Innovation, Sustainable Consumption and 'The Mesh'

Two Steps Forward

Innovation, Sustainable Consumption and 'The Mesh'

I've just glimpsed a world in which the elusive notion of "sustainable consumption" is both possible and profitable. It's a world where products are built to last, shared among both friends and strangers, made more affordable to all, support local communities, and are recycled back into more useful stuff. Best of all, it's a world that's already here, and is growing and thriving.

You may be wondering what I've been smoking. The better question is what I've been reading.

The answer: an engaging and inspiring new book called The Mesh: Why the Future of Business Is Sharing.

The book, published this month, is by my friend and mentor Lisa Gansky, a self-described "marketect" who's a master at spotting and capitalizing on consumer trends. Gansky is behind a succession of breakout companies, starting in the 1990s with GNN, the first commercial website, which sold to AOL, and more recently Ofoto, the photo-sharing company, sold to Kodak. In between, Gansky has worked with the founders of Yahoo!, AOL, Google, PayPal, and Mozilla, among others. (I last wrote about Gansky four years ago, about the ecotourism nonprofit she co-founded that is transforming lives in Chile.)

Her new book zeroes in on an emerging market transformation, a revolution taking place that even its participants don't yet see. Mesh businesses, says Gansky, are those that offer something that can be shared within a community, market, or value chain, including products, services, and raw materials. They harness advanced Web and mobile data networks to track goods and aggregate usage, customer, and product information. Because they focus on shareable physical goods, including the materials used, they make local delivery of services and products -- and their recovery -- valuable and relevant. And their offers, news, and recommendations are transmitted largely through word of mouth, augmented by social network services.

Why call this new wave of businesses "The Mesh"? In her book, Gansky explains:

A Mesh describes a type of network that allows any node to link in any direction with any other nodes in the system. Every part is connected to every other part, and they move in tandem. ... Mesh businesses are knotted to each other, and to the world, in myriad ways. Some connections are formed directly, such as an agreement among companies to identify a market and make coordinated offers. ... Other connections are formed indirectly through third parties, such as aggregated consumer data or via customers' social networks.

Mesh businesses exist thanks to hundreds of billions of dollars in available information infrastructure -- telecommunications, mobile technology, enhanced data collection, large and growing social networks, mobile SMS aggregators, and of course the Web itself. They efficiently employ horizontal B-to-B services, such as FedEx, UPS, Amazon Web Services, PayPal, and an ever-increasing number of cloud computing services.

Zipcar and other car-sharing services are the prototypical Mesh businesses. As Gansky points out, they don't make, sell, or repair cars; they share them. That turns a pricey asset, a vehicle, that might otherwise sit idle 95 percent of the day, into a highly leveraged service delivery system, made possible by members connected through smart phones and websites to an ever-growing network of vehicles. In some respects, it's not unlike the "load management" airlines use to keep their flights full and profitable.

"It takes the friction, the pain, and the annoyance out of needing to do a carshare or a ride share or find some product or service that I'm in need of as I stand at some street corner in some city," Gansky explained to me recently. One result: people abandon their second -- and sometimes their first -- cars in favor of car sharing.

But it's not just cars. Mesh businesses are sprouting across a wide range of sectors: homes, fashion, energy cooperatives, office space, music studios, tool libraries, food and wine coops, and many more. Gansky has cataloged hundreds of Mesh organizations -- both for-profit and nonprofit -- on her website, from tiny cooperatives to Netflix, a billion-dollar share platform that transformed the video and film distribution industry.

A sampling: A Box Life (keeps shippable cardboard boxes in use longer); GoLoco (ride-sharing system that notifies users when their friends or interest groups are going places they want to go); Instant Offices (matches businesses with available office space); Kopernik (connects tools and people where they are most needed); Local Dirt (helps consumers buy, sell, and find local food); Sourcemap (helps consumers find and share stories about where products come from and what they are made of); YouNoodle(users discover and support early-stage companies); and Zopa (helps people lend and borrow money with each other while sidestepping banks).

As you'll see, some of these are pretty homegrown, a few are slick -- but all seem to be garnering engaged and enthusiastic audiences.

"Some of this is driven by the recession and an increasing concern for waste," Gansky told me. "From a business perspective, waste is starting to show up on balance sheets in a way that it hasn't before. What we've normally considered to be waste can have a lot of hidden value. And if we squeeze on what we used to call waste, there's a lot of goodies that will come out, which will make the actual cost of waste much less."

That's fundamental to The Mesh, she says, and entire institutions will need to change along with the shifting business models. For example, secondary services -- mortgages and insurance and such -- have been organized to support owning homes and cars and other items. But a recent piece of legislation passed in California supports insurance covering car-sharing services.

One of the things I find fascinating about Mesh companies is that few are marketed as environmental or sustainable companies, yet that's exactly what they are. They dematerialize commerce by turning products into services, value access over ownership, optimize resource use, and generally improve efficiencies. Much like iTunes and the myriad other services that have transformed the book, music, and movie industries, Mesh businesses catch on not because they're greener, but because they're better -- a point I've been making for some time.

But the Mesh is a sustainability play in several ways. One, as I said, is the fundamental notion of getting more value out of existing resources and assets. Second is that there's a premium on the social connectivity that typically takes place within Mesh businesses, "getting us out of our chairs and into the streets to interact with one another in a way that many people haven't in their own communities for a long time," as Gansky puts it.

Third, Mesh companies tend to take a systems approach to managing "stuff," something traditional companies and value chains haven't done, or done well. That drives companies to look beyond their products to the larger system within which they operate, including where things come from and where they go when no longer needed. Inevitably, they look for ways to optimize that value chain, cutting out waste and inefficiency.

All of which affects product design -- material choices, of course, but also how products are made: more durable, flexible, reparable, and sustainable. A shared bicycle not only needs to last longer to get higher utilization, but must accommodate a broad range of customers, from tall skinny people to short portly ones, not to mention a variety of terrains and climate. "If you're interacting with your car on a regular basis the way you interact with, say, iTunes, it's an entirely different relationship," says Gansky. "That informs design, that informs waste, that informs sustainability."

"Earth," she likes to say, "is the ultimate share platform."

The potential here goes well beyond simply reinventing existing systems of commerce. Gansky envisions developing economies leapfrogging directly to Mesh models of sharing, without first experiencing the ownership society, much the way they have gone directly to mobile phones without ever building landlines.

There's a lot more to the Mesh, and I strongly encourage you to read the book, as I think there is something extraordinary going on here for both startup and incumbent players. The Mesh represents a brave new marketplace where consumers rule and business models are turned topsy-turvy. Where innovation and inspiration collide to create greener, cooler products and services that are high in value and values. And where disparate communities form, if only for an instant, to ignite companies and markets.

Learn more about innovative products, services, and business models at the upcoming GreenBiz Innovation Forum.