Karolina Dvorakova,
Jeffrey Ros,
Robert Akerboom
Within the sub-system of sustainable entrepreneurship, several trends and initiatives regarding sustainable development operate on both small and large scale, trying to find ways to establish themselves in their direct context. These trends and initiatives usually have proven themselves on small scale in pilot projects or small sustainable communities and are therefore interesting for actors with similar visions. Apart from sustainable projects themselves, there are some examples regarding the strategies of the actors involved that can be considered to be trends or initiatives within this sub-system. The trends and initiatives, described in the following parts, are summarized in the figure 1 linked to our 5 domains (entrepreneur, policy, market, culture finance & support). The trends being discussed were chosen, because they are linked to the topic of entrepreneurism and thus could be used in our strategy design. Moreover, we will map the mentioned trends and initiatives regarding the theory of green markets and can therefore be helpful for finding rosaceous implementation on the island of Texel. This last part regarding potential implementation on Texel will be described in the next section.
green banking
Firstly we will focus on the finance domain starting with green banking. It is described by Bhardwaj & Malhotra (2012) in their research about green banking strategies as follows: “Green Banking, is an effort by the banks to make the industries grow green and in the process restores the natural environment. This concept of green banking will be mutually beneficial to the banks, industries and the economy”. Not only will green banking ensure the greening of the industries but it will also facilitate in improving the asset quality of the banks in the future. They conclude in their paper that green banking can be explained by the metaphor of the prisoner’s dilemma, which they call the green prison. “In this prison, entrepreneurs are compelled to environmentally degrading behavior due to the divergence between individual rewards and collective goals for sustainable development” (Bhardwaj & Malhotra, 2012).
It is the fact that the needs for efficient use of resources and environmental friendly corporate social responsibility are recognized all over the world which makes it a trending topic nowadays. “The performance of an enterprise can no longer be evaluated on the basis of economic parameters alone and it needs to be integrated with environmental performance as well’ (Bhardwaj & Malhotra, 2012). This upcoming green banking results in a higher percentage of sustainable projects getting funded by engaged investors who strive for sustainable results. As an important actor within the subsystem of sustainable entrepreneurship, they also provide a platform for sustainable development which increases the sharing of knowledge regarding sustainability which we deem to be the most important factor for sustainable development.
We think green banking is heading in the desired direction regarding sustainable entrepreneurship. it is already taking place in Texel in case of ASN Bank, which has already funded 3 sustainable projects on Texel (ASN Bank, 2015). Similar to the crowdfunding, these banks can reach and be reached by a broad public with a common vision. Policies of these banks however go further than just investing money in “green” projects, they also provide lower rates than market interest rates by incentive taxes to actively promote these initiatives (NL Agency, 2015). On top of that, loads of green banks thrive to “scale out clean energy solutions as fast as possible, maximizing efficiency gains per state dollar’” (Coalition for Green Capital, 2015).
These ideas are in our eyes convincing in meeting these previously mentioned sustainable criteria. Since their goal goes further than providing money, by actually aiming for a “green” goal together with sustainable entrepreneurs. The financial benefits regarding lower rates by incentive taxes is a great example on how policies can try to trigger a certain, in this case sustainable, movement. We can definitely see this happening in our sub-system of sustainable entrepreneurship.
crowdfunding
Next we’d like to discuss crowdfunding and kickstarting as a way to funding a new projects to get them off the ground. Instead of a bank or investing company, crowdfunding and kickstarting is about persuading individuals to each give a small donation. Once entrepreneurs get enough donors, they’ll have some serious cash on hand to take their vision to the next level (Entrepreneur, 2015). These initiatives are not created by technology, but technology has widely broadened the size of the crowds and increased the potential of both charitable and entrepreneurial ventures to find funding (Berlau, 2014). Crowdfunding or kickstarting comes in three flavors: perks, debt and equity. Perks-based is what most campaigns currently offer. This is where something (typically a product, copy or service) is exchanged for the crowd’s money. Debt is the least well known flavor and works like a traditional loan from the bank, but then provided by the crowd. An interesting development though is the equity-based funding, where investments are made in exchange for a percentage of ownership of the company. Therefore, perks can be seen as a donation and debts and equity can be seen as investments (Entrepreneurship.org,2015).
Henry Ford already offered friends, family members or acquaintances a return on their initial investment, an arrangement that gave Ford the capital he needed to start his business. Therefore, he used crowdfunding to launch the Ford Motor Company. So why would we consider this way of funding an actual trend or initiative? That’s mainly because the communication between investors and entrepreneurs has drastically changed. With the introduction of social media, demand and supply can be brought together more easily, optimized by algorithms via internet. Startups had to get through several gatekeepers to success in raising capital. Banks, venture capitalists and angel investors could be hard to get in contact with and sometimes hard to find. Crowdfunding via social platforms flips this paradigm and allows for the startups to promote their idea to potential investors all around the world, no matter who and where they are (Entrepreneurship.org, 2015).
We believe that crowdfunding or kickstarting can be considered a green market for sustainable entrepreneurship, since it enables people to pitch their sustainable business proposals which can reach each and every individual around the globe very easily. Therefore, the gathering of investors isn’t just limited to regional or national actors with their specific ideologies or policies, but it can be funded by any similar minded or believer anywhere at the world. The fact that so many small investors are involved also leads to the fact that there will be many stakeholders and therefore lots of eyes that evaluate the company's results. Since they all thrive the same goal, this can be regarded as a very fruitful board of examiners to keep entrepreneurs sharp and innovative. Such can be done even easier on a local level in Texel among the residents, however because of the limitation of the finance, that could be gathered only through this way, we propose to go beyond the Texel boundaries while searching for donors.
patents vs. knowledge sharing
Traditionally viewed, “patents encourage creative and innovative work by giving the inventors exclusive rights to their inventions for specified periods of time. It is assumed to be an important factor in promoting technological development, but a contrary perspective has shown that the incentives provided by patent rights have been grossly exaggerate, and that the social costs associated with them have been largely ignored” (Poblador, 2012). This view assumes that patents hinder the pace of technological innovation rather than hasten it. In case of sustainable development, loads of promising patents are even claimed by big-powered stakeholders of the unsustainable situation, just so they can keep their power within that market and to slow the shift towards the sustainable situation down. On top of that, it is shown that 60 percent of patent litigation is brought by patent ‘trolls’, primarily against companies with small annual incomes. This affects sustainable development, since the trolling replaces the financial protection, and thus reduces the incentives for companies to turn sustainable ideas into green technology (Lyons, 2013).
Tesla Motors, however, has been founded to increase the speed of the implementation of sustainable transport. They stated that once they will create a technology that convinces the market of electric cars, but keep the intellectual ownership to themselves to slow competition down, they would act in contrast with their own goal. Therefore, Tesla has decided not to initiate any lawsuits against anyone who wants to use their technology out of good faith (Musk, 2014). They believe that both Tesla, other car manufacturers and our planet would benefit from the common, fast evolving technology platform.
Platforms for sharing sustainable ideas, knowledge and creating awareness is also closing in on a label as green market; these platform may work in between entrepreneurs as well as between entrepreneurs and the customers. Reactions so far mention positive developments about thinking differently about lifestyles and about how to sustain them. Most interesting is the fact that most people are usually afraid that a sustainable lifestyle will interfere with the standards of how people like to live, but in most cases, it's just about finding another mindset in which you can do whatever you normally do as well, but with a sustainable awareness which makes you do little things differently. Small changes for each and every individual can have large consequences as a whole.
importance of ICT
With increasing usage of technology around the world, ICT becomes an important phenomena. The young generations, growing up in a rapid technological world, are able to keep up with such changes and easily adapt to these new ways of thinking, however, it might not be as easy for older people. For an entrepreneur understanding ICT is a very important part of his job, as lots of communication nowadays is done online; with customers, suppliers, etc. Moreover a virtual world is an important place for promotion of the business and new ideas, gathering the finances or increasing the demand for the product. Financial infrastructure also changes in past days as more and more payments are virtual.
lean management
Another trend of today, which is already discussed in theory, however not that much used in practise, is lean management. It provides an approach of creating and managing startups and get desired product to customers' hands faster; that way the initial product is developed with minimal costs in minimal time and the actual demand can be soon checked before the product is finalized. Although this theory is already known and very much appreciated in theory, too many new companies still begin with and idea of product that they think people want, spending months and recourses on perfecting the product without showing it even in a very rudimentary form to customer; no wonder that such companies often fails (The Lean Startup, 2016). This is even more important as the consumers are the ultimate drivers of the current environmental stress (Pascual et al., 2011).
Lean isn't about spending less money; it is about failing fast and failing cheap - very convenient in a development of sustainable products and services as in reality nobody really knows what these are about. It is about putting a process, a methodology, around the development of a product. The methodology of lean startup could not possibly be more suited for the sustainable development: instead of asking “can this product be built” we ask “should this product be built” also as “can we build a sustainable business around this set of products and services”. As the awareness of sustainability and the actual demands of customers regarding sustainability remain sometimes a one big question mark, such approach may be used to test first products (called minimum viable product), and if successful, develop the ideas even more (Lean Startup,2016). However, the lean startup is not only about creating a successful entrepreneurial business, it is about what can be learnt from such business for our everyday life. In a bigger scale, lean principles could be applied to government programs, health care, etc., which again could be used regarding the sustainable policies and changes; testing in minimal time with minimal costs and learning quickly from the mistakes (Lean Startup, 2016b).
decentralization & small community initiatives
Another point we’d like to address, is about the decentralization of services and the shift of power that goes with it. With the growing awareness of people regarding sustainable living, more and more situations arise in which local development are initiated. Think for example about local energy production by wind or sun, urban farming or regional food production, water harvesting within the community and so on. In their article, Lebel et al. (2006) conclude that there is a friction between local and national governance regarding sustainable interventions. Local interventions usually have a great impact on the daily life of the inhabitants and can only work if they are properly integrated in their context.
Therefore, it would make sense that local entrepreneurs with knowledge of the context would be made responsible for these interventions, whereas a national government should only set goals to achieve and rules to follow. This would result in regional projects getting the utmost out of their context and since these projects listen so closely to their surroundings, they are way more easy to tune and adapt. Finally, it has certain benefits regarding local laws and policies that suit better within the community than some more mainstream national laws.
This decentralization is happening everywhere around us and as an example, we’d like to mention the energy distribution in Germany. American Economist, political advisor and fanatic activist Jeremy Rifkin (2015) recently presented his famous vision of the third industrial revolution. Within his interesting vision, Rifkin mentions that many local communities in Germany are starting to produce their own energy and are even able to overproduce energy which they can sell to the grid. With this happening on a large scale, the big power suppliers in Germany have been reduced to small scale energy providers. The distribution of the power will ensure lower prices for greener energy and it also makes the people less dependant of this one big actor. More chains in the network ensures a smaller chance of failure of the system and makes it easier to compensate for errors when they occur (Rifkin, 2015).
Another trend that was visible specifically in The Netherlands was the emergence of local commodity and service trading initiatives. We see that people have taken more interest in, for example, second-hand trading and eating food that was grown locally. Another example is that people with a knack for repairing things, offer their help in repairing broken household equipment for free or in return for products or other services. This emerging “shadow economy” can partially be credited to the financial crisis that started in 2008 (Colombo, Onnis & Tirelli, 2016). But it can also be seen as a non-organized but spreading form of “rejecting” increasing government interference in daily lives of people (Volkskrant.nl, 2016).
leaving of the youth
As researched by the ESD group Teach Your Own and others, one of the problems of Texel is the young people leaving the island for education on the mainland and not coming back (Galeano Galván, 2015). The population of Texel thus gets older and some of the potential young innovative minds are lost to boost the local economy. Moreover, as the overall trend of the population is that the western population is getting older in general, with quite low birth rate (CBS, 2013). Texel is thus loosing the social capital and ideas needed for healthy entrepreneurial climate.
sustainability on display
At last, we would like to mention the displaying of sustainable measures which is getting more and more popular. Some regional as well as national actors feel the global need to act sustainably and they use platforms such as outdoor festivals, concerts, national events or private homes to communicate knowledge regarding sustainability and to share passion and spread excitement. Within these platforms, both established and new entrepreneurs who try to enter the market can get in contact to get inspired, expand their professional network, give and get advice and most importantly, generate awareness amongst people.
As an example, we like to refer to the eFFect Festival which is held yearly in the Netherlands and provides a platform with workshops, pitches, meetings, TED-talks and short excursions in the direct environment. All regarding sustainable food, energy, liveability, green and mobility (Effect festival, 2015). On a different scale, this same platform is for example created in people's home’s or within a building block. With the introduction of recent technologies there is a direct interaction possible between the climate system and its users. This creates a constant flow of information which makes it “fun” and interesting to pay attention to the energy usage for example. In building blocks, this can even lead to a common energy meter which makes the challenge of living more sustainable a group activity, which can lead to people correcting and advising others to change lifestyle to a more sustainable one.
In the final figure 3.3, trends were sorted according to which of the main actors (established entrepreneurs, start-ups and/or customers) they mostly relate to.
