Monday, December 13, 2010

One Man's Quest to Change a Gasoline-Based Transportation System

Shai Agassi, CEO of Better Place, is calling for the end of gasoline cars by 2020. If you’ve ever heard this guy speak, I think you’d find yourself believing it.

I’ve blogged about Better Place before. They have raised $700 million from investors who see the potential in Agassi’s business model. Better Place is a global provider of electric vehicle infrastructure, network and services. The company isn’t in the car business nor is it in the fuel business. They are instead in the systems changing business.

I’m particularly impressed with this company because they demonstrate the capability of business to enact social change. This approach to sustainability is much different from what we hear of in a typical corporate social responsibility report where companies demonstrate their commitment to reducing CO2 emissions, waste or energy use by trivial amounts. Better Place’s version of sustainability is not about making incremental improvements to existing models; it is about trying to change the taken for granted and unsustainable transportation system that locks us into an oil-centric society.

There are many companies like these, companies that relentlessly work to change systems that many would argue are impossible to change due to the highly inertial and institutionalized norms associated with their existence. Grameen Bank, Interface Carpets, Patagonia, Terracycle (photo of founder to left). VanCity, and many others are doing hard work to change a highly established set of practices that lead to social inequity and environmental destruction.

But the challenges are enormous – more enormous than any typical entrepreneur would face. For this is not a matter of filling a small gap in the marketplace such as selling a new brand of detergent or opening a restaurant in a neglected area of the city. This is a matter of building new supply chains, unconventional partnerships, and new markets that did not exist before. Better Place needs to build up new suppliers to provide the vehicles to fill these stations, the batteries to fuel the vehicles, and the technology to provide the service. They also need to inspire the consumer to engage in this new system which is not just about purchasing an electric vehicle but about changing the way they think about refueling and driving more generally. They also need to build strong partnerships with unconventional actors like NGOs, communities, and governments. Without the Israeli, Danish and Australian governments’ buy-in, any system-changing endeavor like this one would be quickly disbanded.

Another challenge is the fact that they are facing a brick wall of embedded actors who would be severely threatened if something like this were to happen. Agassi mentions ‘oil’ as his primary competition. Courageous entrepreneurs like Agassi who meddle with a system that a small wealthy elite group has worked to institutionalize will face enormous resistance, much like the electric car industry faced in the 1990s.

So in effect, a firm like Better Place is thinking at the systems level rather than introducing a new product or accessing a new market within an existing system or supply chain. As John Elkington puts it, engaging in this type of entrepreneurship requires a special kind of person, one that is unreasonable and insanely ambitious.

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