Welcome to the Collaboration EconomyA review of The Collaboration Economy: How to Meet Business, Social and Environmental Needs and Gain Competitive Advantage

Eric Lowitt, author of The Future of Value (2011), has recently released The Collaboration Economy: How to Meet Business, Social and Environmental Needs and Gain Competitive Advantage (Jossey-Bass, 2013). The book is a useful resource that provides best-in-class examples of corporate responsibility initiatives.

Assuming the voice of a consultant to senior man-agement and decision makers, Lowitt presents several case studies that serve as food for thought meant to challenge the reader. He successfully encourages, asks questions, and advises the reader to challenge the status quo and reach for disrup-tive approaches in order to achieve new levels of success—and he delivers all this in a compelling and readable manner.

The book is structured in three parts: Part One: Welcome to the Collaboration Economy; Part Two: Bringing the Collaboration Economy to Life and Scale; and Part Three: Putting It All Together to Move Forward. Lowitt uses a forceful approach by ending each chapter with a “Call to Action” that prods the reader (the presumed audience is the business community) to follow through and act as a change agent.

In contrast to a book I recently reviewed in this journal, Enough is Enough (February 2013) which proposed stakeholder activism (boycott) and showed the benefits of a no-growth economy, Lowitt is a firm supporter of business activism and growth. Confirming the title, he goes beyond a solely pro-business stance, citing how the col-laboration between multiple stakeholders—busi-ness, government, nongovernmental organiza-tions (NGOs), citizens, and others—is the best approach for achieving advances in corporate responsibility/sustainability and the resulting im-provement in reduced environmental impacts on people’s lives.

As Lowitt acknowledges, this subject won’t be news to those familiar with other books, e-news-letters, blogs, etc. covering this subject, but this book is a quick read and a useful addition to the

literature. Since Lowitt runs his own strategy, col-laboration, and sustainability consultancy, Nexus Global Advisors, and he cites conversations with clients, some of whom have coauthored chapters, he adds an interesting voice to the chorus on these issues.

Starting in the introduction, Lowitt presents the following premises as the basis for his argument: “our current economic model is broken” (p. 2) and in the United States, “every year $11.4 billion of packaging material that could be reused is instead simply discarded as if resources were infinite and free. This mindset must change” (p. 3). He cites a leadership vacuum within sustainable develop-ment and the fact that central public-sector fund-ing sources “are fully tapped out” (p. 4).

Despite these dire tidings, Lowitt has an upbeat approach trumpeting examples of collaboration that can “turn capitalism into an engine for sus-tainable development … and a basis for competi-tive strategy” (p. 5). Lowitt includes quotes from his clients/coauthors that show how some CEOs are convinced of the value of integrating corpo-rate social responsibility and sustainability, and he takes account of some of their unique approaches. With increased social activism, resource con-straints, and externalizing resource costs, Lowitt recognizes the power and value of partnering, and focuses on three areas of business activity: com-petitive strategies, corporate culture, and opera-tions.

Chapter 2,“Renewing the Global Energy Sector,” covers the current mix of energy resources—fracking for hydrocarbons (gas, oil), the need to upgrade the aging infrastructure (transmission and distribution grid), and power sources: coal (42%), natural gas, (25%), nuclear (19%) (with-out a mention of any possible impacts from min-ing, disposal, security), water/hydro (8%) (with no mention of tidal power)—totaling 94%, and “nonhydro renewable”-wind (no mention of off-shore wind), sun, biomass, and geothermal (no percent given). Lowitt acknowledges the need for diversity in sources and again cites the difficulty

Lowitt presents

several case studies

that serve as food for

thought meant to

challenge the reader.

Book Review

Book Review by Ben Larkey

238 Sustainability MARY ANN LIEBERT, INC. • Vol. 6 No. 4 • August 2013 • DOI: 10.1089/sus.2013.9848

with, and need for, improvements with funding, innovation, and political and business leadership. He urges that “the time to agree on an optimal en-ergy mix is now” (p. 56). However, I would ask: What if policy that set an optimal energy mix had been decided just prior to the recent upsurge in natural gas extraction? My point being that there may never be a current optimal energy mix—it may continue to change over time, and sometimes relatively quickly.

Another of the author’s conclusions is that it’s nec-essary to agree on a global carbon standard, cit-ing the European Union carbon trading system. However, although there’s been regional success, as recognized by supporters in the United States (such as the northeast Regional Greenhouse Gas Initiative, an auction program that funds initiatives including energy efficiency), broader approaches in both the United States and Europe have experienced inconsistent results, such as prolonged low prices with calls for price supports.

Some small anomalies in the book are worth men-tioning. Lowitt doesn’t initially acknowledge the need for improved energy efficiency as a primary way to optimize the energy situation to his target readership. The energy sector has already recog-nized energy efficiency based on a wide range of companies, activities, and successes. However, he then includes an example of GE’s innovative and creative investment into energy solutions, includ-ing their purchase of 25,000 electric vehicles for their sales force and the purchase of the energy-efficiency technology firm, Oblong.

Also Lowitt continues an increasingly outmoded paradigm of us vs. them by attributing “advocat-ing for a significant reduction in the …demand…” (p. 47) only to those opposed to fossil fuels. This seems to be in direct contrast to the premise of his book—collaboration.

Chapter 3 investigates “Turning Packaging Ma-terials into Capital.” Here Lowitt identifies the well-known challenges, including the low recy-cling rates in the United States and the overuse of landfill disposal, which wastes both materials and value (with no mention of waste-to-energy). He advocates “resetting the recycling system [through a] combination of avoided costs of cleanup and the [recovery of the] market value of materials…above $20 billion” (p. 67) by diverting recyclables to materials recovery and reuse. Strengthening the recycling system has the potential for job cre-ation. No mention is made of reducing packag-ing or increasing recyclability by switching from nonrecycable to recoverable materials, an area in which there have been numerous advances.

Urging action,

responsibility,

collaboration of business,

and education of

consumers, Lowitt

describes the potential for

“improved access

to recycling.”

Although the author notes that there are other recyclable materials at issue, he also focuses on a relatively smaller portion of the waste stream: the manufacture and return of beverage containers by residential customers. He cites that recycling of beverage containers and other consumer pack-aging materials is higher in “bottle bill” states, but argues that this type of legislation cannot be implemented on a national basis. Lowitt instead supports the policy of extended producer respon-sibility (EPR), an approach used in the European Union and Canada and requires “brand owners (for each type of packaging) to assume the cost of collection and sorting household recyclables. … All it will take to bring EPR to life in the United States is collaboration across the private, public and social sectors” (p. 76). However, as examples, he cites a number of statewide initiatives, such as national e-waste disposal ban/recycling mandates in 23 states, that are unlikely at the national level “due to the lack of US EPA authority” (p. 79).

Lowitt cites as an example Nestle Waters North America’s (NWNA) efforts to build a coalition with competitors, public sector agencies, labor, and NGOs to increase the recycling of bever-age containers, including support for EPR and activism/messaging, such as drafting legislation. Interestingly, and similar to Coca-Cola’s efforts, NWNA is also building a $30 million polyethyl-ene terephthalate (plastic bottles) recycling plant as a business opportunity, despite an existing na-tionwide collection, processing, and recycling system that is, at present, underutilized by con-sumers.

Urging action, responsibility, collaboration of business, and education of consumers, Lowitt describes the potential for “improved access to recycling” and writes: “we don’t know about you, but in the United States when we clean our cars, we’re usually at a gas station. But there’s nowhere to put the bottles. So we semiconsciously look both ways to make sure no one is watching us and then toss our plastic bottles into the regular trash bin” (p. 78). If writing about Americans in general, this seems to be too broad a description and highly presumptive, both about behavior and recycling bin availability.

Despite lower U.S. recycling rates compared to some other countries and some declines in recycling (such as in New Jersey), there are much improved recycling programs (for example, New York City’s addition of all rigid plastics) and pro-grams offered by waste management firms (single stream, organics collection, e-waste, universal waste-fluorescent lights, etc.). If Lowitt’s gas sta-tion example is a personal description of his

MARY ANN LIEBERT, INC. • Vol. 6 No. 4 • August 2013 • DOI: 10.1089/sus.2013.9848 Sustainability 239

own actions, I would hope that instead of trash disposal, he would take the bottles to a recycling program at another location.

In Chapter 9, “Winning the Collaboration Econo-my,” Lowitt reinforces his message: “your compa-ny no longer controls its destiny; now it can only influence it,” and “your ability to influence your top- and bottom-line growth will be driven by your portfolio of competitive advantages through-out your value chain” (p. 187). This chapter brings together support for Lowitt’s his final “call to action.” He cites an improved corporate strategy within what he calls “the Collaboration Economy vs. the Waste Economy,” which includes these actions: challenge assumptions (e.g., the Starbucks business model that pushed the meme that coffee isn’t a boring commodity), deploy your sustain-ability department as an innovation department, reconsider the costs and benefits of “co-opetition,” know when to collaborate (natural resources and returning materials back to manufacturing) and when to compete (getting goods on/off the shelf, reprocessed materials), see “supplier” think “partner,” and engage your stakeholders in your decision-making process.

Lowitt also reviews how to improve corporate culture: View employees as society’s ambassa-dors and move beyond the mentality of zero-sum competition. However, he presents a contradic-tory premise: in contrast to the book’s theme that continuous improvement is desirable, even neces-sary, he cites that innovation leads to the disposal of older products and states: “But where do these unwanted products land? All too often they are thrown into landfills. Where’s the innovation in that ” (p. 201)? If this book presents innovation as a basis for improvement, and the improvement of consumer goods has net shared benefits (reduced energy consumption, eliminated toxins, reduced resource use in newer models, and improved recovery through better recycling programs), how else would he propose to create newer, improved generations of products ?

For example, each new generation of consumer electronics has been more energy efficient, in part due to competitive advantage (newer products with better features, including green aspects), recognition programs like Energy Star, U.S. Department of Energy legal requirements, and consumer pressure. The green advantages of the new technologies (energy efficiency, reduced tox-ins and packaging, improved recyclability and more recycling programs) appear to be worth continuous improvement. Is he saying that it’s better to keep the older, less efficient, more toxic models? In addition, new products fuel the econ-omy resulting in jobs.

Other recommendations include: accept that you can only influence your own destiny, build communities that engage people rather than hi-erarchies that control them, adopt systems-think as a guide to solving problems, and adopt an influence-and-persuade mind-set. Some of Low-itt’s suggestions are in the category of “Altera-tions to Operations,” which includes advice to roll up your sleeves because there are a lot of stake-holders to reach, view and manage your external costs as actual expenses, view the elimination of externalities as an investment, hire specialized heads of externality management and make their roles matter, and embrace a longer time frame (although elsewhere in the book he also mentions an urgency for a shorter-term call to action).

Lowitt’s business knowledge and his role as busi-ness consultant come through clearly in this book, and lend support to his challenge not only to busi-nesses but also to other sectors to embrace con-tinuous improvement.

Ben Larkey is a corporate responsibility and sus-tainability consultant focused on business develop-ment, risk management, and optimal resource use: supply chain, zero waste, energy conservation, and renewables. Recent experience includes managing the corporate responsibility team at Sharp Electron-ics (US).

Lowitt’s business

knowledge and

his role as business

consultant come

through clearly in this

book, and lend

support to his

challenge not only to

businesses but also

to other sectors to

embrace continuous

improvement.

Book Review

240 Sustainability MARY ANN LIEBERT, INC. • Vol. 6 No. 4 • August 2013 • DOI: 10.1089/sus.2013.9848