Rules and Choices for a Sustainable Local Economy

Economies are social systems within which we make choices based on needs, wants, and means. People regulate economies through rules that set taxes, tariffs, fees, standards, licensure, certification, patents, etc. These rules reflect the priorities of the people who enact them through their governance structures be they for small local groups or large global agencies.

The intent of rules is to limit choices in favor of those that produce the desired behavioral outcomes on a consistent basis. Such rules make the economic system more effective (do the right thing) and efficient (do it the right way).

Oftentimes, rules from multiple levels of jurisdiction apply to the same set of choices. For example, cooperatives, municipalities, county, state, and federal offices and agencies, the European Union, the United Nations, professional societies, industry-wide private sector groups all have a hand in defining various regulations to monitor and manage the supply of basic needs such as food, water, energy, fuel, manufactured goods, etc.

Unfortunately, competing or unclear interests behind the rules or insufficient diplomatic moxie to enforce them results in a complex legal and financial landscape in which to make choices. From a business perspective, this dense web of rules becomes a barrier to entry for all but those that have a global market, deep pockets, and easy access to resources to sort through the alternatives, invest in the opportunities, and pay the consequences for any misstep. It also fosters a dependency by people and their communities, neighborhoods, and rural areas on global players to supply them with basic needs. This places communities at risk for survival if supply chains are disrupted whether by natural disasters, climate change, pandemics, fossil fuel shortages, political turmoil, even a down Internet, to mention some of the more obvious.

As explored in the posting, “Business Models for a Local Economy,” the primary purpose of a local economy is to meet the needs of its participants whereas the purpose of the global economy is to satisfy their wants. Such distinctly different purposes result in different rule sets. Governance structures proliferate at all levels to administer rules of the global economy. Far fewer are in place for local economies. However, several types are available. Among these are policy councils, buying clubs, and co-ops for food, family, education, housing, etc.

Governance structures for local economies establish the rules by which members of communities, neighborhoods, and rural areas have more options available so they can choose to meet their needs through local sources. In effect, such “rules management” facilitates “Business Model Development within a Local Economy”, which drives two fundamental “localization” processes:

Integration across all value-added steps from the point of consumption back to the points of production
Utilization of community assets and resources without reliance on outside funding

The combination of these two processes, under the auspices of a local governance structure, gives interdependent local businesses and support organizations the competitive edge to prevail over their global counterparts when meeting needs of community members. Furthermore, members have opportunities to minimize economic leakage, reinvest their assets, and retain vital resources in the community through an effective portfolio management effort. This collective effort, then, is the foundation for sustainable local economic development.

The diagram below offers another way to view these critical interrelationships.

The integration of value-add steps–a function of rules management–flows from the point of consumption to the points of production, whereas the utilization of community assets and resources–a function of asset management–flows from identification and location to inclusion in an infrastructure project and business case portfolio.

The center of the diagram lists a wide range of professional services required to accomplish the tasks and complete the activities associated with rules management, business ecosystem functionality, and asset management. Social networking and innovation, which characterize asset management, and entrepreneurship and commercialization, which result from rules management, form the backdrop to conduct these transactions.

As the graphic suggests, services are transactions–the lifeblood in social system behavior. Nothing gets done between and among people without transactions. However, some methods and processes require fewer transactions than others. Furthermore, a healthy local economy incurs fewer transaction costs, either internal or external, to meet the needs of its members than a global economy. This is simply because the sustainability of the community is in the hands of those who live there. It’s in their vested interest to manage it. And given the choice to do so, which a vibrant local economy does, members will act on behalf of their collective sustainability.

Community members, represented by the orange-colored background, have the rules in hand to manage the context and the choices available by which they can:

Meet their needs
Sustain their community for generations to come
Assure themselves of a reasonable quality of life
Build on a firm foundation to participate, successfully, in the global economy

These outcomes of constitute the primary purpose for a sustainable local economy and the healthy development it catalyzes and encourages.

Originally posted to Sustainable Local Economic Development on Tumblr by Steve Bosserman on Wednesday, September 8, 2010

Metrics for Local Economic Sustainability

Business models within a local economy engage community members, focus on meeting the physiological and safety needs of members, integrate across value-added steps, utilize community assets and resources , and apply output and performance metrics so that community members can keep score.

Although listed last, the significance of applied metrics cannot be overstated since it is through them the functionality, impact, and cost of the organization or cluster of organizations built upon the business model are measured. However, carefully crafted metrics have the capability to expand the business model beyond its basic purpose to drive solvency and sustainability of an organization or cluster of organizations to deepen the resolve to establish a fully functioning local economy, spur creativity and innovation to find business solutions, increase the rate and degree of adaptiveness, and significantly improve the odds of long-term sustainability for the community-at-large. The quality of the metrics, e.g., the relevance of the scorecard, within the framework of a local economy, shape the design of a business model so that the performance of the organization or cluster of organizations achieves these broader objectives. What are these metrics, then?

The graphic below builds on the basic flows of assets and work functions introduced in the posting, “Does Your Community Meet the Needs of Its Members?” The spreadsheet table superimposes traditional and alternative measurement systems across the two flows in order to motivate, track, and compensate progress. These complement the output metrics already identified in the posting.

The interplay between these two systems of metrics is the engine that strengthens and sustains a local economy. Let’s start with output metrics. The purpose of a local economy is to meet the needs, e.g., food, water, energy, housing, etc., of people within a given community, neighborhood, or rural area. The success of a local economy in delivering these needs to local points of consumption is determined by output metrics. For instance, food can be measured in calories, water in gallons, energy in kilowatts, housing in livable units, and so on.

These same output metrics apply to the work functions associated with delivery of a specific need. For example, food preparation, food processing, and food production provide calories, water recycling yields gallons of potable water, deconstruction and repurposing result in units of usable materials, parts, and components, etc. The more efficient these work functions, the more effective they are in delivering needs and the more sustainable the local economy. How to manage and improve work function operations, then, is of considerable importance.

Work functions or work modules are not independent of one another. They are highly integrated value-add steps that span from the point of consumption to the points of production. The key to managing and improving their operation rests in increasing the degree of integration among them. This requires a highly collaborative effort among those who are responsible for carrying out the tasks associated with each step whether they do so under the auspices of separate businesses or support organizations. For this reason, there is a direct association among the roles community members play: holders of the output metric scorecard; “owners” of the work functions; and leaders of work function integration into clusters of for-profit and support entities in their local areas.

Whereas independent agents dominate the play in the global economy, collective responsibility and leadership for meeting community needs rule the day in a sustainable local economy. The challenge is to match the assets and resources in the community with the work function clusters so they have the wherewithal to deliver according to the desired output metrics. The purpose of the community investment portfolio is to match infrastructure projects and work function clusters with assets and resources such that community members are confident the results will justify their investment. Performance metrics through multiple mediums of exchange indicate how well this match is made.

The posting, “Business Model Development within a Local Economy,” illustrates how a business model can “…execute the work functions required to meet needs and keep the organization sustainable.” Or put another way, a business model shows how to utilize all assets and resources in the community without precluding future availability.

The key is to use the assets and resources without changing ownership or without modifying them to where their original purpose is lost to others who might also use them. This is accomplished through various mediums of exchange such as alternative currencies, time banking, carbon credits, renewable energy certificates, and volunteering that provide liquidity of fixed assets, like land, water, facilities, equipment, housing, clothing, materials, etc., so they can be easily committed to the completion of prioritized work functions.

While money / currency remains a principal way to access resources, to buy or have a long term lease agreement limits access by other community members. It also runs the risk that ownership and control of assets and resources transfer to people outside the community. This imposes another set of restrictions on access and use and contributes to economic leakage, which weakens the community’s chances for sustainability. A Sustainable Seattle report, Why Local Linkages Matter: Findings from the Local Food Economy Study, offers an excellent overview about the consequences of economic leakage related to food sourcing choices and ways to return to a more sustainable path.

The commitment of assets and resources is associated with the completion of commissioned work functions. The same mediums of exchange that assure the flow of assets and resources also incentivize people to apply their skills, talents, and wherewithal to the tasks at hand and fulfill what is necessary to meet the needs specified by the output metrics. And, just as purchased assets often blocks the community from further access, employment often limits the person hired from participating in other work functions and the value exchanges presented by mediums of exchange other than money / currency for salary / wage.

A healthy local economy establishes sustainability through two features. First, it enables members of a community, neighborhood, or rural area to invest and reinvest its assets and resources as represented by multiple mediums of exchange into a portfolio of prioritized project and clusters. Second, it incentivizes community members to carry out the tasks associated with the integrated work functions in each project and cluster in the portfolio as they are prioritized and launched. When the combination of utilized assets and executed work functions deliver on the needs of community members the local economy is successful. And when this is done repeatedly, the local economy is sustainable.

Originally posted to Sustainable Local Economic Develop on Tumblr by Steve Bosserman on Monday, September 6, 2010

Does Your Community Meet the Needs of Its Members?

Everyone needs food to eat, water to drink, air to breathe, clothes to wear, a house to live in, and energy to heat and cool it just to survive. And to assure sustainability, add safety, health, and education for good measure. Communities where people live have the same imperative. Either they provide the means by which members can meet their needs or they outsource the responsibility to others some distance away. In the former, communities are on a sustainable path whereas in the latter community survival is put at risk when needs cannot be met.

Needs met is the universal measure of success and sustainability of any community. Does your community meet the needs of its members? To find out, take a quick survey of your community by considering the following three questions:

Any community members hungry; homeless; living in unhealthy and unsafe conditions; or are they confronted with no paid work; illness; limited healthcare, and inadequate life skills to influence their circumstances?
How do you and your community keep score on needs met?
What are you and other community members doing to impact the scorecard?

The answers to these questions speak loudly. If your community is like most, the answer is “Yes” to the first one. It’s almost impossible to eliminate these conditions. However, the next two answers tell the tale as to whether your community is on track to sustainability.

Their order is important. Tom Peters is quoted as saying, “What gets measured, gets done.” As a community addresses the issues identified in the first question, the answers to the second question are calories of food, gallons of water, kilowatts of energy, cubic feet of fuel, units of housing, tonnage of recovered waste, etc. Those metrics shape answers to the third question in the form of infrastructure projects and business cases that deliver outputs according to the scorecard.

In effect, how a community responds to these three questions highlights economic choices made by community members. Those responses can be mapped onto a flow diagram, such as the one below, to give an overview of the local economic system for the community.

In the local economic system above, the drive for local economic sustainability precipitates flows of community assets and work functions that increase in their range of application and depth of value-add as they proceed to a community investment portfolio loaded with infrastructure projects and business cases that, when launched, generate calories, gallons, kilowatts, units, etc., in an effort to meet the needs of community members.

By placing their emphasis on how to meet their needs, community members take ownership for their sustainability. This commitment frames opportunities to charter projects and develop businesses. It also establishes a local economic context for business models that are based on widespread participation.

So, what’s the scorecard for your community? Calories in meals or community gardens? Gallons of water or number of water meters? Kilowatts of power or utility bill assistance? Housing units or vouchers? And so it goes… How does your local economy rate in terms of progress toward community sustainability? Are unemployed and underemployed community members engaged in paid work through local businesses and organizations whose outputs help meet local needs?

These are topics for further consideration in future posts. Stay tuned…

Originally posted to Sustainable Local Economic Development on Tumblr by Steve Bosserman on Wednesday, September 1, 2010

Who’s Up for Sustainable Living?

In his October 21, 2009 keynote address, “The Coming Famine: the risks to global food security”(presentation and speaking notes) at the Productivity and Food Security Symposium in Sydney, Australia, author Julian Cribb suggested that unabated consumption combined with unpredictable climate change inevitably leads to destabilization of environmental, economic and social systems. In turn, the capability of the global food system to feed people will be compromised. He expands upon this thesis in his new book, The Coming Famine: The Global Food Crisis and What We Can Do to Avoid It. For a quick analysis, consider Mark Bittman’s review, “Seeing a Time (Soon) When We’ll All Be Dieting”, in The New York Times.

Perhaps the time is nigh to advance sustainable local food systems as suggested in the posting, “Which Food System Do You Use to Get Your Calories?”. Hence the question, who’s up for sustainable living?

Originally posted to Sustainable Local Economic Development on Tumblr by Steve Bosserman on Wednesday, August 25, 2010

What’s in the Center of Your Local Economy?

A local economy delivers needs such as food, water, energy, housing, etc., to those who reside within a specific neighborhood, community, or rural area. Like any social system, its function is predicated on what or who is in the center.

In the diagram below, those who produce goods and services are in the center. From there, the system distributes output across stages of processing, preparation, and retail into a market where people choose to purchase what is delivered from multiple competitive options. Such a design opens up the possibility to purchase needs delivered by providers in the global economy and far removed from the transactional boundaries of the local economy. With such choices comes a reduction in local business revenue, outsourcing of paid work, and leakage of expenditures to provisioners outside the area. Basically, this is the way the current global economy works. It is the antithesis to the intent of a sustainable local economy.

In contrast, people placed in the center of a local economy invite a very different dynamic as suggested in the graphic below. Members of the social system meet their needs as close to the point of consumption as possible. The retail “ring” represents the transactional space wherein people take delivery of a needed product or service after completing its value-added cycle.

Since people within a given locality share the same basic needs, they, collectively, define a steady market. This stabile and consistent demand invites an interdependence among businesses in the locally-oriented preparation, processing, and production “rings”.

A local economy is, by definition, a needs economy (see At the Bottom of the Pyramid, It’s Looking Up!). The survival and sustainability of people as a social unit depend on whether they can meet their basic needs without interruption. This imperative places people at the center of their local economy. This gives them access to the assets and resources within their purview and grants them license to deploy those means in ways that assure their continuity and reasonable quality of life.

To have production in the center invites those who are not invested in the sustainability of the local system to have control over its destiny. That is not an enviable situation in which to be. What’s in the center of your local economy?

Originally posted to Sustainable Local Economic Development on Tumbler by Steve Bosserman on August 20, 2010

Greenhouses That Change the World

Richard (Rick) Nelson is the inventor of SolaRoof, a novel approach to greenhouse design and function that integrates a unique covering, heating / cooling system, and infrastructure / framework. It will revolutionize the greenhouse industry. More than that, once the materials are certified for use in human habitation, it will be disruptive to the housing and building industry as well. So what is SolaRoof, anyway, and why does it carry such potential to change the world? Let’s find out.

Revolutionary Technology:

The greenhouse construction is unlike any other. Rather than a single layer of covering or glazing there are two. Each layer is a laminate of woven fiber mesh sandwiched in between two sheets of transparent plastic material. The laminated layers are sealed against the top and bottom of the roof and wall frames to create air-tight spaces. This combination by itself offers hardly any insulating value. However, fill the space with bubbles—yes, bubbles—and the equation becomes totally different!

The distance between the two layers varies depending on the desired amount of insulating value. Each inch is roughly equivalent to an R-factor of 1. A distance of a little over a yard yields an R-factor of nearly 40. That is almost unheard of in traditional construction techniques. And given the transparency of the two layers of covering, over 80% of the photosynthesis-catalyzing sunlight reaches the inside of the greenhouse.

In the (now defunct) SolaRoof webpage: Green Buildings for Urban Agriculture and Solar Living, two illustrations show how the process works from one extreme season to the next. Quite ingenius!

Here is a picture of a greenhouse unit as its side is being filled with bubbles:

And here is what it looks like when the cavity is completely full:

Unbounded Architectural Form:

While the technology is intriguing, it is only part of the picture when determining the disruptive value of SolaRoof. Another feature is that the shape of the structure is no longer confined to a standard box or cube that characterizes many homes, buildings, or greenhouses. It can be made to fit into an infinite array of shapes, sizes, and configurations. One of Rick’s collaborators, Harvey Rayner, who is the founder of Solar Bubble Build, describes the possibilities of the SolaRoof medium as follows:

Architecture has been a long-held passion for me, but my unwillingness to engage in academic study has kept me from pursuing any real investigation into this field. Now, having started this project initially as a practical solution to expanding my wife’s rare herb growing business, I have become engrossed in the process of designing, building and developing this technology.
Increasingly, I am viewing this work as an inroad towards one day creating pure and functional architectural forms. For me, this new breed of building gets right to the heart of how form can follow function. I believe with this technology as a starting point, unique structures can be derived which reflect the beauty of the inner workings of this truly sustainable building solution.

Several examples of Harvey’s designs are featured on Bluegreen Future Buildings.

Open Source for Everyone:

While Rick has spent over thirty years developing and refining the technologies associated with SolaRoof materials and applications, the bulk or his output is non-proprietary and open source. Anyone is welcome to join the SolaRoof Yahoo! Group (restricted) wherein there are member information exchanges, articles about SolaRoof, photos, and diagrams–all is free for the taking. Rick sums it up quite well in his introduction to the SolaRoof group:

You are welcome to join this open source collaboration where we are developing and sharing DIY(Do It Yourself) know-how for building transparent solar structures. To enhance our collaborative development of the SolaRoof methods we now are building a knowledge base where everyone can contribute to building the SolaRoofWiKi. SolaRoof structures may include but are not limited to greenhouses, sunspaces, roof gardens, residential spaces… The goal of our discussion is how to use the sun’s energy to grow food, cool and heat spaces efficiently, rather than rely on fossil fuels and power grids. Our technology includes the use of bubbles to shade and insulate glazing systems, together with liquid solar collection and thermal mass storage, although any related discussions are welcome!

SolaRoof Saves World:

This bold pronouncement was found on hi-trust.tv (now defunct), one of Chris Macrae’s video experiments. Chris, knowledge management and branding expert, offered the following endorsement of the power and potential of SolaRoof:

Rick has also been using what I amateurishly call photosynthesis agriculture and architecture innovations for over 20 years. I have known him for about 4 years in my capacity of hosting radical innovation meetings round London. I suggest a triple-wishing game – you mention a region or peoples in the world where sustainability that matters most to you, and Rick answers with what is doable now, what is developing, and what is his biggest collaboration wish for the region.
Perhaps we can make more videos if people decide this is one of the world’s great unknown practices worthy of a bit more open source weaving. (see Chris Macrae and Rick Nelson on YouTube)
Equally, if anyone knows someone else with inventions that empower every community to the other side of sustainability fuels (water, food, energy) crises, please see if they will join in. I would like to publish a small leaflet on the 5 most radically open guides to how peoples everywhere could collaborate around human sustainability if we take up the challenge and agree urgency is so great that we don’t need any marginal solutions; we need radical experiments…

And in a posting on crisisclimate.tv (now defunct), Chris describes the ramifications for SolaRoof as the underpinnings for a new business enterprise, Life Synthesis LLP, that aspires to the following:

…to shelter residential communities within SolaRoof systems. This includes replacing conventional resource and energy intensive climate control systems with new and dynamic structures that capture and use solar energy by bringing daylight and plants into buildings. These ecologically designed, low cost SolaRoof structures use energy capture, storage, and cooling methods to incorporate plants, water and water based liquids, creating an integrated ecosystem within the building itself. SolaRoof is both accessible and affordable to those living in poverty, but at the same time desirable to the affluent.

The Ball Is in Your Court

And that becomes an open invitation for any and all to take the opportunity afforded by this concept and apply it so that it makes a positive difference for the people directly involved, the community, the planet. Well worth the time and effort required to take up the challenge and do the right thing!

Originally posted to New Media Explorer by Steve Bosserman on Tuesday, October 9, 2007

Cycles of Communication and Collaboration

Recently, several of us were going over the litany of new terms for communication and collaboration “tools” that were less than 10 years old: blogs, mashups, crowdsourcing, webinars, podcasts, etc. just to name a few. It became obvious as we discussed it further than many of us in the conversation were relatively clueless when it came to defining what each is, what it does, how it works, and what were the benefits. As in most instances where there are too many dots and no clear picture in mind to connect them; a framework would be helpful.

The quadrants and circular arrow in the diagram below illustrate a progressive path of organized social interactions. It starts with the blog: the primary virtual means by which an individual, almost any individual who has access to the Internet, announces to the world – here is who I am, what I think, and what I care about. It is a powerful statement of independent thought, self-awareness, and clarity of purpose that any blogger makes simply by posting a message.

When individuals put themselves out there, they are likely to be “discovered” by others who share common principles, interests, and affinities. One of the most likely places to be “found” is in a social network. In these far-ranging open communities individuals extend their connectivity, learn more about themselves and each other, strengthen their affiliations, and become more intentional about doing certain activities together rather than individually.

At this stage, groups engaging in some sort of purposeful collective effort benefit by having collaboration spaces for more efficient and effective teamwork. Here they can work openly among themselves to give projects definition, open their assumptions for testing and scrutiny to those beyond their team boundaries, and adapt the projects to what is learned for more successful and acceptable results.

Of course, such results warrant wider exposure in global networks. News releases are presented to a broader audience for further sponsorship, investment, or utilization–and feedback. Learning and adaptation are triggered on a broader scale. Quickly we know if what we are doing is having the intended result; do others believe in it as we do; what other steps can we take to increase the viability, and sustainability of our offering.

This is where the cycle returns full circle to the blog where further commentary and endorsement (or not) about the news release is made in the context of what is important to the blogger—and the cycle starts anew. Of course, beginning the next round means starting at a different place and time, having more experience, and making additional discoveries between rounds. These are multiple cycles that radiate out in a spiral model approach.

So how do the tools we have available fit into this communication and collaboration cycle? A few are highlighted in the picture below.

There are many nuances and subtleties to each stage of the cycle; and there are certainly MANY more examples of software and system tools that can be included. However, this should give you a feel for how the overall process functions.

Here’s an example for your consideration:

In 2001, Roger Beck, a teacher at Worthington Kilbourne High School in Worthington, Ohio, initiated a program called Building Academic Skills and Experiences (B.A.S.E.). B.A.S.E. integrates twelfth grade English, Government / Economics, and Technology Education. In 2004, this program was linked with Habitat for Humanity in a housing construction project called Home B.A.S.E. In his most recent blog postings, Mr. Beck outlines progress on the current 2006 – 2007 Home B.A.S.E. project – a LEED-certified home – that is now drawing to a close.

One of those groups whose members are very supportive of Roger and his team is a local Worthington social network named, Sustainable Worthington. An announcement to their members stated the following:

WKHS Home B.A.S.E. LEED house pilot project, 258 N. 21st Street, Columbus, OH, Saturday, September 22, 2007, 2:00 p.m.: Roger Beck, the teacher who developed this excellent program, will give us a tour of this amazing house, which offers green solutions to an amazing array of issues facing every homeowner. For a preview, go to where you will see great photos and an archive of the weekly project updates. Come to be educated and inspired!

When Mr. Beck and others initiated their most recent project last year, they sought volunteers in a number of collaborative spaces. This one, the Columbus Chapter of the Construction Specifics Institute, heralded the following headline:

COLUMBUS CSI CHAPTER INVITES YOU TO TAKE PART IN GIVING A HAND UP: Do a good deed, network with fellow CSI members and be part of building a pilot LEED home!

The attraction of volunteers to this project was based on past successes such as the one that ended in 2006 which was described in the news release¹ following a public meeting for Green Energy Ohio in May 2006. It includes a link to a blog dedicated to the project.

The tour is today; I am participating. That will result in another blog posting – stay tuned…

Originally posted to New Media Explorer by Steve Bosserman on Saturday, September 22, 2007

News release is no longer available online ↩

Riff on Michael Shuman

For thousands of people around the world each day the Google News Alerts service deposits the results of key word searches among the thousands of news sources in Google’s global network in email inboxes, mine included. Among the terms I have setup for searches is “community currencies.” This morning the following item appeared:

Candidates for Ward 1

Raise the Hammer – Canada

… His ideas of how credit unions, commercial banks and thrifts with community ownership structures, and local currencies can keep community wealth circulating in …

The content trailer was intriguing, leading me on a two-hour surfing odyssey. The results are logged below in the event that others might be interested in some of the touch points I encountered along the way.

First, click to the article on the Raise the Hammer website; then, click to learn more about the Raise the Hammer community action initiative in Hamilton, Ontario, Canada, which, according to Wikipedia is the 8th largest city in Canada with a population of slightly over 700,000.

Municipal elections are coming up and one of the candidates is a person named Brian McHattie. In a response to a request from Raise the Hammer, Mr. McHattie stated the five most important steps he would take if elected; his fifth and final point was as follows:

5) Develop a Community Economic Development Strategy. ‘Recently, Environment Hamilton brought U.S. economist Michael Shuman to Hamilton to talk about a strategy where communities adopt a strategy of self-reliance with local production for local consumption.

His ideas of how credit unions, commercial banks and thrifts with community ownership structures, and local currencies can keep community wealth circulating in and working for the community must be investigated as a basis for Hamilton’s economy, along with import substitution and directing City purchasing power to locally owned businesses, thereby keeping money circulating within the city – plugging the leaky bucket.’

Enter the name, “Michael Shuman.” So who is this Michael Shuman person?

A Google search found several listings one linked to a biographical article in The Nation. The next click goes to the homepage for The Nation and more background on the publication.

Another link in the search about Michael Shuman referenced “Community-based Economies“¹ at a forum on August 3, 2006 sponsored by the University of Kentucky Appalachian Center and partners.

No journey is complete unless some inviting by-ways are explored 😉 One side-road was a closer look at the terms “Sustainability, Entrepreneurship, and Local Economies.” A click in a Google search led to the University of St. Gallen in Switzerland and its Institute for Economy and the Environment. One of the faculty members, Dr. Rolf Wüstenhagen, co-authored a paper, “Structure of Sustainable Economic Value in Social Entrepreneurial Enterprises” that can be downloaded as a PDF file. Any research that can find better ways to determine value of such endeavors is worth its weight in gold and Dr. Wuestenhagen’s study is certainly a useful approach!

Another trail through the woods led to a startup originally named “Chesapeake Friendly Chicken,” funded in part by USDA grants, but now grant-independent and listed as “Bay Friendly Chicken.” There are several write-ups about this company from a wide range of perspectives including CNN Money and Animal Liberation Front. This represents an “educational process” from which many with a similar entrepreneurial spirit in agricultural production and process can learn.

But I digress, back to Mr. Shuman. His bio in the The Small-Mart Revolution—How Local Businesses Are Beating The Global Competition he is listed a Vice President for Enterprise Development with the Training & Development Center (TDC) based in Maine. The founder and president of TDC is Charles “Chuck” Tetro. Mssrs. Tetro and Shuman team as co-presenters and co-facilitators. One of those collaborations was to deliver a course at Whidbey Institute in Clinton, WA. The flyer announcing the session exploring!²read as follows:

“Exploring Local Living Economies and Community-based Business” with Michael Shuman and Chuck Tetro Sunday, July 17 to Sunday July 24, 2005, A Residential Course at the Whidbey Institute in Clinton, WA: Michael Shuman is the author of GOING LOCAL: CREATING SELF-RELIANT COMMUNITIES IN A GLOBAL AGE and Vice President of Enterprise Development for the Training & Development Corporation. Among his current projects are a poultry company in Eastern Maryland financed through local stock, a small-business venture fund in New Mexico, and a local debit card in Maine. He speaks and consults around the country on strategies for strengthening local and regional economies, and he is one of the founding board members for the Business Alliance for Local Living Economies, a network of, by, and for community-based-businesses.”

Mr. Shuman is a busy person! A search for Business Alliance for Local Living Economies (BALLE) uncovers an active North American network. The search results also show a connection to the specific term “Living Economies” and a link to livingeconomies.org which proves to be the home page for bealocalist.org, aka, BALLE. At one time, Mr. Shuman was on the BALLE board. His former BALLE bio mentioned a website under development named, “CommunityFood” (no longer functional) that is intended “to support marketing by family farmers.” The website layout is an excellent framework / template to utilize in moving the localization of agriculture across North America. And in looking at all the blank states on the BALLE homepage map of chapters / members it appears there are thousands of opportunities 😉

Mr. Shuman’s latest book, THE SMALL-MART REVOLUTION: HOW LOCAL BUSINESSES ARE BEATING THE GLOBAL COMPETITION, published in 2006 by Berrett-Koehler and distributed by Amazon and others, continues to expand his theses in a powerful, yet engaging and entertaining manner, according to the reviewers. But see for yourself.

And this is wonderful place to stop for a while. I’m sure the odyssey will begin anew when another compelling news blurb pops into the inbox — happy reading and exploring!³

Originally posted to New Media Explorer by Steve Bosserman on Saturday, October 21, 2006

Information about Michael Shuman’s forum at the University of Wyoming referenced in my original posting is no longer available online. ↩
Links to the flyer and related information about Charles Tetro and Michael Shuman are no longer available online. ↩
Much of the information about Michael Shuman and the terminology, projects, organizations, and source materials referenced in my original posting evolved over the intervening years. I attempted to keep as much of the original text as possible, except in several instances where deviations became inevitable. Mr. Shuman is still “living the dream” helping others develop local economies as this January 27, 2019 post to his website attests: Why Local Economies Matter. I will pick up the topic of localization in a separate post at a later date. ↩

Localize – Link – Globalize: A Closer Look at India

In my previous posting about Mukesh Ambani’s ambitious plans for Reliance Retail, Ltd., he intends to “revolutionize” two sectors: farming and retail in the process of establishing this new business. His plan to “invest more than $5 billion by 2011 to put both the farms and the stores on the road to modernity, connect them through a distribution system guided by the latest logistics technology, and create enough of a surplus to generate $20 billion in agricultural exports annually” is a bold statement of the speed, scope, and degree to which he will attack the prevailing system. No doubt this will have an impact – revolution does that, although there are often unintended consequences!

Usually, “revolutionize” in the context of agriculture means introducing labor-saving, automated, integrated mechanical and biological systems that eliminate the need for human participation. This accomplishes three things: reduces the cost of the operation by taking people out of the equation; displaces people who are no longer needed in support of agriculture so that they are compelled to do something else; and lengthens the distance between the point of agricultural production and the point of consumption of food, feed, fiber, or fuel. This approach was effective during the last century in those areas of the world where human labor was needed to power the growth of the industrial sector. In fact, the mechanization of agriculture and the subsequent displacement of people from farming and rural areas was a perfect complement to the growth of industries in the urban centers. Is the world ready for more of that?

The last thing countries with the most populous cities in the world need is more people migrating from the less populated rural areas to the urban areas. Further overcrowding of already overwhelmed infrastructures helps no one and contributes further to decline in the quality and even sustainability of life. Still, with nowhere else to go and no hope where they are, relocation to the cities is often the only recourse people have in these circumstances.

The question is: how can technology be applied in the farming sector such that the people whose welfare is dependent on agriculture are able to have sufficient quality of life centered around the principles and values they hold dear at their local community level yet be able to scale their output to meet the demand of more distant communities in need of what they produce?

One way to begin to answer this is through the e-Choupal system introduced by ITC, Ltd. to farmers throughout rural India.

ITC describes e-choupal as a system that…

…leverages Information Technology to virtually cluster all the value chain participants, delivering the same benefits as vertical integration does in mature agricultural economies like the USA.

‘e-Choupal’ makes use of the physical transmission capabilities of current intermediaries – aggregation, logistics, counter-party risk and bridge financing – while disintermediating them from the chain of information flow and market signals.

With a judicious blend of click & mortar capabilities, village internet kiosks managed by farmers – called sanchalaks – themselves, enable the agricultural community access ready information in their local language on the weather & market prices, disseminate knowledge on scientific farm practices & risk management, facilitate the sale of farm inputs (now with embedded knowledge) and purchase farm produce from the farmers’ doorsteps (decision making is now information-based).

Real-time information and customised knowledge provided by ‘e-Choupal’ enhance the ability of farmers to take decisions and align their farm output with market demand and secure quality & productivity. The aggregation of the demand for farm inputs from individual farmers gives them access to high quality inputs from established and reputed manufacturers at fair prices. As a direct marketing channel, virtually linked to the ‘mandi’ system for price discovery, ‘e-Choupal’ eliminates wasteful intermediation and multiple handling. Thereby it significantly reduces transaction costs.

‘e-Choupal’ ensures world-class quality in delivering all these goods & services through several product / service specific partnerships with the leaders in the respective fields, in addition to ITC’s own expertise.

While the farmers benefit through enhanced farm productivity and higher farm gate prices, ITC benefits from the lower net cost of procurement (despite offering better prices to the farmer) having eliminated costs in the supply chain that do not add value.”

Of course, for ITC to make this work requires a dedication to growing its business by engaging farmers as partners in making their businesses successful. ITC’s sustainability policies are based on a deep and unwavering commitment to the people of rural India: to help them improve the quality of their lives, provide them with the wherewithal to keep their families intact and grounded, and contribute fully to the betterment and sustainability of their local communities.

The effectiveness of this program on multiple fronts has not gone unnoticed. ITC has garnered several awards for the e-Choupal program namely, the Corporate Social Responsibility Award in 2004 from the Tata Energy and Resources Institute (TERI), the Wharton Infosys Business Transformation Award (WIBTA) in 2004, and most recently the Stockholm Challenge Award in May 2006.

The goal of e-Choupal is to sustain, strengthen, and scale the operations of farmers with small agricultural holdings throughout rural India. The success of this system is earmarked by farmers staying in business, improving their operations, caring for their families, and contributing to the welfare of their local communities. This outcome scores well in following the sequence of localize, link, and globalize mentioned in last week’s posting by the same title.

And there is room for more! In a country of one billion people, three-quarters of which live in rural areas the efforts of ITC and e-Choupal only touch a narrow few. Reliance Retail, Ltd. is branching out with farming and retail and is committed to build an infrastructure that stabilizes small scale farming operations rather than destroy them; in direct competition to Reliance Retail, ITC is introducing Choupal Fresh.

Then, there are companies like Bharti that partnered with the Rothschild Group to form FieldFresh Foods. They are entering the next stage of scaling up agricultural production in rural India to supply global markets. Are Indian farmers sufficiently stabilized in their newfound capabilities to remain sustainable as small businesses in light of this rapid scaling?

Andy Mukherjee writing for Bloomberg.com paints companies Reliance, ITC, and Bharti with a common brush regarding their intentions for the Indian farmers in light of a worse fate – Wal-Mart. The title of his article “Indian Food Trade Lures Reliance, Bars Wal-Mart,”¹ suggests that a preferred strategy is keeping Wal-Mart at bay. Unfortunately, there are many paths that lead to premature globalization of food production at the farm level – even a seemingly healthy alliance between Bharti and Rothschild is fraught with difficulties!

Clearly, a Wal-Mart excursion into India would have a significant impact on the economics of farming and retailing in India. It poses a dilemma in whether to keep expanding the agricultural sector globally by building from a firm foundation of localized – linked – globalized farming operations, or prematurely opening the floodgates to global markets, compromising the system at local levels, and either becoming non-competitive due to excessive cost or entering the slippery slope of farm consolidation.

The title of a Knowledge@Wharton article, “Will Wal-Mart Succeed in India? Perhaps…But It Won’t Be Easy,”² suggests imminent conflict with Indian retail chains and the Indian government in their unwillingness to allow direct foreign investment into the retail industry. In response, Wal-Mart has formed a joint venture with Bharti. Will that be enough to overcome native resistance? And in “Wal-Mart Pushing India to Lift Ban on Global Chain Stores” published in The Hometown Advantage by The New Rules Project, the argument is raised that large non-Indian retailers like Wal-Mart are not good for the local Indian economy because their realm of interest is with absentee shareholders, not the people of India at the local level. Proceeding further while carrying this lack of concern for the impact one’s business model has on people whose livelihoods are placed squarely at risk is catamount to unethical business practice. In this case, it reverses the preferred approach of localize – link – globalize to drive globalization first and align linkages to suck profits and resources away without stabilizing the local economies first.

The world has endured this “global first” extraction / domination model for centuries. It doesn’t work. It’s time to give it up!

Originally posted to New Media Explorer by Steve Bosserman on Sunday, September 3, 2006

Original Bloomberg article, “Indian Food Trade Lures Reliance, Bars Wal-Mart,” is no longer available online ↩
Original Asia Media article, “Terms of Engagement for Wal-Mart India,” is no longer available online. ↩

Localize – Link – Globalize

In the 17 July 2006 issue of Newsweek International, an article by Ron Moreau and Sudip Mazumdar entitled, “Bigger, Faster, Better: India’s top tycoon hopes to kick the country’s nascent boom into hyperdrive by remaking its stores, farms and even its biggest cities,” provides a compelling twist in corporate social responsibility. Earlier this year, Mukesh Ambani, chairman of Reliance Industries, Ltd, announced the creation of a new, major business venture under the Reliance umbrella, Reliance Retail, Ltd. This is only one step in Mr. Ambani’s far-reaching vision in retailing that seeks to bring broad-sweeping changes in agricultural production and retailing across India as well as how people live in urban areas:

…Ambani, 49, has finalized plans to invest more than $11 billion over the next decade to build two new satellite cities outside creaking, overcrowded Mumbai and Delhi. He foresees these metropolises emerging within just four years, each with a population of 5 million people making $5,000 a year, on average (or seven times India’s norm), and hosting top multinational companies. And that is all pretty simple – a development on steroids – compared with the idea that really gets Ambani going.

Ambani’s favorite scheme aims to revolutionize in one swoop two of India’s largest but most backward sectors: farming and retail. Despite boom times, India is still a nation where 100 million mostly small farmers work with ox and plow, where 96 percent of retail stores are mom-and-pop shops and most of the roads between farm and store are mud tracks. Ambani plans to invest $5 billion by 2011 to put both the farms and the stores on the road to modernity, connect them through a distribution system guided by the latest logistics technology, and create enough of a surplus to generate $20 billion in agricultural exports annually.

I don’t have a clue whether Mr. Ambani will be successful in achieving what he envisions. Actually, that is not the point. What is significant, though, is that he apparently understands the connections between the circumstances surrounding those who produce food, and food production, logistics, and retail sales to consumers; he is willing to challenge the inadequacies and deficiencies in the current system; and even more, he is taking no small risks in making a significant play to install an alternative system that is more respectful, efficient, and sustainable for those who participate at the “ground level,” so to speak.

Basically, Mr. Ambani is addressing the problem by taking an approach that runs backwards from the conventional wisdom of a globalized model. He is, first, raising the capability and capacity of the farmer / producer, establishing an infrastructure to move productive output swiftly and safely to downstream stages in the value-chain, and providing fair compensation for the farmer / producer to assure sustainability:

To transform Indian farmers into quality suppliers for his new retail chain, Ambani plans to create 1,600 farm-supply hubs across India, providing technical know-how and credit, selling seeds, fertilizer and fuel, and buying produce.

Then, he is scaling the output of the farmer / producer to exceed local demands for food stuff and move the overage into the global market:

He also plans to build some 85 logistics centers to move food to retail outlets and to ports and airports for export. Reliance is gearing up to train tens of thousands of new employees in the next six to eight months to do everything from erecting prefab warehouses to transporting fresh produce. Even Reliance’s admirers note that with little experience in farming or retail, Ambani is taking his biggest risks yet. “There will be mistakes,” Ambani admits. “But we are not scared. We will correct our mistakes fast and move on.”

This is opposite to the typical globalizing business model that strips output from agricultural producers for a pittance and pumps it into the global market at the outset without regard or interest in the sustainability of the producer’s business or preserving the sanctity of the local community. The consequence of the more typical approach is farm consolidation, loss of livelihood and location, and dependence on globalized agriculture for local food supplies – not a good position to be in if supply chains are disrupted.

The critical path is to stabilize the producer / provider at the individual / family / community level; link producers / providers with others through flexible and dynamic networks capable of moving information, goods, and services in response to demand AT A LOCAL LEVEL; and lastly, scale the operations to match output with fluctuations in demand on a global level. This simple three-step formula – localize, link, and globalize – is a useful scorecard to measure the validity of any strategy aimed at utilizing natural resources or leveraging human resources in particular areas. If it strives to globalize first or prematurely, the approach is exploitative at best and unconscionable at worst!

Originally posted to New Media Explorer by Steve Bosserman on Sunday, August 27, 2006