The document provides an executive summary of the report "The Phoenix Economy: 50 Pioneers in the Business of Social Innovation". It finds that a new economic order is emerging from the current economic crisis focused on sustainable solutions. Key findings include that the crisis is challenging old priorities and creating appetite for change, but initiatives so far are short-term reactions rather than long-term visions. Entrepreneurs face funding challenges but see growth in their markets. However, they need better market research and a stronger political voice. The report highlights 50 pioneers driving this new "Phoenix Economy" and provides a agenda for supporting market pioneers in achieving necessary scale and impact.

1. The Phoenix Economy
50 Pioneers in the Business
of Social Innovation
VOL ANS
The Business of Social Innovation

2. Contents
Forewords 1 50 x 7.2º = 360º
Executive Summary 4
1.0 Introduction 8
1.1 Entering the Discontinuity 10
1.2 The Surveys 11
2.0 Paradigm Shift 12
2.1 The ‘Pathways to Scale’ Model 14
2.2 The Phoenix Paradigm 17
2.3 Surprises 19
3.0 2009 Survey Results 20
3.1 Weathering the Storm 22
The downturn has hit funding—but
entrepreneurs are confident that,
as the shake-out continues, necessity
will mother invention.
3.2 Upgrading the Business Case 26
Although entrepreneurs see growth in
the need for their services, the market
research informing their business
cases needs to be strengthened.
3.3 Evolving the ‘Ecosystem’ 28
Entrepreneurs recognize the need to
be part of ‘ecosystems of change’—
and to map and pursue ‘pathways
to scale’.
3.4 Bridging the Macro-Micro Divide 30
There is an urgent and growing need
to converge bottom-up with top-down
approaches—to span the micro and
macro levels of change.
3.5 Delivering ‘Government-as-Unusual’ 32
Entrepreneurs expect government to
play a central role in shaping
markets—but want to help provide
‘government-as-unusual’.
4.0 The Phoenix Agenda 34
4.1 The Phoenix Manifesto for 36
Political Leaders and Governments
4.2 The Phoenix Prospectus for 38
Business Leaders
4.3 The Phoenix Syllabus for 40
Business Educators
5.0 Pioneers 42
The Phoenix 50 List 44
Notes 48

3. Volans Foreword 1
Darwin lives, in the sense that natural selection In this report, we aim to show that a new
pressures are working across global markets Phoenix Economy is, nonetheless, self-
in powerful new ways. In 2009, we seem to be assembling—focused on providing social and
at one of those infrequent economic tipping environmental solutions, where markets and
points, also experienced in years like 1919, governments have failed. If the pioneers of the
1929, 1939 and 1989. Among other things, Phoenix Economy are to succeed, they will still
the current economic discontinuity is forcing need substantial assistance from governments,
a profound reassessment of public and foundations, investors and businesses, and
private sector investment in areas such as we identify urgent opportunities for facilitation,
corporate responsibility and sustainable collaboration and support. We also celebrate
development—all at a time when climate a roll call of the Phoenix 50 pioneers in the
change and global inequalities are reaching business of social innovation, nominated by
critical limits and demanding urgent attention. entrepreneurs and other stakeholders.
The uncomfortable reality is that we still
have a great deal to do if the new century’s Please note that this is a report to—not by—
challenges are to be addressed effectively, the Skoll Foundation. We are profoundly
in time and at the necessary scale. grateful to the Skoll team for their support,
but underscore the fact that they only saw
It may be understandable, but disproportionate the text of the report at a very late stage.
effort continues to be lavished on shoring up In future years, we plan to broaden out our
the dinosaurs of the old order, rather than coverage to a Phoenix 500, with change-
investing in the new pioneers, who are working makers themselves driving the selection and
hard—and often against the odds—to assessment processes. Please help us
incubate and scale market solutions essential towards that goal by commenting on our
for a sustainable future. version 1.0. E-mail us at phoenix@volans.com
John Elkington
Co-founder of SustainAbility (1987) and
Co-founder of Volans (2008)
Alejandro Litovsky
Head, Pathways to Scale Program, Volans
Charmian Love
Chief Operating Officer, Volans
John Elkington Alejandro Litovsky Charmian Love

4. Skoll Foundation Foreword SustainAbility Foreword 2
Seismic change is clearly underway, with the In our 20 years experience of analysing
collapse of global financial markets threatening and advising companies on sustainable
to make already critical challenges—climate development, SustainAbility has found that a
change, water scarcity, geopolitical instability— ‘burning platform’ is often a prerequisite for
much worse. But times of upheaval are also radical action. Be it Shell’s Brent Spar or BP’s
times of opportunity, as this latest report from Colombia experience, it took an unwelcome—
our partners at Volans and SustainAbility and unexpected—shock to the corporate
makes clear. system to lead to an overhaul of business as
usual. In this seminal year we see burning
A new generation of entrepreneurs, together platforms everywhere.
with old warriors fighting the good fight,
is coming up with big, bold ideas and Throughout the economy—from high finance
exceptional innovations that light the way to manufacturing—companies are fighting for
forward. Growing Opportunity (2007), the first survival. What their leaders decide now will
report in this series for Skoll, charted the rise determine not only their organisation’s fate,
of an emerging breed of social and environ- but that of the market system as a whole.
mental entrepreneurs. The second report, The stakes are high and leaders across
The Social Intrapraneur (2008), revealed the government and business face an opportunity
inside story of transformative practices to re-frame the terms of the debate. Winner-
underway in mainstream corporations. takes-all business models—concentrating
Against the backdrop of a global economy wealth in the hands of a few or depleting
in crisis, The Phoenix Economy breaks our natural resources in the pursuit of profits—
important ground once again, identifying the no longer hold credibility.
entrepreneurial organizations whose work
speaks to a new order emerging from the But, what will take their place? The Phoenix
ashes. Economy introduces us to an inspiring group
of changemakers whose bravery and vision
The report you hold in your hands also makes may just be sufficient to blaze sustainable
clear how tackling the Bull and Bear markets— pathways out of the economic maelstrom.
that have dominated our ideas of value This compelling report highlights opportunities
creation in recent decades—demands that that—if sufficiently supported and scaled—
we slay the dragon of fear and convention. could contribute to economic re-birth.
Once again, John Elkington and his team give We look forward to continued work with
us good reason to hope. The Skoll Foundation Volans and the Skoll Foundation to support
is proud to support this pioneering research promising innovators and entrepreneurs
and trusts you will find the achievements and wherever they may be found.
ambitions of ‘The Phoenix 50’ both
provocative and inspiring. Maggie Brenneke
Mark Lee
Sally Osberg Sophia Tickell
President, Skoll Foundation SustainAbility
Sally Osberg Maggie Brenneke Mark Lee Sophia Tickell

5. Net Impact Foreword UNEP Foreword 3
Many Net Impact members may be Recent work by UNEP on sustainable ventures
experiencing market conditions that are and entrepreneurial partnerships in developing
unique in their (often short) working lifetimes, countries has highlighted the need to have a
but The Phoenix Economy underscores the good understanding of market conditions.
fact that times of crisis are also times of This is all the more critical today, as market
opportunity. Net Impact is pleased to have conditions are changing rapidly. It is both a
been involved in selecting the first round of time of crisis and opportunity, as we work
the Phoenix 50—and we look forward to with governments, business and others on
continuing the conversation on how we can the greening of economic bailouts and ‘New
extend the discussion and the joint working, Deal’ packages.
to build a new order from the ashes of
the old. The Phoenix Economy is a useful reminder
that this is a multi-dimensional challenge.
Liz Maw It helpfully spotlights some of the market
Executive Director, Net Impact pioneers now developing the entrepreneurial
mindsets, technologies and business models
needed to drive the necessary scale of
change.
UNEP looks forward to working with Volans
and others in engaging leading innovators and
‘superpreneurs’ across the spectrum of issues
and potential solutions identified in this report.
We welcome the prospect to convene these
champions and help build a ‘voice’ for their
agenda in the worlds of government policy-
making and investment.
Sylvie Lemmet
Director, United Nations Environment
Programme (UNEP) Division of Technology,
Industry and Economics
Disclaimer Designations employed and the
presentation of material in this publication do
not imply the expression of any opinion
whatsoever on the part of UNEP or other
Volans partners concerning the legal status of
any country, territory, city or area or of its
frontiers or boundaries. Moreover, the views
expressed do not necessarily represent the
Liz Maw Sylvie Lemmet decision or the stated policy of UNEP or other
Volans partners, nor does citing of trade
names or commercial processes constitute
endorsement.

6. Executive Summary 4
A new economic order is rising
from the ashes—and a new
generation of innovators,
entrepreneurs and investors
is accelerating the changes
essential for delivering scalable
sustainable solutions to
the world.
00 10 20 30 40 50

7. The Phoenix Economy 5
The Phoenix Economy, subtitled 50 Pioneers —Entrepreneurs, like all businesses, face
in the Business of Social Innovation, is the first increasingly tough financial challenges, but
Volans market intelligence report. It reveals there is evidence that this is helping drive
how leading entrepreneurs, investors and necessary adaption. Many of our survey
businesses are thinking as they develop and respondents anticipate new funding flowing
scale market solutions to a broad array of into key sustainability ventures from a variety
economic, social, environmental and of sources, including ‘green new deal’
governance challenges. investment programs launched by
governments. But these same entrepreneurs
The report draws on new surveys of experts must now also develop the political ‘voice’
and entrepreneurs to identify trends and and presence to ensure their views and
examples of how respondents are dealing proposed solutions carry weight and build
with the current economic discontinuity, and— the necessary momentum to achieve
uniquely—spotlights 50 pioneers driving the scale and impact.
development of a new, more equitable and
more sustainable Phoenix Economy. —Strikingly, in spite of the anticipated growth
Key findings include: in markets for social and environmental
solutions, timely, reliable and affordable
—The economic crisis has shaken confidence market research is still generally lacking,
in old priorities, mindsets, incentives and particularly in emerging economies, leaving
investments, which are seen as increasingly many entrepreneurs ill-served when it
bankrupt. This has helped to create growing comes to building their business case.
public and political appetite for an alternative
paradigm, driven by a very different set of The report concludes with a ‘Phoenix Agenda’
sustainable values, priorities and targets. for enabling a paradigm shift, which sets
To date, however, most initiatives have been out how governments, investors, businesses
driven by short-term panic rather than by and business schools can best support
any clear-sighted, long-term vision of how new market pioneers in achieving the scale
our economic priorities must evolve. essential for more sustainable markets—and
more equitable societies.
—Any market transformation must be based
on scalable solutions that bridge the micro-
macro divide. This will require entrepreneurial
successes at five key stages of business and
market development: (1) breakthrough
insight; (2) experimentation; (3) enterprise
development; (4) creation of alliances and
replication of success, and ultimately (5),
mass market infiltration, involving economic
and institutional transformations.
“We must be more creative and
innovative in a time of crisis, and also
be more efficient and effective.”
Albina Ruiz Ríos
Ciudad Saludable

8. The Phoenix Cast 6
Organisation Pages
ABB 48 Eden Project 38,39
Accenture Development Partners EMBARQ 15,37,47
(ADP) 11,38 Evergreen 26
Acumen Fund 26 Extractive Industry
Aflatoun 28,29,44 Transparency Initiative (EITI) 37
AIDG 26 First Book 23,26
AMEE 27,36,44 First Peoples Worldwide 26
American Council on Renewable Flambard Holdings 24
Energy (ACORE) 26,33,39,44 Forest Stewardship Council (FSC) 37
Apopo International 31,44 Foster & Partners 30
Aravind Eye Care System 27,40,44 Freeplay Foundation 23,26
Arup 30,31,37,44 Fuqua School of Management,
Ashoka 13,25,37,44 Duke University 40
Bain 26 Generation Investment
Banco Real 11 Management 28,39,45
BELL 24,26 GE’s Ecomagination Initiative 18,19,45
Benetech 21,23 GlaxoSmithKline (GSK) 18,19,27,45
Better Place 19,28,31,37,44 Global Footprint Network (GFN) 15,45
Bridgespan 26 Global Impact Investing
Build Change 48 Network (GIIN) 18,28,39,45
Business and Human Global Reporting Initiative (GRI) 38
Rights Resource Centre 25,44 Goldman Sachs 39
BYD Auto 27,44 Good Energy 45
C40 28,30,33,36,44 Google.org 19,31,33,38,45
Carbon Disclosure Project 38 Grameen Group 31,38,44,45
Celador Productions 37 Green for All 9,25,36,45
CellBazaar 29,44 Haas School of Business,
CERES 28,39,44 UC Berkeley 26,40
Ciudad Saludable 5,23 Hagar 38
Cleantech Group 29,30,36,45 Harvard Business School 40,48
Climate Change Capital 27,45 Health Care Without Harm 9,26,27,37,46
Climate Group 48 Himanshu Parikh
Clinton Climate Initiative 44 Consulting Engineers 31,37,46
Coca-Cola 11 Homeless World Cup 10,24
Corporate Leaders Group on Climate Honey Care Africa 26
Change, University of Cambridge 39 IDEAAS 48
Danone 38,45 Independence Care Systems (ICS) 26
Dialogue in the Dark 26 Innocentive 27,46
E+Co 25,45 INSEAD 40
Earth Policy Institute (EPI) 9 Institute for One World Health 26,27,46
Econcern 25,45 Interpeace 29,46
EcoVadis 36 J Craig Venter Institute 25,46
The Phoenix Economy references and
celebrates a variety of organisations that are
helping to develop and scale market solutions
to some of the world’s most pressing social
and environmental challenges. A more detailed
listing of the Phoenix 50 pioneers can be
found on pages 42–47.

9. The Phoenix Economy 7
JumpStart 26 Roundtable on Sustainable Palm Oil 37
Kennedy School of Government, RugMark Foundation 24
Harvard University 15,40 Säid Oxford Business School 15
Khmer Legacies 24 Self-Employed
Khosla Ventures 28 Women’s Association (SEWA) 22
Kiva 23 Shorebank 39
Kleiner Perkins Singapore’s Economic
Caufield & Byers 28,31,33,46 Development Board (EDB) 15,18,37
London Accord 38,48 Skoll Centre for Social Entrepreneurship,
Marine Stewardship Council Oxford University 40
(MSC) 28,29,37,46 Skoll Foundation 1,2,10,11
MaRS 29,36,37,46 Solar Aid 15,28
Mobility Aid and Appliances Research and Solarcentury 15,25,47
Development Centre( MAARDEC) 48 State of California 33,47
Monitor Group 26,48 Summer Advantage 24
Morgan-Stanley 11 SustainAbility 1,2,11,43
Mothers2Mothers 25,46 Sustainable Asset
Movimento Nacional dos Catadores Management (SAM) 27,47
de Materiais Recicláveis 28,29,46 Tällberg Foundation 15
MyC4 25,46 Team Stupid 37
National Endowment for Science, Technoserve 48
Technology & the Arts (NESTA) 36 TNT 19,31,38,47
Net Impact 3,11,30,40,43 Toyota 17
New Profit Inc 26 Triodos 39
NOVICA 24 US Climate Action Partnership (USCAP) 38
Novo Nordisk and US National Intelligence Council (NIC) 26
Oxford Health Alliance 19,29,38,47 United Nations 18
Nuestras Raices 26 United Nations Development
Obama Presidency 19,21,30,32,33,36,47,48 Programme 17
Office of the Third Sector 21,36 United Nations Environment
Participant Media 18,37,47 Programme (UNEP) 3,28,36,39
PATH 24,35 Urban Logic 26
PDA 25,47 Virgance 29,37,47
PricewaterhouseCoopers 38 Wikipedia 13
Recycla Chile 23 World Business Council for Sustainable
Renault-Nissan 19 Development (WBSCD) 27,33,38,47
Responde 26 World Resources Institute (WRI) 15,27,47
Riders for Health 26,27 World Toilet Organization (WTO) 25,47
Rocking the Boat 24 Youth Entrepreneurship
Root Capital 26,48 and Sustainability (YES Inc.) 15
Roundtable on
Sustainable Biofuels 15,28,37
“I am convinced we are about to go
over the awareness tipping zone to
an ‘everyone a changemaker’ world.”
Bill Drayton
Ashoka

10. 1.0 Introduction 8
Times are tough and getting
tougher, but leading social and
environmental entrepreneurs are
confident that—with the right
assistance—the time is ripe for
a true paradigm shift to a more
sustainable economy.
Inner Feathers
3.6º

11. The Phoenix Economy 9
Commentators have struggled with what Good news, as far as it goes, but likely only the
to call the current downturn—a recession, beginning of a transformative process that will
a slump or a depression? We call it a take decades to work through—a point long
‘discontinuity’. Early on, politicians and made by Lester Brown of the Earth Policy
business leaders predicted that the recovery Institute in his inspirational work on Plan B,2
would come within months or, at most, a few addressing the challenges of ‘rescuing a planet
quarters. Soon, however, the sense grew that under stress and a civilisation in trouble’.
something different was afoot—and parallels
were drawn with the onset of the Great Meanwhile, although blame is being heaped
Depression of the 1930s. on the governance and management of the
financial sector for the failure of the banks
As a result, 2009 started with a flurry of to count, manage and hedge their risks, we
bailouts and talk of Keynesian ‘New Deals’.1 must look deeper for the true culprits. The
Much of this effort, however, was reactive and root cause ultimately tracks back to a flawed
poorly coordinated. Huge amounts of money mindset—part of our prevailing paradigm—
went to prop up iconic giants of the old that both permitted and drove high-risk
economy, money that might have been better appetites and behaviours with consequences
invested in the new market solutions and far beyond the world’s financial system.
infrastructures necessary to meet twenty-first
century needs: the proposed Phoenix As James Lovelock recently observed at the
Economy of this report. launch of his book—The Vanishing Face of
Gaia: A Final Warning—our ecological debt far
Still, the economic discontinuity is engendering outweighs our financial debt and the ensuing
a radical economic clear-out that is likely to ecological crunch will be severe. This
open out new opportunity spaces for scalable sentiment was echoed by our survey
entrepreneurial solutions to many of the world’s respondents and interviewees who stressed
critical economic, social, environmental and that the world now faces multiple crunches in
governance challenges. Indeed, as The areas such as energy security, food,
Phoenix Economy report raced towards the biodiversity, pandemic risks and climate
finish line, Van Jones of Green for All—one of instability, amongst others.
our Phoenix 50 pioneers—wrote to say that
$500 million had gone into the US economic
recovery bill for green jobs training.
“The 21st century economy is going to
be a green economy. Health Care Without
Harm is right in that slipstream.”
Gary Cohen
Health Care Without Harm

12. 1.1 Entering the Discontinuity 10
In discussing the potential of the current Our respondents believe that the prospect
economic discontinuity to drive change in of a true paradigm shift has never been
desirable directions, we acknowledge that greater—in the original sense of the term
such turbulent periods also tend to trigger ‘paradigm’: a prevailing worldview and what
reactive measures and behaviours, such is taken for normality. The implications for
as protectionism, xenophobic sentiment, their organizations and agendas are
extremist politics and intergenerational tension profound—indeed a number of respondents
and conflict, particularly where inequities requested anonymity on the basis that
are severe and mechanisms of governance their projections could raise real question
and justice are weak. In short, a positive marks over their prospects. Most, however,
outcome to our current crisis is by no means remain upbeat.
guaranteed, which places a premium on
bold, far-sighted and effective leadership
in the public, private and citizen sectors.
Success will depend crucially on the initiative
and achievement of many of the innovators
and entrepreneurs covered in our 2009
survey—the third in a series carried out
with the help of the Skoll Foundation and
other partners.
“People are looking around for
solutions—we have them. We are
exactly in the right space just now.”
Mel Young
Homeless World Cup

13. 1.2 The Surveys 11
Since the late 1990s, members of the Volans —The second, in December 2008 and
team have been spurred by the conviction January 2009, tested practitioner views
that the early decades of the twenty-first on the implications of the current economic
century would indeed see a true paradigm discontinuity via a survey of social and
shift, accelerated by the end of one long-wave environmental entrepreneurs, with 114
economic cycle and the beginning of another.4 responses.
The market leaders highlighted during our
Skoll Foundation-funded work, we believe, —The third, in February 2009, explored wider
provide important early clues as to where professional views via a survey of experts
mainstream enterprise, business, financial and opinion-formers, receiving responses
institutions and governments will need to from 391 members of the Volans and Net
head in the coming years. Impact networks and 36 members of the
SustainAbility Faculty.
While our initial 2007 Skoll Survey (conducted
by SustainAbility) investigated the business Net Impact is a leading global network of
implications of the work pursued by social students and alumni committed to having
and environmental entrepreneurs 5 and the a positive impact on society. They represent
second—carried out by SustainAbility in the sort of thinkers and leaders who will
2008—focused on the work of social and help drive the development of the Phoenix
environmental intrapreneurs working in Economy over the next decade. The thinking
mainstream corporations like Accenture, and priorities of their members are threaded
Banco Real, Coca-Cola and Morgan- through what follows, including their
Stanley,6 our aim in The Phoenix Economy suggestions on the organizations that should
is to begin an exploration of how we can be listed in our first Phoenix 50 (Chapter 5).
harness today’s economic turmoil to spur
the long-term transformation of capitalism In this report, we look at the growing need
and markets. for transformational change (Chapter 2),
introducing the need for a greater focus on
To gauge the impact of ongoing market entrepreneurial ‘pathways to scale’. Then
trends on leading social and environmental we explore five trends that emerged from
entrepreneurs, Volans conducted several our analysis of the surveys (Chapter 3).
linked surveys in 2008 and 2009: Finally, we lay out an agenda for: political
leaders and governments; business leaders
—The first, in June 2008, explored the interest, and financial institutions; and business
and experience, of over 50 entrepreneurs educators (Chapter 4).
in working with mainstream business.

14. 2.0 Paradigm Shift 12
A paradigm shift is under
way—with profound implications
for society, and for politics,
economics and entrepreneur-
ship in particular.
Outer Feathers
7.2º

15. The Phoenix Economy 13
The thing about paradigms is that they persist By extension, the ‘Phoenix Economy’
for what seems like an eternity—and then turn symbolizes the various strands of social
inside-out in what seems disconcertingly like and environmental innovation and enterprise
an instant. As the older economic order begins that will help create a more equitable
to implode, the potential for a shift towards a and sustainable future. At a time when
more equitable and sustainable Phoenix governments are attempting to ‘green’ the
Economy is emerging from conversations with growing number of bailouts and ‘New Deals’,
leading innovators and entrepreneurs around the Phoenix Agenda is a reminder that there
the world. While our survey respondents and is a wider spectrum of challenges that will
interviewees accept that the near-term future need to be tackled in the coming decades.
may seem dark, they also recognize that the
resulting shake-out of the older order promises Some leaders in the field are bullish. “I am
to create the conditions for the emergence of convinced we are about to go over the
new thinking, new models, and a new awareness tipping zone,” says Bill Drayton
landscape of opportunity—much of which of Ashoka, “to an ‘everyone a changemaker’
underlies our framing of the Phoenix Economy. world. Over the last summer, we studied the
patterns of transformation (as in the civil rights
Turn to Wikipedia and you find that the phoenix and women’s movements) and found they
is a mythical bird with many-hued plumage. It all followed the same pattern. We are now
symbolizes longevity—sustainability—with a life moving into a time when the public at large
expectancy of at least 500 years. At the end of engages—and the small pioneer islands
its life cycle it is consumed by flames, and a swallow the whole.”
new bird rises from its ashes. Even today, the
phoenix is understood in many countries as a Paradoxically, however, at precisely the
symbol of regeneration. moment when awareness of, and need for,
the services these entrepreneurs provide is
skyrocketing, their funding—particularly the
financing needed to replicate and scale their
impact—is coming under growing pressure.
And, with few exceptions, they believe things
will get worse.
The Phoenix Economy symbolizes the various
strands of social and environmental innovation
and enterprise that could help create a more
equitable and sustainable future.

16. 2.1 The ‘Pathways to Scale’ model 14
So what exactly are these pioneers trying to Ultimately, if anything like a truly sustainable
achieve? Drawing on survey responses and and equitable future is to be achieved,
interviews, we evolved a simple, 5-stage entrepreneurial initiatives will need to scale
‘Pathways to Scale’ model of change (Figure up further to Stage 5 system change—typified
2.1). Each new business model will typically by broad-based market and societal adoption
begin at Stage 1, with the early recognition of of new mindsets, models and technologies.
an opportunity for a new solution: the ‘Eureka!’ Success in moving from Stages 4 to 5 will
moment. In Stage 2, that initial idea is put to involve the transformation of political priorities,
the test, with prototypes and experimentation. governance process, market rules and
Over time, successful experiments evolve into cultures. The Phoenix 50 pioneers, spotlighted
solutions around which new, Stage 3 business in this report, are helping to catalyze such
models and enterprises are created. Stage 4 changes, though their ability to replicate and
sees the focus shift to the evolution of broader scale their successes—to reach critical mass.
ecosystems of change agents—involving a Their longevity and impact will depend on
growing number of public, private and citizen their ability to respond in good order to the
sector partnerships, followed by secondary challenges identified in Chapter 3, including
waves of imitation. coping with the evolving funding crisis.
Figure 2.1
5-stage ‘Pathways to Scale’ model of change
Stage 1 Stage 2 Stage 3
Eureka! Experiment Enterprise
Opportunity is revealed via Innovators and entrepreneurs Investors and managers
the growing dysfunctions of begin to experiment— build new business models—
the existing order a period of trial-and-error creating new forms of value

17. Pathways to Scale 15
A key element of our work on the Phoenix —Nick Sireau, Executive Director of Solar Aid,
Economy has been our Pathways to Scale and Jeremy Leggett, founder and Chairman
Program, headed by Alejandro Litovsky. This of Solarcentury and Solar Aid, explain how
action-research program builds on earlier work to scale up markets for solar businesses in
reported in The Power of Unreasonable East Africa and South America.
People7 and is building the methodologies,
tools and activities based on the Pathways to —Charlotte Opal, Coordinator of the
Scale 5-stage model, to help leaders scale up Roundtable of Sustainable Biofuels,
the impact of their initiatives. This work is reflects on how to scale up market rules
featured on the Volans website—and includes for the sustainable production and trade
‘market intelligence’ briefs on Phoenix markets of biofuels, as they launch the first version
and ‘ecosystem’ briefs on how trailblazers are of the voluntary standard.
working together to shape tomorrow’s markets
in areas such as solar power and sustainable —Nancy Kete, Director of EMBARQ, the
mobility. Our series of ‘Conversations on Scale’ Center for Sustainable Transport of the
profile the thinking and strategies of leaders for World Resources Institute (WRI), reflects
growing their impact. Early postings include: on the success of transport partnerships
in Istanbul and Mexico City, and the
—Jonathan Kua, Director of International strategies for reaching the world’s most
Organisations Programme Office (IOPO) at populated cities.
the Singapore Economic Development
Board (EDB), explains how the city state The Pathways to Scale team is taking this
plans to grow the social enterprise sector work forward in a number of ways, including:
by being home to international social a session on scaling up sustainable mobility
enterprise enablers as well as regional solutions at the 2009 Skoll World Forum at
social enterprises. the Säid Oxford Business School in the UK;
an action-research project conducted with
—Mathis Wackernagel, Executive Director Harvard Kennedy School of Government
of the Global Footprint Network (GFN) graduate students; and a project with the
explains how Footprint metrics work for Rework! initiative, a global partnership between
companies and countries, and how the Tällberg Foundation in Sweden and
GFN intends to go to scale. Youth Entrepreneurship and Sustainability
(YES Inc.).
Stage 4 Stage 5
Ecosystem Economy
Critical mass is achieved The economic system flips to
through alliances and a more sustainable state—
imitation driving market and institutional
www.volans.com/pathways transformation

18. The Phoenix Economy 16
Figure 2.2
The Phoenix Decade (2010–2020)
Fear Hope
Dragon Phoenix
Decade 2
2010–2020
Bear Bull
Decade 1
2000–2010

19. 2.2 The Phoenix Paradigm 17
Twentieth century capitalism was driven by The Phoenix Economy, by contrast, blurs
alternating ‘Bull’ and ‘Bear’ markets, and the across national borders and works to integrate
twenty-first century’s first decade (2000-2009) the triple bottom line of economic, social and
has seen the collapse of the greatest Bull environmental value added into its DNA—as a
market in history. By contrast, a very different triple helix of change and new growth.
oscillation is now emerging as a driver of
political, economic and business priorities. This involves what Thomas Kuhn—author
We expect the coming decades to see of The Structure of Scientific Revolutions—
growing competition between ‘Dragon’ called a paradigm shift in the way we think
and ‘Phoenix’ models of wealth creation, about the future and about value. As the
superimposed upon—not replacing— Phoenix paradigm evolves, inevitably,
traditional Bull and Bear dynamics extraordinary new market opportunities
(Figure 2.2). will be created. One way to grasp and map
the new opportunity spaces is to think in
The Bull and Bear fight it out in a single bottom terms of a spectrum of value (Figure 2.3).
line world. Both tend to be short term in focus. Biotechnologists label application areas
By contrast, Dragon and Phoenix mindsets by color, with ‘red’ standing for health
tend to be longer term in orientation. Dragon applications, for example, and ‘green’
markets, particularly China’s (until-recently- for environmental applications.8
booming) economy, are often based on longish
term planning, but are powered by business Innovators like the Phoenix 50 operate freely
models and value chains that largely follow the across that spectrum of value creation,
path of Western industrialization, and—as a delivering new or improved ‘value blends’.
result—are likely to be increasingly taxed by Growing effort is being devoted to
environmental and natural resource understanding their dynamics and pathways
constraints. to scale, as in the work of the United Nations
Development Programme 9 and the
To date, Dragon economies have focused, Cleantech Group. But given that the problem
at best, on a double bottom line of economic is often market failure, no amount of market
growth and the maintenance of sufficient research can bridge the gaps. That’s why
social cohesion to keep the national the market-shaping policies of the Obama
locomotive on the rails. In hard times, Presidency—which recently recruited another
Dragon mindsets are likely to default to of our Phoenix 50 pioneers, Van Jones of
economic nationalism. Green for All—are so extraordinary. They
speak of a new paradigm, of a fledgling
Phoenix Economy.
The Phoenix Economy, by contrast,
blurs across national borders and works
to integrate the triple bottom line of
economic, social and environmental value
added into its DNA—as a triple helix of
change and new growth.

20. The Phoenix Economy 18
Figure 2.3
Across the Value Spectrum
Organisation Principle Valuation
General Electric (GE) Market demand for Revenues from GE’s range of energy efficient
‘Ecomagination’ solutions is growing and environmentally targeted products and
Initiative fast services surged to $17 billion in 2008, with
a projection of $25 billion by 2010.10
GlaxoSmithKline The ‘access’ agenda, GSK cut its prices for all drugs in the 50 least
(GSK) in such areas as drugs, developed countries to no more than 25%
energy and water, is of the levels in the UK and US—and less if
a real pain for main- possible—and pledged to make drugs more
stream companies, affordable in middle-income countries such
but also signposts as Brazil and India.11
future markets
Global Impact Even the biggest Over the next 5–10 years, social impact
Investing Network animals and markets investing could grow to represent about 1% of
(GIIN) start with small seeds estimated current assets under management—
about $500 billion.12
Participant Media Culture change must The producers of films like An Inconvenient
involve the media Truth have developed active working
industry relationships with over 80 non-profits in
mainstream media projects, focused on
sustainability issues and reaching over
20 million people.
Singapore Economic Don’t just focus on EDB has announced a S$350 million fund to
Development Board green jobs, focus on support the development of the cleantech
(EDB) clusters industry in Singapore, estimating the sector
will generate S$1.7 billion in value-added
business, creating 7,000 jobs by 2015.13
Stern Review on A new paradigm In 2006, the Stern Review of the Economics
the Economics of means new ways of of Climate Change, produced for the UK
Climate Change looking at our world government, argued that the benefits of taking
and at markets action to stabilise greenhouse gases by 2050
(minus the costs) would amount to a ‘profit’ of
$2.5 trillion (£1.32 trillion).14 Lord Stern now
warns governments need to prepare for
temperature rises of 4–6 ºC.
United Nations United action is The UN already argues that ‘one third of the
crucial for global around $2.5 trillion-worth of planned stimulus
change packages should be invested on 'greening' the
world economy. The estimated $750 billion of
green investment, equal to about 1% of current
global GDP, could trigger significant, multiple
and potentially transformational returns.’ 15
US Green Deal Government policy $43 billion out of a $787 billion spending bill
and spending is earmarked for renewable energy.
central

21. 2.3 Surprises 19
There were a number of surprises in the survey We were also struck by the way that the
results. We were forcefully struck, for example, United States—and the Obama Presidency
by the number of mainstream companies that in particular—dominated the nominations.
made it into the final list—when we had started But if any one organization summed up the
out thinking mainly in terms of social and Phoenix mindset and approach for us, it was
environmental enterprises. Shai Agassi’s Better Place. Based in the
USA, it is increasingly global in its operations.
They included General Electric (GE), with
its ‘Ecomagination’ Initiative,16 Google.org Agassi, formerly a top executive at German
for its focus on renewable energy and other software company SAP, has developed a
sustainability issues, GSK for its industry- business model that treats cars as if they
consensus-shattering announcement that it were mobile phones, with drivers able to pay
would radically cut the cost of its drugs to the a monthly fee to charge their vehicles at
world’s poorest countries, Novo Nordisk for easy-to-use battery stations. The aim is to
its work with the Oxford Health Alliance convert cities and ultimately countries to
(which is about preventing and reducing the electric vehicles. Already countries like
global impact of chronic disease, around three Australia, Denmark and Israel have signed
risk factors—tobacco use, physical inactivity up, together with states like California and
and poor diet) and TNT for its work on Hawaii, and cities like Toronto. Their
providing the logistics for disaster relief and approach—which involves mobilizing all
other large-scale initiatives, including tree levels of government, major companies
planting in East Africa. (like Renault-Nissan) and investors—is a
prototypical example of what expect to see as
the Phoenix paradigm takes hold and the
relevant forms of innovation and
entrepreneurship takes flight.
Question: do you see anything good
about the economic downturn?
“Yes. Publishers and book distributors are
much more interested in dealing with us,
and the terms are more flexible.”
Kyle Zimmer
First Book

22. 3.0 2009 Survey Results 20
Entrepreneurs say that five
trends are driving change—
though the impact and
implications of the evolving
economic discontinuity are
currently top of mind.
000º
270º

23. The Phoenix Economy 21
It is an uncomfortable fact that economic and Happily, the contributions of such
social systems—like ecosystems—go through entrepreneurs are increasingly recognized and
periods of convulsive change. Social and celebrated by some governments, from the
environmental entrepreneurs and intrapreneurs UK with its Office of the Third Sector to the
may be in the spotlight as never before, but United States with the Obama Presidency’s
we are seeing a shakeout that will hit both broad-spectrum change agenda. In ending his
weak and strong organizations. “Down cycles Inaugural Address with the words “future
weed out weak players,” Jim Fruchterman generations”, President Obama underscored
of Benetech comments, and, sadly, “some the challenges the world faces as the human
great groups get weeded out because of population adds another 1.5 billion people
bad timing.” by 2025 and systemic stresses linked to
climate, water, poverty and disease intensify.18
Many survey respondents were increasingly The challenge of developing economic and
somber, seeing a profoundly challenging period business models that will work in today’s
ahead. This should be of concern to leaders world is increasingly urgent, but we also need
in the public, private and citizen sectors alike, models that will create real value and impact
given that the work of many entrepreneurs efficiently, effectively, equitably and above
spotlights and seeks to address critical issues all sustainably in a world projected to reach
like climate change, water scarcity, poverty, 9–10 billion by mid-century.
disease, corruption and an expanding array
of human rights concerns. Entrepreneurs So how do leading entrepreneurs see the
are worth watching because they are challenges and opportunities today?
experimenting with new technologies Our survey results spotlight five trends that
and business models, underscoring the will shape the agenda:
potential for transformational solutions
and change.17 1 Weathering the Storm
2 Rebooting the Business Case
3 Evolving the ‘Ecosystem’
4 Bridging the Micro-Macro Divide
5 Delivering Government-as-Unusual
Figure 3.0
Weathering to Delivering
Five trends that will shape the agenda
1 2 3 4 5
Weathering Rebooting the Evolving the Bridging the Delivering
the Storm Business Case ‘Ecosystem’ Micro-Macro Government-
Divide as-Unusual

24. 3.1 Weathering the Storm 22
Most entrepreneurs say the downturn In fact, SEWA’s members have been
has already hit funding—but even as the experiencing financial crises for the last three
shakeout builds and cost efficiency years. Bhat continues: “SEWA was in a
measures are put into effect, necessity situation where it could have succumbed to
will be the mother of profound reinvention. this crisis. However, our members turned this
around as an opportunity to revise our strategy
As the downturn began to bite in earnest, and achieve financial self-reliance. As a result,
entrepreneurs found themselves—and their members’ economic organizations have been
beneficiaries—caught in a tightening vise. able to achieve 70% financial self-reliance.
50% of respondents had already been This has reinforced our confidence of
affected (Figure 3.1). reaching our impact.”
From India, Self-Employed Women’s Less positively, the global situation is likely
Association (SEWA) founder Ela Bhat to worsen as capital flows to emerging
reported that, “SEWA’s members in the markets are choked off by the financial crisis
informal sector specifically construction in the advanced economies.19 The credit
workers, rag pickers and garment stitchers, crisis is also squeezing funding to leading
have been adversely affected because of the social and environmental entrepreneurs,
economic crises. They have lost their work impacting the value of foundation
and employment. As a result children are endowments—and thus the disposable funds.
being withdrawn from the school and joining Although some entrepreneurs report increasing
their mothers in work, particularly girls— support and growing confidence, a clear
and there is widespread starvation.” majority notes a deteriorating prospect for
future funding. One consequence will be
growing interest in the diversification of
revenue streams.
Figure 3.1 Figure 3.2
Impacted Adapting
To what extent have you been affected What level of adaptation is the global
by the global economic crisis? economic crisis demanding of you
% and your work?
%
50 50
40 40 40
37
35
30 30 31
20 20
15 14
10 10 11
8
5 4
Not at all
Marginally
Affected
Seriously
Badly
Very low
Low
Medium
High
Very high

25. Necessity Mothers Reinvention 23
Rather than a profound process of adaptation, Further south, Fernando Nilo of Recycla
what we see to date from our survey is mainly Chile noted that the smelters they sell metals
a process of cost reduction—hardly surprising, to held payment for 60 days—and were only
given that less than a fifth of our respondents persuaded to pay with the support of lawyers.
said the pressure to adapt was already ‘high’
or ‘very high’ (Figure 3.1). Significantly, Adaptation is well under way in many
however, 40% said the pressure was organizations. “We have shifted staff
‘medium’—although the comments made it substantially towards our revenue engine,
clear that many respondents expect the The First Book Marketplace,” explained
pressures to grow. Asked how long they Kyle Zimmer of First Book. Kiva co-founder
expect the downturn to last, 45% of our and CEO Matt Flannery replied that the
respondents thought 1.5 to 3 years (Figure micro-lending organization planned to
3.3), though there were outliers expecting a “return to a scrappy attitude,” emphasizing
more protracted crisis. Our own assumptions the opportunistic, irrepressible and determined
skew strongly to the right hand side of the mindset and behaviors of a start-up.
time-line. Once again, however, there is a sense
that whilst the funding crisis is profoundly
Respondents were eloquent on the scale of unwelcome, coming at a time when many
the impact to date: “Our microfinance program entrepreneurs are under pressure to replicate
is suffering because local banks are not and scale their operations, there could
lending us money,” said one prominent Latin be significant upsides. “New ideas and
American entrepreneur, who asked to remain approaches will spring forth,” noted Kristine
anonymous. “When they do, they have short- Pearson of the Freeplay Foundation
ened the term to 3 months and doubled the “necessity, once again, will be the mother
interest rate, from 10% to 20%.” From Peru, of invention.”
Albina Ruiz Ríos reported that the price of the
PET plastic that Ciudad Saludable recycles The key challenge for many, as Benetech’s
had dropped from $500 to $150 a ton. Jim Fruchterman put it, is to get through
“the valley of death”. For that to happen,
respondents see an urgent need for key
Figure 3.3 actors to adopt elements of the agenda
outlined on pages 35–40.
Assumptions
How long do you think the global economic
crisis is likely to continue?
%
50
45
40
30 31
20 19
10
4 1
0–1 Years
1–1.5 Years
1.5–3 Years
3–5 Years
5+ Years

26. How Entrepreneurs are 24
Responding to Downturn
In terms of the types of adaptation required, —Closer internal oversight
respondents made the following points: Governance and management are
increasingly important. “We’ve set up a
—Focus on efficiency committee of board and staff to ensure
Many respondents are aiming to do more we’re constantly monitoring the situation
with less. “We made plans to reach the and considering how to adapt our strategies
same targets with less income,” reported accordingly. We’re not in emergency mode,
Yuval Wagner of Access Israel. “While but rather looking for ways to find new
maintaining quality,” said former BELL and opportunities in a changing landscape.”
current Summer Advantage USA CEO said Nina Smith of the RugMark
Earl Martin Phalen, “we are making decisions Foundation.
about what we can do without.”
—Develop scenarios
—Adopt a defensive posture Organizational strategies will have to be
This approach was reported with some adaptive to the context of considerable
frustration by entrepreneurs with a passion uncertainty. “We are developing multiple
to grow. “We have a great core business,” 2009 budgets that react to varying degrees
said Roberto Milk of NOVICA, “it’s just that of income reduction,” reported Adam
all plans are delayed through the crisis.” Green of Rocking the Boat.
Many respondents were already slowing
recruitment or actively cutting staff. —Adapt business models
“We have become very cautious about There is a growing need for flexibility
adding new positions that may not be and diversification. Some not-for-profit
sustainable if the economy gets worse. entrepreneurs are setting up for-profit
At the same time, we must continue to arms, and vice versa.
add those positions necessary to
manage continued growth,” said —Think about mergers
Chris Elias of PATH. “I am considering allowing the organization
to merge with other organizations,” admitted
Socheata Poeuv of Khmer Legacies.
—Don’t forget growth
Such times open out “opportunities to
make long-term moves,” as Rory Stear of
Flambard Holdings put it. As a result,
some entrepreneurs are distinctly upbeat.
“We plan to grow significantly,” said Mel
Young of the Homeless World Cup.
“We have made plans to reach the
same targets with less income.”
Yuval Wagner
Access Israel

27. Future Funding How the Phoenix 50 are 25
Weathering the Storm
When it came to future funding, the sources All sectors and pretty much
seen as most attractive are shown in Figure all geographies will be
3.4. The interest in relatively ‘soft’ money is impacted by the economic
notable. Foundations (72%) lead by a wide discontinuity. Some Phoenix
margin, followed by government grants and 50 organizations will go
loans (56%). Moving to the harder end, we under, others will be sorely
come to making sales/charging fees (49%), squeezed—and a proportion will emerge
attracting help in kind (42%) and public fund- transformed. As the pressures build, some
raising (40%), with joint venturing (33%) and Phoenix 50 pioneers are moving deftly into
venture capital (28%) perceived as relatively the political game—among them Green
less forth-coming sources of finance. For All. Others are redoubling their efforts
to create new funding sources for
It is clear, however, that even in tough times entrepreneurs, including MyC4. As the
the optimism of entrepreneurs is unabated. social fall-out grows, there will be growing
A significant majority (60%) remain confident need for the services offered by such
that they will continue to achieve real impact. Phoenix 50 organizations as the Business
& Human Rights Resource Centre,
Mothers2Mothers, PDA and the World
Toilet Organization (WTO). They will
increasingly need the support of
organizations like Ashoka. The parallel
energy crisis will create new opportunities
for such trailblazers as E+Co, Econcern
and Solarcentury. And, in the background,
some of our wild card listings continue
to explore less obvious aspects of the
Phoenix Economy, in the case of the
J Craig Venter Institute focusing on
synthetic biology and potential new
routes to sustainable energy.
Figure 3.4
Future funding sources
Which sources of funding will be the best
avenues to pursue under today’s conditions? 72
%
56
50 49
42
40 40
33
30 28
24
20
14
10 8
6
Public shares
Unsure
Franchising
Own pockets
Venture capital
Joint venturing
Public funds
Help-in-kind
Sales / Fees
Government
Foundations

28. 3.2 Upgrading the Business Case 26
Although entrepreneurs see an inexorable The downturn, said Gary Cohen of
rise in the need for their services, the Health Care Without Harm, “has forced
available market research is weak. As us to strengthen the business case for
they move to scale, that is likely to be a environmentally responsible healthcare—and
growing gap—and opportunity space. demonstrate how our programs save hospitals
money that could be better used for patient
Huge growth in demand is expected for what care.” “There is no better time for innovation or
social and environmental entrepreneurs do invention than when facing broken systems,”
and provide. The US National Intelligence said Jacqueline Novogratz of Acumen Fund.
Council (NIC) reported, late in 2008, that
by 2025 a whole spectrum of new challenges Given how important market research is to
would test global leaders in the public, mainstream entrepreneurs preparing their
private and citizen sectors.20 Alongside business case, we asked what sources of
“the unprecedented transfer of wealth roughly market research entrepreneurs are using.
from West to East now under way” and seen “Alas, this is not one of our strengths,” said
as likely to “continue for the foreseeable one of our respondents, who asked to remain
future,” the NIC foresaw a range of factors anonymous. “Market research for northern
driving “unprecedented economic growth”, Haiti?” quipped Peter Haas of AIDG. “Sorry
which, coupled with the addition of 1.5 billion mates, there is none.” To date, very few
more people, “will put pressure on resources— entrepreneurs work with marketing or market
particularly energy, food, and water—raising research agencies, though Jumpstart was
the specter of scarcities emerging as demand one. Another was Dialogue in the Dark,
outstrips supply.” where Andreas Heinecke noted that, “we
went through an intensive Bain study to be
The economic downturn will slow—but not ready for take-off.”
stall—this momentum. Some of our survey
respondents see the current downturn as Other pointers on market research options
necessary, if painful. “This is an over-due included the following: “We all must struggle
correction,” as Victoria Hale of The Institute to harvest useful knowledge from the flood of
for One World Health put it. “This is a information today—from magazines, internet-
moment for change—if we can do it based newsletters, research studies and
deliberately,” said Rebecca Adamson of government reports,” said Mike Eckhart of
First Peoples Worldwide. “People might ACORE. Other useful sources identified
be a little less certain that greed is a driver include “the Monitor Group, New Profit Inc.,
for a sound economy,” as Barry Coleman of Bridgespan and other key advisors” (BELL),
Riders for Health noted. His partner Andrea “industry reports” (Health Care Without
also saw potentially positive impacts in that Harm), “in-house research capability and
“charities will be forced to think in a socially work with think-tanks” (Independence Care
entrepreneurial way.” As a result, others Systems), “foundation social impact data,
argued, there needs to be even greater focus to help develop our high-transparency bank”
on the business case for change. (Urban Logic), “World Bank reports”
(Root Capital), “government surveys” and
“national statistics” (Responde), “customers”
(First Book), “listserves” (Nuestras Raices),
“mainly the Internet” (Freeplay Foundation),
“research carried out by NGOs” (Honey Care
Africa), and “word of mouth” (Evergreen).

29. The Phoenix Economy How the Phoenix 50 are 27
Upgrading their Business Case
The closer the entrepreneurs are to viable The new economic reality
business models, the greater their appetite will force many actors to
for market research. In particular there is an upgrade—and in many cases
appetite for targeted, reliable, affordable reboot—the business case
research—though in many cases the likelihood arguments they use to sell
for many respondents is that free sources will what they do. Anyone
win out over paid-for services for some time to wanting persuasive input to their business
come. When we asked entrepreneurs what case would be well advised to take a
questions they would want asked if market look at the work of Sustainable Asset
research capacity were to be available, the Management (SAM), particularly its 2009
replies were predictably broad ranging, Sustainability Yearbook.26 Among the
spotlighting the potential of well-targeted trailblazers rebooting health sector
market intelligence to help them frame their business cases generally are the Aravind
thinking, priorities and business cases: Eye Care System, Health Care Without
Harm, the Institute for One World Health
—A focused analysis of fair trade and organic and, perhaps most strikingly, GSK.
product market trends and opportunities.21 In the area of sustainability policy, the
World Resources Institute (WRI) and the
—How will climate change investments be World Business Council for Sustainable
impacted by the financial crisis?22 Development (WBCSD) stand out.
In the energy sector, the Phoenix 50
—How do Chinese companies and includes AMEE, Climate Change Capital
multinationals operating in China apply and, most powerfully, GE’s Ecomagination
CSR programs in China?23 Initiative. In the automotive sector, we
spotlight BYD Auto, which is morphing
—What do companies most want in from a battery-maker to a producer of
partnerships with social entrepreneurs?24 electric cars. In the wider field of
innovation, we see Innocentive as a
—Where are there untapped sources pioneer, with its focus on “sustainable
of funding?25 breakthrough innovation”.
“We have to make sure that we have the
greatest impact at the lowest cost and do
an increasingly good job at showing how lives
are being changed in a sustained way.”
Andrea Coleman
Riders for Health

30. 3.3 Evolving the ‘Ecosystem’ 28
Entrepreneurs are increasingly aware As the Stage 4 opportunity space opens out
of the need to build ‘ecosystems of in the form of new markets, there has been
change’—and to mobilize strategic growing interest in its development from
alliances in pursuit of ‘pathways to scale’. financial institutions, with Generation
Investment Management and venture
It takes an ecosystem approach to drive capital pioneers Kleiner Perkins Caufield
true system change. Once basic survival is & Byers among the Phoenix 50—and
ensured, the focus of most respondents and Khosla Ventures among those nominated.
interviewees turns to questions of scaling The still-emerging Global Impact Investing
their impact. Building critical mass through Network (GIIN) is a gamble in the Phoenix
partnerships and alliances with other sectors 50 listing, but significant because it is
is seen as a critical condition for moving up catalyzing new ways of blending private
to Stages 4 (Ecosystem) and, ultimately, and philanthropic capital to help social and
Stage 5 (Economy) (Figure 2.1, page 14–15). environmental entrepreneurs. Other 2009
This is the focus of our ‘Pathways to Scale’ Phoenix 50 organizations that demonstrate
work, which has found that the key aspirations the importance of building ecosystems
of entrepreneurs currently moving towards include Aflatoun, the C40 initiative and the
Stage 4 include: Marine Stewardship Council.
—Consolidating their business models and It is striking that social entrepreneurs evaluate
financing mechanisms (Solar Aid). the ‘financial community’ as way below other
sectors in terms of current importance in their
—Evolving alliances to increase their access work. Generally this is because entrepreneurs
channels and market share (Global address areas of market failure, where
Footprint Network). investors tend to venture timidly, if at all.
Cleantech entrepreneurs are an exception
—Improving market regulation through here, because they address markets that are
standards and better governance closer to market take-off. For example, Shai
(Roundtable on Sustainable Biofuels). Agassi’s Better Place aims to create the
system conditions for the roll-out of electric
—Assembling the infrastructures required to vehicles on a large scale—and is unusual
bring their solutions to scale (Movimento among the entrepreneurs covered here in
Nacional dos Catadores de Materiais that they are venture-funded. The interface
Recicláveis). between entrepreneurs and financial markets
clearly merits further work.
—Lobbying governments for new market-
shaping rules that get the incentives right Although international government agencies
(CERES Investor Network on Climate Risk). scored lowest in terms of their significance
for our entrepreneurs, they too can play a key
Most of the entrepreneurs interviewed see role. Consider India’s Solar Loan Programme,
their initiatives and solutions as located led by the United Nations Environment
somewhere between Stage 2 (Experiment) Programme (UNEP) from 2003 to 2007,
and Stage 3 (Enterprise). The growing which created the necessary conditions for
concerns about survival shown by Indian banks to support the scaling up of
respondents underscore the difficulties of lending for solar home systems.27 That said,
sustaining enterprises in Stages 2 and 3, the low score achieved by this sector suggests
let alone moving on to Stage 4. Those we that the relevant institutions and agencies
polled reported that their highest priority is need to rethink their role if they are to spur
to find ways to influence the private sector. the rise of a truly global Phoenix Economy.
But also seen as ‘very important’ is their ability
to influence regulation and public support by
engaging with national governments and by
mobilizing grassroots and broader cultural
change through engagement with the media
in its many forms.

31. How The Phoenix 50 are 29
Evolving Ecosystems
Getting to Stage 3 in our Among those spotlighted in the Phoenix
5-stage model of ‘Pathways 50 are Aflatoun, the Cleantech Group,
to Scale’ (page 15) is never Interpeace, the Marine Stewardship
easy, but is a good deal Council, Movimento Nacional dos
simpler than the convening, Catadores de Materiais Recicláveis
building and managing of and Novo Nordisk with its support for
strategic alliances and partnerships the Oxford Health Alliance. Many are
necessary to operate effectively at working on technologies and business
Stage 4. The Phoenix 50 organizations— models that open out the landscape
and many others covered in these of opportunity for others, including
pages—are trying to build ecosystems CellBazaar, MaRS and Virgance.
for change. The relevant skills will need honing,
but the role of market-shapers like
governments, stock exchanges, financial
institutions and business can only
become increasingly important.
Figure 3.5
Stakeholder importance
What sectors do you need to work with Irrelevant
to scale your impact? Not very important
Number of votes Important
Very important
100
90 10
12 5 6
10 10
80 34 16 29
32
20 32 34
70
33
60
International Governemnt Agencies
30
50 51
46 46
42
40 40
National Governements
Citizen sector / NGOs
Financial Community
32
30
23
Foundations
20
Business
Media
10

32. 3.4 Bridging the Macro-Micro Divide 30
Entrepreneurs see an urgent need to Despite its enormous ecological footprint
converge bottom-up with top-down and its profound economic problems, the
approaches—and to link micro-level US was seen by many as well placed to help
solutions with macro-strategies. build the Phoenix Economy, “once (and if) the
right incentive structures are put in place.”
If any one characteristic stands out in the work See pages 36–37 for our Phoenix Manifesto
and achievements of the most celebrated for governments.
social entrepreneurs in the developing world, it
is their focus on micro-models: micro-finance, Several of the pioneering Phoenix 50
micro-insurance, micro-energy generation and organizations aim to bridge micro and macro
so on. When asked for their prescriptions for levels of change. They include the Cleantech
future progress in their fields of interest, most Group, which since 2002 has been a leading
social entrepreneurs working in these areas source of market intelligence in the cleantech
continue to emphasize the micro, often sector and Arup, the global firm of designers,
assuming—or stating—that the best way to engineers, planners and business consultants
the desired macro outcome of system change that has been involved in the design and
is by the aggregation of a growing number of planning of eco-cities like Dongtan, Shanghai,
bottom-up initiatives. China. More significantly, Arup Director, Peter
Head, told us that the 1,000 people working
Others see things differently. “Macro solutions on sustainable development issues in the
are key,” said one of our Net Impact firm are now helping direct new business
respondents. “How else,” she asked, “are development across the 9,000-person
we going to replace the 200-plus million organization.
cars in the USA with non-carbon-based
transportation?” Many of the social and Another similar organization nominated was
environmental entrepreneurs we interviewed architect Norman Foster’s Foster & Partners,
are increasingly aware of the need for macro- which is doing the master planning for the
level support for their work. Indeed, many new eco-city of Masdar in the United Arab
of our survey respondents were extremely Emirates, designed to be both carbon neutral
enthusiastic about the promise of the and zero waste. Increasingly, cities around the
Obama Presidency, precisely because world are trying to work out how to bring their
of its aim to support social and environmental collective weight to bear on issues like climate
entrepreneurship by building the necessary change. This is the focus of the C40 initiative,
macro-level policy and incentive structures. among others.

33. The Phoenix Economy How the Phoenix 50 are 31
Bridging the Macro-Micro Divide
Exciting though such eco-cities are, many No amount of micro-level
more people will live in the world’s sprawling, innovation will flip the
noisome slums than are ever likely to live in system to a new (macro)
new cities of any type. Over a billion people are state. Significantly, the
thought to live in slums worldwide, a number Grameen Group, founded
that could double within a couple of decades, by Muhammad Yunus,
placing a massive premium on approaches is most closely associated with micro-
and initiatives that offer hope of raising living scale solutions, but has constantly
and environmental standards in such areas. experimented with ways of scaling micro-
level activities—and with partnerships
Of the Phoenix 50 organizations, the most designed to address the macro-level
relevant here is Himanshu Parikh Consulting challenge. Yunus even considered running
Engineers, in India. Using what they dub for the highest political office. Venture-
‘Slum Networking’, they study the natural funded Better Place straddles the macro-
topography and drainage of slum areas to micro divide, as do venture capitalists
improve the environment and provide quality, Kleiner Perkins Caufield & Byers (KPCB)
gravity-based water supply, sanitation, storm represented by ‘greentech’ champion
drainage, roads and landscaping at costs John Doerr. Among Phoenix 50
lower than conventional solutions like public corporations selected on the basis
stand posts and community latrines. of their macro-micro strategies are
The various components of infrastructure architects and planners Arup, search
are bundled, to cut the cost, integrated from engine pioneers Google and logistics
micro to macro levels. “The Slum Networking giant TNT. But even solutions developed
concept has been tried in several cities of by tiny enterprises can vault to the
India such as Indore, Baroda, Ahmedabad, point of addressing macro issues, like
Bhopal and Mumbai,” reports Himanshu Apopo with its ‘sniffer rats’ hunting out
Parikh, “directly transforming lives of about landmines, helping to underscore the
a million people.” significance of the multi-dimensional
security agenda. Our market pioneers
increasingly recognize the need to sniff
out opportunities for change at micro,
meso and macro scales.
Question: do you see anything good
about the economic downturn?
“[We could see a] shift in societal values.”
Bart Weetjens
Apopo International