Better Place: The Very Model of a 21st Century Enterprise

betterplace

Photo: With colleague Jennifer Biringer, test-driving the Th!nk EV at Better Place’s Palo Alto headquarters back in June.

Many of us at SustainAbility have a big sustaina-crush on Better Place, the start-up working to build the infrastructure for electric vehicles—charging stations and battery packs—in cities around the world, and its founder Shai Agassi. (Our biggest Better Place fan, Gary Kendall, has contributed to their blog here and here, and the urgent need to transition our systems away from oil is a recurring theme for our team—see most recently Jeff Erikson’s blog on the BP Deepwater Horizon spill.)

But what’s a crush without a little analysis? Here are seven reasons why we think Better Place is one of the best examples of a 21st century enterprise out there.

1. Better Place started with an urgent social need, is moving rapidly to bring a solution to market, and is doing so by prototyping around the world. First, Agassi started with a Big Hairy Audacious Goal for his country: no less than independence from oil.

Says Better Place Australia CEO Evan Thornley in an interview on CNET’s CarTech blog: “[When Shai Agassi was coming up with his initial white paper] he went through the stages of ‘how can we run a country without being dependent on oil?’… We’re a mission-driven organization; we want to get the world off oil. There’s nothing good about it: fighting over it, paying for it, running out of it, or polluting the atmosphere with it.”

And Better Place is not wasting any time, as Cisco strategy EVP Inder Sidhu writes in a nice excerpt from his strategy book Doing Both, which argues that pursuing two seemingly disparate paths at once is often mutually reinforcing:

Agassi hopes to move quickly—before the next wave of first-time car buyers choose gas- or diesel- powered vehicles… Over the next five years, Chinese and Indian consumers are projected to buy as many as 70 million vehicles—more than all of the cars that exist in the UK and Germany today.

Most technology startups set out to build advanced products for sophisticated customers in established countries… Afterwards, they typically water down their innovations for sale to customers in emerging countries. Agassi has dispensed with this model and is instead focused on building simple solutions that can be deployed anywhere around the world simultaneously.

2. Better Place is thinking service, not product. Why are service-based business models often a better bet from a sustainability perspective?

Service-based models incentivize manufacturers to make assets that last and to take end-of-life responsibility (think Xerox copiers). They allow many more people to get use out of the same amount of physical assets (think laundromats, or car sharing services like Zipcar, and see Rachel Botsman and Roo Rogers’s Collaborative Consumption website and book for more examples). And they start with the human need and ask, “How can we best meet this?”

Agassi understands that people fundamentally seek the service of convenient mobility. This insight means that his business model is designed around meeting that need for mobility as effectively as possible, rather than making the current model (liquid-fuelled cars) somewhat better.

For transportation, says Agassi in an interview, what matters is miles:

Oil companies sell miles…at the end of the day [not gasoline]. [Better Place is like] an oil company that has a guaranteed supply of oil at a cost of zero dollars a barrel… I don’t sell the energy—the battery makers do that. I sell the convenience. (Interview by Martin LaMonica, CNET)

And access to a service is often a much better model for the customer than owning the asset itself, say Better Place’s Evan Thornley and Guy Pross in another interview:

Separating the battery from the car is a key to our business. It not only takes that battery [technology] risk from you, but also saves you from purchasing the battery up front, which is a huge part of the cost of hybrid and electric vehicles. (Interview by Derek Fung, CNET)

3. Better Place is harnessing the power of intelligent networks. These days, it seems to be all about data to make systems from transportation to food to supply chains to healthcare more intelligent, environmentally sustainable, and socially inclusive. IT companies from IBM (Smarter Planet) to Vodafone (mHealth) are making data for transparency and access to services and information the cornerstone of their sustainability strategies.

For Better Place, all plug-in points will be on a smart grid, as my colleague Jennifer Biringer and I learned back in June when we headed down the Peninsula to check out one of Better Place’s electric vehicle test drives. This layer of intelligence leads to efficiencies and even to cheaper car insurance, says Better Place’s Evan Thornley in his CNET interview:

[We won’t fill] a million batteries at 3 p.m. on a 40-degree [Celsius] day when the grid is already at peak load. We’ll actually help the grid out by taking some of the charge out of those batteries and helping load balance the grid, and put the charge back in at 3 a.m. the following morning when the wind farms are spinning and there’s no one taking the electricity.

It’ll also make our cars cheaper to insure, because if anyone tries to steal it, we’ll shut it off the network… [Or] your insurance company can offer you a 25 percent discount, because you’re someone who actually doesn’t speed, instead of being just someone who doesn’t get caught speeding.

4. Better Place is building an ecosystem of partnerships… Changing an entire system takes many players. Better Place has built this into their business model from the get-go, partnering with governments (Israel, Australia, Denmark, San Francisco…), utilities (Hawaiian Electric Company, Danish light rail company DSB…), and vehicle makers and owners (Renault Nissan, China’s Chery Automobile, Japan’s Nihon Kotsu taxi operator).

5. …and orchestrating the necessary—and pre-competitive—international standards. Though standards can get ignored amidst more glamorous talk of collaboration and innovation, “standards are crucial for innovation and action,” notes the UK’s standards body BSI (PDF). And action at global scale requires common, non-proprietary global standards.

“We are strong believers in standardization, we are strong believers in openness,” says Agassi in an International Electrotechnical Commission interview. “A car needs to be able to plug in in Copenhagen and drive down to Rome and be able to charge and switch along the way… Nobody wants to buy a product that will not end up being a standard… If we argue, if we have competing standards, if we have competing ideas, the market will basically sit on the sideline until everybody agrees.”

6. Better Place is meeting mainstream consumers where they are. Of course, it’s not enough to get the supply side right. Getting mainstream consumers to adopt a new product or service—and to change behavior—is often the greatest hurdle for business innovators. As Agassi admitted in his CNET interview, “The last thing that remains that nobody knows is scale and the X factor: consumer fear versus consumer green.”

One solution? Besides building great infrastructure, soothe consumer fears through great branding. Think back a century to the early days of the London Underground, perhaps one of the world’s first examples of branding for behavior change: the Tube’s iconic map, careful signage, brightly lit stations and witty posters were all developed to increase passenger numbers on what must have been a rather scary mode of transport.*

As Fast Company’s Alissa Walker writes in an excellent piece on their branding strategy, developed by Berkeley, California-based firm Addis Creson and PR company Hill & Knowlton:

[One challenge] was the importance of communicating that the concept was not so far-flung that it seemed unreasonable or unattainable for potential consumers. “It’s not like a flying car,” says [Addis Creson’s John] Creson. “We already have these things in place…” So especially in the renderings, elements like the switch station robotic arm, which can swap out batteries so people don’t have to wait at charging stations, had to be shown as a realistic, everyday object—as usual as a gas station.

*For more on branding and cleantech, see last year’s short report on the value of strong brand positioning and communications for cleantech companies by Chris Sherwin and Dorothy Mackenzie of global brand strategy agency (and occasional SustainAbility collaborator) Dragon Rouge.

7. Better Place is “building the tribe”—both online and in real life. Marketers have always relied on word-of-mouth, but with the rise of online social networking technologies “creating the crowd” (as IDEO’s Bruce Macgregor puts it) has never been technically easier or more important. The power of social networks to drive social change is even starting to get attention in US and UK public policy circlesWrites Fast Company on Better Place’s social media efforts:

“How do we keep [communities that might not see a Better Place for five years or more] excited and interested?” …To keep this momentum going, Better Place allowed people to create “minifestos,” short videos that would allow others to engage with their story, making them ambassadors for the cause and creating more social dialogue that could be spread virally.

And Cisco’s Sidhu adds that they’re building the momentum offline as well, spurring “the creation of electric car enthusiasts groups in Eastern Europe, South America, India and Africa, too. ”

Seven reasons we believe Better Place will succeed, and seven reasons why it’s a great business model for the coming century.

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