- September 21, 2017
John Pontillo is an associate at FSG, a social-impact consulting firm. After graduating from Swarthmore College, John served as a Peace Corps volunteer in Moatize, Mozambique, where he did work in disease prevention through clinics and construction projects (employing members of his soccer team to install mosquito nets on every house in his village). Although he might change his mind at breakfast tomorrow, he hopes to work towards producing social equity through policy. He says he may need an architect.
P: Your work has interfaced with urban problems and material flows, interfacing with municipal governments and the built environment at large. Could you elaborate what you do specifically, and the role of your firm, and firms like it, in this larger conversation of equity and possibility?
JP: I work for FSG, or Foundation Strategy Group. It was founded in 2001, and is the brainchild of two Harvard Business School professors: Michael Porter and Mark Kramer. It began as a way to help foundations and philanthropic entities make a greater impact with their money, capital, and resources. It has expanded to include corporations, private entities, and governments, in addition to philanthropic entities. We have projects in global health, education, the environment, and so on.
P: And you’re basically doing strategy work for them?
JP: About 1/3 of the work is strategy work—which is taking the inputs from a foundation and finding the best ways to maximize them—using data analysis and qualitative input: like surveys, interviews, and focus groups. All of the work is rooted in two ideas pioneered by our two founders.
The first is called Collective Impact: if you want to effect social change, the most effective and sustainable way to do so is through an aggregation and [alignment] of all social entities in a given area. For example, if you have a lower than average high school graduation rate, you should engage not only the school, but athletics, arts, churches, youth groups, parents, [and] PTAs to align them on overarching goals, share data, convene and foster collaboration, and collect those resources to push in the desired direction.
The other is called Shared Value: creating social impact and value and creating business impact and value are not mutually exclusive. CSR (corporate social responsibility) is very popular with corporations that make billions of dollars and are presences in our daily lives (like Unilever, Nike, etc.). They have so much money and they want to show that they care about the communities in which they work. They have foundations that take a small percentage of what they make and put it towards social impact. A lot of companies will sponsor a walk or a run or a beach clean-up, give away things, or run a recycling campaign. They’re siloed, one-off projects that tend not to be sustainable. We try to work with these corporations to link a social challenge with a business opportunity, with the intention of making it profitable. At that point, it’s no longer CSR—you’re creating sustainable social impact incentivized by its profit.
P: Do any of these projects interface with the built environment?
JP: I think the project in Brazil does. We were working with a large wood pulp company that at its inception, cut down forests, and planted expansive eucalyptus forests. When this occurred in the 60s and 70s in Brazil, there were still large communities of indigenous people living in rural places as well as isolated communities called Quilombolas—descendants of African slaves who escaped from plantations and set up their own societies in isolated areas. They were pushed off their land, and, eventually, there were attempts to defend their rights, and a demand for retribution. There were acts of retaliation, whereby some people in these communities set fire to forests or stole wood. They were reacting to the fact that their homes were destroyed, never to be replaced. The eucalyptus forests are known as “green deserts” in some of these areas because of the perception that nothing else can grow there. They were not given an opportunity to thrive on the land they had inhabited for a long time.
When we got involved, the company was already pretty far along towards Shared Value. We did data analysis to promote the fact that if they could increase the number of people living around the eucalyptus forests to merge into their business plan, it could be win-win for both sides. We proposed to give people land, which would immediately reduce the company’s tax base, and to provide training and tools to communities to grow eucalyptus and other secondary crops. Eucalyptus takes seven years to grow in Brazil—it’s the fastest cycle in the world—but while it’s still a year or two old, you can do partner planting because the other plants will still get enough sunlight to grow well. By training and employing this local and independent workforce, the company is reducing its costs in two ways. First, it expands their forest—because it can employ people that own and harvest property around the existing forest—meaning it doesn’t have to buy as much on the spot market, which is several times more expensive than what you can produce yourself. Second, it reduces the overall cost of harvesting by subsidizing local people to do so, and giving them a guaranteed market. Through this process, the company can give these perpetually wronged groups a renewed opportunity to have more money, educate their children, and live a better life, while saving money and reducing its waste.
I think that has something to do with space-making and the built environment.
P: Yes! That’s crazy.
JP: A different kind of Shared Value was in action in the Espírito Santo state. The forests grow really well there, and it’s where the company first started expanding and growing large swaths of eucalyptus. When Brazil was being colonized, the state of Espírito Santo was a buffer that the Portuguese didn’t develop to make it more difficult for others to reach Minas Gerais, where they were mining coal, oil, gold, etc. They wanted to deter other people from getting to this valuable resource by leaving it undeveloped. So, when the Brazilian-company decided to locate there in the 70s and 80s, they had to start from the ground up. They didn’t have any services, nor any economy to tap into. For example, when a conveyor belt on a machine broke, they had to hire someone from São Paolo to bring the parts and do the labor, because there was no one there that could. In that way, they had to develop an entire infrastructure themselves. They attracted people to the area and offered incentives in training for small businesses to grow. The company encouraged them to come with subsidies, incentives, free training, opportunities, etc. They created cities: The city of Aracruz is there because the company wanted to reduce their cost and labor by producing a market system on location.
P: Who does the actual planning? The city and the company are deciding what to do and where to do it, but who is executing it? Do they hire a municipal planner?
JP:They hire someone from the capital city of the state to help with the planning and development, but the residents build it themselves in many cases. Members of the company sit on the board and actively plan alongside the city government for expansion and development, etc.
P: So what was FSG’s role in all of this?
JP: We evaluated how we could apply Shared Value to city development. We have a model called the “Virtuous Cycle,” that we use to help explain Shared Value. Basically, if you have a social issue and you can directly link it with a business opportunity, you can incentivize its continued effectiveness and scalability. In this case, we address the social issue first, and the business model second. We do interviews and analysis, and discover that people are concerned about poor sewage systems and lack of hospitals, which deterred people from moving there, so the company would have to pay them a higher wage in compensation. We see two possibilities: one, develop the city so that people would be more attracted to live there, or two, train local residents and young people in the necessary trades to obviate the need to import labor. In this way, we look at the social issue first, and then try to figure out how to solve it through economic incentive.
P: How much does FSG consider the built environment and space in all of this? Is that left to the municipal architect or the city? Are there conversations even happening?
JP: I think my answer is yes. But when you say space, it might mean something different than when I say space. Let me explain.
I’m also working on a project in Buffalo, with a large foundation. Every five years, they have a refresh on their strategy, trying to figure what people want, desire, or need, within the city that they can affect, and they’ll change their initiatives to focus on those needs. Buffalo has been garnering a lot of attention in the last two or three years because the Governor, Andrew Cuomo, has been pouring a lot of money into the city to revitalize it.
The city is divided down the middle by Main Street. The west side of the city is white and wealthier, and closer to the lake. The East side is made up of people of color, poorer, and interior. The transportation infrastructure in Buffalo is generally insufficient. This makes it very difficult for people without cars to get to jobs in different neighborhoods or in the suburbs. Either it’s impossible, or it’s incredibly time consuming and expensive. So in this project, we are looking at the spaces that divide people, the relationships between them, and how the infrastructure is setup to produce or inhibit equity, with the hope of conceiving of their revision.
P: How are you going about that? What is the general strategy?
JP: Right now we are analyzing what’s happening and talking to people. We provide the foundation with recommendations based on our analysis and on what we see and hear from the community. Our analysis informs the decisions the foundation ultimately makes, and they work with the community on implementation.
Here are a few of the ideas: private companies might be able to offer transportation for people that don’t have cars on the east side. Distributing a large portion of the Buffalo Billion, what Andrew Cuomo is pouring into Buffalo, to infrastructure projects that would create more equity in the city. It seems small, but it’s an attempt to create a more equitable environment for people who don’t start at the same line.
P: When you were describing that, all I could think is, “that’s what planning offices do, that’s what transportation offices do.” Do you guys feel like you’re filling a gap that is not being met by these organizations?
JP: I think that’s right. Often in governments and large foundations like this, people want to make a change and they want to see things get better, but a lot of times there are too many cooks in the kitchen. You’re fracturing dollars, fracturing efforts, but if you could get people to convene and talk, they could be much more effective and coordinate giving and impact. A lot of the value that we create is in simply getting a big picture with a lot of data and analysis, and then doing what we can to promote collaboration and get people around a table to talk. I was surprised by how rarely this happens. School administrators don’t know the mayor. School superintendents don’t know people at local universities or vocational programs. These connections don’t exist, and there is so much distrust between entities, that our objective is basically to just show objectively: this is what needs to happen, here’s how we think it can happen.
P: Bryan Boyer described his work as “for foundations, on behalf of cities.” Who do you eventually deliver this work to? Does the foundation implement this stuff, or do they then make recommendations to the city government of Buffalo who will then carry them out?
JP: So the foundation funds other entities that do work in a given area. For example, foundations can fund local initiatives focused on environmentally friendly development or affordable homes.
P: So they are an institution of funding that make it possible for smaller institutions to deliver these processes in the world.
JP: Yeah, exactly.
P: It’s so interesting. It’s something that we keep coming upon: the strange and often convoluted process of money, strategy, and execution that go into effecting change in a city. A consulting firm advises a foundation, which is then distributing money to institutions, which are then implementing things, without formal input from the city. In Brazil, you’re working with a company that is making cities. And in Buffalo, you’re working with a foundation that is informing a city government, which is failing to a certain extent. What they have in common is that the planning office seems to have no clue what’s going on.
JP: In Brazil, it’s often due to corruption. Here, it’s often due to political apathy. Generally, the work has taught me two things. One, there’s not nearly enough collaboration happening to address these issues. It’s such an important first step to get everyone on the same page. Politically, it’s very difficult to have people discuss issues across party lines, as is evident with the current state of the country. Two, inertia wins out. I think change, generally, is just going to come very slowly to an area. There are so many people that have a stake, and there is so much push and pull.
I also think that if you can show facts and analyses that provide a path of action, there can be alignment, and relatively modest but sustainable change. But it requires a long-term view. Mayors, and even leaders of community foundations, have an average tenure of a few years. How can you expect someone who is spending their time campaigning for reelection or looking for their next job to really think about a long term change. They’re just more focused on the immediate. We see the same thing with companies, which are more interested in their quarterly earnings for their investors as opposed to big investments that will pay off later. It’s risky, and no one wants to take on a big risk. If you have to have positive quarters or you’re out, you won’t do it.
The value that we add is real in that sense. We’re getting people on the same page to present a path forward that hasn’t been proposed before, and if it’s not accepted, that’s the decision of the area. But a lot of the time, even just understanding what’s happening is important to an area, whether they decide to act on it with that specific plan or not.
P: Now I know that you’ve been thinking and writing a lot about the circular economy, which both fits into this idea of Shared Value and interfaces directly with the built environment. Could you tell us what it is and where you see the possibilities for it?
JP: The circular economy—the concept of reusing materials through up-cycling and down-cycling to increase their lifespan and reduce waste—is restorative and regenerative by design. . I heard a great quote recently that speaks to it: I was at the US Chamber of Commerce Foundation conference for a three day summit on the circular economy in June, and the first keynote speaker was the CEO, Tom Szaky, of TerraCycle (a company that works with corporations to recycle everything they possibly can) and he gets on stage and says, “everything can be recycled, given enough time, energy, or money.” This was a bit of a revelation for me about what waste is. The idea of the circular economy is biomimetic. The life cycle of an organism is symbiotic: when a plant dies in a forest, fungus consumes it and grows, then animals eat that fungus, and are then eaten themselves, etc. In our linear economy model, we take natural inputs, use them to manufacture products, and then put the products in a dump, where they can’t be broken down fast enough to go back into the earth. This is a major contributor to greenhouse gases, which we know are critical to global warming.
Up-cycling is the process of taking the material from a product and reusing it to make a new product. For example, TerraCycle is helping P&G to cull ocean plastics, which otherwise sit in the ocean indefinitely with significant ecological consequences, and reuse them to make shampoo bottles, making it so they don’t have to produce any new plastic while reducing the waste that already exists. Down-cycling is reusing a material or product for something of equal or less productive way. In an Iphone 4 from 2009, there’s a transmitter that probably works fine. Instead of throwing the whole phone away, you could create products that have the same material assembly that would allow you to reuse that perfectly functioning transmitter in the new product.
P: How do you imagine yourself operating in this world in the future? The three of us have very similar ambitions in the world, and we’re offering different value propositions to that world about why they should listen to us.
JP: This will probably change tomorrow morning, but I’m very drawn to this idea of the circular economy. It’s the place where you can really create social equity without a dependence on those with more. We’re spiraling towards massive climate change which will affect the way that humans live, and it is going to harm most dramatically those who can’t protect themselves, those who are least insulated from it. That’s going to create social unrest that will be very difficult for the world to adjust to. So, I’m interested in the ways that climate change can be mitigated through this process, be it by removing plastic from oceans, allowing island nations to fish again and reducing disease in the water supply, or otherwise. I see myself more interested, today, in learning the business aspects of it, and how to implement it in the private sector in some capacity, whether it’s directly through plastics or food waste reduction. All roads lead to policy, maybe not as a politician, but someone who influences policy in some direct way.
P: If I’m going to leave you with one thing that ties these two worlds together, and it’s that there are enormous opportunities in precisely what you’re describing in the building industry. There’s a huge void in considering the life cycle of building materials towards a possible circular economy. And not just life cycle of building to building, but non-building materials to building materials and the reverse. Get to work!