Gunter Pauli’s Blue Economy

TEDxTokyo community member Gunter Pauli is launching a new approach to economics, the Blue Economy Initiative. Each week for the next two years he will release a new proven Blue Economy case study.

Imagine 100 innovations that could generate 100 million jobs over the next decade. Over the next two years I will introduce real opportunities one by one, on the basis of technologies proven by scientists to work, benchmarked as a business somewhere inthe world, and ready to be introduced anywhere.

As an entrepreneur, who established 10 companies, I have always been searching for the best way to enter the market, to out compete the market leaders. An entrepreneur introduces innovations, that respond to a need, generate cash flow, create jobs and work with what is readily available. With a track record in media, databank management, internet and eco-products I was very much impacted by my incapacity to see unintended consequences – even collateral damage, trying to do implement a new business model. What happened?

As president of Ecover, I promoted biodegradable soaps manufactured in a greenfactory with a huge grass roof. I was shocked to learn that as demand for palm oil – the main ingredient – increased, more rain forest was destroyed. How could I ever have overlooked that cleaning up the rivers in Europe leads to the destruction of the habitat of the orangutan? I learned the hard way that biodegradability has nothing to see with sustainability. This is the world of the Green Economy: the intentions are good but asking customers to pay more to get less, while loosing sight of the whole maybe less bad, but it is still not good enough.

As a consequence, it became a passion to imagine an innovative and competitive business model that has no unintended consequences. I searched for the opportunity to create companies that outcompete on the market, thanks to solid innovations, dramatically increasing productivity, improving return on investment, while operating inharmony with the ecosystems. I imagined business that not only preserves the environment, rather businesses the enhance ecosystems in which my companies would operate.

The United Nations University and the Japanese Government offered me the chance to imagine such businesses, scientifically proven and economically viable. The platform in Japan permitted me to build a team to pioneer concrete examples from a beer brewery in Africa, to coffee farming in Colombia and waste management in Japan.

These hands-on cases inspired me to undertake a competitive analysis and make an inventory of all innovations inspired by nature that are likely to shape the future. A review of +2,200 innovations revealed that only very few were adopted by business. Of all the sustainable innovations borrowed from nature only three that had become mainstream with sales in excess of €100 million: Velcro from the USA, Lotusan from Germany marketed by Sto and proboscis-inspired needles from Japan made by Terumo.

I turned to the projects I knew, the scientists I visited, the CEOs I had met and discussed the best ideas with business journalists, corporate strategists, management scholars, policy makers and innovation experts. Thanks to their input I drew up a list of 100 innovations that are likely to change the competitive game in many sectors of the economy.

There was a major surprise. When the experts advised me on the magnitude of potential job generation, the number reached 100 million. Checking the benchmarks before me, I was surprised that one third of the business ideas are already invoicing and the several innovations represent platform technologies applicable in dozens of sectors.This portfolio of innovations has more than potential.

A business model emerged that fundamentally changes the rules on the market. Instead of a triple bottom line, there is a triple cash flow. How is this possible? Ever since management focused on core business based on core competence, companies have discarded any opportunity outside their tight focus on economies of scale, making more of the same cheaper through mergers and aquisitions. This is the world of the RedEconomy – an economy of debt.

The 100 cases that will be released one after the other provide insights on how costs externalized within that core business model turn into multiple income applying aconcept known as economies of scope. This clustering and value adding generates revenues that did not even exist. This is the core uniqueness of the competitive business models that will be released one by one as of February 22, 2010. This is the start of the Blue Economy. There is more.

Once entrepreneurs can generate multiple revenues, value and cash flow, then it is easy to understand how these innovations create jobs. On top of that, since value is created out of something that had no value before, there is no substitution effect. The traditional economist will be surprised that higher productivity now equates with jobcreation. While the generation of additional cash flow will be a main argument, the fact that themarket leaders have limited means to formulate a competitive response turns the odds in favor of the entrepreneur.

Companies that have decades of experience and a loyal customer base worldwide,supported by a stable cash flow and profit margins, will not easily hand over a major part of business to a newcomer. However, these innovations change the rules of the game, often without openly informing key players, maybe taking them off guard andwithout the internal competences to respond.

The portfolio of opportunities based on these 100 cases is vast. More than oneentrepreneur, more than one investor, more than one venture fund can take the initiatve. That is the main reason for offering this inspiration open source.

The 100 cases offer an insight into an emerging economy – the Blue Economy- that is more competitive, generates jobs, brings innovations that steer business towards sustainability and builds up social capital. Who would not like to join this?

Gunter Pauli
author of the Blue Economy
www.zeri.org

For further background on the 100 cases
www.blueeconomy.de