Better by Measure: What's Material?
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Why should start-ups consider environmental sustainability and how? Better by Measure, a class from the Products of Design masters program at the School of Visual Arts (http://productsofdesign.sva.edu), explores how startups can build value by critically embracing civic, environmental, and human health challenges. The course is taught by Jen van der Meer (@jenvandermeer) and Rebecca Silver (@rgsilver).
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Better by Measure: What's Material?
- 1. BETTER BY MEASURE! WHAT’S MATERIAL?! Class 5 | October 2, 2014! ! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 !
- 2. OUTLINE! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 2! STUDENT PRESENTATIONS! ! SCIENCE LAB: WHAT’S MATERIAL?! !
- 3. WHAT’S MATERIAL?! SCIENCE LAB! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 !
- 4. WHAT IS CORPORATE SUSTAINABILITY STRATEGY?! What is sustainability strategy?! ! Why is it important?! ! How does it tie to your core business strategy?! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 4!
- 5. EVOLUTION OF SUSTAINABILITY STRATEGY! From its origins: ENVIRONMENTAL HEALTH & SAFETY (EH&S)! • Activities: Legislation compliance, safety, managing averse events! • Structure: Separate department within companies; likely tied to legal department! ! To current paradigm: CORPORATE SOCIAL RESPONSIBILITY (CSR)! • Activities: Corporate Giving, risk avoidance & management, marketing (creation of good will), influencing regulation, reporting, auditing of suppliers! • Structure: Separate department in company under diverse array of functions; small team or single actor! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 5!
- 6. WE’RE EVOLVING SUSTAINABLE STRATEGY TO MATCH EVOLVING ECONOMIC THEORY! FROM: “The social responsibility of corporations is to increase profits.” ! – Milton Friedman, 1970! ! ! TO: Businesses must reconnect company success with social progress. Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center. We believe that it can give rise to the next major transformation of business thinking.! – Michael Porter, Harvard, Author – Creating Shared Value! ! $ FOR PROFIT! for… profit! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 6! $ FOR PROFIT! out to change the world!
- 7. BETTER BY MEASURE’S APPROACH! Future paradigm: SUSTAINABLE BY DESIGN! • Activities: ! • Sustainability strategy tied to core company strategy & value proposition! • Holistically engaging societal needs to better serve customer! • Focusing on sustainability as an opportunity to innovate! • De-coupling Resource use from financial growth! • Designing for resiliency! • Positively contributing to shareholder value! ! • Structure: Priorities set by senior leadership; all departments responsible for ensuring sustainability goals/values are met and for advancing agenda; suppliers aligned with customer’s sustainability mission! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 7!
- 8. GOALS OF CORPORATE SUSTAINABILITY STRATEGY! 1. Maximizing positive impact, including:! • Lens to develop new more sustainable products, services and revenue streams! • Improving product/service quality! • Saving money via efficiency! • Building customer goodwill and attracting new customers! • Building relationships with partners, i.e. suppliers! • Building relationships with external stakeholders, i.e. NGOs, communities ! • Avoiding pending legislation & shaping legislation! • Attracting and retaining employees! 2. Avoiding unintended consequences, including:! • Supply chain disruptions! • Negative financial impacts! • Negative consumer perceptions! • Lifecycle burden shifting & Jevons paradox (rebound effect)! • Regulations/legislation! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 8!
- 9. LEAN APPROACH TO BUILDING SUSTAINABILITY STRATEGY! ENVIRONMENTAL, SOCIAL, AND HUMAN HEALTH IMPACTS ARE AN OPPORTUNITY FOR BUSINESS VALUE CREATION. THEREFORE: ! • Your sustainability goals should be considered upfront and intrinsically tied to your value proposition! • View of the customer (via customer discovery) must include holistic view of their surrounding environment and community needs! • You should pivot and shift your sustainability strategy in tandem with your business strategy, in ways that are agile and resilient ! • As your company grows and your concept is proven your sustainability strategy should also be refined and solidified! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 9!
- 10. BUILD SUSTAINABILITY INTO CUSTOMER DISCOVERY! BETTER BY MEASURE CUSTOMER DEVELOPMENT MODEL! STOP STOP STOP BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 10! BETTER BY FOCUS! MEASURE! Eco/Social Hypothesis Testing:! By delivering your value proposition, what ecological/ social values are created/eroded and how does this effect the customer?! Designing for Sustainable Growth:! How might different growth scenarios affect ecological/ social value creation/erosion? ! ! Measuring Eco/ Social Outcomes:! How can we measure and sustain or improve environmental/ social outcomes of corporate activities?! Co-Creating Eco/ Social Solutions:! Can you co-create value which addresses both customer needs and ecological/social values?! ! - The Four Steps to the Customer Epiphany by Steve Blank! Customer Discovery! Customer Creation! Customer Validation! Company! Building! Pivot!
- 11. WHEN IN BUSINESS FORMATION & GROWTH SHOULD YOU CONSIDER SUSTAINABILITY STRATEGY?! Early Stage! IPO! 1 3 2 4 3 3 3 4 4 4 Revisit sustainability strategy at strategic inflection points: ! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 11! REVENUE! TIME! Break Even! Later Stage! 1st! 2nd! 3rd! Mezz-anine ! Angels, FFF! Seed Stage! 6 Public Market! VCs, Acquisitions & Mergers, ! Strategic Alliances ! Valley of Death! Secondary Offerings! 1. At launch, when determining value proposition! 2. When pivoting your business strategy! 5 4. When planning for growth or making major capital investments ! 5. Before official public launch! 6. When considering 3. Before funding rounds! secondary offerings!
- 12. IDENTIFYING KEY IMPACTS WITHIN YOUR BUSINESS MODEL! BASE OF T: WHAT A COMPANY DOES! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! IMPACTS FROM HOW A ! COMPANY DOES WHAT THEY DO! 12! TOP OF T: HOW A COMPANY DOES WHAT THEY DO! Initiatives which allow value proposition to be delivered:! • Positive impacts a company is is intentionally or unintentionally creating, or ! • Negative impacts a company is intentionally or unintentionally mitigating or adapting to! • Ideally sustainability initiatives/positive impacts should reinforce value proposition! • Prevention of impact creation in other areas of business! IMPACTS FROM ! WHAT A COMPANY DOES! Initiatives embedded in value proposition:! • Positive impacts a company is intentionally creating, or ! • Negative impacts a company is intentionally mitigating or adapting to!
- 13. METHODOLOGY ALIGNS WITH BUSINESS MODEL CANVAS! BASE OF T: WHAT A COMPANY DOES! ! Value Proposition: As function of product or service delivered to customers! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! IMPACTS FROM HOW A ! COMPANY DOES WHAT THEY DO! 13! TOP OF T: HOW A COMPANY DOES WHAT THEY DO! Revenues & Customer Segments: As (un)intended behavior change resulting from customer use/consumption of service! Distribution Channels & Key Activities: Embedded in operations (supply chain & facilities)! Key Resources & Strategic Partners: Investment (via direct investment or purchase of goods/services)! Cost Structure & Corporate Relationships: Corporate giving & policy! IMPACTS FROM ! WHAT A COMPANY DOES!
- 14. WHEN A SUSTAINABILITY STRATEGY FAILS! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 14! “Greenwashing” rather than developing full strategy! Example: British Petroleum’s troubled rebrand as “Beyond Petroleum”! Sustainability isn’t tied to core product offering/value proposition! Example: Boxed water focuses on sustainable packaging attributes rather than on their core product: “water”; concentrated laundry detergent incentivizes over dosing!
- 15. WHEN A SUSTAINABILITY STRATEGY FAILS! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 15! Primary sustainable goals set, but other impacts created across operations! Example: Walmart’s positive environmental force but negative labor issues, the poor eROI of corn ethanol! Companies with full T strategy Example: Patagonia’s comprehensive approach to environmental sustainability!
- 16. FOCI OF SUSTAINABLE STRATEGY! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 16! 2. DIRECTLY MITIGATE NEGATIVE ! IMPACTS! 1. HELPS SOCIETY ADAPT TO NEGATIVE IMPACTS (CAUSED BY OTHERS) ! 3. INDIRECTLY MITIGATE NEGATIVE! IMPACTS! 6. AND AVOID CREATION OF ! NEGATIVE IMPACTS! 4. DIRECTLY CONTRIBUTES TO POSITIVE IMPACTS! 5. INDIRECTLY CONTRIBUTES TO POSITIVE IMPACTS!
- 17. CREATING POSITIVE AND ABATING NEGATIVE IMPACTS! 1. HELPS SOCIETY ADAPT TO NEGATIVE IMPACTS (CAUSED BY OTHERS) ! • Example: “Agro-Ecology” can adapt agricultural systems in readiness for climate change! 2. DIRECTLY MITIGATE NEGATIVE IMPACTS! • Example: Wello’s WaterWheel eases burden on women! 3. INDIRECTLY MITIGATE NEGATIVE IMPACTS! • Example: Space sharing via Airbnb may lead to energy, water & waste impact reductions! 4. DIRECTLY CONTRIBUTES TO POSITIVE IMPACTS! • Example: Voluntourism projects benefit communities in host communities! 5. INDIRECTLY CONTRIBUTES TO POSITIVE IMPACTS! • Example: Twitter & Facebook facilitate “Arab Spring”! 6. AND AVOID CREATION OF NEGATIVE IMPACTS (BOTH DIRECT & INDIRECT)! • Example: CVS and other pharmacies ban sales of tobacco products! ! ! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 17!
- 18. BRINGING IT BACK TO THE CUSTOMER! Your overall sustainability strategy must positively reinforce your core value proposition (creating virtuous feedback loops) and focus on benefits to the customer.! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 18!
- 19. START BY BUILDING HYPOTHESES ABOUT YOUR IMPACTS ! BUILDING THE BASE OF YOUR T BY INTEGRATING FRAMEWORKS: ! Exploring impact categories as opportunity for improvement (presented last week)! ! Using value proposition canvas to look for strategic opportunities for positive sustainable impact! ! Set goals using changing values framework & systems map! ! ! ! Using adapted business model canvas ! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 19! SOCIAL ! IMPACTS! HEALTH! IMPACTS! ENVIRONMENTAL ! IMPACTS! BUILDING THE TOP OF YOUR T ! !
- 20. WHAT IMPACTS SHOULD YOUR BUSINESS FOCUS ON?! SOCIAL ! IMPACTS! HEALTH! IMPACTS! ENVIRONMENTAL ! IMPACTS! AIR POLLUTION! ENERGY & CLIMATE CHANGE! LAND/BIODIVERSITY LOSS! RESOURCE USE & WASTE! WATER POLLUTION! WATER USE! ECONOMY & FINANCE! EDUCATION! EMPOLYMENT & WORKERS’ RIGHTS! HUMAN RIGHTS & JUSTICE! POLICY & ADVOCACY! SOCIAL RIGHTS & SAFETY! COMMUNICABLE DISEASE! FOOD & NUTRITION! MATERNAL & CHILD HEALTH! NON-COMMUNICABLE DISEASE! OCUPATIONAL & ! ENVIRONMENTAL HEALTH! WATER & SANITATION! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 20!
- 21. BASE OF YOUR T: VALUE PROPOSITION CANVAS! BY DELIVERING YOUR VALUE PROPOSITION, WHAT WOULD BE THE IMPLICATIONS FOR SOCIETY, HEALTH, THE ENVIRONMENT ! (THE POSITIVE AND NEGATIVE OUTCOMES OF THE SYSTEM)! SOCIAL IMPACTS! HEALTH IMPACTS! GAIN CREATORS! ENVIRONMENTAL ! IMPACTS! Describe how your products and services create customer gains.! ! How do they create benefits your customer expects, desires or would be surprised by, including functional utility, social gains, positive emotions, and cost savings?! ! Rank each gain your products and services create according to its relevance to your customer. Is it substantial or insignificant? For each gain indicate how often it occurs.! PAIN REIEVERS! GAINS! PAINS! Describe what a specific trying to get done. It could complete, the problems they are trying to solve, or the needs they are trying CUSTOMER JOB(S) ! List all the products ! and services your value proposition is built around.! ! Rank all products and services according to their importance to your customer. Are they crucial or trivial to your customer?! PRODUCTS & SERVICES! Describe how your products and services alleviate customer pains. How do they eliminate or reduce negative emotions, undesired costs and situations, and risks your customer experiences or could experience before, during, and after getting the job done?! ! Rank each pain your products and services kill according to their intensity for your customer. Is it very intense or very light?! ! For each pain indicate how often it occurs. Risks your customer experiences or could experience before, during, and after getting the job done?! Which products and services do you offer that help your customer get either a functional, social, or emotional job done, or help him/her satisfy basic needs?! ! Which ancillary products and services help your customer perform the roles of:! • Buyer! • Co-creator! • Transferrer! Describe the benefits your customer expects, desires or would be surprised by. This includes functional utility, social gains, positive emotions, and cost savings.! ! Rank each gain according to its relevance to! your customer. Is it substantial or is it insignificant? For each gain indicate how often it occurs.! Describe negative emotions, undesired costs and situations, and risks that your! customer experiences or could experience before, during, and after getting the job done.! ! Rank each pain according to the intensity it! represents for your customer.! Is it very intense or is it very light.?! For each pain indicate how often it occurs.! customer segment is be the tasks they are trying to perform and to satisfy.! Besides trying to get a core job done, your customer performs ancillary jobs in different roles. Describe the jobs your customer is trying to get done as: Buyer, Co-creator, Transferrer! ! Rank each job according to its ! significance to your customer. ! Is it crucial or is it trivial? ! For each job indicate ! how often it occurs.! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 21!
- 22. BASE OF YOUR T: VALUE PROPOSITION CANVAS! GAIN CREATORS! How do your products & services create positive environmental, social and health gains?! ! How do they create benefits for your customers (either directly or indirectly)?! PAIN REIEVERS! Which ! products & services do you offer that help the environment, society, or human health?! PRODUCTS & SERVICES! How do your products & services mitigate/help customers adapt to negative environmental, social and health impacts or eliminate risks for customers (either directly or indirectly)?! SOURCE: Canvas concepts developed by Alexander Osterwalder! GAINS! PAINS! Describe the specific environmental, social and health problems they are trying to solve or…! CUSTOMER JOB(S) ! Describe the environmental, social and health benefits your customers expect, desire or would be surprised by.! Describe the negative environmental, social and health impacts your customer experiences or could experience before, during, or after getting the job done.! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 22! ! ! needs they are trying to satisfy.!
- 23. BASE OF YOUR T: CHANGING VALUES FRAMEWORK! GOAL: Designing with the end in mind; USEFUL FOR: Long-term goal setting! ! 1. Map the system for your product/service! 2. Define goals: Outline your desired financial, environmental, social and health outcomes/goals. Be specific in terms of what social/environmental/health issues you think you might be able to address and how these can POSITIVELY relate to each other (these should inherently align with your company’s values & value proposition).! 3. Determine preconditions: Via your systems map and through customer discovery, determining which preconditions need to be achieved to reach the desired outcome. Consider where tradeoffs might occur.! 4. Define interventions: Evaluate the preconditions to see which leverage points are ripe for business intervention; build a hypothesis about which opportunity should your company/organization should engage in and test it.! 5. Define metrics: Determine which metrics or indicators you’ll use to test your hypothesis, to measure progress toward the outcome.! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 23!
- 24. TOP OF YOUR T: BUSINESS MODEL CANVAS! BY DELIVERING YOUR VALUE PROPOSITION, WHAT WOULD BE THE IMPLICATIONS FOR SOCIETY, HEALTH, THE ENVIRONMENT ! (THE POSITIVE AND NEGATIVE OUTCOMES OF THE SYSTEM)! SOCIAL IMPACTS! HEALTH IMPACTS! ENVIRONMENTAL ! IMPACTS! KEY PARTNERS! KEY ACTIVITIES! VALUE PROPOSITIONS! CUSTOMER RELATIONSHIPS! • What key activities do our value propositions require?! • Our distribution channels?! • Customer relationships?! • Revenue Streams?! KEY RESOURCES! • How do we get, keep, and grow customers?! • Which customer relationships have we established?! • How are they integrated with the rest of our business model?! • How costly are they?! CHANNELS! • Who are our key partners?! • Who are our key suppliers?! • Which key resources are we acquiring from our partners?! • Which key activities do our partners perform?! • What value do we deliver to the customer?! • Which one of our customers’ problems are we helping to solve?! • What bundles of products and services are we offering to each segment?! • Which customer needs are we satisfying?! • What is the minimum viable product?! • What key resources do our value propositions require?! • Our distribution channels?! • Customer relationships?! • Revenue Streams?! • Through which channels do our customer segments want to be reached?! • How do other companies reach them now?! • Which ones work best?! • Which ones are most cost-effective • How are we integrating them with customer routines?! COST STRUCTURE! REVENUE STREAMS! CUSTOMER SEGMENTS! • For whom are we creating value?! • Who are our most important customers?! • What are the customer archetypes?! ! • What are the most important costs inherent to our business model?! • Which key resources are most expensive?! • Which key activities are most expensive?! • For what value are our customers really willing to pay?! • For what do they currently pay?! • What is the revenue model?! • What are the pricing tactics?! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 24!
- 25. ADAPTED BUSINESS MODEL CANVAS! KEY PARTNERS! KEY ACTIVITIES! VALUE PROPOSITIONS! CUSTOMER RELATIONSHIPS! What environmental and social externalities might the key activities drive?! KEY RESOURCES! • Will customer acquisition/retention drive ecological and social impact?! • Can positive ecological and social value be used to acquire customers?! CHANNELS! What key environmental and and societal stakeholders might our activities effect?! What ecological and social value could be embedded in the core value proposition to customers?! What environmental and social externalities might resource use create?! What environmental and social externalities might these channels drive?! • Which of these externalities is likely to become future economic costs to our business, and by what mechanism (policy, public demand etc.)?! COST STRUCTURE! REVENUE STREAMS! CUSTOMER SEGMENTS! What are the ecological/ social values and behaviors of our customers? What do they care about?! • What key costs to the environment and civic society are driven by our business model? ! What customer behaviors will revenue generation drive which may affect the environment, health and society, and how?! SOURCE: www.businessmodelgeneration.com//canvas | Canvas concepts developed by Alexander Osterwalder and Yves Pigneur.! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 25!
- 26. WHICH IMPACTS ARE THE MOST RELEVANT TO YOUR BUSINESS?! DETERMINE WHAT’S SALIENT BY PERFORMING A “MATERIALITY ASSESSMENT”! This is a dominant framework used by corporations who have done a comprehensive assessment of their environmental and social impacts and risks.! ! Goal One: Help you determine where you should focus so you don’t waste valuable time and resources addressing negative or creating positive impacts which are of little concern or relevance to stakeholders & shareholders (i.e. non material factors).! ! Goal Two: Lays the groundwork for a plan you (your company) can take to address negative or create positive impacts.! ! Goal Three: To communicate the most material impacts to stakeholders and shareholders so that they can better assess your financial value, corporate values and risks now and into the future.! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 26!
- 27. MATERIALITY ASSESSMENT FRAMEWORK! Impacts of! High ! Materiality! Low! High! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 27! RELEVANCE TO YOUR BUSINESS! High! RELEVANCE TO SOCIETY! Impacts of! Low Materiality! Impacts of ! Moderate Materiality!
- 28. MATERIALITY ASSESSMENT FRAMEWORK! RELEVANCE TO YOUR BUSINESS: Is an (each) impact material to your business? Make a list of top criteria important to stakeholders representing your business to assess this, and evaluate against criteria (can be stakeholder specific):! • How might each environmental/social impact identified directly/indirectly affect BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 28! business and customers both now and in the future?! • How relevant is the impact to the financial success of your business both now and in the future?! • Why do you believe the above to be true (under what conditions? how would you test or validate?).! ! RELEVANCE TO SOCIETY: Is an (each) impact material to society? Make a list of top criteria important to stakeholders representing society to assess this, and evaluate against criteria (can be stakeholder specific):! • How might the environmental/social impact directly/indirectly affect society? ! • How relevant is this to society (what signals would allow you to gage this)?! • Why do you believe the above to be true (under what conditions? how would you test or validate?).!
- 29. WHO REPRESENTS THE COMPANY VIEW? SOCIETAL VIEW?! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 29! COMPANY VIEW! Lenses! • Growth! • Profit! • Financial return! ! SOCIETAL VIEW! Lenses! • The trees & bees! • Jane Jacobs! • The body! Stakeholder representatives: ! • Founders (you)! • Employees! • Board! • Shareholders/investors! • Customers! • Strategic suppliers (influential suppliers)! Stakeholder representatives: ! • Citizens ! • Activists! • NGOs! • Legislation/legislators! • Communities! • The broader environment (flora & fauna)! • Suppliers & labor (those with less of a voice)!
- 30. VETTING YOUR MATERIALITY STUDY! How do you know if you’ve correctly identified the impacts which are the most material?! • Using gut checks - testing the system dynamics by seeing how the impacts you identify BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 30! as material fit into the systems map you made! • Reading the market, identifying trends & megatrends ! • Reviewing regulations, both current and forthcoming! • Via scientific, academic and valid media sources! • Getting expert guidance from scientists, academics, and others, i.e. talking to people! • Looking at key measurement & reporting frameworks including IIRC, SASB, and GRI (introduced next week)! !
- 31. WHAT’S THE RIGHT TIME HORIZON? WHAT ABOUT GAPS?! How far in the future can you reliably make predictions about your impacts?! • Set some semi-fixed long-term goals: Which CORE sustainability values/positive impacts (the base of your T) you want to build your business around, which should only change if your business fundamentally pivots – use the Changing Values framework & Value Proposition Canvas to help you plan for these key goals! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 31! • Other projections can be more agile: For other impacts select a specific, common timeframe to assess your impacts against (though you can pick multiple time horizons if relevant)! • Carefully document assumptions you make about predicting impacts! ! What key gaps in information are there (elements of your business model that are very uncertain) which prevent you from assessing your potential impacts? ! • Carefully document gaps and uncertainties you identify so you can revisit them once these elements of your business solidify! ! NEXT STEPS (over next two weeks): Using tools to quantify materiality and scenario planning!
- 32. ASSESSING MATERIALITY ACROSS IMPACTS! Rank top potential impacts according to highest level of materiality. Organize your findings via a matrix, spreadsheet or diagram illustrating:! ! For top 10 positive and/or negative impacts, place into a single framework:! • Identify the impact and why you believe this is (will be) an impact ! • Gage how much the impact matters to your business! • Gage how much the impact matters to society! Document all sources, assumptions and gaps within this framework.! ! Have a discussion about your findings. Rank the positive and negative impacts in your diagram/spreadsheet to determine which impacts are the most “material?” ! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 32!
- 33. EXAMPLE: MATERIALITY ASSESSMENT FRAMEWORK! Impacts of! High ! Materiality! Evaluate these top impacts for which should be your core focus as the base of your T; assess which other key impacts to focus on (the top of your T)! ! Low! High! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 33! RELEVANCE TO YOUR BUSINESS! High! RELEVANCE TO SOCIETY! Impacts of! Low Materiality! Impacts of ! Moderate Materiality! Evaluate these impacts and select a few to focus on as your develop your business model as the top of your T; All of these impacts should be carefully documented and reviewed at key milestones! ! These impacts should be revisited at a later time, but for now don’t need to be disclosed or considered! !
- 34. ASSESSING MATERIALITY ACROSS IMPACTS! Tips for narrowing down top impacts: ! • Create a decision tree with the top impacts, ! • At different branching points in the decision tree, ask a key question which can help you narrow your results or select a pathway (related to the the resources/services you’d have to provide to manage/foster the impact etc.)! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 34!
- 35. HOMEWORK PART 1! 1. Identify impacts: For a TOP competitor to your company, look for where they have WEAK impacts. Use the adapted Value Proposition Canvas, Business Model Canvas, and Changing Values Framework to hypothesize about their core impacts (positive and negative).! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 35! 2. Asses materiality: Estimate how “material” each impact is - build out first-draft materiality matrix/diagram.!
- 36. HOMEWORK PART 2! 1. Prepare a presentation – guidelines below:! • Cover slide – describe your business concept concisely!! • Latest version of Adapted Business Model Canvas (with social/environmental impact factors) with changes marked before and after ! • Latest version of Adapted Value Proposition Canvas with social/environmental impact factors) with changes marked before and after ! • Updates to market size ! • Propose 2 experiments to test elements of your business model, starting with the value proposition and customer segments. Talk to at least 10 people in your intended segment. What constitutes a pass/fail signal for each test?! 2. Social/environmental values:! • Refine core goals (bottom of the T): outline your desired financial, environmental, social and health outcomes/goals. ! • Build a hypothesis: by delivering your value proposition, what ecological/social values are created/eroded and how does this effect the customer? (be specific in terms of what social/environmental/health issues you think you might be able to address; these should align with your company’s values & value proposition). (Note we will explore how to quantify and test these next week)! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 36!
- 37. ADVANCED TOOLS FOR SUSTAINABILITY STRATEGY DEVELOPMENT! BETTER BY MEASURE | WEEK 5: OCTOBER 2, 2014 ! 37! READ: “Navigating the Materiality Muddle”! ! (Next week) Measure your impacts (positive and negative) using:! • Core reporting frameworks: ! • International Integrated Reporting Council (IIRC) ! • Global Reporting Initiative (GRI) ! • Sustainability Accounting Standards Board (SASB)! • Risk - benefit analysis! • Life Cycle Assessment! • Environmental/Social Footprinting! • eROI! ! (For midterm presentation) Build a business case with sustainability embedded using:! • Scenario planning and quantitative projections (using above tools)! • Presenting case!