Public ends, private means

Affordable student housing in a 12th century convent in Venice.  A food truck collaborative in a gritty Boston suburb.  Mobile-phone charging stations in Burkina Faso. This is sustainable development?

Yes.  This is exactly the frontier where new models for sustainable development are being created: unconventional, innovative projects to achieve public ends through private means.

These models come from optimism but also from frustration. The optimism reflects the belief that new things are worth trying. The frustration reflects the experience many have had trying to work around the limits of conventional models, including:

  • Private sector, especially the corporate world.  Society expects more and more from businesses.  But good intentions can be ground down by the complexities of fiduciary responsibilities and quarterly earning pressures. Investment is stranded in old business models – and even older organizational cultures.  We’ve seen good progress and sometimes great innovation from business, but the limits are real.
  • Public sector, in both the developed and developing worlds.  Even the world’s oldest democracies are seeing stalemate rather than statesmanship in addressing their biggest challenges. We’ve had to put hopes for public policy solutions off to the side; almost a sequestration of expectations.  At this point, we expect so much from business precisely because we expect so little from government.
  • Philanthropy and foundations.  They do great work, but they are often not in for the long haul.  They can be enormously helpful at getting something started.  Providing dependable, year-on-year baseline funding seldom fits their business model, though.  That makes sense – but only if what they help start has some other form of funding to remain viable.
  • Civil society and non-profits.  Many do amazing hands-on work to fill the urgent gaps, including feeding the hungry and sheltering the homeless. That work requires ingenuity to stretch scarce resources every day.  There is no surplus to invest in new models, not when that can be done only by taking food off the table at the soup kitchen.

All these sectors and models play needed roles but all have their limits.

Now we’re seeing fascinating work on creating and testing new models.  (In full disclosure, I should point out that some of this work is being done by my greatest mentors, intellectual partners and friends.)  This work is building unconventional approaches to:

  • Harness private means including capital, spirit, management rigor, creativity;
  • For public ends including interconnected concerns around economic development, jobs, environmental sustainability, housing, energy, diversity, transportation and education;
  • In financially-sustainable ways, breaking the dependency on undependable foundations, grants, government agencies.

One might almost call this nexus… truly sustainable development.  At the very least, it’s putting back in the missing “economic” piece in the sustainability “triple bottom line”.

What does this look like in practice?  There are lots of initiatives including micro-credit, transportation, energy financing and other areas. Three striking examples of different models can be seen in:

  • The Crociferi development in Venice, providing affordable student and faculty housing built on a base of a 12th century convent and tourism spending.   (The facility opened just a few months ago with publicly funded property investment and privately funded management.)
  • Projects around the world sponsored by the Low Carbon Enterprise Fund (a program of the ERM Foundation).  The Fund’s projects “provide finance and pro-bono technical and management support for low carbon entrepreneurs in the developing world”, ranging from fuel-efficient stoves in India to carbon-neutral, shade grown coffee in Latin America and Ethiopia.
  • A new project in Malden, Massachusetts aiming at local business development for immigrant communities based on co-creating development rather than providing arms-length financing.

The people deeply involved in these experiments are asking tough questions themselves.  Isn’t each project its own “special case” and if so, how do we extract common lessons? Does sustainable financing depend on meeting both public and private ends? How do we scale up? How do we do enough to really matter when no one project is that large? Can we scale up without new forms of “hybrid capital?” Is “sustainable development” even the right label for all this, given how much economic impacts are overlooked in the sustainability world?

Where will this all go? I’m not sure.  Nor are the people driving these experiments.  I suspect it will be non-linear path, filled with twists and turns and setbacks and surprises both good and bad.  Then again, the people driving these experiments got where they are today on non-linear paths that ran through (among other things) railroads, economic development, boards of banks and consultancies, Native American crafts enterprises, and grass-roots political organizing. What the paths all have in common is a focus on broader pubic needs and experience in making things work in the private sector.  Maybe we should call it public yearning, private learning.

I’ll try to keep track of these experiments and share the lessons learned. (I’m already learning lessons just from the reading they’ve each suggested; see the mini-bibliography at the bottom of this blog.) I’m finding that these experiments are all about connection: connecting resources and needs, knowledge and challenges, opportunities and people willing to pursue them.  They are also about connection at a very personal level: reconnecting with old friends, connecting them with each other, and tapping the energy and creativity of much younger new friends being drawn in.  The path won’t be linear but it certainly will be interesting.

[Scott Nadler is a Senior Partner at ERM.  To share this post, see additional posts on Scott’s blog or subscribe please go to snadler.com. Opinions on this site are solely those of Scott Nadler and do not necessarily represent views of those quoted or cited, ERM, its partners or clients.] 

Mini-bibliography:

One thought on “Public ends, private means

  1. The oft-reinforced caricature of the ineffective government and the profit-crazed private sector flourishes where one has nothing to do with the other, and is sometimes worse when the two claim to work together but instead continue to spin their wheels in separate orbits. It still seems to me (and you’d know far, far better than I) that these are still the dawning days of genuine, effective, and ethically well-grounded collaboration between the public and private sectors, and that we’ve only just begun to learn how to maximize the resources of each. Helping to find the right algorithm is what attracted me to the Malden project to begin with, and the granular, local focus has made it easy to become immersed in the process. Being able to experiment and customize our project features to a small, specific location is wonderful, and makes it very easy to quickly identify what does and doesn’t work — I suspect those working on the Venice and Low Carbon Enterprise Fund projects feel similarly.

    The benefits of the “non-linear path” that you outlined are also a good thing for me personally to keep in mind. For me, the most intimidating part of working on a project like this is that seemingly defining features of our model that I presumed to be set in stone — features that had been part of the model since Day 1 — ultimately needed to be discarded or drastically remodeled. Initially, I perceived this to be a kind of failure, and would be very discouraged when this happened. Mine is a public sector mindset shaped by working for legislative offices, and since the legislative arena is so overcrowded and it’s a constant struggle to be heard, any “return to the drawing board” is inherently bad.

    The folks I’m working with, to my surprise, had the opposite reaction — they seemed energized by these revamps, eager to chart the progress they represented, proudly trumpeting breakthroughs that I had previously viewed as embarrassments or liabilities. Like you, I also have the good fortune to be collaborating with some extraordinary minds belonging to people I respect and care about deeply. I have finally come to appreciate how every discarded aspect of the project, major and minor, is a valuable teachable moment not just for our project team, but all the wonderful entrepreneurs with whom I’ve met and compared notes, live and digitally. I see this also from the many surprising and unexpected things I’ve learned from entrepreneurs on other small projects, even wildly different ones from our own. I have no doubt that different though the Venice, Burkina Faso and Malden projects may seen, even minute details from every stops on this “non-linear road” are highly applicable to each project, as our underlying principle and strategic mission is the same.

    What I used to think of as failures may actually be the most meaningful deliverable we’ve come up with so far: A contribution, even a small one, to the discussion about achieving public goals through private means. We’ve benefited from other entrepreneurs sharing their own learning processes, and it’s encouraging to know that even in our nascent stages, we can also create some of that value.

    As such, in terms of your question about whether it can all matter when the projects are so small by design: Together, indeed, we seem well-positioned to create extraordinary things. I look forward to learning new and exciting things in Burkina Faso today that will inform Malden tomorrow. Thanks for the great insights and your thoughtful description of the Malden project and its goals.

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