Regenerative businesses don't have 'supply chains'
Not in the conventional sense at least. As we start making our first products through Good Growth we've come to focus on what we really mean by "ecosystem out".
A conventional supply chain sees an ecosystem - a place - at best as a "source of raw material". The design process starts at the other end of the chain, say in a studio in Milan, where the decision is made to make a wonderful cashmere cardy in beautiful colours. Then the search begins for the softest, whitest fine cashmere down.
The supply chain takes that fine cashmere from the place, pays the market price (it makes no difference at all to the herder where their fibre ends up - they'll get paid the same), leaves everything else and moves on. They may come back next year, they may not. It depends on what happens in Milan.
So....if we want to restore nature to places, to create value for regeneration, we really can't do this outside-in process. It is intrinsically extractive and wasteful. Instead we have to design for place, work with the natural balance (or better said the regenerative balance) within each place and create value for that balance.
I love this part of Good Growth - it feels liberating to relocate design's position in the system from its currently - literally - dislocated position and instead put it into the ecosystem.
The whole yak - and the goats, the camels, and the sheep
The problem with the conventional supply chain is that it distorts nature - if the only thing that is valued in a place is cashmere wool, but the price is static irrespective of end product, then the only way the herders can increase income is by "raising output" i.e. having more goats.
In some of the places we are working 90-95% of income comes from one commodity. Everything else has no financial value. The impact on the environment is devastating.
So instead of focusing on just one 'commodity' we seek to work with everything there is in a place. If we can create value (financial and non-financial) for everything in the place then the pressure for herders to raise goats numbers falls away.
The challenge becomes "what can we make with this?"
Right now we have 270 KG of coarse yak fibre from one village in the Khangai Mountains to play with. This is the guard hair that is normally chucked away in the process of looking for the fine down. We know what we can make with superfine fibre, but the coarse stuff presents a big playground. Eco-wadding, big woven blankets, mix it with other fibres?
For designers and textile innovators this is exciting. Whatever we make - however it gets sold - we will have created a financial return for the herders that wasn't there before. If we can make something place-identified and iconic (watch this space) then maybe we can make something very special for each place.
The first products will be out in the world at the end of this year.
But it goes further than that. The stories of regeneration and the origin of materials are in themselves valuable. So we're not just making place identified products, we're also establishing 'place brand companies' in each place that allow us to form a joint venture with the community in each place. A percentage of the selling price of each product gets returned to each place brand company - which transforms both the position of the herders in the system (from invisible providers of 'raw materials' to centre of the story) and their incomes. Relocating primary processing from monopoly (and monopsony) nodes in the system back into communities also generates new opportunities for livelihoods in each place.
And beyond that....we're convinced there are even more ways to generate value for place, not just through products but through the telling of the stories themselves, through experience and relationships. Part of the investment thesis for the regeneration fund we are building is in these additional value add areas.
And now for the camels
Initially we are taking this design-for-place approach in a handful of places in Mongolia and Patagonia, focusing mostly on working with animal fibres spanning sheep, yaks, goats and guanacos.
We've been asked to look at a new place for us, a big place, which doesn't offer a huge amount of opportunity for people needing to live there. Yet if the country is to avoid excessive migration from rural communities into the cities these kinds of places need to be attractive places to live and work.
But one thing it does have is camels. Lots and lots of beautiful red Bactrian camels.
So....in the next few weeks our designers and creators will be working out what we can do with the camel hair to create value for regeneration of that place. We'll ask the ecologists to advise on what other animals are critical to the ecosystem (there are goats and sheep too) and to start moving towards a view of what would be good to make.
Once we have that (at least roughly - it will get more precise over time, this regeneration business is a long term endeavour) we can work out what the processing chain might look like, and what opportunities we have to locate small scale processing facilities in the place. (We have written elsewhere about how unhelpful "economies of scale" are when trying to regenerate).
And if I get half a chance we will make those small scale processing facilities the eco-envy of the fibre world. Water and chemical free washing. We're pretty sure we can do it.
A by product of this will be the creation of jobs in the place that just aren't there today - best of all jobs that create value for the restoration of nature in that place.
None of this can happen without designing for place - it is, I am sure, one of the fundamentals of a regenerative business. A small change - but one that is almost impossible for a conventional product business to pull off. And of course it will manifest itself in place-identified product brands which will feel very different from the mass brands we are used to.
In many ways what I am advocating is for aspiring regenerative brands to behave more like winery brands such as Teliani Valley - work with nature to make the products that reflect the specific characteristics of a specific place.
Places. The foundation of regenerative business.