in the social, economic and environmental impacts of the goods and services they provide. The most common approach in large companies might be to protect their core business, while at the same time experimenting on the side with sustainable innovations that could eventually shift their business model. However, while entrepreneurs face numerous challenges in sustaining their growth and scaling up, the companies’ potential for impact is greater and they have a unique market position to influence changes in societal norms, policies, values, expectations and behaviors as well as the resources to do so. Thus, the role of companies in shaping ‘societal norms and behaviors throughout the social innovation process’6 should not be underestimated. Yet, the entrepreneurs, through their networks and community engagement, often challenge more fundamental societal norms and consumer attitudes. While companies have the power to scale up, smaller players may be more easily able to disrupt traditional markets and business models.

Ultimately, whether it comes from companies or from entrepreneurs, the societal embedding of sustainable products and services requires a combination of the following factors: systems change thinking, transparent co-creation with different actors and stakeholders, the understanding of innovation as a network for learning, and the use of ‘different types of practices to influence societal norms and expectations as well as user habits and routines’. 7

5. As identified by Nielsen, K. R., Reisch, L., & Thogersen, J. (2014). User, innovation and policy makers in sustainable

innovation. Copenhagen Business School and Aarhus University. EU-InnovatE report

6. Purtik, H., & Arenas, D. Embedding Social Innovation: Shaping Societal Norms and Behaviors throughout the Innovation

Process (working paper)

7. Purtik, H., & Arenas, D. Embedding Social Innovation: Shaping Societal Norms and Behaviors throughout the Innovation

Process (working paper)


10

3.3 THE ROLE OF POLICY IN CREATING MORE SUSTAINABLE LIFESTYLES Business and entrepreneurs do not operate in a vacuum. One of the key objectives of the EU-InnovatE Project has been to assess how policies can help create conditions to foster sustainable innovation; specifically, ‘How to develop better policies to encourage governments, businesses and individuals to take action and to work together to develop sustainable innovations in order to support sustainable living’. 8

Following the discussions of the Sustainability Innovation Exchange hosted by Cranfield University and Globescan in May 2016, four areas were identified in which policy change could enable more sustainability innovation products and processes: 9

a. Education: a shift in educational systems to enable sustainability innovation and entrepreneurship through more learner-centered programmes, critical analysis and systems thinking approaches. Other ideas suggested are to include sustainability innovation in higher education and to offer grants to support the development of sustainability curricula and teaching resources.

b. Networks: government policy should encourage and establish mechanisms for the creation and maintenance of sustainability learning networks where multiple stakeholders collaborate. The creation of formal networks and incubators for entrepreneurs are some of the policy recommendations suggested.

c. Funding: facilitate access to finance and better tax and investment incentives to run, escalate and grow business ventures, companies and SMEs with a positive social and environmental impact.

d. Impact: different impact measurement and a new definition of ‘value’ appear as two important factors to consolidate sustainability innovation. Some ideas on this would be the mandatory inclusion of non-financial metrics in corporate reporting to showcase the environmental and social value of an innovation.

8. Highlights from the Sustainability Innovation Exchange, Cranfield University and GlobeScan, May 2016.

9. Extracted from ‘Highlights from the Sustainability Innovation Exchange’, Cranfield University and GlobeScan, May 2016.


11

04

4.1 COMPANY- DRIVEN INNOVATION

Regarding company-driven innovation processes in which citizens-users-consumers have participated, our analysis has identified some key enablers, tools, and outcomes, which we summarize below.

a. Company Internal Enablers

LEADERSHIP AND TOP MANAGEMENT BUY-IN

A key organizational enabler is leadership and top management buy-in. A clear intrapreneurial organizational culture also proved to be decisive, not only in the decision to include citizens-users-consumers in the innovation process, but also in allowing experimentation in the adoption of new projects. Top management support, visionary leadership, a strong organizational culture of trial and error, internal collaboration and strong entrepreneurial attitudes were identified as key facilitators of sustainable innovations in companies.

b. Company External Enablers

ROLE OF STAKEHOLDERS AND COLLABORATION

The active participation of both primary stakeholders (e.g. suppliers and business partners) and secondary stakeholders (e.g. public authorities, civil society organisations, universities and foundations) was key in all the cases analysed, although it seems that secondary stakeholders play a bigger and more important role than in other types of innovation. In the case of some civil society

organizations we observe a much more co-creative and collaborative role, moving away from their traditional roles of advocacy and confrontation.

These different types of stakeholders play a variety of different roles throughout the process: as facilitators of citizen engagement, acting as stimulators, initiators, brokers, concept refiners, legitimators, educators, context enablers and impact extenders.10 This also shows that citizens can play a role in these processes, not just as consumers of companies’ goods or services but also as members of institutions where they serve as professionals, as affiliates of civil organizations, as students, and in other capacities.

Innovation for sustainability is highly collaborative in nature. While companies find it challenging to deal with multiple stakeholders, they also recognize that these stakeholders are very important in the sustainable innovation process, as they contribute knowledge, resources and capabilities, and thus can become sources of competitive advantage. Either working with specialized foundations (Unilever, Veritas) or municipalities (Vélib’) as well as small primary stakeholder groups (Kard Architects), the stakeholder management effort to integrate stakeholder insights into the sustainable innovation process has not only provided extra information to be used in the project, but often has changed the nature of the project itself (a sustainable school building, a new zero-waste product line and a hybrid, inclusive distribution chain).

Companies involved in these co-creation processes are also developing new organizational capabilities, since proper integration of insights requires a set of competences specifically for selecting and evaluating stakeholders and establishing proper dialogue with them, as well as aligning and empowering internal actors for external collaboration.11

INITIAL FINDINGS

10. Goodman, J., Korsunova, A., & Halme, M., (2017) Our Collaborative Future: Activities and Roles of Stakeholders in Sustainability-Oriented Innovation. Business Strategy and the Environment. Wiley online DOI: 10.1002/bse.1941.

11. As identified in Zimmerling, E., Purtik, H. & Welpe, I. User involvement in Business model innovation. Findings from two case studies in the context of electric mobility. Working paper.


12

c. Tools

INTEGRATION OF CITIZEN INSIGHTS

The companies analysed have used a variety of methodologies and tools to involve citizens-users-consumers and other stakeholders in their co-creation processes. Many of these methods come with a twist of lifestyles 2.0 (e.g. conducting focus group discussions in an online environment). Such modernizations introduce interesting improvements to the traditional methods. First, they decrease the costs of participation for end users (e.g. travel and participation time) and make it possible to include population segments from different geographical locations. Second, the online environment balances out personality factors in discussion dynamics.

For instance, after posing the question online, all participants have an equal amount of time to type their responses simultaneously. They are able to express their own opinions more freely because they do not see the responses of the others right away. This helps to avoid the dominance effect of the most outspoken participants, and allows people with different personalities to have their opinions expressed and recorded. 12

The main citizen-user-consumer integration methodologies used are summarized in Figure 3, separated into the different stages of the innovation process. As seen in the figure, most of the methods are used at the ideation and, specially, product development stage.

d. Outcomes

HIGHER MARKET ACCEPTANCE

Amongst the benefits of citizen-user-consumer involvement in sustainable innovation processes is that the final outcome is more tailored to consumer needs and, hence, its rate of success and market acceptance when launched is likely to be higher. Citizen-user-consumer involvement also allows business model experimentation and the development and refinement of different components of the resulting outcomes. Last, this way of integrating insights allows a specific business unit or department to experiment with a more advanced stage of innovation, while the rest of the organization continues with the usual business. This pilot approach to sustainability is very flexible and enables experimentation and eventually can yield quick wins that the entire organization can then incorporate more systemically.

12. EU-InnovatE WP3 Report by Korsunova, A., & Halme, M. (2015).

Figure 3 | Distribution of citizen integration methods across innovation stages in company driven processes. Adapted from report by Korsunova, A., & Halme, M.

IDEATION

online idea contest; home visits and observation; survey of expectatuibs; personal interviews; weak signals; feedback in stories; lead user workshops

COMMERCIALIZATION

prototype testing; focus groups; consumer communication in stores; online ideation for potential service use; end user committee

POST-LAUNCH

cooperation with bloggers; engaging mobile applications; workshops/seminars; collecting feedback

PRODUCTDEVELOPMENT

(online) focus group discussions; surveys; prototype testing; co-creation workshops; discussions “echoroom” personal interviews; mock-up testing; consumer diaries; home visits; long-term product testing


13

4.2 SUSTAINABLE ENTREPRENEURSHIP INNOVATION

As mentioned previously, sustainability innovation processes led by citizen-entrepreneurs present some differences from innovation led by an established firm. Here we summarize some of the key aspects and common characteristics our study has come across.

a. Sustainability entrepreneurship development pattern

THE SUSTAINABLE ENTREPRENEURSHIP PROCESS (SEP)13

From the analysis of the cases a pattern for sustainability entrepreneurship appears, which echoes the model developed by Frank-Martin Belz and Julia Binder. This model includes six distinct phases that are common in all cases studied (see Figure 4):

▪ To begin with, the future sustainable entrepreneurs face a social or ecological challenge in their private or professional life, which makes them react and put all their energy, passion and skills into solving it.

▪ Second, they re-frame their challenge as an entrepreneurial opportunity.

▪ As an intermediate step, the entrepreneur seeks the alignment of his-her idea or venture with social or ecological goals (“double bottom line solution”) and the key values and needs of the specific customer groups is addressing.

▪ It is important to note that the triple bottom line of social, environmental, and economic goals is integrated in a sequential manner and not simultaneously.

▪ The last two stages are funding/forming a sustainable enterprise and creating/entering a sustainable market.

It is also worth noting that funding of these sustainable enterprises pursuing the triple bottom line depends on on a variety of potential sources for seed capital, including family, friends, bank loans, crowdfunding and public funding. Another characteristic of sustainable enterprises is that they either create new sustainable niches or enter established sustainable niches and segments in the higher end of the market.

13. Belz, F. M., & Binder, J. K. (2015). Sustainable entrepreneurship: A convergent process model. Business Strategy and the Environment. doi: 10.1002/bse.1887.


14

In the following pages we present the eight cases of companies selected by ESADE Business School for the EU-InnovatE project. They can be classified as established companies which engage with citizens-user-consumers in sustainability innovation processes and new sustainable entrepreneurial ideas developed by citizens-users concerned by sustainability. They can also be classified according to the four industries which were the focus of EU-InnovatE, as having the highest impact on the promotion of sustainable lifestyles: food, living, mobility and energy.

FOOD: Unilever, Veritas, Food Assembly

LIVING: Kard Architects, Noem

MOBILITY: Social Car, Vélib’

ENERGY: Som Energia

DEVELOPINGTRIPLE BOTTOM LINE SOLUTION

FUNDING AND FORMING OF A SUSTAINABLE ENTERPRISE

CREATING A SUSTAINABLE MARKET

RECOGNIZINGECOLOGICALPROBLEMS

RECOGNIZINGECOLOGICALOPPORTUNITY

DEVELOPINGDOUBLE BOTTOMLINE SOLUTION

RECOGNIZINGSOCIALPROBLEMS

RECOGNIZINGSOCIALOPPORTUNITY

DEVELOPINGDOUBLE BOTTOMLINE SOLUTION

Figure 4 | Sustainable Entrepreneurship Process Model. Source: Belz, F. M., & Binder, J. (2015). Sustainable entrepreneurship: A convergent process model. Business Strategy and the Environment.

PART 2

CASES UNILEVER

VERITAS

VÉLIB’ JCDECAUX

KARD ARCHITECTS

SOCIAL CAR

SOM ENERGIA

FOOD ASSEMBLY

(La Ruche qui dit Oui!)

NOEM

16

UNILEVERMICRO-ENTREPRENEURSHIP OPPORTUNITIES

FOR YOUNG UNEMPLOYED PEOPLE

IN SOUTHERN EUROPE

ABOUT THE COMPANY

Unilever is one of the world’s leading fast-moving

consumer goods companies with products sold

in over 190 countries and a turnover of €53.3

billion in 2015. According to company data,

more than two billion people daily use Unilever

products. Unilever has more than 400 brands,

14 of which generate sales in excess of 1 billion

a year. Unilever España S.A. operates as a

subsidiary of Unilever NV.It was founded in 1948

and is currently based in the Barcelona suburb

of Viladecans. In 2015 it had a total turnover of

€604 million and employed over 450 people.



17

01 | WHAT IS THE SUSTAINABLE

INNOVATION ABOUT?

“Soy Frigo” is an inclusive business proposal which Unilever España developed to fight youth unemployment in Spain (more than 50% in 2015); it was created with the ambition of being rolled out into other Southern European countries, where percentages of unemployed youth are equally high (around 50% in Greece; 26% in Portugal). The project involves the creation of a new retail business model: young entrepreneurs are trained to manage their own mobile vending ice cream business, recovering the original spirit of ice cream consumption and delivery, using low-carbon-emission vehicles. The idea was to become a ‘bottom of the pyramid’ business model initiative for developed countries.

The programme is addressed to young unemployed people with high risk of social exclusion as well as graduate students that are searching for employment and their first job experience. The aim of the project is not only to provide a temporary job, but also to offer mentoring, training and support to acquire the necessary skills in micro-entrepreneurship, food handling management, marketing and finance to be able to run their own small business in the future. The participants are involved in the design, planning and the strategy of their small enterprise and provide continuous feedback to Unilever for the improvement of the operation.

02 | WHERE DID THE IDEA COME FROM?

The idea of implementing micro-entrepreneurship mobile vending schemes followed the model applied by Unilever in some developing countries, mainly in Asia. Adaptation of this model to the European context entailed a first-hand knowledge of the most successful initiatives, especially those in India and Thailand. Encouraged by Unilever CEO Paul Polman, top management members and the directors of the Ice Cream and Beverages Business Unit started discussing how to make the initiative a reality. Several meetings with users of the model and with mobile vending experts took place to gather necessary information and assess the main characteristics of the model. For decisions on the vehicle mix, defining locations and routes, as well as the profile, training and coaching of entrepreneurs, the Unilever Singapore team organised a co-creation workshop in March 2014, with the mobile vending business responsible person and sellers from India, South Africa, Brazil, Mexico, Vietnam, Malaysia and Thailand, so that Spanish project leaders could get the maximum information possible.

03 | WHO WAS INVOLVED?

The project development could not have been possible without wider stakeholder involvement. The collaboration with public and local authorities (municipalities, local governments and the Spanish Ministry of Employment) as well as the involvement of other partners (Foundation Manpower, for the training scheme) and NGOs such as Èxit Foundation (for the selection of the programme beneficiaries) has been crucial to the project viability and success. Rapid scalability and impact of the project have made the project attractive to these different stakeholders.

The pool of potential participants is provided by Èxit Foundation, an NGO that works on the employment of young people at risk of social exclusion, while recruitment and training is coordinated by Unilever and the Manpower Foundation. In its second edition, in 2016, the company has also created a website where potential candidates can register and apply directly. Once the participants are selected, they receive training modules on finance, marketing supply food management and social media. After this short but intense training period, the selected sellers are provided with a vehicle (bicycle, caravan, adapted isocars Piaggio or small pushcarts) and a selected distribution area for their business distribution (usually touristic locations with good concentrations of people enjoying leisure time, such as beaches, concerts, festivals). Up-front clearance of all necessary municipality licenses and permits is a pre-condition to start the program. The sellers make a minimum initial investment for buying the ice cream products, and the benefits they obtain are according to their turnover performance. The Unilever ice cream division supervises the project and is in contact with all participants on a frequent basis.


18

04 | WHAT IS THE ENVIRONMENTAL

IMPACT OF THIS INNOVATION?

The project has a more distinct social impact rather than an environmental one. However, regarding the mobile vending aspect, this approach promotes the use of low-carbon and energy-efficient vehicles, with a special focus on use of bicycles whenever possible, especially at events, leisure parks and camping sites, where mobility is more limited and the concentration of people is higher. While the environmental aspect of the distribution model needs to be further assessed, so far it appears that this new approach (smaller amounts, more frequent trips, by low-carbon-impact vehicles) is more environmentally friendly than the traditional model of supplying bigger quantities to larger retailers using delivery trucks. Using a regional warehouse per geographical area also means there are less CO2 emissions per delivery.

05 | WHAT IS THE SOCIAL IMPACT

OF THIS INNOVATION?

The socially inclusive and entrepreneurship dimensions of the value proposition are key to understanding its impact: selecting, training, coaching and creating jobs for young unemployed people to increase their employability is the most important aspect of the project.

The pilot programme, ‘Frigo y tú’, was initially launched in the summer of 2014 in Spain and Portugal, being successfully implemented in more than 213 locations, deploying a total of 190 low-carbon vehicles into the market and providing an opportunity to 410 people in Spain and Portugal to get their first seasonal job and acquire the necessary knowledge and skills to eventually develop their own business.

In 2015, the project was officially launched and renamed ‘Soy Frigo’ (“I am Wallis” in the rest of Europe), and in 2016, the number of participants was already 450 young people, while more than 25,000 had showed interested in joining the programme. The project is now developed in Portugal, Greece, Italy, Hungary, the UK and Poland.

In 2014 ‘Frigo y tú’ was selected as one of the most sustainable innovative projects at Unilever amongst a total of 1,200 around the world. It won the Global Internal Heroes’ award, which is granted to the best socially and environmentally intra-entrepreneurship propositions developed at different Unilever offices.

06 | IS THIS INNOVATION

ECONOMICALLY SUSTAINABLE?

The project achieved its breakeven point in the first year. Total sales revenue was estimated at around 150,000 for 2014 (a year that was negatively impacted by bad weather in summer and lower ice cream consumption). The turnover forecast for 2016 is to reach 800,000 and to employ 450 young people.

The sellers initially make a small investment to create commitment to their business; this covers some of the initial costs of the vehicle they will be operating as well as their initial product stock. As the company treats the project as an innovative new channel of distribution, ROI are not as demanding as for other projects. The main objective for the first year was to roll out an effective pilot programme to validate the business model, while in the second and third iterations (summer 2015 and 2016) the goal was to establish the programme and make this distribution option a profitable one for the company as well as for the entrepreneurs. In order to motivate their sales, three prizes are awarded at the end of the programme to the best selling units as well as the more innovative approaches to increasing sales revenue.

07 | WHAT LESSONS CAN BE LEARNED FROM THE SOY FRIGO SUSTAINABILITY INNOVATION?

SPURRING INTRAPRENEURSHIP

Spurring intrapreneurship and sustainable innovation initiatives within Unilever: some of the main outcomes of the innovation have been to create a climate where intrapreneurship is valued and encouraged, as well as

greater commitment and employee engagement.

ENGAGEMENT

The project enhanced the relevance of community engagement and multistakeholder programmes which are gradually becoming more transformational at the societal level, moving away from a traditional

CSR approach.

PARTNERSHIPS

The success of the project relies on successfully building alliances and creating strong relations with public and private partners with a shared common goal: reducing youth unemployment. Partnerships also assist in enhancing credibility of the project and

the business model.

YOUTH INTEGRATION

Youth integration in societies where youth unemployment has reached alarming rates (55% in Spain) and there is a high risk of social exclusion, attempts by companies to fight this problem are welcome. Youth integration can be accomplished

throughout the value chain as suppliers, sellers or micro-entrepreneurs.

MICRO-ENTREPRENEURSHIP

Coaching and training allow for the possibility of enhancing entrepreneurship initiatives, potentially

increasing employability opportunities of the beneficiaries of this programme.

USE OF LOW-CARBON VEHICLES

Distribution through low-carbon-emission vehicles (bicycles, pushcarts) is more environmentally

efficient than traditional high-volume transportation (mainly done through trucks).


20

CUINA VERITASSLASHING FOOD WASTE TO ZERO:

IMPLEMENTING CIRCULAR ECONOMY

PRINCIPLES TO CREATE A NEW PRODUCT LINE

ABOUT THE COMPANY

Eco Veritas is the largest retail company for organic and ecologically

certified food products in Spain, with a network of more than 40

supermarkets and an on-line shop. Eco Veritas employs 200 people and

had a turnover of €45 million in 2015.

The company was created in 2003 by four families with a strong tradition

in the Spanish food distribution and retail sector. Aware of the world

trends in organic food consumption, the founders were convinced that

sustainability was also possible in the Spanish food and nutrition market.

Eco Veritas takes a vertical integration approach. They are actively involved

in sourcing, distributing and selling organic food products. The expansion

strategy of the company is ambitious with two to three new supermarkets

opening per year. Shops are supported by the company headquarters,

located in Barcelona, as well as a central logistics and distribution center,

a baking facility where traditional types of fresh bread are produced daily

and, most recently, a food processing kitchen (Cuina Veritas).



21


INNOVATION ABOUT?

The Cuina Veritas (Veritas Kitchen) project developed by Eco Veritas supermarkets aims at reducing food waste along the value chain by creating a new range of ecological and organic products. These products are made with fresh, top-quality fruit and vegetables that consumers reject due to their imperfect appearance and which would otherwise have gone to waste.

The project has two sustainability dimensions. First, an ecological aspect aims to drastically reduce the level of food waste at the company. Second, there is a social aspect through the inclusion of mentally or physically disabled people in the handling and manufacturing of the products. The project development (from ideation to market launch) lasted four years and the first range of products was introduced to the market at the end of 2013, with strong consumer approval.

The sustainable innovation mix that Eco Veritas offers combines many aspects of sustainability: ecological value and the concept of zero waste, social integration, a sustainable education platform promoting food waste reduction, and a rediscovery of traditional recipes.

At present, the product range includes a wide variety of broths and soups, tomato and vegetable sauces, fruit jams, and ham and vegetable pizzas.


The idea to develop Cuina Veritas originated from the top management team’s concern about food waste along the value chain, which is considered to be a major economic, ethical and environmental challenge by both the employees of the company and many of its consumers. Since 2009 the company had been receiving frequent questions from customers about the level of waste generated by the stores and complaints addressed to the management about why an ecological and sustainable firm was throwing food away.

The company researched several ways of reducing food waste. These included carefully planning production with farmers in the supply chain and working in collaboration with charities, companies and food banks to find a way to make use of food products with a short shelf life. However, there was increasing concern about the level of waste generated by the products rejected by consumers because of their imperfect appearance despite being in perfect condition. Edible fruit and vegetables not meeting consumer expectations for size and appearance, or dairy products which were nearly out of date or had some visual flaw in external packaging, were not chosen by customers and were eventually thrown away.

Around the same time, the CEO met the director of Fundació Alícia (Alicia Foundation), a centre devoted to technological innovation in cuisine, improving eating habits, healthy nutrition and rediscovering traditional food heritage. They started a dialogue about how to develop a new sustainable product which would also help Eco Veritas to achieve zero organic waste. A final factor in the development of Cuina Veritas was the impact of the economic crisis in Spain, which added a new social dimension to the supermarket food waste challenge. Throwing away food when most people were struggling with the consequences of high unemployment and increasing poverty seemed less acceptable than ever from an ethical standpoint.


In 2010, a small team was formed including the CEO, the Marketing and Communications Director and the Purchasing Manager in order to work on solutions and further develop the preliminary ideas.

Eco Veritas has been open, from its very beginnings, to stakeholder insights, such as those coming from consumers or producers. In this sense, Cuina Veritas has been the outcome of integrating concerns from users and reaching out to other stakeholders. While the idea originated from top management, its development has also included third parties such as the Alicia Foundation and Grupo SIFU.

CONSUMER ENGAGEMENT

Eco Veritas actively engages with its consumers through several communication tools and platforms. These include monthly newsletters and point-of-sale satisfaction questionnaires, social media (mainly Facebook, Twitter and You Tube) as well as customer email and consumer workshops. Eco Veritas customers tend to be very pro-active in providing feedback to the company, so that a lot of information is gathered about the preferences, opinions and ideas of the clients regarding the product line offered. Consumer feedback and insights are processed weekly by the Marketing and Communications director who, in turn, informs the Purchasing director about underlying trends and unsatisfied demands, which could lead to new products being added to the portfolio.


22

This frequent communication with customers was very important for getting ideas about how food waste could be proactively prevented. It also was key in the commercialization phase, when the product was first placed on the supermarket shelves and initial consumer feedback was gathered for improving it and even adding new proposals to the line.

OTHER STAKEHOLDERS

Alicia Foundation is a research centre dedicated to technological innovation in cooking, promoting organic food and traditional culinary heritage to enhance healthy eating habits. Alicia Foundation offered its knowledge and expertise as well as offering access to market intelligence and a team of project devoted experts.

Eco Veritas and the Alicia Foundation worked together in analysing different organic fruit, vegetables and dairy products offered by the main food retail chains, both traditional and specializing in organic food. The conclusions drawn from the market research analysis were useful in defining which recipes could be tested and developed, and which product range would be more competitive.

Grupo SIFU: The final product manufacturing and processing of Cuina Veritas products was done by mentally or physically disabled people through collaboration with a special centre, Grupo SIFU. With 17 years of experience, Grupo SIFU recruited and trained the people involved in these stages of production.



The most important environmental impact of this innovation is the reduction of food waste (mainly vegetables and fruits, but also ham and chicken). Many of the materials that would otherwise have gone to waste are now reincorporated into the value chain. The company is adopting a zero waste philosophy and already drastically reducing the level of food waste going to landfill.

The project is improving waste management across the value chain. From where the product is sourced to the final consumer, there is a clear strategy of reducing food waste: products are not rejected at the production site (especially in farms), and all company departments (from transportation to warehouse, distribution and sales) are aware of the process. The company is moving towards a closed-loop approach.


OF THIS INNOVATION?

From a social perspective, the project has had two main impacts: first, products are manufactured by physically or mentally disabled employees, who often face challenges in being integrated into the workforce; and second, it promotes a new way of consuming and rediscovering traditional home food management expertise. The value held by older generations of creating nutritious food out of leftover ingredients and never throwing away any food is rekindled and contributes to rediscovering traditional food.

Finally, another innovative characteristic of the project is that it acts as a communication and educational tool for sustainability among consumers by increasing awareness and offering an ecological alternative. Since supermarkets play an important role in shaping consumer behavior, innovations like Cuina Veritas challenge current unsustainable consumer ‘throw-away’ lifestyles which place little value on food and encourage us to buy more from our overstocked supermarkets.



The economic viability of the project was not considered a major priority for the company. The final products are being sold at a competitive price. However, the production process adds some costs, which were not originally foreseen. After the second year on the market, the company executives expect the Cuina Veritas product line will break even.

07 | WHAT LESSONS CAN BE LEARNED FROM ECO VERITAS’ SUSTAINABILITY INNOVATION?

IMPORTANCE OF CUSTOMER PERCEPTIONS

Customer concerns about food waste in Veritas supermarkets and the responsiveness of the company were at the origin of the project creation. Customer reaction to company proactiveness has also been very positive and has enhanced

brand loyalty and corporate reputation.

NEED TO MANAGE RELATIONS WITH DIFFERENT STAKEHOLDERS

Both consumer needs and external stakeholder demands needed to be leveraged during the product development

process. This presented challenges and created concerns about the feasibility of the project. How to balance the needs of all actors involved, particularly when the project management team is relatively small and also in charge of normal business operations, will need to be addressed in the next phases of the

project. However, the importance of co-creating sustainable innovations is now part of the corporate philosophy.

ALSO FOR SMEs

Cuina Veritas is an excellent example of how small to medium-sized companies can act as drivers of innovation

for sustainability.


LEADERSHIP FROM THE TOP

A strong and inspiring leadership, clear vision and goals, a committed and engaged managerial team, and a focus on integrating sustainability in business development strategies are some of the key characteristics Eco Veritas has demonstrated to be important in innovating for sustainability.

24

VÉLIB’/ JCDECAUXBIKE-SHARING AND SUSTAINABLE

LIFESTYLES IN THE CITY OF PARIS

ABOUT THE COMPANY

Vélib’ is a public-private project between the Mairie de Paris

(Paris City Hall) and JCDecaux.

Founded in 1964, JCDecaux is the world’s second-largest outdoor

communications company. Headquartered in Paris, France, the company

has installed approximately 1.1 million advertising panels in over 75

countries and generated revenue in excess of €3.2 billion in 2015.

One of JCDecaux’s three key business units is the installation

and maintenance of street furniture (e.g. bus shelters, kiosks and

automated public toilets) which contain advertising panels. The income

from advertising funds JCDecaux´s bicycle-sharing programmes.

After success in various towns and cities, and particularly the large-scale

project in Paris, JCDecaux now provides this system all over the world,

recording a total of 350 million rentals from systems registered in 69 cities.



25


INNOVATION ABOUT?

Vélib’ (Vélos en libre-service à Paris) is one of the largest cycle-share systems in the world. Based in the city of Paris, it has more than 20,000 bikes available covering the whole city, day and night, throughout the year. The project was initially developed by the company JCDecaux in 1999, and aimed at providing a zero-carbon cycle-share system for the city. This was part of the ‘espaces civilizés’ initiative of Paris Mayor Bernard Delanoë, aimed at greening the city, reducing pollution and making Paris more accessible for pedestrians and cyclists. The initiative aimed to almost halve the use of private vehicles in the city centre by 2020.

Today, Vélib’ is the largest bicycle-sharing programme in Europe with 1800 stations, an average of 108,090 daily users, and the highest market penetration (1 bicycle for every 97 residents). It has more than 280,000 subscribers and is considered to be the cycle-share system which has inspired the worldwide trend in providing self-serve bicycles and more sustainable mobility in large cities. It has received widespread acclaim and was awarded the Ingenuity Award in 2012 by the Financial Times and Citi for JCDecaux´s pioneering spirit, as well as the Responsible Tourism award.

While bicycle sharing systems are now well known around the world, Vélib’ presents some unique characteristics that have positioned the initiative as truly innovative. One was the development of technology, a breakthrough at the time, which totally ‘dematerialized’ the access to bikes, making the system completely self-service. The concept involves the positioning of self-service bike stations throughout the city, which can be accessed by would-be cyclists for short trips. By using a contactless card, cyclists can unlock an individual bicycle and use it to make a trip within the city. The bikes are then returned to another station at the destination.

Vélib’s patented technology, which enables credit cards to be used directly at the cycle terminals, has meant that it is easily accessible both for local residents and for tourists.

Another unique characteristic is the active involvement of the bicycle users. Through several channels the citizens have provided continuous feedback and ideas which have been the source of innovations. From conception to the present day, citizens have been involved in Vélib’ in a variety of different ways, including a customer relations call centre, a blog, surveys, focus groups and most notably through a User Committee, which meets several times each year and provides insights and feedback on how to improve the system to the City of Paris and JCDecaux.

Last, an active stakeholder engagement approach with third parties has fuelled the creation of a sharing mentality and sense of community in the city of Paris, as well as encouraging users to switch to other sustainable products and services in other areas of their day-to-day lives, further enhancing sustainable lifestyles amongst its citizens.


The idea came from the founder of the company, Jean-Claude Decaux, who originally launched the cycle-share concept in Vienna in 2003, followed by other smaller projects in the Spanish cities of Córdoba and Gijón. After introducing the system in France (with 2,000 bikes in Lyon), the city of Paris decided that the bike-sharing scheme could also be workable in the capital, as part of a broader plan conceived to promote cycling and reduce the use of private cars to decrease the carbon footprint of the city.

Vélib’ was launched in 2007 with 10,648 bicycles at 250 stations. In less than six months, this number was doubled. In 2014, a new service catered to the needs of children aged two to eight was introduced, in what is considered the first kids’ bike sharing scheme in the world, aimed at instilling the idea of cycling in the younger generations.


26


One of the most distinctive features of the Vélib’ project in relation to other bicycle-sharing schemes is how citizens and users of the service can interact with the company to provide their feedback and ideas about a more sustainable and effective product and service.

Citizens’ opinions and feedback have come to play a role in the way the company improves Vélib’ functionalities, thanks primarily to the establishment of a user committee, a blog, focus groups and surveys, as well as a more traditional customer relations call centre. Ideas generated through these interfaces are then passed up to JCDecaux by a director of customer relations and several decision committees. The ability to pilot ideas and prototypes with end users at the early stages of the service was noted as particularly valuable.

At the request of the Mairie de Paris, a User Committee was established in 2010 in order to obtain recommendations from the Vélib’ community. The committee is composed of around 12 volunteers who serve for two years. Successful applications were chosen as a representative selection of users from different backgrounds and areas of Paris. The User Committee meets three to four times a year with representatives from JCDecaux and Mairie de Paris to discuss challenges, potential solutions and trials of new ideas.

New ideas were also gathered through surveys and focus groups: JCDecaux’s research department has experts in both qualitative and quantitative research and often deploys surveys to get feedback from users about Vélib’. In contrast to the usual low response rates to questionnaires in general, bike sharing prompts a large response, attracting participation rates of up to 30%. Also, in order to obtain citizen feedback on some more specific issues, focus groups

were organised. Groups discussed their visions for the future and how they see the self-service bikes of tomorrow in order to generate ideas about possible innovations.

ENGAGEMENT OF OTHER STAKEHOLDERS

Collaboration has been central to the Vélib’ project. Particularly useful for JCDecaux, traditionally a business to business company, have been those partnerships which have supported an interface between Vélib’ and its customers. Working with third parties has created and facilitated a much wider movement and a cultural change around mobility in Paris leading to more sustainable lifestyles.

▪ Mairie de Paris: For JCDecaux, Vélib’ represented the opportunity to secure the outdoor advertising contract with the City of Paris, and was therefore fundamental to JCDecaux’s core business. JCDecaux bore the cost of setting up and managing Vélib’ and in return it benefits from advertising income throughout the capital. The role of the Mairie de Paris is to manage the blog and the User Committee. More broadly, the transport and infrastructure policies of the Mairie de Paris have been essential for the development of Vélib’. Policy changes such as extending and improving cycle lanes to substantially reduce and, at some point in the future, eliminate the use of private cars in large parts of Paris—hence to ‘green’ the city—have created an environment in which Vélib’ can thrive.

▪ CitéGreen: The collaboration between CitéGreen and JCDecaux provides advantages for all parties involved. As a French startup communications company with the aim of promoting ‘green’ behaviour, CitéGreen accelerated

the use of Vélib’ and extended its impact into other areas of sustainable lifestyles. CitéGreen developed a programme that enabled the tracking of subscribers’ movements, who were then rewarded for their ‘green behaviour’ through an incentive system. This system enabled the exchange of points for green products and services and other rewards. CitéGreen also organised several competitive challenges annually to promote Vélib’ usage.

▪ Cycling associations: Vélorution is a movement that aims to reclaim the streets for cyclists and pedestrians. By working in collaboration with Vélib’ in debating issues such as cyclist safety, legal issues and cycling lanes, this cycling association played an important role in helping to ‘bring people into the streets’.

▪ Other associations: A number of informal associations have grown up around Vélib’ such as ‘Velibataire’, a French dating site for bike fans. The creation and growth of both formal and informal associations and organisations has had the effect of creating a broader sustainability lifestyle culture, which benefitted Vélib.


27



The environmental impact of Vélib’ is broad. To begin, it led to the conversion of over 6,000 parking spaces in the streets of Paris into Vélib´ stations. This fact contributed to the overarching objective of reducing the use of cars in Paris and promoting cycling and pedestrian areas. Alongside the conversion of parking spaces into Vélib’ stations, there was also a substantial extension of cycle lane networks throughout the city.

Another area of Vélib’s environmental impact which is noteworthy is in the sourcing, maintenance and disposal of the bikes themselves. 90% of the material used in the bikes can be recycled. Even tires and inner tubes are being re-used by four partners of JCDecaux to make leather-type goods and jewelry. Another environmental consideration is the use of rainwater and eco-friendly anti-graffiti product to clean the bikes. Last, Vélib’ has set up a network of 20 natural gas-powered vehicles to enable the maintenance and redistribution of the bikes. There is also a river barge that moves bicycles to different destinations and maintenance workers use bicycles powered with additional electric motors to travel around the city.

The use of bikes in Paris has doubled in the past ten years. Previously, between 2001 and 2006 alone, the share of trips made in the city by bicycle increased 48%. It is estimated that 20% of users have made a trip thanks to Vélib’ that they would not otherwise have made. Citizens of Paris have become more environmentally aware in their daily transportation thanks to Vélib’.


OF THIS INNOVATION?

Several specific social measures have been taken to make the service more accessible and affordable to young people and the unemployed. Vélib’ has also spurred sustainable lifestyles in Paris by creating a sharing mentality and sense of community in the city. The fact that there are incentive systems and partnerships with third parties (such as CitéGreen) has broadened and extended the concept of sustainable lifestyles beyond the use of the bike-sharing system, especially in sustainable living (organic food and access to other sustainable products) and energy saving.

More than 40,000 users of Vélib’ participate in those schemes, which has spillover effects on other sustainable projects in the same city, creating a movement that connects food, waste, transportation and energy.



JCDecaux’s joint venture SOMUPI covers all the costs for setting up and operating Vélib’ while the company benefits from the infrastructure and advertising rights. The large advertising potential of Paris means that the revenues generated finance the bicycles. Most of the profits are derived from billboard advertising, while there is a subscription and fee scheme for the users of the service covering operating costs. Users can choose between an annual subscription and shorter-term options.

07 | WHAT LESSONS CAN BE LEARNED FROM THE VÉLIB’ SUSTAINABILITY INNOVATION?

ROLE OF CITIZENS

Citizens have played an important role in Vélib’s development and success, from their initial involvement in designing bikes and materials related to communications, tariffs, and apps on how to encourage the use of the bikes more generally. They have played a key role in the innovation process and

have provided valuable insights for the company.

CHANGE IN COMPANY CULTURE

JCDecaux was essentially a B2B-oriented group, and involvement in a large-scale project such as Vélib’ has changed the way the company interacts with customers. This enabled JCDecaux to learn and develop transversal collaboration among the group’s R&D, production,

marketing and technology departments.

PUBLIC ADMINISTRATION AND POLITICAL SUPPORT

The Mairie of Paris was essential in the success of the initiative, through its vision for a greener city and passing regulations to facilitate cycling lanes. It also made it clear that it wanted citizens to be involved in Vélib’ and this partnership was key to the broader inclusion of end users in the innovation process. JCDecaux itself learned

that this involvement would be essential.

A COMPANY MORE OPEN TO INNOVATION

A lasting legacy of the project is that the approach the company has now towards innovation is more open. A cross-functional innovation team unites the four key management areas every month,

something that did not previously exist.


29

KARD ARCHITECTSFOSTERING SUSTAINABLE LIFESTYLES THROUGH

THE CO-CREATION OF AN ECO-DESIGNED SCHOOL

ABOUT THE COMPANY

Kard Architects is a small family-owned firm created in 2003 from the

merger of two main architectural ventures in Thessaloniki, Greece:

Kouloukouris & Associates and Sempsis & Raidis Architects. Both

companies have more than 35 years of architectural and planning

experience in almost all sectors of private and public development,

with a strong focus on sustainable construction projects.

Kard Architects has been involved in several sustainable architectural

design projects in Greece and Serbia, and was awarded a prize by the

OECD programme of Green Growth and Eco Innovation for the best

initiatives in Greece in 2010.

Kard Architects has a core team of 15 people and works in partnership

with several architects and construction companies on a project

basis. During the period 2012-2015 they worked on projects with a

total value of €5 million.



30


INNOVATION ABOUT?

Kard Architects accepted the challenge of developing a new school construction project focused on both environmental and social sustainability, posed by the American Farm School (AFS) of Thessaloniki, Greece. The AFS is an independent, nonprofit educational institution devoted to sustainable education, farming and agricultural business practices that are economically viable, ecologically sound and socially responsible. AFS management had witnessed that due to the harsh economic crisis in Greece, people were shifting towards more sustainable and conscious consumption behaviors and attitudes.

AFS decided to respond to this emerging trend by offering a different education concept: an experiential and sustainable primary school where the children would be learning in a building meeting the latest eco-design criteria and surrounded by nature. Kard Architects was the company selected to undertake the project due to their expertise and commitment to sustainable architecture.

The goal of the assignment was to create a breakthrough and innovative school-building concept, focusing on sustainability both from a construction perspective, and from an educational and experiential perspective, creating the necessary conditions so that sustainability education could be a reality for students, parents and teachers alike.

From a purely environmental perspective, the project aimed at meeting the latest bioclimatic requirements. This objective ultimately influenced how the building would be modified, constructed and used (e.g. the layout and the maximization of natural light), as well as the kind of construction materials and technologies selected and deployed. The final goal was threefold: 1) to reach optimal levels of energy efficiency and

integrate renewable energies, 2) to make it functional for the children, and 3) to enhance the experiential and sustainable attributes of education methodology.

In order to achieve that goal, the building’s layout was designed so that all the necessary facilities could be housed (classrooms, laboratories, offices, assembly halls, infirmary, reception, administrative spaces etc.), and the building’s shell was reinforced with energy-saving eco-friendly materials and systems (gas network, solar collectors, photovoltaic systems, heat and moist insulation, non-toxic paints and plasters). Furthermore, the landscaping of the surrounding area was planned to provide enough open space for the children to play, practice sports, and feel close to nature.


The idea of creating a new school was originally conceived by the AFS School management, with the aim of expanding its offer of a sustainable, full educational cycle: from pre-school to graduate education.

Previous to that decision, AFS conducted preliminary market research at leading sustainable schools in the US and Europe to gather ideas on how this concept could be implemented in Greece. To complement that information, AFS also used ‘mystery shopping’ techniques in questionnaires at fairs and educational exhibitions they were attending. In this way, the management team was able to gather insights from potential interested parents and check the acceptance of their idea. Once this was clear, the project was assigned to Kard Architects.


31


Given the special characteristics of the school, a very participatory and open process was in place from the very beginning. Input and ideas were carefully gathered from several stakeholders and users, including the school administration, teachers and parents. This approach came quite naturally to the company, since Kard Architects has been traditionally committed to stakeholder involvement in every stage of the design and construction process for their projects.

The process dynamics allowed interaction and open consultation of the company with school administration, parents and teachers to generate and evaluate a continuous flow of ideas. A ‘Parents Committee’ was created to promote participation and brainstorming of ideas to improve their own children’s environment and education. As a result of this process, many new features were included in the layout and distribution of the school. These included interior design features like special furniture allowing different class settings, an experiential garden and new external areas. The ongoing nature of the collaboration has led to the creation of new side projects with a strong sustainable and experiential component, such as an olive oil production centre and an alternative energy park where students can experiment, play and learn.

In sum, the relations created among all the participants in the process and all the insights given at several stages of the school construction offered new value to the innovation. The final ‘product’—the school building—was therefore the outcome of a true co-creation process.



The construction of the AFS Primary School contributes to environmental sustainability through its distinctive bioclimatic features. The goal was to reduce the existing energy consumption by 70%, while creating special characteristics to allow the interactivity of scholars and teachers in enhancing sustainable lifestyles.

More specifically, the key features were:

▪ Bioclimatic architecture principles (south-facing facades and high insulation) and innovative solar systems, which were aimed at reducing energy demand for heating, cooling and hot water.

▪ New heating system: Installation of natural gas heating boilers, thermal zone control, cooling with energy efficient heat pump and mechanical ventilation with heat recovery.

▪ Classrooms with natural ventilation and natural light, double-glazed windows, improved indoor air quality (low CO2 level in classrooms), increased thermal comfort, as well as the use of fans to avoid air conditioning in summer.

▪ Bioclimatic interventions such as frames, joinery replacement and thermal insulation of building shell, including the installation of insulated window frames and low-e glass. Those interventions were aimed at aesthetically upgrading the buildings to improve structural malfunctions.

▪ Use of glass shelters to protect children from bad weather and rain, and at the same time, creating proper shade when the sunlight is too strong and not needed (hence avoiding excessive cooling costs in summer).

▪ The use of ecological materials in construction: bricks and paints free from toxic substances. All building and construction materials were renewable and locally sourced from areas as close to the school site as possible, to keep the carbon footprint low.

▪ Tank for collecting rainwater, which recycles the water used for watering plants in the school gardens using an automatic electricity control system.

▪ Thematic gardens and vegetable garden were designed to provide children with direct access to nature and allow them to benefit from experiential learning by growing their own vegetables and taking care of traditional botanic and aromatic Greek plants.

▪ Creation of renewable prototypes in small scale, such as photovoltaic systems and a wind generator, to demonstrate eco-friendly practices to the students and promote experiential learning.


32

05 | WHAT IS THE SOCIAL IMPACT OF

THIS INNOVATION?

Besides the environmental aspect of the innovation, the AFS school building operates as a ‘training tool’ for the promotion of strategies of natural resource management, recycling and social values.

On one hand, the building itself has encouraged the development of a sense of collective responsibility for sustainable behavior and environmental management. Some of the skills taught at the school are the use of energy, recycling, sustainable transportation, and growing organic food. These skills have been adopted by the children and, by extension, have shifted their families’ social behavior.

The school has integrated sustainability into every aspect of school life, namely the administration, the learning process, the management of buildings, the transportation to and from school, and the school’s relationship with the local community by sourcing all the food and vegetables, either from the school garden or ecological farms nearby. The active involvement of students and staff in reflecting and acting on sustainability themes creates a sense of responsibility which in turn is transferred to the interactions between the school and the wider community. In this sense, the parents have mentioned how the impact of the new education and the school building features was having a clear impact on the way the whole family perceived and experienced sustainability. The children’s education influences family habits and becomes part of a learning process in which several issues are (re)considered: mobility behavior, water and energy management at home, recycling, shopping habits (favoring organic food and sustainable clothing) and even how they are spending leisure time (in direct contact with nature).



The economic viability of the project is ensured by two main factors. First, the value proposition of the school is highly attractive for sustainability-conscious parents and its acceptance amongst more conventional families is also growing. As a result, applications to the school are increasing every year and the business model of the school is very sound. Expansion into new buildings is currently being considered.

The second factor is related to the better resource management of the school, which yields obvious economic benefits. The building has a high energy efficiency performance (an estimated saving of 50%). Better energy efficiency and improved water management techniques have had an important effect in lowering operating costs and strengthening the business case for expanding the construction of new sustainable schools.

07 | WHAT LESSONS CAN BE LEARNED FROM KARD ARCHITECTS´ SUSTAINABILITY INNOVATION?

HIGHLY COMPLEX CONTEXT

The industry for sustainable construction and housing is only emerging in Greece and the sector prospects are bleak due to reduced investment and the harsh economic crisis in the country. However, the AFS Primary School construction is considered a benchmark in the country for its relevance in the sustainability education context and the way it has been designed and constructed

(materials and process).

IMPACT ON THE COMPANY

The sustainable impacts arising from the project assisted the company’s commitment to sustainable architecture. The project reinforced the view the company had regarding sustainable buildings and architecture as catalysts for creating a more

sustainable society.

SPILLOVER EFFECTS

While the initial objective of the project was to reduce the environmental footprint of the school, the fact is that, through the active role of students and teachers, the ecological footprint of the families has been reduced as well. At the same time, in an era of financial crisis, reducing the ecological footprint has resulted in reduced

spending for running the school building.

CRISIS AS A CATALYST FOR SUSTAINABLE INNOVATION

Last, but not least, it could be said that financial and economic crisis sometimes is not an impediment, but instead can act as a catalyst for sustainable innovation and a new approach to doing business with a longer

term perspective and increased social impact.

BECOMING AN EXAMPLE

The project has influenced the school building and educational system in Greece. The fact that the AFS Primary School is considered a benchmark in the country, inspiring new schools to adopt this approach and hence opening new horizons, opportunities and expectations for sustainable and

experiential education in the country.


34

SOCIALCARPEER-TO-PEER CAR RENTAL SERVICES IN SPAIN

ABOUT THE COMPANY

SocialCar is Spain’s first web-based peer-

to-peer car-sharing platform, offering rental

services directly from car owners. Created in

Barcelona in 2010 by the entrepreneur Mar

Alarcón, it focuses on including social and

environmental aspects in its business model,

management and impact.

Today, SocialCar has a growing community of

100,000 users and is present in more than 600

cities all over Spain.



35


INNOVATION ABOUT?

SocialCar is a car rental platform creating a community of drivers and owners sharing the use of a car. Through a peer-to-peer system, SocialCar has developed a social-collaborative model: users can rent a car at affordable prices, while automobile owners gain an additional source of income from their underutilized asset through the direct rental.

The peer-to-peer rent-a-car works in quite a similar way to other rental companies. For users, the first step is registering on the platform, providing basic information such as the driving license and payment method. When a user wants to rent a vehicle, he or she looks for a car on the platform. The main search criterion is usually the user’s location to facilitate vehicle pick-up. The platform allows users to make as many pre-booking requests as wanted to secure the car rental process. When the car owner approves the pre-booking request, SocialCar charges the user the rental amount and sends the owner the contact details to facilitate the delivery. At the end of the rental period, the car is returned to the owner, and both look over the car to check that everything is in similar condition. If there are no incidents, the rental agreement ends. After the service is provided, the owner and user are able to evaluate and rate the rental experience in order to offer other platform users information for future rentals.

SocialCar charges a 20% service fee of the total amount of the rental to the car’s owner. The remaining amount goes to the owner’s account in the form of monthly installment. The sharing, as a concept, is environmentally friendly since it optimizes vehicle use by allowing people use a car without owning one, hence reducing the impact associated with manufacturing new cars.


In January 2010, after having successfully launched several other entrepreneurial ventures, Mar Alarcón decided to create a car-sharing company in Barcelona. With a strong law and business management background, Alarcón first learned about social entrepreneurship in Bangladesh during her internship at Grameen Bank with the Nobel Peace Prize winner Professor Muhammad Yunus. Her motivation in setting up new businesses was inspired by this experience and her sustainability beliefs. SocialCar got its name from the first company she and her husband created: Social Energy (a renewable energy systems integrator for roof mounted photovoltaic power plants in Spain, France and Italy). She decided to maintain the first part of the name—i.e. ‘social’—because she thought it defined the company’s objective. To set up the venture, she put together a small team of four people to define a business plan and manage the operations.

The idea of creating SocialCar is also rooted in a strong environmental vision. The initial idea was solar-powered electric car rentals, but gradually the model shifted to make it more viable for Spain where such vehicles were very scarce. In April 2010, she decided to conduct a market study on car-sharing initiatives and found Whipcar, an innovative peer-to-peer rent-a-car company operating in the United Kingdom. The peer-to-peer model was seen as sustainable and efficient, providing a choice for giving people easier mobility, and it had a social component because car owners could make money by renting their own cars.

The next step was to develop an online platform to encourage peer-to-peer bookings. The development of the technological platform was outsourced because the team had no previous experience on that front. Four months later, in July 2010, the online platform was launched and the first cars were available for rent.


36


During the following months, Mar Alarcón worked to attract cars to the database for rental, initially from family and friends who were easily convinced to offer their cars into the platform. They soon realized that most customers left the platform shortly after registering, mainly because of the small variety of car models. The team quickly realized that searching for new vehicles had to be their core activity, and thus made it a priority for the rest of 2011. The biggest challenge was to design the right processes and tools to ensure safety and warranties for all users: car owners and car drivers.

Starting in January 2012, the company’s operations became smoother. Having more vehicles available on the platform led to an increase in the number of rentals. The economic crisis in Spain at that moment also created an opportunity for collaborative consumption and, in fact, there was an increasing interest in collaborative and sharing economy initiatives. Alarcón’s venture got a great deal of media attention, which was an unexpected promotion as peer-to-peer car sharing was an unknown service in Spain at the time when SocialCar was launched.

According to Mar Alarcón, 30% of the Spanish population have now heard about renting their cars to their peers. People who have tried the service get excited and some even become SocialCar brand ambassadors.



While the idea of having an electric car fleet was the original idea, it was soon discarded when the founder realized there were many under-used vehicles in the city. Introducing collaborative economy principles in the car rental business was considered a more efficient model. Renting as a concept is considered environmentally friendly, since it is estimated that every car affiliated with SocialCar substitutes for four cars.

Thus, SocialCar’s model of car-sharing can reduce the number of cars in the city because not everyone has to buy a car, but rather can use someone else’s car when needed. This would lead to fewer cars being manufactured lowering the environmental impacts associated with that. It is possible that this could also contribute to reducing traffic congestion and therefore reducing CO2 emissions, but the company has not yet established key performance indicators to track and monitor this impact.


OF THIS INNOVATION?

SocialCar provides a platform to allow peer-to-peer rental services directly from vehicle owners. By providing this opportunity to car owners, the company can make a contribution to society. Roughly 11% of average household expenses cover the cost of owning a car, while food is around 15%. In the economic crisis in Spain, people who have lost their jobs have found it difficult to maintain car payments and costs, so having the possibility of renting the car can bring an additional source of income.

In addition, SocialCar provides a diverse range of cars on its platform, including cars adapted for people with special needs. Fundación ONCE, the largest Spanish institution dedicated to aiding the disabled community, joined SocialCar’s initiative to help car owners to recover the investment on adapting their vehicles by finally having a marketplace for renting such cars.


37



SocialCar was initially self-funded. It received a grant from the Ministry of Economy and also applied for national funds for business innovation (Plan Avanza) in 2010. For the most part, the financing has been equity. SocialCar expected to reach its breakeven point in 2015. SocialEnergy, Mar Alarcón’s first enterprise, has done well financially and has been able to cross-subsidize SocialCar. The organic growth of SocialCar and the income it has generated has allowed the company to cover its own costs. More recently, the company gathered a total of €800,000 in private financial rounds of funding and it is targeting to raise another €2 million shortly for the future expansion of the business.

SocialCar’s prices are lower than those of traditional car rental companies. At the same time, SocialCar offers a wide variety in their car fleet—from more low-range cars costing €15 per day to luxury cars, including Tesla electric cars costing €400 euros per day—making an appealing offer to different segments of the public. This competitive model has allowed SocialCar to grow by 120% annually during the past two years. In 2012, the turnover was almost €300,000, increasing to €600,000 in 2013.

On average, a car owner can earn around €2.000 annually by renting via SocialCar. Some car owners have their cars almost always available on the platform and in those cases their income is significantly higher. In this sense, SocialCar is increasing customer satisfaction in two ways: by offering car owners opportunities to earn extra income and by offering a competitive price to car rental users. By creating a total of 16 new jobs for the venture, one can say that SocialCar also has had a positive social impact on job creation.

SocialCar currently has 100,000 users, a very strong community who, on average, rent vehicles for three days. The company charges a 20% commission per transaction and is planning to use the funds for marketing purposes, to raise awareness and attract new customers.

07 | WHAT LESSONS CAN BE LEARNED FROM SOCIALCAR’S SUSTAINABILITY INNOVATION?

USE OF TECHNOLOGY

Technology allows the promotion of the concept of sharing rather than owning, which is at the centre of the collaborative economy philosophy. It also helps the creation of a community of users around a more

sustainable and efficient use of resources.

ENTREPRENEUR VISION

The entrepreneur’s background and strong motivation are key to understanding the success of the company in the Spanish market. Mar Alarcón’s sustainability values and previous entrepreneurial experience shaped the creation of the company.

FLEXIBILITY

While SocialCar’s original goal was to create a rent-a-car company with electric cars, the founder’s

managerial experience and awareness of the context led to a change of direction. Alarcón soon realized the model would require a large up-front investment and thus reaching the break-even point would take longer.

GENERATIONAL CHANGE

For millennials, a car is mostly considered an expense and a source of pollution. This new mindset is bringing changes to the automotive industry, as it needs to find the value proposition for this new generation. The car-sharing model is becoming a much more attractive value proposition for this generation, as well as for

people adopting more sustainable lifestyles.

CONTEXT OF ECONOMIC CRISIS

The success of the venture was possible due to the effects of the crisis, which led to changing consumption habits. People were looking for access to different services at a fraction of their average market price; or, alternatively, to

gain an additional source of income.


39

SOM ENERGIAA VISIONARY ENTREPRENEUR LEADING

A RENEWABLE ENERGY MOVEMENT

ABOUT THE COMPANY

Som Energia is a cooperative started by a group of

professors and students at the University of Girona who

were looking for a sustainable alternative to energy

consumption and wanted to challenge the current

energy industry paradigm in Spain. The nonprofit

cooperative is focused on marketing and producing

energy of renewable origin. Som Energia also sees itself

as a social and citizen movement working towards a

more sustainable future by making the energy market in

Spain more transparent and green.

The cooperative is growing rapidly and it currently has 27,000

members and 25 full-time employees. Its headquarters are

based in Girona, 100km north of Barcelona. Som Energia

expected turnover in 2016 is € 23 million.



40


INNOVATION ABOUT?

Som Energia Cooperative produces and commercializes 100% renewable energy with guaranteed-origin certificates. In the future, it aims to meet all of its members’ electricity demands with its own energy production. The cooperative started with the vision of an entrepreneur, Gijsbert Huijink, and a group of students and professors from the University of Girona who had seen successful cases of citizen participation in renewable energy models abroad and decided to implement them in Spain. They started by buying locally produced green energy from the grid; currently they also produce some of their own. They plan to increase their energy projects with biogas, photovoltaic, wind turbines and mini-hydroelectric initiatives to be able to meet all of the members’ energy needs.

Som Energia has the ambition of being an alternative-energy, citizen movement. Therefore, it not only provides a service, but also actively seeks the engagement of members, who are project investors, can participate in working commissions, local groups and the cooperative assembly, allowing them to be directly involved in the development of the cooperative and its daily management.


The story of Som Energia is closely linked to the story of its founder, Gijsbert Huijink, a Dutch entrepreneur who moved to Girona with his wife in 2005. Although lacking any previous experience with the energy sector, he had an enthusiastic startup mentality and a drive for implementing new ideas and solutions. The starting point of the venture was the difficulty

in accessing electricity in the rural area where he and his wife were renovating their home. After receiving a quote of €80,000 to be able to connect their home to the grid, Huijink started looking for alternatives. He installed solar panels in his home to produce his own energy and started researching about energy and consumption cooperative models in the Netherlands, Germany and the UK. Around the same time in the same town, a group of people who called themselves ‘Territories with Energy’ were interested in setting up renewable-energy projects. Nuri Palmada, a co-founder of Som Energia, was a member of that group. They had formed an association and had been researching successful cases and best practices in renewable-energy projects implemented in other countries at a local level. As part of the research, they visited Wildpoldsried, a town in Germany that produces 200% of its consumption from renewable sources, thus feeding the grid with windmills, biomass and biogas. They wanted to start a similar project in their town when they met Huijink, who told them about his idea of starting a cooperative. They decided to join forces and began looking into how to get more people interested. With the assistance of 20 research volunteers from the University of Girona, where Huijink was teaching at the time, they developed a business plan including a focus on citizen participation in a renewable energy model, that not only sold green energy but also produced its own.

The initial proposal included triple-bottom-line criteria: a non-profit organization covering all its costs, an employment-generating organization with decentralized local groups, and a 100% renewable-energy producer and service provider. In 2010, the cooperative was officially founded and operations started right away as a website and minimum office infrastructure were set up. Members quickly started joining. Many members joined in response to the lack of green energy options and the high bills of the

large energy companies, which had oligopoly power of the market as the two largest companies accounted for 80% of the Spanish energy market.


User participation and involvement is key in the success of Som Energia. The cooperative is horizontally organised with local autonomous groups in towns and cities who determine the activities at a local level. Every member has a voice.

Local groups are constituted within the legal framework of the cooperative and can decide their status and roles based on their needs and abilities. The groups are volunteer-based and have different focuses: spreading information and ideas, developing technical ideas like implementing projects with other organizations, and working directly with public entities. Full autonomy and space is given to all members to contribute according to their motivation and skills. This has created some chaos, but also has been the seed of many innovations. Most importantly, it has shaped a sense of community and belonging in which all its members feel they are contributing to a more sustainable future.

Additionally, the members are also investors in new projects and activities. In just four years, around one thousand members of the cooperative have invested over €3.5 million in sustainable energy schemes, which include eight photovoltaic projects, a 500-kilowatt biogas plant and an 80-kilowatt biomass heater. A recent project crowdfunded by members was the photovoltaic plant of Alcolea del Río, with 8,800 solar panels with 300-kilowatt generation. A total of 2,200 members invested €2 million less than two hours.


41



Som Energia facilitates energy consumption based exclusively on renewable energy sources (solar, wind, biogas and hydroelectric) and also invests in new production projects increasing the volume of green sustainable energy.

The cooperative currently produces 6% of its electricity needs, but its ultimate objective is to advance gradually towards 100% production. Som Energia is taking its progression as a learning experience and fostering a continuous improvement approach.

Som Energia guarantees that it will only sell certified green energy. Renewable energy sources are energy producers who obtain their energy from virtually endless sources. These are certified by guarantees of origin issued by the National Energy Commission (Comisión Nacional de Energía, or CNE).


THIS INNOVATION?

The social dimension of the project lies in the active involvement of the members of the cooperative, their learning experience, and growing awareness. They can participate in the development and management of the organization through working commissions, local groups and the annual assembly. For instance, the latest general assembly had 300 members in 15 different locations participating simultaneously through video conference.

Transparency and democratic inclusion are two of the basic principles of the cooperative, which makes its social impact stronger. Transparency is achieved through publishing all

information on its website, maintaining an active blog and responding to any member questions on line. The cooperative has an extensive social diffusion, developed by more than 50 local groups throughout Spain. The activity of Som Energia also includes the awareness of and information for members of the cooperative and for other stakeholders.

Som Energia also aims at having an impact on local economies by creating jobs and using contractors from the social economy. In a context of harsh economic crisis, with a rise in energy poverty in the country (this is, many households experiencing serious difficulties in paying their electricity bills), most members see their participation in Som Energia as an opportunity to invest in a project that also creates social value.

Last but not least, the cooperative endeavors to make it as accessible as possible for those on low incomes to join: its one-time membership fee of €100 is relatively low compared to similar projects. Although Som Energia does not receive the state subsidies that the big energy companies enjoy, it aims to offer some kind of social tariff financed from its profits. Som Energia has also launched a socially inclusive programme addressed to people who are suffering the consequences of the economic crisis, providing them access to free energy for a year and having agreements with social services to ensure the application of this initiative.



Achieving financial sustainability for the cooperative has not been an easy journey. Becoming an official seller of electricity, finding a partner to work with and the small scale of the operation were hurdles to overcome at the beginning of the project. Like all electricity sellers, Som Energia had to buy energy from

the market, but, due to the low volume of consumption at the beginning, it was prohibitive for such a small player. However, this motivated the cooperative to become bigger, starting a strategy of alliances and partnerships with other cooperatives to make their purchasing model more efficient.

Som Energia does not receive financing from banks or other institutions. It is a business model financed by cooperative members. Every member pays a one-time €100 membership fee into the social capital fund. If a member wants to leave the cooperative, the €100 is refunded. With over 27,000 members, the social capital fund is now at €2.5 million and allows for making a small profit which is reinvested in projects and the cooperative. It is currently growing at a rate of 900 new contracts per month, and while the profit margins are low (around 0.5-1%), the fact that its end objective is changing the market rather than making a profit means that the financial goal is equal to covering costs.

Som Energia has also crowdfunded some of its projects through voluntary contributions where members receive interest (3-5% financial return) for any voluntary contribution beyond the initial €100.

In sum, the cooperative’s business model is more efficient than that of traditional electricity companies considering its not-for-profit structure. It lacks publicity costs, it does not pay large management salaries, operates modest offices and communicates with its members via internet and social media, which decreases costs.

07 | WHAT LESSONS CAN BE LEARNED FROM THIS SUSTAINABLE INNOVATION?

CITIZEN PARTICIPATION AS MAIN DRIVER

Citizen participation can be one of the goals of sustainable entrepreneurship, not just offering a social

or environmental product or service.

SYSTEMS CHANGE

An initiative can aim in the short term to offer a service such as access to renewable energy, with the ultimate goal of challenging the entire field, such as

the prevailing energy system.

AUTONOMY OF LOCAL GROUPS

Rapid growth can be achieved by giving a high degree of autonomy to local associations. Since Som Energia was founded, community-led projects are proliferating in Spain, with more than eight energy projects functioning and an increasing number of cooperatives being networked at the national level.

RAPID GROWTH ALLOWS ECONOMIC SUSTAINABILITY

As well as awareness about an environmental problem such as energy. In five years it has

managed to go from 150 initial contracts to over 30,000—58% in Catalonia and 42% in the rest of

Spain—and is currently growing at a rate of 200 new contracts per week.


43

THE FOOD ASSEMBLY(La Ruche qui dit Oui!) CHANGING HOW AND WHAT SOCIETY CONSUMES BY SUPPORTING SMALL- SCALE LOCAL PRODUCTION

ABOUT THE COMPANY

The Food Assembly is a social enterprise that developed

a web platform to support communities of consumers of

local food. It was launched in France in 2011 to facilitate

the link between consumers and high-quality small-scale

food producers, thus enhancing local rural jobs, health and

social well-being.

The Food Assembly is currently a movement across

Europe, with more than 1,000 assemblies in countries such

as France, Belgium, the United Kingdom, Spain, Germany

and Italy. The enterprise employs 135 people all over

Europe working on network development, research and

development, and strategy and communications. Initially

created under the name ‘La Ruche qui dit Oui!’ (the beehive

that says ‘yes’), after its expansion it is known as The Food

Assembly in the UK or, in Spain, ‘La colmena que dice sí’.



44


INNOVATION ABOUT?

The Food Assembly is an online community platform created in France by two entrepreneurs, Guilhem Chéron and Marc-David Choukroun. It connects farmers and consumers directly to encourage local food distribution and consumption. The company’s vision is to combine technology and sustainable agriculture to bring more power back to producers and consumers. It aims at creating a world with shorter supply chains where people are connected to the food they eat in a much more meaningful way.

The project allows consumers to buy directly from several producers online, bypassing large chains, and pick up their order at a regular pop-up markets called Food Assemblies where they meet local producers and other people interested in healthy and local food. In this way, it brings together the modern online-ordering aspect of retail with the added benefits of face-to-face, traditional farmers’ markets.

The producers pay a service charge for the platform’s technical and support services. In exchange, they have access to a transparent arrangement with no middle-men, and can set fair prices. For the farmer or food producer the main advantage, apart from higher margins, is that the products are pre-sold, allowing them to plan their logistics accordingly, reducing waste and unsold products.

Consumers can buy directly from producers, and choose from a wide variety of local products (from fruit and vegetables to bread, cheese and meat) with the flexibility of deciding what they want and when they want it since there is no fixed weekly commitment. Through the technology solution of the online platform, the final goal of the initiative is to have more people who buy their products from local famers instead of going to supermarkets.

Finding locally sourced food products (often referred to as ‘short food retail chain’ on account of the short distance between producers and consumers) is not completely new in Europe. However, what it is innovative about The Food Assembly is the ability to sell local food directly by leveraging the power of technology, i.e. the internet platforms. Another innovative feature is the fact that everyone in a particular Assembly (producers, members—the people buying the food—and the assembly leader or host) meet regularly in the weekly pop-up market. This creates a sense of community that it is rarely seen in other projects. As stated in The Food Assembly’s vision: ‘Community is at the heart of the Food Assembly—we connect neighbours to farmers, neighbours to each other, and everyone to their food.’


The idea came initially from Guilhem Chéron, a fellow of the Ashoka social entrepreneurship network. Chéron had a strong interest in agriculture—his grandfather was a farmer—and believed that the current agricultural models were not providing farmers with a decent living. With the drive to do something about this, in 2009 he joined an entrepreneurship incubator for six months, where he came up with the initial idea.

Chéron met his partner, Marc-David Choukroun, in 2010, when he realised he needed a project manager with a more technical background to develop the online platform. Choukroun, with a strong web project management background and a focus on IT and communications, was the perfect match. At the time he was working with large corporate clients and searching for something more meaningful, like being involved in a long-term project where an online platform could be used to create a community for social good. The two shared the same vision and started working together immediately developing the platform.

Both of them soon realized that people were looking for new and innovative solutions to buying food online while interacting face to face. They wanted an easy-to-use platform that could challenge and change the food system, foster engagement and participation, and allow users to feel autonomous, empowered and interconnected. In September 2011, the first Assembly was founded in France.


The aim of The Food Assembly was to set up a scalable and easily replicable model by using technology as the enabler for a wider movement. For that reason, it was very important to ensure grassroots involvement. The model is based on three key pillars: the Assembly Leaders, the Assembly Producers and the Assembly Members. The creation of the role of Assembly Leader (or Host) is fundamental to understanding the success of the project, since it ensures that communities are sustainable. This person has the responsibility of preparing the Assembly by finding at least 50 initial members and at least four or five producers of different products, after which a party is launched where additional people are invited to be part of the Assembly. Once members are registered on the platform, they can start ordering products. Recruitment of Assembly hosts focuses on highly committed individuals who are willing to help their local area and neighborhood access local food. The earnings can provide them with a second source of income. Assembly Leaders, about 80% of whom are women, tend to be strong supporters of buying healthy local food for their families.

The Food Assembly strongly encourages interaction among its members. Participants’ feedback has allowed a continuous improvement of the platform by working closely with those who use it.


45



Although the social aspect of the initiative was the main motivation for the development of the idea, environmental concerns were important as well. Produce must be locally sourced—within a 250 km radius—and while not exclusively organic, producers tend to be small-scale enterprises with high eco-standards. Approximately half of the food is organically grown and produced, and the objective is that it will eventually reach 100%.

Other issues improving the environmental impact are the fact that since the food is locally sourced, the carbon footprint decreases considerably. Also, the pre-order system gives the producers an added advantage in minimising food (and time) waste; supply matches demand since producers know in advance exactly how much to deliver.


THIS INNOVATION?

The social impact of The Food Assembly innovation is twofold: on the one hand, it helps meet the needs of local producers with higher margins and better management of their crops and sales; and on the other, it nurtures a growing demand for local food and a community of conscious consumers, also providing employment for some of them (the community hosts).

Supporting the growth of equitably paid jobs in the agricultural sector has been also another key motivation of the founders. The average farmer receives only 10-15% of the retail price when supplying through conventional supply chains such as supermarkets, but through The Food Assembly they receive 83.3%. At the same time, members have access to high-quality, locally grown food, including vegetables and fruits, cheeses and meats. Another improvement for the well-being of the farmers is that through the platform they have access to financial management tools to streamline their businesses: they receive automatic invoices and financial documents which simplify their accounting. Social media tools also allow producers to be in close contact with their customers and increase their network with other fellow farmers and food makers, as well as with workshops and events organised by the host. This helps them to reach a larger market and make their business more viable.

Creating a community of people who know where their food comes from has re-socialized the shopping experience in local markets and has also given consumers a deeper sense of purpose, meeting personally with the farmers behind the food they eat and supporting the local economy.



A main goal of the project is to assist the economic viability of small local farmers. As such, the model is set up so that 83.3% of the price goes to the farmer, with the other 16.7% divided evenly between (1) the Assembly Leader, to compensate organizing and managing the sales and the community; and (2) service and transaction costs that cover the platform, management, and support teams. The invoice is paid in full to the farmer who is then debited the corresponding 16.7% commission to the organization and Assembly Leader.

This way The Food Assembly does not act as an intermediary by paying the farmers, but rather is paid for its services, including the platform and the training and support programmes. The payments from the Assembly members are made on the platform and the payment is held in an electronic wallet until the pop-up market where the products are delivered directly to the customers. With no need to exchange money in person, and with the automated nature of the platform, the system has trust built in because the payments cannot be altered nor used for other purposes.

In 2015, The Food Assembly had more than 800 Assemblies running, with more than 5,000 active farmers. Its sales volume was €30M with a turnover of around €2.5M for the platform. In that same year, the organization received 3,500 requests to create new assemblies all over Europe. A new feature of the platform, which is evolving along with the organization’s growth, is to provide farmers with new training in logistics and technology tools so they can focus more on the quality of their products.

07 | WHAT LESSONS CAN BE LEARNED FROM THE FOOD ASSEMBLY’S SUSTAINABILITY INNOVATION?

INNOVATION AND DECENTRALIZATION

In The Food Assembly, decentralization provides room for innovation: a few core Assembly members are more proactive and begin to organise new activities such as visits to farms or educational talks. The organization follows up regularly with the community hosts to share ideas in roundtable discussions, but also allows a high degree of autonomy to the leaders to organise new activities. This has helped the project spread out rapidly and has fostered

engagement of its community members.

IMPACT SCALING

One of the unique aspects of this model compared to other direct sales or short food supply chain models is the speed at which they can scale the initiatives. They have systematized the learning processes so that new communities can start much more quickly

than if they were doing it on their own.

PROFESSIONALIZATION OF LEADERSHIP

The organization has placed a strong focus on the Assembly Leader. They have identified a clear profile of competencies that a leader should have to be able to sustain a community. They also give support to the leader throughout the process and enable leaders to learn from each other and share experiences. This may be a possible mediating influence in the process.

TECHNOLOGICAL PLATFORM AS KEY DIFFERENTIATOR

The entrepreneurial team understood that, in addition to knowing the processes of starting and maintaining a community, their platform differentiates them as a key market player. Most other organizations of this type are using programs such as Google Docs at a very small scale and involve a large amount of trust in all of the members of the community. With a robust, transparent, and continually evolving platform, The Food Assembly is able to instill trust in its members through the platform.


47

NOEM CHANGING THE RULES OF THE HOUSING SECTOR

ABOUT THE COMPANY

Noem (which stands for No Emissions Living)

is an eco-house design and manufacturing

company based in Sant Cugat del Vallès, a city

located about 15 km from Barcelona. It was

founded in 2009 by Rosa Vilasarau and Pol

Guiu with a clear vision: to design and build

sustainable houses with strict energy efficiency

criteria and minimized CO2 emissions.

Noem is a small entrepreneurial venture.

Besides the two co-founders, the company

currently employs eight full-time employees

and hires specialists on a project basis.



48


INITIATIVE ABOUT?

Noem specializes in designing and building tailor-made, modern, modular homes using wood as the base of its projects. Noem’s value proposition is energy-efficient and sustainable high-tech houses in just few weeks.

At the same time, it has a customer-centric approach, co-creating and keeping the client engaged during all the planning and construction process and making sure the needs of all the future homeowners are reflected in the final design of the house.


In 2007, Rosa Vilarasau resigned from Chupa Chups, the company where she had been working in the marketing department for the previous 13 years. Chupa Chups, one of the most important confectionery companies in Spain, had been sold in 2006 to Perfetti Van Melli, an Italian company from the same sector. Vilarasau decided it was the right moment to start her own venture. In 2009, together with Pol Guiu, an University friend, they started to think about creating a venture linked to advancing sustainability in the transportation and construction sector.

One of the main motivations of the founders was to create a company with strong sustainability values. After exploring several alternatives, they finally decided to focus on the housing industry. Guiu had some previous experience in the prefabricated housing sector and had attempted to build his own house following ecological criteria. This was a frustrating experience for him, as he was not able to find adequate suppliers and sustainable materials in the country and he observed there was a tremendous lack of awareness about sustainable housing in Spain.

The identification of a market niche opportunity was very important in developing the venture idea. In 2009, Spain was already affected by a significant economic crisis, which was particularly severe for the construction and real estate sectors. The entrepreneurial idea was mainly motivated by the founders’ personal aspirations for developing a house that minimized CO2, was made from renewable materials, and was versatile and modular. The founders also intuitively believed that the sustainable living concept should be in demand, as general interest in sustainable consumption and production was increasing at the time.

With those ideas in mind, Vilarasau and Guiu registered the company in December 2009 under the name ThinkCO2. In 2010, they took part in Solar Decathlon Europe, a competition in which teams design and build energy-efficient houses. For this competition they developed their first house prototype, made with sustainable wood, after an intense three-month period of work. The prototype, although not part of the competition, was presented at the Solar Decathlon, where it attracted media and visitor attention. During the two weeks of competition, more than 5,000 people visited the module that became Noem’s first product: Noem Go. That was a big boost for Pol and Rosa´s ambitions, who were at the same level as companies with longer market experience and more financial assistance.


While Noem designs and builds sustainable and energy-efficient houses, the company is committed to doing that in close collaboration with the future homeowners. The company co-creates the final product together with their client, who plays a central role in the design process. Noem’s flexible and modular design allows integration of customer needs, wishes and habits during the design stage.

To describe the integral participation of the customer in the entire development process, the company has developed the term ‘Building 2.0’. Noem lets the customer visualize his or her home in 3D to check that every detail meets customer needs and preferences. Once the customer has approved the design, Noem guarantees to complete the house in the agreed time period without any deviation from the arranged cost.


49



Noem designs and produces a prefabricated construction system based on locally sourced natural materials and minimised and controlled CO2 emissions at every step of the process. The company has designed a versatile wood-based construction system that combines modularity and prefabricated parts to allow personalised energy-efficient buildings to be designed, built and assembled on-site, in a matter of weeks.

Noem’s products meet three basic criteria: sustainability, design and comfort, and the use of technology as a driver for customization. Regarding the sustainability principles, the structure of Noem’s buildings comes from pine and fir trees from the Pyrenees certified by the Programme for the Endorsement of Forest Certification (PEFC), ensuring sustainable forest management. Insulation materials also come from natural and local components such as wool, wood fiber and cotton. Noem measures the CO2 footprint of the life cycle of each house with specialized software (SimaPro7) to achieve a ‘negative CO2

footprint’. That means that the house must retain more CO2

than the total emissions of greenhouse gases released to the atmosphere during the house’s life cycle.

Noem also pays attention to other environmental indicators, such as water consumption and energy efficiency. Regarding energy efficiency, Noem can build certified passive houses that consume less than 15kWm2 per year, but also builds houses with levels of efficiency A or A+1, depending on customer requirements.

Noem measures and publishes the ecological impact of each house it has built. Its houses have a negative CO2 footprint thanks to the use of renewable resources and wood materials. Heating,

ventilating and air-conditioning consumption in Noem houses is around 15 Kw/h m2. Noem is also leveraging the most recent technological innovations to provide users with applications and systems to reduce overall energy consumption at home, so that sustainability standards are also continually improved after the house has been built.


THIS INNOVATION?

Initially, Noem had not considered the social dimension of its proposition, beyond offering a high-quality product focused in offering well-being to customers. Noem uses prefabricated production processes, which give high-quality levels and shorter construction periods to customers. Customer engagement in the design process provides better housing experiences, and the integration of technology in the houses—applications and automatic devices—makes daily life more comfortable for their users.

More recently, health issues (such as air quality) are also beginning to be considered. For instance, a set of sensors can be installed to measure the quality of indoor air and activate natural ventilation systems automatically. By providing this type of information during the design process, Noem is also educating users about sustainable lifestyles at home.

A last consideration is about product affordability. Price has been a concern to make the houses attractive to a wider target segment. Noem’s economic proposal is mainly based in the savings achieved by its low-energy houses, but the market price for Noem’s houses does not differ substantially from the average market sector price for ‘high-standard housing’. As Noem increases its activities, its prices could also become more appealing to mid-range customers.



During the initial period of their venture, the co-founders decided to invest their own savings and did not rely on external financing. They preferred to bootstrap product development (i.e., savings were mainly used to finance the construction of the prototype) to maintain control over the product and have the freedom and flexibility to change it without any kind of external pressure.

While its value proposition for customers is clear, Noem still needs to improve its financial performance to reach its breakeven point. With an annual turnover of €600,000 in 2014, the company needs to earn above €1 million to break even.

Since its launch, Noem has designed, produced and sold twelve houses. At the beginning, Noem was able to build only one house at any given time, but the company is now equipped to build two simultaneously. Bearing in mind that the average commercial margin in the sector is around 15%, a greater volume is needed to be sustainable. That is precisely one of the top priorities for Noem; there is an acknowledged need for more marketing and communication to have more projects in the pipeline.

07 | WHAT LESSONS CAN BE LEARNED FROM NOEM’S SUSTAINABILITY INNOVATION?

TECHNOLOGY AND EFFICIENCY

Noem has developed a technological solution and an efficient production process to offer a sustainable house adapted to a family’s needs that could be built in a

convenient amount of time and at a reasonable cost.

REGULATION

To make sustainable housing a more mainstream option, regulatory frameworks need to help, too. In some parts of Europe (i.e. Germany), where regulation is more favorable, the modular, eco-house construction has flourished. In this sense, Noem can be considered a relevant sustainable innovation because it is pioneering the eco-house movement in Spain. Hopefully, new consumer attitudes, the availability of a greater number of technologies and materials, and mandatory assessment of buildings in terms of energy efficiency will represent a favorable context for these kind of buildings to attract greater market share in the future. The Energy Performance of Buildings Directive from EU requires all new buildings to be nearly zero-energy by the end of 2020. This will definitely reinforce Noem’s proposition and start

turning its niche market into a mass market.

NEW TRENDS AMONG CONSUMERS

The construction industry in Spain is very traditional and changes at a very slow pace. While it is possible that Noem’s kind of houses may never become mainstream, citizens are increasingly asking for more eco- and energy-efficient houses. So far in Spain, the houses have been bought by early-adopter, conscious, forward-thinking, sustainable

consumers who are aiming to live differently.

HARNESSING MARKET OPPORTUNITY

The fact that the construction sector was not offering an innovative solution to new trends and needs for housing—such as flexibility, adaptability, mobility and sustainability—presented a unique niche opportunity for

these kind of houses, and for Noem specifically.


PART 3

FINAL REMARKS


52

FINAL REMARKS

The selected cases profiled in this study show how pioneering companies and entrepreneurs in several European countries are unleashing new value opportunities and building competitive advantage through sustainability innovation initiatives aiming to solve pressing societal or environmental challenges. In all the cases, the outcome (a new product, service or business model) is the result of an open co-creation effort, in which citizens-users-consumers and other stakeholders participate in the innovation process at several stages (ideation, product development, commercialization or post launch). Regardless of whether the innovator is an established firm or an entrepreneur, gathering the insights and feedback of different stakeholders and effectively incorporating them into the final value proposition has led to much more user-oriented outcomes and to more impactful and rapid market acceptance for the sustainable innovation. Furthermore, in some cases, the way they interact and engage with citizens and key stakeholders (business partners, governments, communities, and consumers, among others) is not only seen as a source of new ideas, but also as a new way of running the company. It becomes an essential part of the business model.

In all cases, the external context and the willingness of the innovators to address complex challenges are key factors for starting the process. They all acknowledge that the size and scale of the issues they are facing need to be tackled collaboratively and that citizens at large in their everyday actions play a key role. Youth unemployment, food waste, climate change, sustainable mobility, eco-building and housing, and making organic food and alternative sources of energy available to wider communities are some of the challenges that have inspired these companies and entrepreneurs to search for new ways of innovating. In this respect, all innovating firms in our sample advocate for a different definition of ‘value’, not understood strictly in the financial sense, but rather as a more inclusive concept that adds a social and environmental dimension. Some of them go as far as adopting a broader systems change perspective.

The leaders of these companies and ventures have strong long-term mindsets and a forward-looking understanding of their business context. They are constantly looking for disruptive and resilient business models that will accommodate the challenging conditions of the future.

Although most of these initiatives are not yet part of the mainstream in the countries in which they are taking place, they showcase examples and key lessons on how sustainable innovation can increase positive social impact while achieving financial performance. Not all cases illustrate complete alignment of the triple bottom line (social, environmental, and financial). In some cases, the business proposition has clear social impact but lacks an environmental mission. In others (especially in the cases of entrepreneurs and startups), financial viability is still at an early stage or just at the breakeven point. It is important to distill which key elements will favor this shift towards more companies adopting sustainable innovation practices and more disruptive sustainability entrepreneurs challenging current market dynamics.

The path to citizen-driven and citizen-engaging sustainable innovation is not an easy journey, but in all of our cases we found encouraging insights that make us think this could be an important trend in the future. In order to foster more sustainable lifestyles in Europe, these initiatives will have to be further escalated and a more knowledge-sharing attitude will have to be adopted so that those initiatives can spread across different sectors, company sizes, ownership models and geographical areas.

The analysis of the different projects provides a variety of examples of sustainable innovation. As a conclusion for this study, we have categorized different roadmaps and key lessons that can be followed by interested companies, entrepreneurs and managements students willing to incorporate sustainability as a key asset in their innovation models. 14

14. For a more comprehensive list of business models please check the report ‘Model Behaviour. 20 Business Model Innovations for Sustainability’. SustainAbility, February 2014.


53

01 | SUSTAINABILITY LEADERSHIP

Visionary leadership and top management support is key in the successful development of company-driven sustainability innovation. In some cases, as with Unilever Spain, the creation of a sustainability council overseeing these projects was fundamental. The council had the goal of establishing a corporate process to identify risks and opportunities, the scope and drivers of stakeholder engagement, and the incorporation of key insights. Recent literature has also suggested the assignment of responsibility for sustainability to the board of directors, or alternatively forming a separate board committee for sustainability, as useful mechanisms in ‘high sustainability companies’.15

In other cases, as with the medium-sized company Veritas, we also have identified strong and visionary leadership with clear goals, and a highly committed and aligned managerial team, as key success factors for integrating sustainability innovation in its product development strategies. In the Veritas case, the leader’s vision of creating an ecological and organic alternative in the Spanish retail food market has enhanced the role of consumers as idea generators for the development of new product lines. This entailed strengthening the marketing and communications departments and allowing them a high degree of proactivity in the co-creation process.

02 | THE ROLE OF PUBLIC–PRIVATE

PARTNERSHIPS IN CITIES

EMBRACING SUSTAINABLE INNOVATION

Creating strong public–private partnerships with a clear vision of integrating citizen inputs into their operations is offering a competitive edge to cities which desire to position themselves as ‘green’, ‘smart’ and ‘sustainable’. Across the globe, cities are multiplying their sustainable development initiatives, positioning themselves as environmentally friendly and people-oriented. In the case of Vélib’, the public cycling scheme of the city of Paris, the municipality had decided to implement this vision through collaboration with a private partner: a company whose core business focuses on placing advertising panels on street furniture but with a visionary leader with an innovative and sustainable approach to transport in cities. This collaboration, along with continuous input from citizens, has not only yielded important benefits in the way both partners act, but also in the way that new sustainability innovation projects are replicated and escalated in cities.16

03 | ENHANCING CONSUMER

BEHAVIOUR CHANGE TOWARDS

SUSTAINABILITY

By engaging citizens in the innovation process, entrepreneurs, companies and cooperatives achieve consumer awareness on sustainable living options. They stimulate and motivate a change in consumption patterns at several levels. This aspect is more evident in cases where a strong sense of belonging to a community has been fostered. For example, in the case of Vélib’, a change in transportation behavior is not only ‘greening’ the city and lowering CO2 impact in Paris, but is also spurring the participation of the cycling community in other groups and communities advocating for a sustainable lifestyle culture in the city. In Som Energia, through the active participation of its members in the daily management of the cooperative, the organization is not only moving towards its vision of meeting members’ electricity demands with its own energy production, but also creating a high level of awareness and commitment towards an alternative way of living. Most of its members are also active supporters of organic food and sustainable transportation.

15. Eccles, R. G., Ioannou, I., & Serafeim, G. (2014). The impact of corporate

sustainability on organizational processes and performance. Management Science 60 (11), 2835-2857

16. Willsher, K. (2016). After Vélib’ bikes and Autolib’ cars, Paris adds mopeds to hire

fleet. The Guardian, 21st June.


54

04 | INTEGRATION OF CITIZEN AND

STAKEHOLDER INSIGHTS INTO THE

DESIGN OF PRODUCTS AND SERVICES

AS DRIVER OF INTERNAL CHANGE

The integration of citizen and stakeholder insights not only creates more resilient sustainable products or services when launched into the market, but also acts as a driver within the company to foster a new culture of trial and error through collaboration. This appears to be the case regardless of whether they are small or large companies. For instance, in Kard Architects, the broader stakeholder involvement in the construction of an eco-school reinforced the view the company had regarding sustainable buildings and architecture, and is going on to inspire new projects following the same philosophy within the company. At Unilever Spain, the Soy Frigo project is also enhancing the company’s view of allowing intrapreneurship for new project generation and is helping to position Unilever Spain as a driving force behind the multinational effort of creating 100,000 new jobs globally for young people by 2020. Last, in the case of Vélib’, the widespread acceptance of the bicycle sharing scheme has created a new diversification proposal: Autolib’, an electric car sharing scheme operating on similar principles.

05 | CLOSED-LOOP PRODUCTION

Applying circular economy principles to the creation of new products is another path for sustainable value creation. Veritas’ vision of improving waste management throughout its value chain, following closed-loop production concepts, led to the development of the Cuina Veritas products. The initiative reduces food waste by ‘recycling’ it and ‘using’ it to launch a new product line that also educates the consumers about sustainable management of their household food waste. Applying this kind of initiative requires strong commitment and continuous engagement from the company’s value chain. In this case, the shop vendors play an active role in the process by collecting waste products and explaining the nature of the project to concerned consumers challenging the food waste policies of the company.

06 | PRODUCTION ON DEMAND

This model is based on the idea that production should take place only when there is guaranteed demand. Thus, the company does not waste energy in the production process. Similarly to closed-loop production, a continuous effort to bring consumers into close relations with the producers is key for the success of these initiatives. For example, the Food Assembly created an alternative marketplace with direct interaction between consumers and producers, supported by an internet platform which allows small farmers to forecast consumer needs and control their stocks better. This assists the economic viability of small farmers and reduces waste.

07 | COOPERATIVES AS CATALYSTS

FOR SYSTEMIC SUSTAINABLE INNOVATION

Community-based entrepreneurship, usually in the form of cooperatives, often offer more radical innovations and disruptive sustainable business models, which seem to be leading to quicker adoption of sustainable lifestyles across the four domains studied (energy, mobility, housing and food).

The rise of cooperativism and eco-entrepreneurship is, in part, one of the consequences of the recent economic and social hardships that many European countries, especially in the Mediterranean area, have been exposed to since the financial crisis of 2008. This crisis adds to the ecological one, all of which makes many people turn to cooperative enterprises and worker ownership, to more conscious and collaborative ways of consumption and also to a new way of perceiving economic transactions.

Another fact that explains the success of cooperative networks is their participatory decision-making processes. Since they involve citizens in all phases of the development process, they can provoke a shift in citizen mindsets. The use of technology is also relevant in rapidly creating these communities and facilitating interaction and participation: member blogs, local groups, and virtual general assemblies create new pathways for community-based sustainable innovation. Almost all new ventures or community-based sustainable innovations are making strong use of technology to support the involvement of their members and customers.


55

08 | COMMUNITY-BASED ENTREPRENEURSHIP

AND SUSTAINABLE LIFESTYLES

From a survey conducted with the cooperative members of one of our cases (Som Energia) we infer that members’ commitment to the values of the cooperative have a clear spillover effect and affect consumption choices in other areas (e.g. mobility, food, and to a lesser extent, housing options).17 The changes in behavior are more profound since changes in one area of consumption lead to personal reflection and changes in other areas. The results indicate that being a customer and member of a cooperative or a community-based initiative also derives into ‘consumer activism’. Members are highly committed and become brand ambassadors of the initiative, participating in crowdfunding campaigns to support new projects, creating new projects themselves (or new markets in the case of Food Assembly) or bringing new people to what they consider a ‘movement’. The role of cooperatives not only by providing goods and services but also creating a sense of community where their members get information, education about sustainable lifestyles and practical tips about how to change consumer behavior seems to have a systemic effect, mainly in the adoption of transformative pathways for more sustainable lifestyles en Europe.

09 | THE ROLE OF TECHNOLOGY

IN COOPERATIVES AND SHARED SCHEMES

Sustainable innovations led by cooperatives like Som Energia and collaborative platforms like Food Assembly and SocialCar change market dynamics by leveraging the power of technology (internet and social media) and promoting a sense of belonging to a ‘social movement’ rather than solely to a collaborative platform. In the three cases, technology is used to bring more control and power to sustainability-oriented consumers. In the cooperatives studied, like Som Energia and Social Car, the use of internet and social media allows increased participation of the members and a higher commitment to the ‘cause’ while it also assists with the generation of new ideas.

In the case of Social Car, technology also favors the spreading of the sharing economy principles, making it easier for users to share their resources and challenging the way they consume (from ownership to access). The use of technology is key in providing a level of transparency amongst the users. This model allows a more efficient use of resources along with a positive environmental and social impact.

10 | HYBRID DISTRIBUTION CHAINS

AND MICRO-ENTREPRENEURSHIP

The Unilever Soy Frigo case highlights how inclusive business models can be a source of shared value for a major company and for society at large. In this case, by incorporating recent graduates and young people with risk of high social exclusion, the company is fighting a pressing social problem in the country, youth unemployment, by creating opportunities for micro-entrepreneurship and giving young people access to broader skills that will help them in their future professional development. At the same time that Unilever brings these young people to the formal labor market, the company is also benefitting from increased sales in key locations where it previously had no access, enhancing the efficiency of its distribution channels.

17. Conclusions extracted from questionnaires given to users as part of the EU-InnovatE project during the period June- September 2015

As mentioned in the Introduction, innovation in search of sustainability engaging citizens-users-consumers or driven by citizens-entrepreneurs is an emerging field. The purpose of this study has been to offer some preliminary insights coming from our case analysis within the EUInnovatE project. Our findings should be seen as part of an ongoing discussion to catalyze more sustainability innovation and foster more sustainable lifestyles in Europe by 2030. Thus, we welcome comments, ideas and questions from all citizens, companies, entrepreneurs, scholars, researchers and policy makers to further enrich the debate around this promising field.


56

ABOUT THE INSTITUTE OF SOCIAL INNOVATION

The mission of the Institute for Social Innovation is to develop the capacities of individuals and organizations in the business and non-profit sectors to strengthen, in its own activities, their contribution to a more just and sustainable world. To this end, the Institute generates and disseminates knowledge and provides training in the areas of corporate social responsibility and relationship with stakeholders, leadership and management of NGOs, social entrepreneurship, sustainability and social innovation.

JENNIFER GOODMAN

Jennifer Goodman is a post-doctoral researcher at Aalto University School of Business in Finland, where she has helped to manage Aalto’s contribution to the FP7 EU-InnovatE project and teaches on the Creative Sustainability Masters programme. Her research and teaching interests lie broadly in the relationship between business, government and society, business ethics, sustainability and CSR. Before embarking on her PhD in Management Sciences at ESADE, Jennifer worked as a researcher and financial analyst and has managed professional language training courses for multinational companies around the world. She also holds a Masters of Research in Management Sciences from ESADE, an MBA from Warwick Business School, a Diplôme de Commerce International from ESSEC, and a BA in International Business with French from the University of Plymouth.

SOLANGE HAI

Solange Hai is a PhD candidate in Management Sciences at ESADE Business School. Her research interests include social entrepreneurship, hybrid organizations, and sustainable agriculture. The research for her dissertation focuses on the implications of the proliferation of social enterprises. Before joining ESADE, Solange worked in Latin America as a researcher and agricultural economist in projects ranging from smallholder farmer capacity-building to policy development. Solange holds a Master of Research in Management Sciences from ESADE and Bachelor of Arts in Economics from Boston University.

ABOUT THE AUTHORS

SÒNIA RUIZ

Sònia Ruiz is the founder of NOIMA, a sustainability innova-tion and communications consultancy based in Barcelona. She is also a researcher at the Institute of Social Innovation in ESADE. Prior to that, she has held marketing communica-tions, CSR and sustainability managerial roles international-ly in major corporate and nonprofit environments (amongst them, the Spanish Embassy in Greece, S&B Minerals (Im-erys), the Organising Committee of the Athens Olympic Games and Greenpeace). Sonia holds a degree on Political Science and International Relations from the Autonomous University of Barcelona and the University of Birmingham as well as an MBA from the ALBA Graduate School of Business. She has followed executive education on Leadership and So-cial Innovation, Sustainability and Corporate Responsibility at Harvard Kennedy School of Government, Stanford Univer-sity and ESADE Business School.

DANIEL ARENAS

Daniel Arenas is Associate Professor and Head of the Department of Social Sciences at ESADE Business School, where he is also Research Coordinator of the Institute for Social Innovation. He holds a PhD from the Committee on Social Thought at the University of Chicago, a Degree in Philosophy from the University of Barcelona and a Diploma from the Program of Executive Development at ESADE. He teaches courses on Sociology, Business Ethics and Corporate Social Responsibility. His research interests focus in the area of stakeholder engagement and NGO-business relationships.


57

This project has received funding from the European

Union’s Seventh Framework Programme for research,

technological development and demonstration under

grant agreement no 613194.

Des

igne

d by

: ww

w. v

anst

eran

dlei

.com

innovating in search of sustainability: citizens, companies and entrepreneurs

Economy & Finance