Creating impact through business and business through impact
When he joined Enviu as CEO in 2016, Michiel came from a background in consultancy with a focus on strategy, innovation and business modelling within the financial service industry. Michiel strongly believed – and still believes by the way – in the importance of the social mission upon which financial companies were originally founded, banks and insurance having grown out of fulfilling a social need. However, this mission had been lost along the way as finance grew to focus on shareholder value at the expense of its social role. During his time as a consultant Michiel strove to make a difference in this sector, innovating its way back to its original purpose, but the scale and complexity of the institutions coupled with their webs of stakeholders and shareholders made doing so a difficult task.
After meeting Enviu’s founder Stef van Dongen in 2016, Michiel was introduced to Enviu and inspired by its goal to create positive change with a business perspective and skillset. Later that same year Michiel joined Enviu with the ambition to put his experience and skills to use and make a difference through creating innovative ventures with the potential to change the world.
What do you see as Enviu’s mission?
At Enviu our mission is to design and build sustainable businesses that drive the transition towards tomorrow’s economy.
To us, tomorrow’s economy is an inclusive one that serves both people and planet. To achieve this future we fundamentally believe that innovative, viable business models are needed to drive change. What we do best is design these models and build them into working businesses. These businesses then have a dual role, creating a direct positive impact whilst at the same time inspiring other market participants to adopt these now proven models. Through this mechanism we can drive system change and realize a new inclusive future.
Why do things need to change, what is the problem that needs to be overcome?
In its essence it’s about the unsustainability in many of the things we all do. Enviu was founded on a deep belief in inclusiveness and an inclusive economy, the idea that people and planet can benefit from the flow of business and money.
Unfortunately, the world hasn’t been like this, there has been an assumption of unlimited resources, and a view that these resources and the world’s people are there to make value. Thankfully, this is slowly changing but we believe we can drive change faster through acting as a pioneering venture builder, taking the risks to be the first to validate and build these sustainable businesses, clearing and leading the way for the market to follow.
Why sustainable businesses, what makes them the best solution to driving change in the world?
It comes down to the essence of what it means to be sustainable. As the current economy we find ourselves in is unsustainable, it follows that any solution must itself be sustainable. A successful business can do that, sustain itself indefinitely via profit, whilst simultaneously creating positive change.
Just putting money into a system to fix a problem is inherently unsustainable. The money might not always be there, and if it dries up the problem could come back. There are certainly fields where this kind of money is very much needed, like emergency support and (most) nature conservation, but I believe that for a large part of the world problems there are self-sustaining business solutions that we can create.
To add to that: it’s not just about creating impact through business, but also business through impact. For some of the world’s biggest problems there are incredible business opportunities waiting to be capitalized on. Look at plastic pollution for example, last year the Ellen MacArthur Foundation calculated that switching 20% of plastic packaging packaging to reusables could yield an economic opportunity of $9billion, in just one packaging niche. There are many possibilities like these, just waiting for the right business model to be found. I really love this ‘double bottom line’ innovation.
How does Enviu approach building these companies and what makes its way of doing this unique?
We use an issue centric program approach which means we work in specific areas, be they plastics, food, shipping, textiles or finance. Within a particular area we ideate, create, validate and build business models that drive the transition towards tomorrow’s economy. What makes Enviu unique is how we do it. Our methodology combines two approaches, which themselves are perhaps not new, but are certainly unique in combination.
Firstly, we build with a systemic view. When we start a program, we look at the problem and really study the system to find the root cause of the issue. This takes the form of an issue analysis where we break down a value chain or industry. Through this we discover what needs to change and identify the levers of change upon which a solution needs to act in order to solve the problem.
Then we take these learnings and actually build the business, from the ground up, as serial entrepreneurs, piloting and pivoting to prove viability. Doing this shows there is more than just good in the model, but a functional, scalable business case.
How can building several business models create system wide change?
Broadly there are two ways to achieve this. The direct impact of the company itself, and its ability to inspire and influence the market.
Whilst our aim is always a real working business, building these sustainable companies also offers up concrete examples to be used by our partners in their lobbying or advocacy. These help act as proof and convince other stakeholders to adopt these kinds of solutions or move relevant policy forwards.
We also want to inspire and invite competitors to follow us, we work as transparently as possible and share our learnings with a view to having more than just a successful company, but a successful solution.
Then of course, the potential for system wide change is woven into the DNA of all the businesses we build, a consequence of starting from the problem with a systems perspective. Each business is designed with scalability in mind and positioned at key levers of the system in such a way as to maximize its impact.
What does it mean for a business solution to be positioned at key levers?
A great example of what we mean by being positioned at a key lever is the work our FoodFlow program is doing in East Africa.
In the local fruit and vegetable chain there is a lot going wrong. Half of everything produced is wasted within the chain. This has consequences, it means farmers can’t earn a real living, that there isn’t enough nutritious food and both resources and carbon emissions are being wasted on food that never makes it to market. We looked at this and thought, how can we fix this and really turn things around?
After a thorough issue analysis of the system the key leverage point turned out to be what happens at the farm immediately after harvesting. Farmers often have a day or two to sell their goods to a system of informal brokers, what they cannot sell on that given day is lost. This is where almost 40% of all the systems waste comes from. And if a broker does come, by the way, the farmer is in no position to negotiate and is left with no choice but to take what the broker offers. To solve both of these problems, we built SokoFresh, a venture that offers cold storage as a service to smallholder farmers.
Intervening at this one key point has the potential to be game changing, if farmers can store their produce on site for 1-2 weeks rather than for just one day, then the whole chain can be formalized. Brokers can have one full van rather than three partial deliveries, farmers waste less and thus earn more, we can build a market linkage system and bring in additional value via processing.
This just shows how just one venture, positioned at a key lever in the chain can have an exponential effect in terms of impact. This is how we envision businesses changing a system.
What are the biggest challenges right now for Enviu in realizing its mission through building businesses?
Setting up businesses is always difficult, but we’ve been doing this for 16 years now and have learnt many lessons that we carry with us today, in terms of our systemic approach, design thinking and scalability. We work lean and fail fast, so to speak. We’re always ready to adapt and pivot where necessary in order to get a business model working.
The success rate for our ventures is above 80% so our approach is definitely paying off, but when it comes to funding, we still see big challenges. Now we’re closing in on our 17th year of venture building we have learnt that without a wider array of capital on offer most social enterprises will fall into what we call the pioneer gap. This is where they lack the funding needed to go from being at the stage of promising social venture, to investor-ready organisation.
This gap in capital is something that we have to work towards closing as a society, but we also see it as a big call and invitation to truly pioneering funders.
We need catalytic capital at this crucial stage to build a pipeline of potentially world changing businesses. This requires being committed to the long term, accepting a non-traditional risk-return profile and attributing real value to impact. Not only do we know that the impact of our business models is evident, but we strongly believe they are a financially viable investment in the long run, and for that reason we are always looking for like-minded and like-ambitious funders to join us in driving the much needed change towards tomorrow’s economy.