Business 3.0

Enlarge

The 6th Annual Fast 50

• Business 3.0
• Q&A: C.K. Prahalad - Pyramid Schemer
• Q&A: Pierre Omidyar - Empower Seller
• Q&A: Arnold Schwarzenegger - The Germinator
• 2007 Readers Favorites

Eventually, on networks such as Kiva's (and its successors'), other forms of exchange will flourish--in both directions. Instead of simply being one-way conduits for financing, they will become two-way platforms for freshly minted businesses to resell their knowledge and services to other nascent entrepreneurs. Expect to see the emergence of greater "economic lateralism"--connectivity, knowledge, and financial exchange not just between rich and poor, but among individuals of all socioeconomic strata, even those who are poor and oceans apart. These village-to-village (or "V2V") pathways will become a significant new means for the spread of innovation across the developing world, even as they become the conduits for first-world businesses to deliver low-cost services everywhere.

The Conscious Consumer

Thanks to supportive demographic and psychographic trends, companies hoping to practice ecologically innovative capitalism will find a rapidly growing base of highly desirable, cash-rich, values-driven customers right here at home. Known as the LOHAS market segment (for "lifestyles of health and sustainability"), it is today a $227 billion domestic market for goods and services focused on sustainable living, social justice, and alternative health care. These are the consumers, in other words, who are eating organics, driving hybrids, and buying fair-trade morning lattes. And there are 63 million of them out there, making up 30% of the American market. They are not necessarily wealthier than other Americans, but they have proven themselves willing to spend up to an astounding 20% premium on clean, green products over the non-sustainable alternatives.

Over the next 20 years, this group is going to grow explosively as American society becomes a demographic "hourglass," with the largest populations of old and young people in its history living together. The psychographic principle at play is that the older you get, the more you think about the planet you're leaving behind, and conversely, the younger you are, the more you cling to your idealism.

With two huge generations dominating American society--the baby boomers, who created the first draft of contemporary environmentalism, and the millennials, the most globally connected cohort in history--principles of conscious consumption will come to dominate the brandscape. That ethos will carry with it a direct penalty for companies reluctant to sign on. These consumers are nearly twice as likely to associate their own personal values with companies and their brands, and research we conducted at Z + Partners shows that perceptions of environmental, ethical, and social stewardship are the fastest-growing contributors to consumer brand value.

Mother Knows Best

For all kinds of problems--from how to build durable structures with locally available materials, to how to filter waste out of a complex system--the natural world has a multibillion-year engineering head start on us. That's a lot of trial and error. Now, thanks to interconnected revolutions in systems ecology, materials science, nanotechnology, and biology, we're finally developing the scientific and engineering tools to understand and emulate nature's ability to devise elegant solutions to real-world problems. Business is about to reap the rewards.

Consider a typical industrial activity, such as purifying silicon to make computer chips. Humans accomplish this, as we so often do, by using extremely high levels of energy and toxic chemical solvents, which in turn creates unwanted by-products (chemical waste, pollution, excess heat, etc.) which must be further processed, contained, or otherwise dealt with. The process is terribly energy-inefficient, hugely capital-intensive, dangerous, complicated to manage, and produces frightening amounts of hazardous waste. Sounds like fun.

By comparison, researchers at UC Santa Barbara recently discovered the means by which the simple and ubiquitous marine sponge chemically synthesizes a skeleton of silica molecules with nanoscale precision--in ordinary seawater at ambient temperature using nothing but organic chemistry and the light of the sun. This completely natural process is carried out with a molecular exactitude and energy efficiency that cannot be duplicated by our best semiconductor technology. The researchers at UCSB believe that a biomimetic manufacturing approach, based on the sponge's chemistry, will inevitably make its way into the semiconductor industry. How much do you think it might be worth to Intel, AMD, or Freescale?