Capital and Sustainability

In the article The Five Capital Model - a framework for sustainability Jonathon Porritt simply defines capital as “wealth creation” and he shows us 5 ways in which capital can be both created and destroyed.

Each of the 5 types of capital are created in various ways. Natural Capital is created by the earth. With or without humans, Natural Capital will exist and create value for other organisms and the planet. In fact, without humans extracting Natural Capital it probably would create even more value for other organisms. Human Capital is created by humans for humans. Social Capital is also created by humans for humans. However, unlike Human Capital, Social Capital is created by many people for the enjoyment and use of many people. Manufactured Capital is create by humans to do specific work. The last form of capital in this model is the first form of capital that we often think of - Financial Capital. Both Manufactured Capital and Financial Capital are created as a means to an end, unlike Natural, Human and Social Capital which all have value independent of the others.  

I enjoyed reading the examples that Porritt shared for practical ways to incorporate and understanding of different forms of capital into a businesses. I imagine there are many companies, managers, investors, and leaders that want to incorporate sustainability into their product and services, but they don’t know what that really means or how to make that happen. By expanding the idea of what constitutes capital businesses leaders and companies can use their knowledge about increasing manufacturing and financial capital to the other forms of capital. This framework makes it easier to begin thinking about sustainability and it’s everyday impact into every organizational action and decision, like ordering recycled paper, offering family friendly HR policies, or reducing sugar from a product.

For the businesses already working on sustainable policies, I think this framework adds depth beyond a “triple-bottom-line” approach. It provides a framework that integrates sustainability into every business action rather than cordoning it off into philanthropic or environment ideas. It also looks beyond “doing less harm” and into the ways that we create and destroy value beyond money.

What I like about the 5 model framework is that it reminds us that our economy is not separate from society and the environment. There are many ways to create wealth and there are many ways in which we can lose value through exploitation. It seems that the difficulty lies in measuring the value that is created when it wasn’t created explicitly to generate money.

This brings the question of, how do you measure it? We have been exploiting 3 forms of capital to increase Manufacturing Capital and Financial Capital for centuries and we have good ways to measure how that value is created. How do we measure value (and destruction) of the other forms of capital?

I look forward to learning more about that in the coming term.

How to get involved

There are many fun ways to get involved with design. Check out some of the cool companies highlighted in earlier posts like Blue Earth Network and D-Rev, or check out IDEO which pioneered HCD. Their free toolkit on HCD is a great place to start. There are some other great west coast firms – Frog, Catapult Design, XPLANE, and Ziba - that also do interesting work and use design and design thinking to solve a number of problems. XPLANE in particular has a great blog that demonstrates innovative ways to use design principles beyond Buchanan first 2 levels of design.  

If classes are more your style, check out the class IDEO and +Acumen created. They offer it twice a year and the next one starts March 31st (next week!). It is a free, online 7-week course that involves lectures as well as design challenges to perform with a team. You can learn more about it here and sign up with a team in your area.

Another great way to get involved is through weekend long design events. Service Jam is an event where teams of people think creatively about a theme and build a service to satisfy a need around that theme in 48-hours. Sustainability Jam is a similar 48-hour event with an explicit focus on sustainability. Both of these event occur yearly all over the world.

In fact, design is such a hot topic right now that there are lots of organization to explore like Design for America or community events like design meet-ups, free lectures, and open houses are happening all the time.

I also love exploring blogs. There are some great examples of the 4 orders of design out there. My favorites are: Always with Honor, a graphic design firm in Portland; Design*Sponge, an interior design and product review site; Work|Play|Experience, a German service design firm; and Stanford’s Social Innovation Review.

What are your favorite ways to engage with design?

Design Thinking | Systems Thinking

During the February  intensive I had the pleasure of talking with Nina Serpiello, a professor at BGI. She worked at IDEO for years and has been a major proponent and teacher of design principles. We talked about the role of the designer, where “design” happens, and what systems thinking can bring to the design process.

Nina talked about how design springs from process. Once we are able to move through the awkwardness of a wild idea new pathways to solutions emerge. To get to that place we need permission to play, explore and to trust one another and the process. We need the capacity to tolerate ambiguity and engage with juxtapositions. The design process can create content, but really it is about building relationships and developing creativity.  Organizations can use the design process to solve large problems and include many stakeholders rather than just a small team or one person to solve a problem.

An example of this process at work involved redesigning a key service within a hospital. During the research the designers found that the nurses, doctors and other staff had forgotten what it felt like to be a patient in the hospital system. To remind them the designers set up a restaurant that offered the same customer experience as a hospital. The nurses and doctors entered the restaurant. Some were sat at a table immediately, other were told to wait for an hour, while still others were told to remove some of their clothing and then wear a bib while they waited. The food arrived at different times and at different qualities. Basically, it was not the customer experience that anyone expects from a viable business.

This experience reminded hospital staff what it is like to be patient within the hospital. Through play they experienced the problem that their customers faced in a new light. With this new empathy the hospital staff was able to think about the problems with a different mind set and new solutions emerged. Empathy is a key piece of Human Centered Design.

When looking at problems in big systems the design process can create space to dream up new solutions. However, those solutions might not work if designers don’t understand the system at play. Nina also talked about the importance of systems thinking when looking at wicked problems. Designers dig into a problem with the end user, understand their need, and co-create the perfect solution. But, often times if you don't understand the system in which the solution will operate the idea won't work.

I found an example of the interaction between design thinking and systems thinking with a recent product developed by D-Rev [1]. Their new energy efficient affordable light-therapy unit that treats jaundice had much lower than projected adoption rates in India. This was confusing to D-Rev as they had conducted many field interviews with doctors and hospitals to pin-point the need. They partnered with a local manufacture that already had the infrastructure to distribute the light-therapy unit.

The light-therapy unit from D-Rev

Once their product hit the market they found that hospitals, the core customers of the unit, were buying their unit. Instead, they were buying more expensive units. They found that this happened for two reasons. D-Rev’s revolutionary design was such a departure from what already existed that the buyers didn’t understand the new technology. The second reason had to do with the system of medial purchasing. In India, there are kickbacks to the hospital buyers if they purchase specific devices, typically more expensive devices. Even though D-Rev had interviewed a number of end users about their needs and they created a product that was superior at a much lower purchase and operational price, they came up against a system that did not support the distribution [2].

This highlights what Nina was talking about regarding the interplay between design thinking and system thinking. I think that this is particularly important when designers are developing something for communities other than their own. We all have an intuition on how our communities and cultures work, but not all communities and cultures work the same way. When working on any problem, but particularly problems outside your community it is essential that you explore not just the end-user’s need, but also the system that has created the need. Without that knowledge many great ideas, products, and services are doomed to fail.

Who Designs What?

There are many ways to think about and define “design”. In the last post I discussed the history of design and the emerging idea of “design thinking.” These discussions can quickly morph into abstract concepts, so I’d like to shift gears a bit and talk about what design is and highlight some innovative practitioners.

When describing design as a discipline I look to Richard Buchanan’s “four orders of design”: communication design, artifact design, interaction design, and environment and system design (1). Buchanan is a designer, theorist, and professor at Weatherhead School of Management at Case Western Reserve University where he currently teaches design to MBA students.

Communication Design includes graphic design and information visualization. It focuses on how we design symbols, signs, images and words to communicate meaning to one another.

Design Action Collective is a graphic design and communication agency out of Oakland, California. They collaborate with “progressive, non-profit, and social change organizations” to create visually engaging messages for social justice. 
     

Image from Design Action Collective

Artifact Design refers to industrial designers, architects, and engineers. The “product” created are physical like iPads or buildings.

D-Rev, a product development organization in San Francisco, designs products to, “improve the health and incomes of people living on less than $4 per day.” (2) Most recently they developed a low-cost prosthetic knee that has similar features of a prosthetic knee that would cost several thousand US Dollars. Their motto is that everyone deserves products that are well designed.     
       

Image from D-Rev

 
Interaction Design is a new type of design that recently emerged as we began to think wholistically about people’s experience with services and products. Interaction design includes human-computer interaction, experience design, and service design, and looks at ways that humans interact with one another through process, activities, and services.

Udaiyan Jatar’s Blue Earth Network lead a redesign of the Atlanta Center for Self-Sufficiency (ACSS) job placement for members of Atlanta’s homeless population.  Instead of placing ACSS’s clients into any available job, they asked the job seeker what work they were interested in and worked to find a good match. As a result of changing the service that ACSS provided their clients the 90-day job retention rate increased by 32% (3)

Environment and System design create organizations, systems, and environments (physical and nonphysical) that all the other orders of design exist in. Buchanan sees this as creating ideas and values that are core to how systems and environments operate.

Maren shared a great article about innovative CEOs. Tony Hsieh, CEO of Zappos, is re-designing the way work hierarchy is thought about. He recently removed job titles and managers in an effort to increase accountability and transparency (4). Instead employees will participate in holacracy, a series of overlapping circles of roles. 
    

Diagram from TalentRocket

While Bachanan’s four order framework is helpful in understanding the far reaching impact of design methodology he is quick to caution us not to see these orders as defining strict boundaries of design (5). Graphic designers are instrumental in describing how new systems will work (like in the image above). Industrial designers need to know about services that will partner with their product designs so that both product and service are effective. But it is helpful to broaden our understanding of design practitioners, which brings us full circle back to what is design thinking and who practices it. 

In the end, we are all designing something. As MBA students studying systems thinking and ecology we will be designing services and systems that affect thousands if not millions of people. Understanding the tools at our disposal is critical to our success. 

As Bachanan eloquently said,  "design is a discipline that everybody can participate in. Everyone is affected by [it], and if we do it right, we increase human’s access to their own rights. Economic, cultural and social rights." (5)
 

Collaborative and Lasting Change

Image from Stefanie Di Russo.

Design, once a specific term to describe creating an object has now become a common term used outside of creative disciplines. Businesses and business schools all over the country are embracing design “thinking” as a way to explore deep seated issues and unmet needs. Even NGOs, governments, and UNICEF are beginning to use the phrase and the methodology.

What does Design Thinking mean? It is a process that begins by framing an issue or problem, talking with people who are affected by the issue, coming up with a number of quick prototype solutions, and refining the prototypes. Or put more succinctly, “inspiration, ideation, and implementation...aimed at getting beyond assumptions that block effective solutions.”(1)

Diagram from Stefani Di Russo

As a methodology for solving problems design thinking has its roots in many disciplines - engineering, urban planning, graphic design and industrial design. How did all these seemingly different disciplines combine to create to what is seen as a “new way of thinking”? Design researcher Stefanie Di Russo created a diagram to make sense of design’s recent history. (2)

Looking at the history of design, what stands out most to me is who is part of the design process and how they are involved. As Di Russo explains, the 1960’s “participatory design” was a tool of science and engineers. They drove the design process with little input from end-users. User-testing was focused on the usability of the product and often disregarded user need and interests. (2)

In the 1980’s “user-centered design” emerged as designers began looking to user needs and interests. They designed with the user in mind. Service design extended the design approach beyond product development to include human interactions. This approach includes looking at how users use products and services and using those insights to create better products or services. (2)

In the late 1990’s Human-Centered Design began to look at products and services as a means to an end. Ideally, products and services would disappear into the background as people’s needs and interest were met. Drawing on curriculum at the Stanford’s d. school, IDEO democratized the design process by breaking Human-Centered Design down into 3 steps - hear, create, and deliver - and created a free toolkit for anyone to use.

For me, the power of design thinking lies in its ability to look at systemic problems with curiosity and invite experts, the people who live with the issue on a regular basis, to participate in crafting the solution.

A good example of what design thinking can offer comes from a story told by Catapult Design at a workshop I attended last summer. An NGO was working in a slum to increase the health of residents through sewage treatment. “Experts” in waste management went in to the neighborhoods to observe how people were informally handling sewage waste. They observed that people went to open areas and used them as open-air communal toilets. Open ditches ran through the neighborhood draining these areas. With these observations in hand, the NGO worked with engineers to create in-house sewage treatment units. They were odorless, efficiently took care of waste and were supplied to household by the NGO. The problem was that no one used them.

Had the “experts” in waste management talked with the residents about their lives and the system that they lived in, they would have discovered that the residents had many competing needs. One of the greatest needs was finding alone time away from families and neighbors in the the crowded slums. Using a toilet outside of the home was one of the few moments each day they had to themselves and it wasn’t something that they were willing to give up.

It is this nuanced understanding of shared human needs and desires that I hope design thinking can address in a way that creates collaborative and lasting change.

The Intersection of Design and Social Impact

Growing up my parents introduced me to the power of design, although they called it “being resourceful.” A household appliance or piece of clothing wasn't functioning the way they wanted, so they’d re-designed it to suit their needs. My mom taught me to sew and I’d find little things that needed a custom bag to protect it, or sew extra pockets into my clothes. In the wood shop my dad taught me to use power tools to make boxes and stools. Later, as a sailor, I carved pieces of wood to protect my rigging knife, and made canvas buckets to haul tools up the mast. My parents taught me to literally make solutions to the problems that I faced. Yes, this is "being resourceful." And I later realized that it is also called design.

As a young adult, however, I saw “design” as something frivolous: shiny products that oozed cool and were made by skilled industrial designers and glamorized by creative marketers. These beautifully designed objects -- smartphones, cars, kitchen knives, bags, artisanal coffee -- surround Americans everyday. They make our world beautiful and seemingly unblemished.

Walkway at SFO airport

In 2010 I saw Emily Pilloton's TED talk about using design to change people’s lives. Pilloton worked in rural North Carolina with high school students. She used design principles to engage her students in finding solutions to problems that ailed their communities. They weren’t just building a farmer's market, they were creating meaningful employment for their neighbors and families.

Pilloton’s talk showed me a new side of design. Design is a tool, and like all tools it can be used for meaningful things or frivolous things. Pilloton introduced me to a movement that takes industrial design, anthropological study of human needs, and marketing finesse to effect deep change and for people all over the world.

Exciting changes are happening in social entrepreneurship, international aid, and design. This blog will explore where and how these topics intersect to create a better world for us all.

My capital manifesto

Over the course of this quarter I’ve learned about the theory behind various forms of capital - financial, social, human, natural, etc. And I realized that not only do we interact with capital everyday, but we also create capital, we use capital, and in some ways we are capital. It sounds eerie and reductionist at first, but I wonder if there isn’t some way to feel ownership (pun intended) over the construct of capital. How can we make it ours and make it work for the communities and environment we care about?

Traditional economics speaks to the ways in which capital does “work”. As Investopedia explains, “Capital...is used to generate wealth through investment...Capital itself does not exist until it is produced. Then, to create wealth, capital must be combined with labor, the work of individuals who exchange their time and skills for money… [and] Capital has value because of property rights.”

So the traditional definition of capital is linked to wealth creation. It must be created, and owned. How can we re-imagine wealth, creation and ownership then?

Wealth - It is excess that you don’t use immediately, resources that we can stored or saved. Depending on who you are talking to, wealth is manifested in the form of money, possessions, knowledge. Yet, interestingly it can be used to described people and things. It is more than possession it can also be a descriptor: a wealthy family, city, and nation.

Creation - Bringing something new into existence. But is anything new ever really “created”, or is it just repurposed, a shifting of ideas, atoms, and elements. Charles Eisenstein certainly feels that most things that are sold was once an object and services that humans provided for themselves and their community without exchanging money for it.

Ownership - It is to possess, rule, control. Those words are very different from service or stewardship, yet all three can look the same in action. I own my dog, but that just means that I have to pick up his poop and make sure that he doesn’t get hurt or hurt other. In fact, it seems that he controls me.

Now, just for fun, with this new look at wealth, creation, and ownership let’s look at what financial, social, human, and natural capital we interact with, use, live and create on a daily basis. There is the obvious physical environment that surrounds us. Each building serves use-value and transaction-value. It is owned by someone and created by someone. It is probably making wealth for someone (the bank, the landlord) as well. What about the people walking around and working? They all have capital, which is to say knowledge and skill that they own, created, and are driving wealth from (or at least we hope there is an excess of resources taking place). In fact, I am using mental capital right now. I am building my writing skills, and deepening my understanding of economics. I own these new skills and I hope to profit off of them in the near future.  What about trees and parks. They create wealth because they improve quality of life (who doesn’t like excess quality of life?). They are “owned” by taxpayers and are created by nature and human intervention.

It seems that with a broad sense of capital, wealth creation, and ownership we can apply the label capital to almost everything we come in contact with.

Yes, the world is unjust. Yes, there are many institutional, systemic, and structural barriers that keep people from achieving the mythical “American Dream”. But, we all have some capital.

How are you going to use your’s?