January 2011

Sustainable business case study: Anglian Water

31st January 2011 by John Drummond

Anglian Water - Love Every Drop

Anglian Water is responsible for supplying clean water and taking away and recycling dirty water for six million people in the East of England.

But there’s a problem. They work in one of the lowest lying areas of the UK and are therefore more vulnerable to climate change. Rainfall is low – about the same as Jerusalem. And the population has gone up 20% in the last 20 years and certain to grow further.  It’s not sustainable.

Their response in the last year has been to imagine a new sustainable business model for the company under the banner Love Every Drop. Their ambition is to put water at the heart of a whole new way of living.

There are three pillars – and this is what makes their approach distinctive.

Smart business:
Smart business is everything they do as a business to achieve long-term success including 100% customer satisfaction, zero waste, no incidents, reducing carbon and being a frontier performer in the industry. It’s a lot but it’s not enough….even if they do all they can, that’s not going to address issues of population growth and climate change. So they set themselves a second area of action.

Smart environment:
Smart environment is stepping up to the plate as a leading employer in the region to help create a movement towards a truly sustainable region. They can only achieve sustainable success if other organizations act alone and together to create a sustainable East of England. But even that has a dependency. Even if each organization acts, it doesn’t guarantee real change so they have a third area of action.

Smart communities:
Smart communities is about the role Anglian Water and others have to encourage sustainable living. It’s about each of us taking the small daily actions to live sustainably. In other words it’s about personal behaviour change.

And all of this is backed up by 10 goals, transformational change and 100 commitments and measures of success. It won’t be easy. But it’s a stake in the ground and an inspiration for others. More information can be found at http://www.anglianwater.co.uk/about-us/EDCA9E86306447CD91E9169E4A427B7B….

Is the Big Society in crisis? What might be done?

24th January 2011 by John Drummond

The Times

Today’s lead story in The Times (January 24, 2011) says the Big Society is in crisis and that negative publicity is harming the UK government.

It’s not in crisis.  Let’s be clear what Big Society is – government reform, community empowerment and millions of people engaged in social action through their day-to-day decisions.

The government is adept at the first. There are dozens of examples of government reform that is localizing decision-making. The problem is that the thinking around the other two elements needs to evolve. There are three actions that the government can take to help Big Society live.

First, the government can accept that it has a role to create a structured intervention to build the skills of local authorities and other collaborators around Big Society.

The reality is that such an intervention is a pre-requisite for success. Big Society is a mindset change which requires new skills around behaviour change, collaborative action and community empowerment. A programme that helps build new competencies through training, “how to” guides, tools and case studies and that is open to all sectors could help leverage change.

Second, the government can evolve it’s thinking that the only way of achieving real behaviour change is through exceedingly clever one-off interventions. In my view it should warmly embrace social marketing.

Social marketing isn’t about the wasteful investment in unnecessary advertising they sometimes think it might be. It’s about behavioural insight that helps inform strategies to achieve real social change. Again, in my view, it is an approach which is a pre-requisite to engaging millions in day to day decisions.

Third, the practice of community empowerment can be developed and illustrated so people can find it easier to move from idea to implementation. I spent the weekend looking for examples of Big Society in the four vanguard local authorities. So far, there is a strong impression that community empowerment is something done to communities by local government rather than creating the framework so that communities are doing it for themselves.

There is one other action the government should consider. There seems to be a prejudice that communications is a cost (and any substantial investment in communications is a waste of public money).  Communications is one of ten potential strategies to achieve real change. The fact that senior communications professionals across government still need to clear communications funding over a certain value does not sit comfortably with devolved decision making.

The road to Big Society will be bumpy. But it’s premature to suggest a crisis.

Government and behaviour change 2: What examples are there of turning behavioural insight into practice?

19th January 2011 by John Drummond

Piano staircase
Can individual interventions change behaviours?

Theory only works in practice. So what examples are there of how new behavioural insight can be used to improve lives?

The new publication from the Cabinet Office on “applying behavioural insight to health” features a bunch of examples.

They break down into:

Interventions that head off the risk of future unwanted behaviours
To reduce the incidents of unwanted teenage pregnancy, take a teen and introduce them to toddlers at nurseries across the UK.  That’s the recipe adopted by charity Teens and Todders in 26 local authority areas. By experiencing the demands of parenthood first hand, you re-set the risk of unwanted pregnancy.

Interventions at point of relevance
Prompted choice: by prompting applicants for driving licences to choose to register as an organ donor or not, the state of Illinois has increased registration since 2008 from 38% to 60%.  The new national food hygiene scheme launched last November by the Food Standards Agency encourages restaurants to display their food hygiene rating influencing consumer choice and the hygiene of restaurants.

Changing social norms: Another planned project involving Drinkaware aims to raise awareness of students at Welsh universities to actual drinking habits to reduce the potential negative impact of social proof or the behaviour of others. In other words, it’s possible as students realize the actual drinking habits of the majority of students they may re-set their views of the social norm around students and drinking. Asda and the Department of Health trialed using social norm messaging on shopping trollies.

Changing product design or presentation: A pilot in Mexico of a shopping trolley with a yellow tape and a sign defining an area of the trolley for fruit and vegetables, increased the purchase of fruit and vegetables without effecting retail profit. In Iceland, fruit and vegetables were re-christened “sports candy” in the popular childrens TV show LazyTown. Now the Department of Health plan a partnership with LazyTown in the UK.

A collaboration between Bayer Healthcare and Nintendo DS has led to the development of a Didget device which gives points to diabetic children in return for them consistently consenting to regular pin-prick blood-sugar tests. These points can be used on Nintendo games or in the Didget web community, where children can compare their performance against others.

Making it fun to act: A Nike GPS phone application turns running into a game and a competition. Volkswagen invited ideas for making pro-environmental action fun. This led to piano stairs at a Stockholm subway that increased use of stairs over the escalator by 66% (www.thefuntheory.com). Swipe cards on lamp-posts encourage kids to walk to school and earn points at two schools in London.

Interventions that incentivise population-wide behaviours
Creating new units of value:  In Japan, the Fureai Kippu is a unit of one-hour voluntarily invested in the social care of elderly people like helping with shopping or food preparation.  Now one of the four Big Society vanguard councils is pioneering a CareBank scheme that builds on this idea with the possibility of a national roll out to follow.

They’re all good examples and it will take time before this kind of thinking becomes business as usual for practitioners. It’s all to be welcomed. But one-off interventions won’t always be the answer to achieving sustained behaviour change.

Government and behaviour change 1: The revolution begins to put people at the heart of policy

17th January 2011 by John Drummond

Fringe festival
Can we put people at the heart of policy?

There’s a revolution in thinking at the heart of the UK government. It is being driven by the behavioural insights unit in the Cabinet Office, a team of academics and civil servants, and it is shaping government policy and touching our lives.

So what does this government think about people and what persuades us to act? In this, the first of a series of blogs on government and behaviour change, let’s look at where we currently are.

The current theory of behaviour change is based on a simple insight. We used to think that if people were given good reasons and the right incentives, they would always act in their own best interests. We now know that this two-dimensional view of people is flawed. In fact, people are influenced by very many other factors including habit, the behaviour of others and social context.

The fact that this government is putting behavioural insight into practice at Cabinet level is stunning. It shouldn’t be, but government for the people that is based on new insight into neuroscience, behavioural economics and social psychology is a new thing. It will lead to pragmatic policies that will improve lives and frequently save them.

Let’s look for example at organ donors. There are around 8000 people on waiting lists for organ transplants. Around 1,000 people die each year because of a shortage of organs. Around 90 per cent of people say they are in favour of donations but only 29 per cent are currently registered.

The plan, announced in December, is to change the default. Currently, people have to opt in. In the new system from July 2011, new drivers will be given a prompted choice to either register to donate their organs or refuse to make their organs available to others in the event of their death.

There are three behavioural insights that drive this decision. First, the need for people to feel in control. They still have a choice. But the choice is being forced upon them.  This is being called” “prompted choice”. The second insight is that the best place to touch people is at the point of relevance in their lives. Third, that people tend to go with what is easiest. As long as organ donation remained an opt-in, it’s been easier to do nothing.

To help spread this understanding of behaviour change, a new model has been created by the Cabinet Office in partnership with the Institute for Government. It is called MINDSPACE. Mindspace is an acronym which aims to pick out some of the underlying principles of behaviour change to help policy makers  It is in the public domain in the form of two reports – a discussion and a practical guide and you can find out more by clicking the link.

Mindspace draws attention to many of the principles of social marketing practice. It understands motivation theory - the fact that people are influenced by personal benefits like incentives and also by the behaviour of others (social norms). It understands interventions – going with the flow of pre-set options. It also understands the way we process our thoughts and feelings through unconscious short-cuts (if you want the jargon, it’s known as heuristics).

The fact that the UK government is basing decisions on a much deeper understanding of people is transformational. The fact that within a year of coming into office, decisions are regularly being made that turn this thinking into practice that touches our lives is new and it is potentially transformational.

But I have questions and challenges. I’m not certain that Mindspace is accessible to practitioners. I’m not sure any thought is being given to rolling this out to people who can make a difference in local areas like local government. I am concerned that the focus is on interventions not on strategies to achieve real social change. And I am concerned that the government has a mote in its eye about the fertile soil that already exists after years of investment in social marketing capacity building by the Department of Health.

More later.

The energy sector is transforming

10th January 2011 by John Drummond

Power, everywhere

The energy sector is a compelling example of the new world of sustainable business. At it’s simplest sustainable business has three key elements.

Element one: a clear preferred future
The clear preferred future is a sustainable, affordable energy supply. Linked to the clear preferred future there is always a compelling narrative. The compelling case for action in energy is that demand is increasing as supply is decreasing. Demand for electricity could double by 2050. At the same time, a quarter of our existing power plants need to be replaced as nuclear and coal plants reach the end of their lives.

Element two: a new sustainable business model
The new sustainable business model includes a mix of energy sources. For example, EU targets mean 30% of our electricity must come from renewables by 2020. The model also means the need for sustainable funding to invest in new power stations and in the electricity grid. Another key part of the model is the need for sustainable customer behaviour to reduce energy use.

Element three: a transformational agenda
Having defined the preferred future and the sustainable business model, the vast bulk of action then goes into a series of transformational initiatives to achieve radical change often involving collaboration. In this case, new power plants, new financial mechanisms to attract £100bn plus of investment, a smart grid and a fresh regulatory model.

Also typical is that all of this becomes much more customer-focused. The smart grid puts customers more in control of their energy use. The regulatory model encourages customer-facing innovation. And there is a need to use social marketing campaigns to encourage customer behaviour change.

The Chief Executive of Centrica Sam Laidlaw gets the preferred future, the new business model and the transformational agenda. At a speech at the RSA in September he said:  “our ambition is for a secure, low carbon and affordable energy supply… achieving this goal requires us to work together – and urgently – to put in place the right building blocks….the right Government framework, companies delivering, and customers engaging.”

He said: “…a company like British Gas must be as much about energy saving as it is about energy supply….this transformation is possible…by the end of 2012 we aim to have installed 2 million smart meters…microgeneration brings new meaning to the phrase power to the people…all this needs a change of mindset….a transformation in our business model…one geared around helping customers manage their energy not just use it…” He concluded: “the old utility business model is dead.”

Is the third sector about to face an historic funding crisis?

4th January 2011 by John Drummond

Is the first big issue of 2011 an imminent crisis in third sector funding?  In the front page lead story in The Times (1.1.11) the potential impact of cuts on the third sector was described as a tsunami by Sir Stephen Bubb, the CEO of ACEVO, the organization representing 2000 voluntary sector CEOs.

The Big Issue

We know that David Cameron sees a bright future for the third sector as the cornerstone of the Big Society.  But the spending review has hit charities. Sir Stephen says there has been a £500m hit to date. He projects that will grow to £1bn in 2011/12 and potentially increase to £3bn a year by 2014/15 as councils buy fewer services or cut grants.

The first port of call to fill the funding gap will be donations but the numbers don’t add up. Sir Stephen says there has been an increase in fundraising and donations from £10.2bn to £10.6bn in 2009/10. But that is still considerably lower than the £11.3bn in 2007/8.

The fact is, the voluntary sector will require help in building a bridge from where we are today to the new world. Otherwise, the result will be a smaller society not a bigger society and the victims will be those who need support the most.

Sir Stephen says: “If the third sector pays today it will be the homeless, the disabled and the elderly tomorrow – and the day after it will be taxpayers paying billions to pick up the pieces.” Some are predicting massive changes in the sector with many of the UK’s 180,000 charities going to the wall.

The knee-jerk reaction will be to ask the corporate sector to fill the gap through philanthropy. I predict a great gathering around this through 2011. But it’s not the answer. Asking companies to plug the gap won’t happen. It’s highly resource intensive for charities to find the right partner at a time when resources are scarce and there is evidence the trend is in another direction.

In a December 2010 quick survey of charities by the Directory of Social Change, 83% of respondents felt corporate community investment was heading away from cash and towards gifts in kind.

If there is to be a shared march to a new world where we collaborate to improve lives and achieve real social change, a primary focus on philanthropy is a distraction. This is a time to innovate by changing third sector business models.

Sir Stephen proposes an extra tax on bank bonuses to help raise an additional £3bn for local services. Again, this is understandable. The banks have played a major role in destroying wealth not creating it and yet, while the leaders of other companies have heard the wake up call, I am struggling to hear the voice of leadership from the financial services sector.

If I were the chancellor, I would be asking the CEOs of financial service companies to present their strategies for creating wealth. And the answer is not philanthropy nor, on its own, is it liberating personal wealth and enterprise. It must also involve collaborative and transformational programmes to help create economically sustainable communities.

We are at a crossroads. We could march merrily back to the past where business is about financial success and charities are about giving. Or, we could seek to build the bridge to the new world where business is about long term success and helping customers improve lives. A part of this will provide opportunities for collaborative partnerships with charities to achieve shared goals.

The long-term answer for sustainable funding from the private sector will be through imaginative, customer-facing strategies to help create sustainable marketplaces…..not just through philanthropy and enhanced community investment.  This is the road of substantial long-term partnerships where the basis for engagement is a compelling business case not an act of kindness.

None of this of course helps bridge the short-term crisis the third sector faces. There will be wide innovation. New social enterprises will be launched. New services created and delivered. Some charities will fold. There will be mergers between charities who share a passion for a common cause. But unless, on the way to the new world, there is a short term structural solution led by government there is likely to be significant damage to the lives of many.