NEWECONOMYLAB ///

James Slezak | @jslez

MIT Media Lab guest lecture

1.  Organizations making transformative social impact have access to growth channels that others don’t

2.  New Economy businesses must ask first what value they can create, and only later how to capture a piece

3.  This can be applied across production, consumption and finance. Illustrations we will discuss: §  Sharing Economy movement §  Social innovation in large businesses §  Financial innovation for good

The future used to look so good

But it has failed us as people

INEQUALITY

SOURCE: Economic Policy Institute; New York Times

+10%

+80% Labor productivity

Median wage

1973 2011

1.0

1.8

INEQUALITY

The world’s 300 richest people have the same wealth as the poorest 3 billion

Per capita income has tripled since the 1940s yet average happiness and life satisfaction has fallen

9

Production, control and wealth are largely centralized

Industrial Economy

Sharing Economy

We are beginning to see alternatives

12

14

Organizations making transformative social impact have access to growth channels that others don’t

1

25,000,000

3,000,000

0 Year

50

Amnesty International

At the heart of these models is peer growth!

18

New Economy businesses must ask first what value they can create, and only later how to capture a piece

2

volume x (price-cost) EVA = Not a formula for wealth extraction Σ

products (risk weighting)

The world is dependent on polluting

forms of energy

$176 M venture funding

Information is hard to find

$225 Bn created in 12 years

Staying connected to people is difficult

$50 Bn created in 8 years

Economic value creation flows from solving a problem in society

$225 Bn +$$

Direct cash value created for others: Consumer surplus

+$$$ Social value created: Non-monetary value

Shareholder value captured

The value captured by these social businesses is only a fraction of the value they create for others

The other model

$228 Bn Shareholder value

captured (Chevron)

-$??? Bn Social value destroyed:

Unaccounted, uncharged externalities

Social innovation can be regarded as a search heuristic for the space of new products

Conventional approaches that are not social innovation:

1.  Incremental product improvement based on market research (e.g. next year’s car model)

2.  Auteur intuition-driven product innovation (Apple)

3.  Fast followship (Samsung)

4.  Raw exertion of market power (monopolists)

There are infinite products you could create. Searching any infinite space requires a heuristic, that is, a strategy that simplifies what you’re looking for

CITIZEN

Economic power

CONSUMER PRODUCER

INVESTOR

LEVERS OF POWER

26

Social innovation and collective action are beginning to be applied to consumption and production

3

SOURCE: http://bit.ly/186vwhc

30

! !

MEMBERS WIN LEGALIZED RIDE SHARING THROUGHOUT CALIFORNIASEPTEMBER 19, 2013CAMPAIGN EXAMPLE

! !

MEMBERS TURN OUT IN SILVERLAKE TO DEFEAT A BAN ON HOME SHARINGSEPTEMBER 9, 2013CAMPAIGN EXAMPLE

35

We now need to transform finance

Funds 50

World net wealth $500 Trillion (6 x GDP)

All financial assets 200

HNW 10

Retirement 40

SRI 0.1

Alternatives 5

Impact investing 0.005

NEWECONOMYLAB Source: NEL analysis, public reports

NEWECONOMYLAB ///