The Little Company With A Big Goal

Posted on by Carbon Lighthouse

Carbon Lighthouse is a rare breed of young company – an environmental organization executing nuts and bolts building retrofits, while seeking startup-like growth. Startups seek exponential growth and wide market reach, while most  service companies doing physical work (e.g. contractors, restaurants, consultants) have a local focus and scale more or less linearly with the number of staff. Carbon Lighthouse was founded with the audacious goal of solving climate change and we intend to get there through relentlessly pursuing practical solutions, starting with energy efficiency in commercial and industrial buildings.

To meet our mission, we need to be both highly local while also rapidly scalable. Interestingly, this exact challenge faces many socially motivated ventures. The recurring storyline is a huge, seemingly unsurmountable challenge that needs to be tackled quickly – education in inner cities, clean water, malaria – and solving it requires working with people and infrastructure – individually, locally, and personally.

Scaling this type of business model, where there is no substitute for hands-on action, is hard. Teach for America is arguable one of the most successful examples from the non-profit space, yet there are placing only 10 times more teachers in schools per year today than they did at their start 20 years ago. (Teach for America started with 500 teachers in 1990 and placed 5,100 new teachers in 2011.)  Zipcar, the most successful car sharing company in the  U.S., is another example. When they were acquired in 2012 after 13 years of business they were profitable and had 800,000 users, a business success story, but they have not fundamentally changed the landscape of personal car ownership.

Given the difficulties of rapidly scaling this type of company, why did Carbon Lighthouse choose to pursue such a labor intensive solution (physically managing energy efficiency projects) to a problem that requires immediate, scalable action (climate change)? There are some very good companies that are developing software solution for reducing energy and helping mitigate carbon emissions.

However, actually solving climate change is an infrastructure problem; someone needs to physically enter buildings and do a thorough job or making them run better, so that is what we are doing. This puts us in relatively uncharted waters when it comes to growing our type of company as quickly as we need to and our mission is our only guide. There are three key areas that are critical to scaling, each of which has been strengthened and focused in surprising beneficial ways by our strong and unwavering commitment to mitigating climate change.

People

Being a good energy efficiency engineer is hard and not terribly glamourous. It requires doing complicated engineering calculations, conducting potentially dangerous field work and interacting with C-suite executives all in the same day. People with these skills are really hard to find, but we have been extremely fortunate in recruiting and have securing our top picks in every hiring round.

Moreover, in the three years since our founding not a single teammate has left the company. There are many reasons for this, but a few are directly related to the strength of our mission. First and foremost, making the mission front and center during the recruitment process attracts people who are passionate about what they (and we) do. Second, once people are one board, our mission unites us as a team against a larger challenge.

This keeps us from getting bogged down in details of small ego-related issues. I have personally watched hundreds of disagreements get resolved by refocusing the discussion on how best to serve the mission.

Innovation

As a company, making physical changes in the world, Carbon Lighthouse’s ultimate success depends on changing an enormous number of valves, pumps, fans, and other equally exciting assets in buildings. Since valves cannot be changed by an app, our mission necessarily requires us to grow our team and make it possible for each person to be more productive each month than they were the one before.

In recognition of this, we have worked hard to make sure that our company has a culture actionable innovation. Our first priority is to innovate and automate ourselves out of the labor and tasks wherever possible, such as downloading field data. Our second priority is to increase achievable energy savings per building by improving modeling, reducing the cost of installing measures, and accelerating the measurement and verification process.

Our third priority is to develop new ideas for solving climate change. Carbon Lighthouse’s mission motivates a clear understanding of these priorities and focuses every team member’s work in the same direction, resulting in rapid iteration and improvements on the highest impact areas.

Operations and Measuring Progress

Our mission has given us the foresight to invest in long-term company infrastructure and operations early. For example, because we will need thousands of engineers within the next decade to achieve our goals, we invested heavily to create a program that reduced the training time for our most recent hires from six months to six weeks. The value of this asset will grow exponentially as we do. Our operations team also spent hundreds of hours creating a project management tool that reduces project time by dozens of hours per project.

Without the focus on long-term scale provided by our mission, we would not have been able to justify either of these time-investments so early on. Our corporate metrics for progress are also driven entirely by our mission; they are CO2 reduced per person-hour of labor and profit per ton of CO2 eliminated – in that order. Because we see profit as a means to an end, and that end is solving climate change, we repeated defer short term profits to lay the groundwork for a more impactful economy in the long term.

This has made us a much more resilient and scalable company because our investment in research has opened up more savings per building and new market segments, while decrease labor per project.

Carbon Lighthouse’s mission commitment has put us on a challenging path, but it is also acting as the guiding light that will get us there. As we succeed and grow, we hope that the course we are charing will provide direction to the huge range of ambitious companies tackling rapid growth in hands-on industries.

 

The Little Company With A Big Goal

Posted on by Otto Acosta

Carbon Lighthouse is a rare breed of young company – an environmental organization executing nuts and bolts building retrofits, while seeking startup-like growth. Startups seek exponential growth and wide market reach, while most  service companies doing physical work (e.g. contractors, restaurants, consultants) have a local focus and scale more or less linearly with the number of staff. Carbon Lighthouse was founded with the audacious goal of solving climate change and we intend to get there through relentlessly pursuing practical solutions, starting with energy efficiency in commercial and industrial buildings.

To meet our mission, we need to be both highly local while also rapidly scalable. Interestingly, this exact challenge faces many socially motivated ventures. The recurring storyline is a huge, seemingly unsurmountable challenge that needs to be tackled quickly – education in inner cities, clean water, malaria – and solving it requires working with people and infrastructure – individually, locally, and personally.

Scaling this type of business model, where there is no substitute for hands-on action, is hard. Teach for America is arguable one of the most successful examples from the non-profit space, yet there are placing only 10 times more teachers in schools per year today than they did at their start 20 years ago. (Teach for America started with 500 teachers in 1990 and placed 5,100 new teachers in 2011.)  Zipcar, the most successful car sharing company in the  U.S., is another example. When they were acquired in 2012 after 13 years of business they were profitable and had 800,000 users, a business success story, but they have not fundamentally changed the landscape of personal car ownership.

Given the difficulties of rapidly scaling this type of company, why did Carbon Lighthouse choose to pursue such a labor intensive solution (physically managing energy efficiency projects) to a problem that requires immediate, scalable action (climate change)? There are some very good companies that are developing software solution for reducing energy and helping mitigate carbon emissions.

However, actually solving climate change is an infrastructure problem; someone needs to physically enter buildings and do a thorough job or making them run better, so that is what we are doing. This puts us in relatively uncharted waters when it comes to growing our type of company as quickly as we need to and our mission is our only guide. There are three key areas that are critical to scaling, each of which has been strengthened and focused in surprising beneficial ways by our strong and unwavering commitment to mitigating climate change.

People

Being a good energy efficiency engineer is hard and not terribly glamourous. It requires doing complicated engineering calculations, conducting potentially dangerous field work and interacting with C-suite executives all in the same day. People with these skills are really hard to find, but we have been extremely fortunate in recruiting and have securing our top picks in every hiring round.

Moreover, in the three years since our founding not a single teammate has left the company. There are many reasons for this, but a few are directly related to the strength of our mission. First and foremost, making the mission front and center during the recruitment process attracts people who are passionate about what they (and we) do. Second, once people are one board, our mission unites us as a team against a larger challenge.

This keeps us from getting bogged down in details of small ego-related issues. I have personally watched hundreds of disagreements get resolved by refocusing the discussion on how best to serve the mission.

Innovation

As a company, making physical changes in the world, Carbon Lighthouse’s ultimate success depends on changing an enormous number of valves, pumps, fans, and other equally exciting assets in buildings. Since valves cannot be changed by an app, our mission necessarily requires us to grow our team and make it possible for each person to be more productive each month than they were the one before.

In recognition of this, we have worked hard to make sure that our company has a culture actionable innovation. Our first priority is to innovate and automate ourselves out of the labor and tasks wherever possible, such as downloading field data. Our second priority is to increase achievable energy savings per building by improving modeling, reducing the cost of installing measures, and accelerating the measurement and verification process.

Our third priority is to develop new ideas for solving climate change. Carbon Lighthouse’s mission motivates a clear understanding of these priorities and focuses every team member’s work in the same direction, resulting in rapid iteration and improvements on the highest impact areas.

Operations and Measuring Progress

Our mission has given us the foresight to invest in long-term company infrastructure and operations early. For example, because we will need thousands of engineers within the next decade to achieve our goals, we invested heavily to create a program that reduced the training time for our most recent hires from six months to six weeks. The value of this asset will grow exponentially as we do. Our operations team also spent hundreds of hours creating a project management tool that reduces project time by dozens of hours per project.

Without the focus on long-term scale provided by our mission, we would not have been able to justify either of these time-investments so early on. Our corporate metrics for progress are also driven entirely by our mission; they are CO2 reduced per person-hour of labor and profit per ton of CO2 eliminated – in that order. Because we see profit as a means to an end, and that end is solving climate change, we repeated defer short term profits to lay the groundwork for a more impactful economy in the long term.

This has made us a much more resilient and scalable company because our investment in research has opened up more savings per building and new market segments, while decrease labor per project.

Carbon Lighthouse’s mission commitment has put us on a challenging path, but it is also acting as the guiding light that will get us there. As we succeed and grow, we hope that the course we are charing will provide direction to the huge range of ambitious companies tackling rapid growth in hands-on industries.

 

Linking Innovation with Compassion

Posted on by Matt Tenney

In the recipe for creating and sustaining a highly innovative culture, could compassion be the most important ingredient? It’s well known that as organizations continue to grow, it becomes increasingly difficult to attract and retain highly innovative people.

Most large organizations become increasingly bureaucratic as they grow, and nothing will drive away highly innovative people more quickly than lots of bureaucracy. As a result, most organizations gradually become less innovative over time. There are, of course, exceptions to this general trend.

It is possible, even in large companies, to create a culture that attracts and retains highly innovative people and, perhaps more important, helps people who are not natural innovators to be more innovative as well. The key ingredient for creating and sustaining such a culture is being committed to serving and caring for our employees.

Two excellent examples are Google (Zurich office pictured above) and the software giant, SAS, which are among the most innovative companies in the world. Every year, these two companies are also both highly ranked among best companies to work for. On the 2013 list of the Fortune Magazine Best Companies to Work For, they were listed as numbers one and two, respectively. The examples of how Google works to care for employees are almost legendary.

They include free, on-site haircuts; gyms; pools; break rooms with video games, ping pong, billiards and foosball; on-site medical staff for easy doctor appointments; and the option to bring one’s dog in to work. But Google didn’t invent this type of incredible workplace culture. They actually emulated the culture at SAS, a company that has produced absolutely phenomenal business outcomes. SAS has posted record earnings for 37 consecutive years, including $2.8 billion in 2012.

CEO Jim Goodnight often says that the secret to their success is taking care of their employees. One reason serving and caring for our people is so effective for building and sustaining a highly innovative culture is that when we truly care about our people and are committed to helping them grow, we don’t stifle innovation by worrying about our own position.

Instead of thinking that we have to come up with all the good ideas to look good as leaders, we are happy when our team has great ideas. Also, leaders who are more focused their own performance than on leading their people often tend to micromanage, which erodes trust and crushes innovation. When we truly care about our people and are committed to helping them grow, we are also much more likely to trust them and give them high levels of autonomy.

Providing high levels of autonomy is one the most important elements of attracting and retaining those rare, highly innovative people who abhor bureaucracy but can add so much value to our organization. Serving and caring for our people can also help employees who are not natural innovators to become more innovative. According to the research of the Perth Leadership Institute, most people have a fairly strong cognitive bias called the status quo bias.

As a result of this bias, most people are much more comfortable doing things that don’t buck the status quo. They would much rather fit in. In other words, most people are unlikely to suggest and act on ideas that are contrary to the status quo – i.e. ideas that are innovative – because of their fears of rejection or not fitting in and, in the case of the business world, their fear of being fired. When we are focused on serving our people and consistently caring for them, those fears are alleviated.

With consistent care and trust, our people trust us more, and they know that we will not fire them for taking appropriate risks and making mistakes. The more secure people feel, the more likely they are to suggest and act on innovative ideas. We are essentially removing the status quo bias by removing the status quo. Jim Goodnight of SAS offers a great example of just how powerful this can be.

In the fall of 2008, the Great Recession was imminent and many companies in the industry started laying off large numbers of employees. But Goodnight’s response to the recession was dramatically different, as Mark C. Crowley, author of Lead From The Heart: Transformational Leadership For The 21st Century, describes in an article he wrote for Fast Company:

In early January 2009, Goodnight held a global webcast and announced that none of its 13,000 worldwide employees would lose their job. He simply asked them all to be vigilant with spending and to help the firm endure the storm. “By making it very clear that no one was going to be laid off,” Goodnight told me, “suddenly we cut out huge amounts of chatter, concern, and worry – and people got back to work.” What likely will be astonishing to many is that SAS had record profits in 2009 even though Goodnight was perfectly willing to let his then-33-year track record of increased profit come to an end. At 70 years old, Goodnight holds the conviction that “what makes his organization work are the new ideas that come out of his employee’s brains.” He therefore holds his employees in the highest esteem. So while he fully anticipated that the recession would constrain the firm’s short-term revenues, he instinctively knew that his team would produce breakthrough products while his competitors were cutting costs. And even four years later, his commitment to his people has paid off handsomely. Said Goodnight, “new stuff we’re rolling out this year is going to take the market by storm.”

Linking Innovation with Compassion

Posted on by Julie Van Ness

In the recipe for creating and sustaining a highly innovative culture, could compassion be the most important ingredient? It’s well known that as organizations continue to grow, it becomes increasingly difficult to attract and retain highly innovative people.

Most large organizations become increasingly bureaucratic as they grow, and nothing will drive away highly innovative people more quickly than lots of bureaucracy. As a result, most organizations gradually become less innovative over time. There are, of course, exceptions to this general trend.

It is possible, even in large companies, to create a culture that attracts and retains highly innovative people and, perhaps more important, helps people who are not natural innovators to be more innovative as well. The key ingredient for creating and sustaining such a culture is being committed to serving and caring for our employees.

Two excellent examples are Google (Zurich office pictured above) and the software giant, SAS, which are among the most innovative companies in the world. Every year, these two companies are also both highly ranked among best companies to work for. On the 2013 list of the Fortune Magazine Best Companies to Work For, they were listed as numbers one and two, respectively. The examples of how Google works to care for employees are almost legendary.

They include free, on-site haircuts; gyms; pools; break rooms with video games, ping pong, billiards and foosball; on-site medical staff for easy doctor appointments; and the option to bring one’s dog in to work. But Google didn’t invent this type of incredible workplace culture. They actually emulated the culture at SAS, a company that has produced absolutely phenomenal business outcomes. SAS has posted record earnings for 37 consecutive years, including $2.8 billion in 2012.

CEO Jim Goodnight often says that the secret to their success is taking care of their employees. One reason serving and caring for our people is so effective for building and sustaining a highly innovative culture is that when we truly care about our people and are committed to helping them grow, we don’t stifle innovation by worrying about our own position.

Instead of thinking that we have to come up with all the good ideas to look good as leaders, we are happy when our team has great ideas. Also, leaders who are more focused their own performance than on leading their people often tend to micromanage, which erodes trust and crushes innovation. When we truly care about our people and are committed to helping them grow, we are also much more likely to trust them and give them high levels of autonomy.

Providing high levels of autonomy is one the most important elements of attracting and retaining those rare, highly innovative people who abhor bureaucracy but can add so much value to our organization. Serving and caring for our people can also help employees who are not natural innovators to become more innovative. According to the research of the Perth Leadership Institute, most people have a fairly strong cognitive bias called the status quo bias.

As a result of this bias, most people are much more comfortable doing things that don’t buck the status quo. They would much rather fit in. In other words, most people are unlikely to suggest and act on ideas that are contrary to the status quo – i.e. ideas that are innovative – because of their fears of rejection or not fitting in and, in the case of the business world, their fear of being fired. When we are focused on serving our people and consistently caring for them, those fears are alleviated.

With consistent care and trust, our people trust us more, and they know that we will not fire them for taking appropriate risks and making mistakes. The more secure people feel, the more likely they are to suggest and act on innovative ideas. We are essentially removing the status quo bias by removing the status quo. Jim Goodnight of SAS offers a great example of just how powerful this can be.

In the fall of 2008, the Great Recession was imminent and many companies in the industry started laying off large numbers of employees. But Goodnight’s response to the recession was dramatically different, as Mark C. Crowley, author of Lead From The Heart: Transformational Leadership For The 21st Century, describes in an article he wrote for Fast Company:

In early January 2009, Goodnight held a global webcast and announced that none of its 13,000 worldwide employees would lose their job. He simply asked them all to be vigilant with spending and to help the firm endure the storm. “By making it very clear that no one was going to be laid off,” Goodnight told me, “suddenly we cut out huge amounts of chatter, concern, and worry – and people got back to work.” What likely will be astonishing to many is that SAS had record profits in 2009 even though Goodnight was perfectly willing to let his then-33-year track record of increased profit come to an end. At 70 years old, Goodnight holds the conviction that “what makes his organization work are the new ideas that come out of his employee’s brains.” He therefore holds his employees in the highest esteem. So while he fully anticipated that the recession would constrain the firm’s short-term revenues, he instinctively knew that his team would produce breakthrough products while his competitors were cutting costs. And even four years later, his commitment to his people has paid off handsomely. Said Goodnight, “new stuff we’re rolling out this year is going to take the market by storm.”

Mobile’s sleeping giant

Posted on by Real Leaders

With no costly infrastructure to overhaul, Africa has leapt ahead in mobile communications and m-banking.

Third World mobile banking systems are piquing the attention of international operators and international banking organizations. The result – if all goes well – could be a fresh influx of investment and technological know-how poured into an arena where Third World countries are the innovators.

Hopefully, the interest being shown by regulators will also create legislation that encourages innovation and allows more players to enter the fray. The fear, of course, is that new legislation may stifle these developments if banking organizations regard them as unwelcome incursions into their hallowed territory. Europe and the U.S. have made slow progress with mobile banking because there simply isn’t much need for it. At best, it’s an add-on service for people who already have plenty of physical branches and good Internet access if they choose to bank online.

A recent study concluded that 1.7 billion people do not have a bank account, but do have a mobile phone, making mobile phones a direct conduit to nearly half of the world’s unbanked.

Yet, in the emerging nations, massive populations have no access to banks and so little money to spend that the cost and hassle of opening a bank account has never been worth it. Yet everyone needs to give money to someone else, whether it’s to pay for a bus ticket, a grocery bill, or to send money to relatives. Global technology research company Gartner estimates the number of mobile payment users worldwide at 212 million, yet Nigeria alone has 25 million people with a cellphone but no bank account and mobile operators are keen to capitalise on this.

African mobile operators have identified a gap in the market to provide customers with an affordable service they need, leveraging on their brand, large subscriber base and distribution capabilities. The minute people are able to do financial services on their mobile handset, a mobile operator’s subscriber churn reduces immensely. Nigeria’s banking regulator is giving more freedom to mobile operators, while the local governments have started paying social grants to the unbanked via mobile services.

The global awakening of interest is highlighted by the numerous conferences being held to debate mobile banking and thrash out strategies for its regulation. Recent developments in mobile phone-enabled financial services suggest we are on the cusp of a revolution in the way financial services are delivered. Debates are under way on how to enable innovation without creating undue risk to operators or their customers, while adhering to national and international security standards including the prevention of money laundering and the financing of terrorism.

Their worry is that operators introducing financial services to millions of unserved people may expose the financial sector and payment systems to new risks that existing regulations do not address. Or perhaps governments are just worried that the banks they regulate are under threat from new rivals, and are too slow and staid to retaliate. Harnessing the power of technology could dramatically increase access to financial services for poor people, says the Consultative Group to Assist the Poor (CGAP), a microfinance group within the World Bank.

But it can only happen if regulators and private firms strike the right balance between protecting customers and allowing innovation to flourish. Poor people need a safe way to save and send money, and African innovations like M-Pesa and M-Kesho are showing us how to reach the billion people worldwide who have a cellphone but no bank account. Millions of people could be given access to safe, low-cost financial services using mobile phones and other technologies, giving them opportunities to manage their lives. Some of the most innovative solutions for financial inclusion have come from Africa.

The mobile phone is a pervasive device that has penetrated the poorest economies due to an overwhelming demand for communications. That makes it a useful tool for banking as well. Africa’s abundance of people, untouched by traditional financial services, is usually viewed as a challenge, when it’s actually an opportunity to explore new ways to bring people into the financial environment.

Africa is a cash-based society, and companies are proving mobile banking can be used as a tool to facilitate virtually any form of payment, directly from a mobile phone. As an example, Celpay in Zambia and the Democratic Republic of the Congo offers virtual bank accounts via a cellphone with features that compare to many normal accounts. Account transfers, bill payments, cash deposits, withdrawals and prepaid airtime vending are all supported.

Celpay has also developed an m-banking cash-on-delivery payment that many national chain stores are using. A thriving network of agents is vital to the success of mobile banking, but building and sustaining that network is challenging. In a survey of Safaricom’s M-Pesa service in Kenya, it was found that it had successfully established large agent networks, but that not all were profitable. M-Pesa has more than 5 million users and handles about 160,000 transactions per day worth US$4 million.

Agents earn a commission on each transaction, and a typical agent generates more than twice as much revenue through M-Pesa than by selling mobile phone airtime. Some believe mobile operators should automatically get limited banking licences to offer shortterm loans, overdrafts and handle payments for their customers, while banks should be given communications licences to run secure hotspots to increase the range of services they offer at ATMs. A recent study concluded that 1.7 billion people do not have a bank account, but do have a mobile phone, making mobile phones a direct conduit to nearly half of the world’s unbanked.

As many as 364 million low-income, unbanked people currently use mobile money, generating US$7.8 billion in new revenue via transaction fees, improved loyalty, and more cost-efficient airtime distribution. To successfully capture this opportunity, operators must understand the financial lives of unbanked and low-income consumers.

Most of the target market receive their incomes in cash, and keep their money at home, in a hiding place or join a saving club. Africa’s advantage to many banks in the developed world is that many old and established financial institutions use old systems that are not as scalable or adaptable as the new technology architecture that mobile networks offer.

Being able to use a cellphone to make purchases or transfer money has rapidly won an enormous customer base in Africa. Ease-of-use, speed, price and accessibility may have overshadowed the concerns about security that would be raised in countries where this is far from an essential service, but as the user base grows and money starts crossing borders, the authorities, as well as banks and global operators, are starting to pay attention.

 

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