What I Learned from Building a Social Business to Feed Pandas!

Pandas are lovely.  And no, this article is not entirely about pandas but I will mention pandas frequently to hopefully increase viewing!

When I was working at the Calgary Zoo, one of my projects is to bring the giant pandas to the zoo.  I remembered that Dr. Clément Lanthier, President, and CEO of the Calgary Zoo, used to have stickies by his desk with issues that kept him awake at night and one of them read in all caps: BAMBOO. 

Indeed, bamboo had been a nightmare for all visiting pandas (a.k.a. honorary Chinese ambassadors in countries that China likes at the time).  It was easy for a politician to show up at an event, sign some paper and shook hands for pandas to come to a country.  It was an entirely different matter for zoos, often non-profit organizations, to burden the rest of what could only be best described as a “financial and logistical ordeal”.  A zoo in Australia almost went bankrupt because of it and many others are still struggling to keep up.

Out of thousands of species of bamboo, I was NOT surprised to learn that pandas only eat six that are native to the high mountains of Sichuan province, China.  To feed their carnivore stomach (they stop eating meat completely out of laziness), every panda needs to eat at least 50kg of fresh bamboo every day half of which were discarded due to various unknown reasons to us (just like how we wonder why our children don’t eat mushrooms!).   Hence, as much as how the panda program had been so successful in funding important protected habitats and conservation initiatives in China, bamboo had been an issue for all the hosting zoos.  For one, those species of bamboo aren’t native outside of China.  Many zoos who are able to grow their own would have to introduce a large plantation of foreign species of bamboo which they need to control very carefully and destroy after the pandas are gone.  Some resorted to scavenging in people’s backyards.  For Canada, those weren’t even viable options as the dry and cold Canadian climate would kill bamboo instantly.  

Before our pandas came to Calgary, they spent five years in Toronto Zoo eating bamboo that was shipped by charter flights from Memphis Zoo (also hosting pandas and owning bamboo plantations) via FedEx on the same day.  By the time, it’s Calgary’s turn, the bamboo source in Memphis diminished.   

On one trip to Chengdu, Clément and I met with a local entrepreneur who happened to own assets in Canada and was traveling between Chengdu and Calgary at the time.  We mentioned the possibility of shipping bamboo from China.  This was unthinkable until Calgary got a direct flight connection to China via Hainan Airlines.  This stroked a chord with the local entrepreneur.  Bamboo was all they have in some places just a few hours outside of Chengdu.  These communities have a population that’s aging, with an average age of 50, but still very capable.  Most people of the younger generations have gone to bigger cities to seek jobs as the communities only have bamboo.  The people left behind parents, grandparents, and children used to harvest bamboo shoots, a local delicacy, to sell as food and make a living.  Harvesting bamboo shoots damage wild bamboo forests as, despite the high renewability, they still need to grow to be mature bamboo.   Some villages started to have a problem of flooding due to deforestation not to mention the grave impact on wildlife.  

So, what if we ship bamboo from panda’s birthplace? Was it such a bold idea?  Turned out, it was just the solution that would work for pandas, people, forests, and the environment.  Although pandas like shoots, they mostly consume mature bamboo that can be sustainably harvested.  In fact, harvesting mature bamboo at the right time of the year is better for the forest to grow stronger.  Bamboo as panda food was sold at a premium.  The better economic outcome would encourage villagers to give up digging bamboo shoots hence changing their relationship with the mountain, from exploitation to nurturing. The local community would benefit from increased income and if the business could sustain, this economy may even attract some young people back.  When we looked at the shipping route, we were able to work with Hainan Airlines who also had a hub in Chengdu to reduce the shipping duration to within 36 hours to ensure the freshness.  Instead of chartered cargo shipments, Hainan Airlines used the belly cargo of existing commercial flights.  This insured the lowest carbon footprint.  They were also giving us a significant discount from their corporate responsibility fund to support the initiative.  For the first time in history, pandas overseas were able to enjoy bamboo from home that is sustainable for the environment at the same time.  It’s no small feat, but we pulled it off. 

Unknowingly to us at the time, we really had started looking at designing a social business based on the problem at hand (connecting pandas abroad and local people) and evaluating the desirability, feasibility, and viability of the business.

The resulting collaboration not only resolved the panda diet issue at the Calgary Zoo but also helped local communities to make a better living and the forest to grow better from sustainable harvest.

Today, this bamboo business created from the idea of feeding the Calgary Zoo pandas continued to flourish providing bamboo based on the same model to pandas visiting European and American zoos.  

Building a social business could be daunting. However, when the problems and conditions satisfied the desirability, feasibility, and viability of the market, it could also come together and become successful very rapidly.  The most important lesson for me is to be bold and ask a lot of questions.  Businesses depend on critical partnerships and those partnerships won’t come by if you don’t ask and explore with a common goal in mind.  Another lesson is thinking about solutions that not only help your problem but perhaps a shared social problem at the same time.  Social business comes out of unexpected circumstances all the time.  As entrepreneurs, it could be as easy as connecting the dots. In this case connecting panda, bamboo forest and people!

Why Traditional Nonprofit Model is Doomed and Social-Profit Sector Must Emerge

The September 2019 issue of Stanford Social Innovation Review presented a fascinating study on why business should co-create solutions with the low-income communities (academically termed BoP which is the “Base of the Pyramid”) in developing countries rather than the traditional transfer approach that takes a patronizing white colonial guiding view on International Development (Cocreating with the Base of the Pyramid, London & Jäger 2019).

I found a striking parallel between the transfer approach towards BoP and the framework with which the traditional nonprofit model operates in North America. Social problems that often have a lot to do with the base of the pyramid (BoP) in a developed country are largely the responsibilities of the social sector currently consists largely of nonprofit organizations. These organizations were governed by volunteer boards from members of the business community to provide their “expertise” in the business world to nonprofit.  In other words, it is a “transfer approach” as referred by London and Jäger. However, it’s common knowledge for those of us who actually work in nonprofit organizations that often time board governance is more distractive than effective. The only assets that the board could effectively offer is their networking power to fundraise. On the other hand, many nonprofits in North America heavily rely on government grants and private donations. These “free” money also come in with a price. That is, the nonprofit becomes limited to utilizing the fund raised to build its own capacity or seek innovation.  Dissecting these problems deeper with three lenses: Power Dynamic, Economic, and Innovation, we quickly can see how this model is becoming obsolete and need to make ways for the new social-profit sector to emerge.

Power Dynamic Lens

The relationship between nonprofit and government/businesses is that of charity and patron. Therefore, businesses and governments have way more say in setting agendas in the social sector.  With a transfer approach from the private and government sector to the social sector, the solution is often symptom-focused and rather turning a blind eye to the root cause of a systematic problem that’s currently benefiting private sectors. Nonprofits are left powerless because they rely on their patrons for “free” money and advice. In a social-profit model, the government and businesses become customers instead of patrons. The shift of power dynamics will facilitate system change that the social sector wants to see. 

Economic Lens

The technological revolution in the past decades brought faster communication into the world and knowledge becomes less controlled and authorized by the elite. Generations of people from more diverse backgrounds and armed with these new mindsets are empowered to make changes faster in the world and they intend to do so. They want to be more engaged in decision making and using market power to benefit society. They soon realized that the BoP not only has economic power but also has assets that could turn the outcome into profit. As Shaun Loney rightfully pointed out, nonprofits are giving out lucrative outcomes while social enterprises evaluate and sell outcomes (Loney, The Problem Solver’s Companion, 2019). While the transfer approach does not recognize the value of the BoP market, a co-creation approach blends nonprofit with for-profit by leveraging network, leadership and knowledge assets of the nonprofits and sound business practices to grow sustainable businesses, create markets and solve a social problem at the same time.  

Innovation Lens 

Today, innovation is essential to the survival of any organization. Innovation requires an environment that’s creative, collaborative, and risk-taking. The social sector should thrive on innovation to resolve social problems. Instead, the nonprofit model stifles innovation with a scarcity mindset as donors and funders are often too focused on efficiency not building capacity. The social-profit approach emphasizes business acumen, borrowing lean and agile management while creating human-centred innovative solutions for social problems. 

Seeing what’s wrong with the traditional nonprofit model through the three lenses explain the two biggest trends we are experiencing in the philanthropic sector: Diversity and emergence of a blended solution. Diversity of not only the base of the pyramid but also the top of the pyramid puts the traditional concept of philanthropy in question. Changed mindset brought forward different ways of financing solutions to social problems. The emergence of impact investment and social impact bonds are two examples. The expectation for the nonprofit to become more sustainable and self-sufficient is also higher. Many nonprofits started to use a blended model but most are still resistant to the paradigm shift. There are still plenty of people in nonprofits who think profit is evil. However, these major trends are resulting in diminishing donors as well as calls from funders for financial diversification and collaboration. Although I don’t think it’s time to call use the name Social-Profit Sector yet as the system still needs to change first, the shift from nonprofit to social profit is inevitable. It’s not a question of if but a question of when.