How Startups are Prototyping The Future of Business on Fogo Island
NOTE: This article was originally published on July 30, 2015 on the SiG blog, and has been cross-posted with permission from SiG.
Uncovering the keys to resilience in one of Canada’s oldest communities
A social entrepreneur, an artist, and a fisherman walk into a bar. It sounds like the start of a bad joke, but it’s not. These days, collaborations are vital to mesh old ways of knowing with new ways of business – one that holds community resilience and prosperity at its core. Social entrepreneurship has become one of the fastest growing sectors worldwide and we’re just beginning to see the potential here in Canada. This new frontier of business lies in our ability to collaborate, support impact-driven enterprises, and combine our country’s diverse assets.
So, what does a more purposeful approach to capitalism look like? Some of the answers may be found in the unlikeliest of areas – the remote coastal community of Fogo Island, Newfoundland, for example. A recent visit uncovered a new economic model that may hold learnings for communities everywhere.
My journey to Fogo began with an invitation from Shorefast Foundation, a Canadian charity building a new model for economic and cultural resilience to experience a bold new way of doing business that blends a 400-year old hosting and craft culture with reimagining business principles as a force for good.
On Fogo Island, the Shorefast Foundation approach to community revitalization has been to focus on three distinct elements: The development of a geotourism industry, with the construction of the Fogo Island Inn; Fogo Island Arts, an organization that facilitates artistic practice that is local in context and global in scope; and a micro-lending program where entrepreneurs can establish and grow their own small businesses.
In my observation, these Shorefast Foundation startups are going beyond classic business notions of keeping shareholders’ interests top-of-mind, optimizing value chains, protecting intellectual property, growth and scale as paramount aspirations, and so on – and shaking up the startup process. Two contextual pieces seem to form the bedrock of this new way.
The first is maintaining a jazz band approach.
The landscape (both physically and entrepreneurially) here is as remote, rural and rugged as it gets in Canada. There are no incubators, no hackathons, no business plan competitions, no startup drinks, no angel networks, no pitch fests, no entrepreneurship clubs, and no labs filled with post-it notes. Constraints of starting and doing business in such an environment are vast – ranging from resource scarcity and inconsistent access to goods, to infrastructure and unpredictable weather. Harsh constraints make one gutsy, force improvisation, and require flexibility, collaboration and a wider view of the ecosystem to which the business contributes. This approach is more akin to a jazz band than the classic way of doin business – top-down and rigid – which is more like an orchestra. As Miles Davis famously stated, it’s ‘the spaces between the notes’ that make all the difference.
The second is audacious questioning.
Shorefast Foundation startups are looking beyond recognizable patterns and ways, taking things back to first principles. They have given themselves the freedom and audacity to deeply consider, reflect on, and ask important questions such as: What is wealth? How much growth is good? Why is the value chain a chain? How might the community be stewards of a business? How can customers also be co-creators? How do you capture the value of resilience?
A jazz band approach and audacious questioning has led Shorefast startups to do a number of things differently. In my 50+ conversations with Fogo Islanders, I believe these principles – which have already started to take root there – will revolutionize the way business is done around the world. In particular, I’ve been obsessed with the following three mindsets and practices since my return.
#1: Look at the Long Picture, not just the Big Picture
“There is a ton to learn from the history of business in exploitation. They always said look at the big picture, but we say look at the long picture,” says one Fogo Island Inn team member. This got me thinking about conventional quarterly businss cycles, sales targets, margins, and the one-dimensional accounting that captures “success.” The point made here is that business isn’t just a profit/loss story, but also an economy story. There isn’t just a gap-in-the-market story, but a long-term community vitalization story.
This reflection led to an equally memorable conversation on Shorefast’s thinking of moving beyond “profit as the sole proxy” to illustrate success. It reminds me of the notion that Dom Potter, a UK-based social entrepreneur articulated, “the profit proxy falls woefully short of capturing 99 percent of the value that an organization offers the world. It is a narrow definition of success that, as a standalone measure of anything but business model efficiency, belongs back in the 19th century.”
Shorefast startups are already demonstrating that we need to move on. Embracing the long picture means looking beyond profit. In order to do this, businesses must be incubated in and with community – and not “in silos” to generate rapid and maximum returns. Taking the long view means the product development does not happen in silo in a lab. Rather, in this case, the entire island is the lab – the businesses live, breathe and interact with the wider ecosystem every day from conception to boot up.
What might capitalism look like if we move beyond the profit proxy as a shorthand way of determining whether a business is successful or not?
#2: Let’s move from Value Chain to Value Mesh
“Wealth for us is when the community benefits,” said an older gentleman from Tilting, a former fisherman who now spends his time painting, repairing and building houses. This made me reflect on value chains and why there was a top and bottom. What if the valuechain was more like a mesh? In which everybody contributes, creates, and captures value. A demonstration of Shorefast’s value mesh thinking is the new “Economic Nutrition label” for their products – likely a first in the world. Just as food nutrition labeling created a revolution in the food industry, the Economic Nutrition label is intended to spark the same change for a better understanding of value, giving consumers a clearer definition of a dollar’s impact along the input chain.
What if every business incorporated an Economic Nutrition label to demonstrate their value mesh? How might this type of radical openness improve capitalism, as we know it today?
#3: Democratize Making and Bring Back Craft
Craft was alive and thriving everywhere I looked on Fogo Island – from boat building and textiles to furniture making and tool welding. Since the beginning of European settlement in the late 1600s, Fogo Islanders, by virtue of their centuries of geographic isolation, have become masters of making things by hand, recycling and devising local solutions to all mann
er of challenges. As one woman in Shoal Bay put it, “craft is the lifeblood of the community. It is what’s been passed on from generation to generation to generation.” Today, scale and corporates have effectively killed craft. So, in reimagining principles of business, Shorefast had to creatively think about how to ensure craft contributed to a new kind of enterprise. They engaged artisans and makers from across the Island and from around the world, effectively democratizing making and putting the emphasis not in scale-based production, but in growing hand-made craft. As an example, members of the Winds and Waves Artisans’ Guild produce much of the textiles of Fogo Island Inn.
Imagine a world where craft could scale and making is local and democratized – in which you could have the world’s local car, furniture, technology, toys and more. This might be the future of craft and organizations like The Fogo Island Shop and Open Desk in the UK are already paving the way.
There is much that Shorefast Foundation’s principles, practices and mindsets can teach incubators, governments, entrepreneurs, corporations, and others working in or supporting enterprise. A renewed form of capitalism is already upon us – one that embraces openness, generates resilience, and is relevant for our interdependent reality.
I hope that these observations and provocations spark the same kind of audacious questioning about business in your boardrooms, lunchrooms, entrepreneurship clubs and pitch fests, as well as ideas on how we might integrate them into our organizations. Together, Canadians can become rockstars in generating community resilience by creating businesses that redefine success and are good for the world.
About the author
Vinod Rajasekaran is an engineer and cross-sector leader obsessed with improving systems so we can do good better for the next 100 years. He works with The HUB, the world’s fastest-growing social innovation community for people and organizations working to better the world. Vinod is also involved in HUB’s incubation of Rideau Hall Foundation, which aims to catalyze and align ideas, people and resources to move the Canadian spirit forward.