CHAPTER ONE – How to Change the World

“Imagination is more important than knowledge.” — Albert Einstein

Want to have lunch with Einstein? (He died in 1955, you know.)

But let’s let him guide us through a buffet line where, by using our imagination, we see how we can select some of this, some of that, and end up with a meal—no, make that a life—that meets all our needs.

Along the way, we’ll begin to learn about how we can change the world.

Are you torn between making a living and making a difference? Earning money and finding meaning? Paying the bills and changing the world?

You don’t have to choose one way or the other. Your choices in life mean everything, so why not choose the life you crave?

Let’s do a thought experiment. Einstein did these mental experiments throughout his career to make profound discoveries (such as his famous special theory of relativity, which shows that the faster you travel, the more time slows down). So let your hair down for a minute (or maybe comb it straight up) and let’s pretend we’re Einstein. Read the following descriptions and notice your reaction to each:

You’re on fire with passion. You’ve been working for a grassroots organization that is promoting a new conception of manufacturing where companies produce only goods that are nontoxic and designed never to see a landfill. You are working with other committed individuals who share your inspiration for respecting the environment and promoting prosperity. You feel a connection to a cause that is beyond anything you could have dreamed possible. Yet you can’t save because you barely make any money. And a lack of job security has led you to reconsider your long-term future. Sometimes, when your head hits the pillow, you begin to dream that …
You’re a success! Money is not a problem. It’s great to have all those loans behind you, and at the end of every month you can put something away for your retirement or your kids’ college. You just bought a house, and ten weeks from now you’ll be skiing for six days. You’ve got a good job as assistant technical liaison, which puts you in line for promotion to associate creative affiliate. But climbing the corporate ladder is a grind. Work seems to be sapping your energy, and it’s gobbling up more and more time. You’re beginning to question what you are doing with your life. Sometimes, when your head hits the pillow, you begin to dream that …

Did you connect to any part of the first description? If you didn’t quite relate to working to create an economy without waste or pollution, how about living in a developing-world village and helping provide opportunities for subsistence farmers to sell crops for a profit? Or saving the oceans and the marine life in them? Or maybe working toward everyone having access to a decent education right here at home?

But didn’t the second description talk to you a bit, too? Wouldn’t it be nice not to worry about money? To be confident that your bills will always be paid? To have freedom to travel? To be saving for whatever future you want to create? To handle all the financial curves on the road ahead?

Perhaps you’re having your own fork-in-the-road moment right now like the poet Robert Frost described nearly a century ago:

Two roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could . . .

Then . . .

. . . knowing how way leads on to way
I doubted if I should ever come back.
. . .
I took the one less traveled by,
And that has made all the difference.

With apologies to the great poet, what if Frost had described the choices at a modern buffet:

I looked down one line as far as I could
For salmon planked on cedar wood . . .
And the other, as just as fair,
Vegetables, salads, and desserts of pear . . .
And I, knowing these were all among my favorites,
Took some of each . . . and that made all the difference.

So, Frost might have only won three Pulitzer Prizes for penning those lines—not four—but we’d have been reminded that we can choose what we want, even if we have to stand in two lines to get it.

And that brings us to a second thought experiment. Again, read these words and note your reaction:

The promotion you just got feels great. Yeah, you’ve been working too hard, but it’s hard not to when work is so engaging and you’re a part of such an amazing—and effective—program teaching inner-city kids. Having your own staff now provides an opportunity for you to create even greater impact by multiplying your own efforts. The recognition, the nice raise: They you know that you’ve found a place where you fit in, are valued, and can deliver for the long haul.

Does this feel more like you’ve gone through the buffet line as many times as you like?

How about a second helping of salad, this time with more carrots, a hot and cold entrée, a splash of fruit juice in your iced tea, and a little taste of three desserts?—a meal designed by you, for you, made with all the things that you like.

Can’t we build our lives with two entrées, one that makes the world a better place, and one that makes sure that we are well fed and provided for? It won’t automatically happen by following an already existing path. But we can create our own path, not by splitting the difference or settling, but by choosing those elements that we feel are most important to our own well-being and seeking—or creating—opportunities to use them.

The Benefits of a Hybrid Organization

Let’s stop and think about this for a moment. Doesn’t it stand to reason that we can build organizations in new ways, creating hybrids from elements not typically combined, just as you could make that amazingly satisfying “hybrid” meal?

Let me give you an example. Have you ever heard of Google.org? No, not that one. Google.org is a charity, and we all know what charities are, right? Except Google.org is a for-profit charity that focuses on problems such as pandemics and climate change.

But wait a minute. For-profits are companies whose goals are to make lots of money, aren’t they—like pharmacies? Well, yes and no. Take OneWorld Health. It’s a pharmacy, but it’s a nonprofit.

These two examples illustrate hybrid organizations that defy the typical rules. Rather than sticking to a formula, they chose elements from the buffet that they needed and discarded the rest. Google.org—the charity—forfeited nonprofit status for the opportunity to build products (and businesses) that serve society, to generate profits to fuel its growth and increase its impact, and to lobby Congress. OneWorld Health—a pharmacy—sought nonprofit status in order to receive donations of out-of-fashion drugs from other pharmacies as a replacement for massive investments in drug research.

Hybrid organizations offer the possibility of getting “unstuck” when it comes to dealing with societal problems. Unstuck, because such organizations seek results rather than standing on precedent. Hybrid organizations are shameless about stealing ideas that work and applying them to new situations. McDonald’s had some ingenious ideas about making hamburgers efficiently when they began one of the world’s most successful franchises. The world’s largest eye hospital—Aravind Eye Hospital in India—has applied these principles to perform cataract surgery. Ever notice that children eagerly jump into new situations without the need for any kind of instruction? Sugata Mitra, an educator and information technologist, noticed, so he stuck computers in “holes in the wall” around the world so that children who would not otherwise have access to computers could begin to explore the Internet.

It is human nature to be ever evolving, even in the world of business. In 2002, two business professors at the University of Michigan, C. K. Prahalad and Stuart Hart, described the business and societal benefits of doing business with the billions of people at the “bottom (or base) of the pyramid” rather than following the standard business principle of focusing on those occupying the pyramid’s wealthiest tip. Introducing this concept has motivated companies around the world to serve and work alongside these people and to create new products and services, new forms of delivery, and entirely new business models that break down the distinction between a company-selling-to-a-community, and a community-as-partner-of-a-company.

Hybrid organizations can produce results that others can’t because they recognize and capitalize on some of the greatest strengths of both businesses and nonprofits. They strive to incorporate business elements such as skill at execution, a strong focus on results, and financial might necessary for long-term sustainability. Hybrids adopt the strengths of nonprofits and similar organizations, too: a grassroots orientation, a commitment to people, and an eye for identifying what needs to be done on behalf of the needy.

Combining these strengths, hybrids resemble nonprofits by working on some of the most demanding problems of the day:

  • Eradicating poverty
  • Improving both the access to and quality of education
  • Eliminating treatable but often neglected diseases
  • Improving access to basic health care
  • Providing sustainable, economically sound solutions to environmental crises

But, acting like for-profits, hybrid organizations can produce revenues and profits to ensure that their efforts continue over time and attract the necessary resources when they wish to grow.

But hybrids that combine the advantages of for-profits and nonprofits illustrate only one way that strengths can be combined. Large, multinational companies can partner with tiny micro-enterprises overseas to create community-based businesses with the heft of a corporation. Social networks that span geography, income, and personal relationships become vehicles for sharing ideas, loaning money, and providing educational opportunities. Companies seeking to make a splash with “green products” in the West may find that they can best tune these products in the developing world first.

And these examples give only a small taste of what is possible when one good idea is combined with another.

1 Good Idea + 1 Good Idea = 1 Great Idea

Something Old, Something New

I’ve been talking about hybrids as if they’re brand new. In fact, they’re not new at all. As we will see throughout this book, growth and change has always occurred through borrowing, copying, and adapting ideas from elsewhere. But something is different in terms of the types of hybrids that are being created today to address social problems (Let’s use the terms social and societal interchangeably to modify problems, hybrids, and other words and phrases.).

First, certain events are having an impact on everyone in the world, even if they affect us all differently. One of the best examples of this phenomenon is global warming and climate change. In the developed world, citizens and companies are realizing that the ways that we’ve always done things cannot be extended into the future. There’s just not enough planet left. On the other hand, those in the developing world are beginning to bear the brunt of an energy-hungry world most dramatically in the forms of droughts, water shortages, and famine.

Until recently, our separate worlds rarely bumped into each other. Now, they’re bumping into each other all the time. The Western world’s search for crops that can be used as replacements for fossil fuels is aggravating food shortages in Africa. So is China’s new appetite for meat, which reduces the caloric effectiveness of agricultural land by nearly 85 percent. Brazil’s response to climate change has been to produce sugar ethanol, but that has worsened, not helped, the situation by promoting deforestation. This all affects climate change, which leaves the hungry hungrier and increasingly desperate.

As we realize how small and interconnected the world is, we are pressed to look for new approaches to doing business that address societal ills. We begin to understand that saving the Amazon is not just a frill to benefit ecotourism. By helping offset the carbon we’re putting into the air, protecting the Amazon may allow us to keep cars on the road and keep our economy moving. In fact, new markets are appearing that allow companies in the West to buy credits stemming from avoiding deforestation of the Amazon or from installing solar, wind, or other “green” technologies halfway around the world.

In the same spirit, finding sustainable livelihoods for the poor provides increased security for wealthier citizens who cower behind gates, walls, and fences in various cities in parts of Latin America and Africa. Thus, creating good jobs and the education necessary for those jobs in places where business is ordinarily reluctant to go makes a lot of business sense.

Are these efforts altruistic? Not at all. Systems linking companies, nonprofits, and people throughout the world can benefit all parties. If the wealthy benefit and so do the poor, if we preserve the rain forests and clear the atmosphere, and this allows us to maintain a growing economy, then we have the recipe for success. Everyone has skin in the game, everyone wins, so everyone wants to keep playing. In fact, we can also let into the game those sitting on the sidelines who are now far too poor to play.

Something else is accelerating the pace of development of hybrid solutions to societal problems—new technologies, especially new information and communication technologies. Just a few years ago, the “crazies” promised that tiny, remote African villages would be able to provide all their children with powerful, Internet-connected computers (never mind that these villages don’t have electricity); that two people anywhere in the world could talk to and see each other over their computers—for free; and that someone from Toledo would be able to make a microloan to someone in Tanzania and later get her money back while never leaving her computer.

Not only were the “crazies” right, but today they are very wealthy. All by taking advantage of continually plummeting prices for increasingly sophisticated computing and communication technologies.

All this can be dizzying but also exciting. As soon as we realize that One Laptop Per Child, Skype, or Kiva are real, we see someone else already creating a new extension or a related technology inspired by these now “tried-and-true” technologies. Although the Internet may seem like it has been around forever, we are only in our first (human) generation of experiencing what this technology can do. Just as the first, ancient cell phones, which cost nearly $100,000, seem to bear little resemblance to today’s devices—did you know that cell phones are being adopted more quickly in Africa than anywhere else?—it’s hard to imagine what “new” technologies will be used throughout the world tomorrow. But we can be sure that they’ll be in the hands of more people, making the world even closer, creating better awareness of each other, and creating new opportunities for us to work together.

Finally, the acceleration in adopting hybrid forms to improve society comes from the fact that we are bumping up against boundaries everywhere. Companies face intense competition, they have sold all the whatchamacallits they possibly can to affluent consumers, and they know they must “go green” eventually. There is almost a magnet pulling them to parts of the world where there are four to five billion new customers and where they can explore new, clean technologies without the competitive pressures from old, dirty, but still cheap alternatives. Nonprofits, in turn, are tiring of being completely dependent on donations and contributions. They correctly perceive that they have knowledge and other skills that can be converted into revenue-producing products and services. Governments and multilateral institutions, too, are seeking fresh new ways they can produce more powerful benefits for citizens rather than providing only handouts and aid.

This trend toward experimentation is happening around the world. In India, we see poor farmers linked by the Internet to local markets and to the Chicago Board of Trade. We also see the most completely electronic elections anywhere in the world. Argentina, even after its devastating financial setback, is trying to connect its entire national school system to the Internet and create a self-financing program, allowing students, teachers, and others to share educational content and teaching ideas and provide mutual support throughout the country. In Kenya, the Base of the Pyramid Protocol, or BoP Protocol, has brought together slum dwellers and a large American multinational company to jointly create a new business that benefits both sides.

Here’s a smattering of other exciting initiatives:

  • Microloans, micro-insurance, and micro-equity (shares of stock in tiny companies) in Africa
  • World-class heart care and telemedicine for the poor in India
  • State-of-the-art educational tutoring linking the skills and needs of those in Singapore, England, India, and the United States
  • New worldwide markets for organic produce, fair trade products, and even clean skies and water that are supported by “green” certifiers and auditors

Advances in alleviating povertyand creating wealth, improvements in quality and access to health care, better educational opportunities, and efforts to create a healthier planet are taking place everywhere around the world. Still, this is the tip of the iceberg. By presenting some of the things that are happening and providing a lens through which to examine them, I hope we can move more and more of this iceberg above the surface.

A Preview: Creating Cross-Sector Hybrid Organizations

I have used the term hybrid frequently and with intention. In the natural world, hybrids combine desirable traits of different organisms within or between species. Cockapoos and Labradoodles are hybrid dogs that humans have designed and bred (and inartistically named). Want a cocker spaniel without the shedding? Or an easily trained (almost) Labrador that is less likely to cause an allergic reaction? Then there’s a dog for you.

Technological hybrids—such as hybrid electric vehicles that use internal combustion engines plus electric motors for power—follow similar principles of hybridization. These principles apply, too, when we cross for-profits with nonprofits to create organizations that can adeptly address societal problems. I call these “cross-sector hybrid organizations.” (Here, too, I use various terms, sometimes just referring to hybrids, societal hybrids, social hybrids, or other terms that I’m sure you’ll understand in context. )

In this book, I will explain how cross-sector hybrid organizations can be designed to address societal problems in powerful new ways. I will also explain how evolutionary mechanisms can ensure that they become better adapted to these tasks.

Let me “unpack” the last paragraph a little bit. Any organization can be described by a set of features. This holds for organizations in the for-profit, nonprofit, governmental, and multilateral institution “sectors.” Hybrids “cross” sectors by adopting some features from the for-profit world and others from the nonprofit world. These cross-sector hybrids can powerfully address societal problems by being less rigid about adhering to “the way things have always been done.”

Evolution plays an important role in making sure these new institutions are strong and vibrant. Just as different animals and plants differ in their ability to thrive, organizations differ in their “fitness,” too. And just as living organisms have genetic traits that can be passed on to their progeny, organizations can be described by a set of features, and we can substitute one feature for another or interchange the features from two different organizations to create new organizations. Sometimes such changes will be a bust; other times, the resulting organization may produce more powerful societal solutions than before. Finally, if the fitness measure used to compare organizations is a truly robust, broad-based gauge, it will reflect one organization’s ability to out-survive another, “weaker” one.

If cross-sector hybrids can produce powerful solutions for addressing societal ills, then we might want to know how they come about. Must we wait for a Labrador to be smitten by a Poodle for “Labradoodle magic” to take place? As a matter of fact, there is so much intermingling of features among organizations already that we barely notice it. For instance, paying “proper attention to detail” usually demands that any insurance claim be examined with a microscope (and s-l-o-w-l-y), though some insurers are adopting the mantra of speed found in other industries and pay all claims as fast as they can. In addition, more and more companies are turning over key aspects of design to their customers—creating entirely new meanings for concepts such as customer loyalty and new product development.

But we don’t have to wait for a slow drift of features to change companies’ behavior, especially if a drift produces homogenization rather than vital innovations. By looking at organizations in evolutionary terms, we begin to see them as an expression of their “genes” and “chromosomes.” By understanding that an organization’s fitness and genetics are intimately bound together, we can study both more closely and deliberately create hybrids with more societal impact. By understanding the power of selection in evolution, we can accelerate the rate of societal evolution or change.

Some day “ages and ages hence,” you may look back with pride and satisfaction that the hybrid path that you’ve created was the road “less traveled [but] has made all the difference.”

Creating a better life and a better world—that’s what this book is about. I think Robert Frost would approve.