For hybrid solutions to climate change, check out this guy:
Meet a Sustainable Entrepreneur: Phil LaRocco, E+Co
One of the scourges of the developing world is a lack of energy – an absolutely essential resource in promoting economic development. However, it has also become increasingly clear that our current methods of energy production and consumption are harming our environment in potentially irreversible ways. Therefore, the challenge is to not only provide billions of people with access to cheap and reliable energy, but also to do this in a way that promotes environmental sustainability. A difficult task indeed, but not impossible, as demonstrated by the non-profit company E+Co and its founder, Phil LaRocco.
E+Co, founded in 1994 in Bloomfield, New Jersey, empowers local small- and medium-sized enterprises to supply clean, modern and affordable energy to households, businesses and communities in developing countries. E+Co does this by providing business development services and investment capital to enterprises, a combination that distinguishes its work from others in the clean energy field. The organization receives support from a number of sources, including foundations, governments and investors.
Phil LaRocco, Founder and Executive Director, has, since 1990, focused solely on creating energy enterprises in developing countries and the refinement of the “enterprise centered model” of development. Prior to his founding of E+Co, Phil was Director of World Trade and Economic Development for the Port Authority of New York and New Jersey where he oversaw the NY World Trade Center, a network of international offices (including London, Zurich and Tokyo) and a portfolio of local economic development projects. Therefore, upon starting E+Co in 1994, Phil was no stranger to complex problems. The Port Authority, Phil explained, is not just a little bus terminal and a port harbour, it runs three metropolitan area airports, seaports, all tunnels and bridges from New York to New Jersey, a commuter railroad, and commercial activities which, at that time, also included the operations of the World Trade Center.
During his years at the Port Authority, he went through some significant, though unconscious changes with respect to how he views the interface of the public and private sectors. The Port Authority, he explained, is a place where a number of different sectors meet, and over the 20 year period that Phil worked there, he occupied a unique space between the public and private sectors, though never thought this was particularly significant. It became simply natural that the public and private sector interact in manifold ways and that goals were often times the same. “The view of the world is compartmentalized too much,” he explained, “I like to say that the private sector does 20 percent, the public sector does 20 percent, and together the public and provide sector do 60 percent.”
After learning of this interesting and multifaceted job at the Port Authority, the obvious question to ask is why did he decide to leave this cushy job to work in the non-profit sector? The answer was simple: “I had an entrepreneurial itch!” he exclaimed. “I decided to form a project management firm to explore what business opportunities existed in this evolving space called ‘sustainability’”. In this capacity, he conducted a number of projects, including a study for the Rockefeller Foundation on how to approach problems in the global environment. The conclusions of the study stressed the effect of increasing energy usage in the developing world. The results of this project, Phil explained, was the essential kernel of E+Co: a model to take best practices from public and private sector to create clean energy in developing countries.
Today, the concept of sustainable development is a hot topic with obvious and widespread appeal, however, when I asked Phil to comment on public opinion and perceptions of sustainability 15 years ago when he started E+Co, his answer was quite straightforward: “It was lonely, man! We occupied one table at a bar in Marrakech!” He added, “public opinion 15 years ago was ambivalent about the importance of the concept of sustainability…there was not a lot of comfort that small, locally-based entrepreneurs could actually make a difference regarding how we produce and distribute energy. Very few people grasped onto this concept of locally-based entrepreneurship, especially regarding energy production…in this respect, I was lucky to link up with partners such as UNEP and a few NGOs with operations in five African countries who also felt that this was worth a try - otherwise, we wouldn’t have separately had the confidence to build this.” An added result of these barroom discussions was the original idea for UNEP’s African Rural Energy Enterprise Development (AREED) program.
To put this local model into perspective, Phil emphasized that from the 1950s to the 1990s, global problems such as, for example, clean water provisions and sanitation, were dealt with through a top-down, outside-in approach where programs were conceived and mobilized in big world cities, exported to the various country capitals and through the respective governments, then finally trickled down to folks in the communities. The approach of E+Co is a completely different paradigm, Phil stressed, where every community has a man or a woman making a decent living supplying modern energy to his or her neighbors. If more of these local entrepreneurs were empowered, all the other stuff, i.e. capital, human resources, etc, could be mobilized. “In 1995 if you said local entrepreneurs would make the difference and not the big government programs, you were thought of as crazy…Now we are witnessing the microfinance revolution and the promotion of local entrepreneurs. People are finally realizing that the largest untapped energy resource at our disposal is not oil or natural gas, but men and women who can deliver modern energy to local communities.”
While large government programs have certainly helped a number of people worldwide, there is definitely a certain appeal and freshness to E+Co’s model. How exactly does this model work and what makes it different? First, E+Co identifies potential entrepreneurs in communities around the world in need of energy services. Next, they work early on with the entrepreneur, providing enterprise development services in order to refine the technical needs, marketing and policy approach. This is done hand-in-hand until a functioning business model is developed. However, E+Co’s engagement does not stop simply at training. What makes E+Co different is after working with them to develop the business, they actually invest in it. In describing this process, Phil stressed, “so many programs teach them how to do something, for example to bake bread, however after-the-fact they do not provide them with ovens! You can’t just train them, you need to implement it – and you need to finance this implementation…To me this coupling of capacity building and investment seems like a no-brainer, however, this is actually the innovation of the E+Co model…The innovation is implementation and the payoff is immediate.”
With this model, E+Co has 180 investments in 30 countries providing over 2 million people with access to clean energy. The organization has 7 developing country offices in Central and South America, South and Southeast Asia, and Africa, all of which are run by locals. “E+Co is a 45 person organization doing about a 90 person amount of work,” he explains, “there is a lot of damage control and cheerleading, but we are in and promote a learning culture - when someone makes a mistake it’s a group mistake. As long as the risk was understood it is always considered a group mistake and we learn from this. That’s why we are still standing. Most graduate schools don’t incorporate this type of thinking into their business administration teaching, but they should.”
Regarding the success of the investments, as a rough guide, the majority of the companies will stay small, repay the investment and continue on providing local energy service without significant growth. Some will really take off and will serve as an inspiring example and point the way for other companies. There is some failure, of course, but this is considered part of the portfolio and usually there will be lessons learned from these examples. This portfolio approach, Phil explained, is a paradigm approach in contrast to the project approach.
This new approach is also at the heart of UNEP’s African Rural Energy Enterprise Development (AREED) program, an initiative with essentially the same goals as E+Co to provide sustainable energy enterprises that use clean, efficient, and renewable energy technologies to meet the energy needs of under-served populations. E+Co works together with AREED as if a normal business relationship. The two organizations delegate roles and responsibilities in order to tackle together these complex models which combine services, capital, entrepreneurs and investments. It was a difficult road with many bumps, however, the effect of the AREED program on local populations has been extensive. From an idea hatched in a bar in Marrakech to a successful collaboration 15 years later, Phil said, “the legacy of the AREED program is empowering entrepreneurs. We have made mistakes together but at the same time we have figured out how it works. Our partnership is no more different or difficult than a 20 year marriage.”
When asked what he appreciates most about the UN as a partner, he responded, “The UN has an unrivalled rolodex. When you want to do something, weave together pieces, or navigate the landscape, the UN system offers unrivalled potential…it isn’t just convening power as many people emphasize – it is CONNECTING power.” With this in mind, Phil also explained that while the UN has great potential in connecting people, one of the things he has learned through his work over the years is that implementation should always be carried out at the local level rather than top-down by the UN or other external programs. “This is the most effective and sustainable method and should not be messed with,” he stressed.
Phil LaRocco’s and E+Co’s approach supports the conclusion that the critical element of success is not simply money, an investment model, or developing procedures and practices, but rather finding and investing in men and women who want to make their livelihood supplying clean energy to their neighbors. Investing in that small- or mid-sized company is an indispensable step for sustainability and there is a huge potential of viable clean energy companies and an enormous pool of potential entrepreneurs. In closing, Phil added, “people are the only game in town - everything else is arithmetic. While, of course, the arithmetic is necessary, the interaction with the people is the most important. I could give you the numbers that it takes 2.75 years to see the benefit of what we have invested in, but in the end, the benefit and impact are immediate.”
COMMENTS
BY Tracy Smith
ON April 1, 2008 08:21 AM
For hybrid solutions to climate change, check out this guy:
Meet a Sustainable Entrepreneur: Phil LaRocco, E+Co
One of the scourges of the developing world is a lack of energy – an absolutely essential resource in promoting economic development. However, it has also become increasingly clear that our current methods of energy production and consumption are harming our environment in potentially irreversible ways. Therefore, the challenge is to not only provide billions of people with access to cheap and reliable energy, but also to do this in a way that promotes environmental sustainability. A difficult task indeed, but not impossible, as demonstrated by the non-profit company E+Co and its founder, Phil LaRocco.
E+Co, founded in 1994 in Bloomfield, New Jersey, empowers local small- and medium-sized enterprises to supply clean, modern and affordable energy to households, businesses and communities in developing countries. E+Co does this by providing business development services and investment capital to enterprises, a combination that distinguishes its work from others in the clean energy field. The organization receives support from a number of sources, including foundations, governments and investors.
Phil LaRocco, Founder and Executive Director, has, since 1990, focused solely on creating energy enterprises in developing countries and the refinement of the “enterprise centered model” of development. Prior to his founding of E+Co, Phil was Director of World Trade and Economic Development for the Port Authority of New York and New Jersey where he oversaw the NY World Trade Center, a network of international offices (including London, Zurich and Tokyo) and a portfolio of local economic development projects. Therefore, upon starting E+Co in 1994, Phil was no stranger to complex problems. The Port Authority, Phil explained, is not just a little bus terminal and a port harbour, it runs three metropolitan area airports, seaports, all tunnels and bridges from New York to New Jersey, a commuter railroad, and commercial activities which, at that time, also included the operations of the World Trade Center.
During his years at the Port Authority, he went through some significant, though unconscious changes with respect to how he views the interface of the public and private sectors. The Port Authority, he explained, is a place where a number of different sectors meet, and over the 20 year period that Phil worked there, he occupied a unique space between the public and private sectors, though never thought this was particularly significant. It became simply natural that the public and private sector interact in manifold ways and that goals were often times the same. “The view of the world is compartmentalized too much,” he explained, “I like to say that the private sector does 20 percent, the public sector does 20 percent, and together the public and provide sector do 60 percent.”
After learning of this interesting and multifaceted job at the Port Authority, the obvious question to ask is why did he decide to leave this cushy job to work in the non-profit sector? The answer was simple: “I had an entrepreneurial itch!” he exclaimed. “I decided to form a project management firm to explore what business opportunities existed in this evolving space called ‘sustainability’”. In this capacity, he conducted a number of projects, including a study for the Rockefeller Foundation on how to approach problems in the global environment. The conclusions of the study stressed the effect of increasing energy usage in the developing world. The results of this project, Phil explained, was the essential kernel of E+Co: a model to take best practices from public and private sector to create clean energy in developing countries.
Today, the concept of sustainable development is a hot topic with obvious and widespread appeal, however, when I asked Phil to comment on public opinion and perceptions of sustainability 15 years ago when he started E+Co, his answer was quite straightforward: “It was lonely, man! We occupied one table at a bar in Marrakech!” He added, “public opinion 15 years ago was ambivalent about the importance of the concept of sustainability…there was not a lot of comfort that small, locally-based entrepreneurs could actually make a difference regarding how we produce and distribute energy. Very few people grasped onto this concept of locally-based entrepreneurship, especially regarding energy production…in this respect, I was lucky to link up with partners such as UNEP and a few NGOs with operations in five African countries who also felt that this was worth a try - otherwise, we wouldn’t have separately had the confidence to build this.” An added result of these barroom discussions was the original idea for UNEP’s African Rural Energy Enterprise Development (AREED) program.
To put this local model into perspective, Phil emphasized that from the 1950s to the 1990s, global problems such as, for example, clean water provisions and sanitation, were dealt with through a top-down, outside-in approach where programs were conceived and mobilized in big world cities, exported to the various country capitals and through the respective governments, then finally trickled down to folks in the communities. The approach of E+Co is a completely different paradigm, Phil stressed, where every community has a man or a woman making a decent living supplying modern energy to his or her neighbors. If more of these local entrepreneurs were empowered, all the other stuff, i.e. capital, human resources, etc, could be mobilized. “In 1995 if you said local entrepreneurs would make the difference and not the big government programs, you were thought of as crazy…Now we are witnessing the microfinance revolution and the promotion of local entrepreneurs. People are finally realizing that the largest untapped energy resource at our disposal is not oil or natural gas, but men and women who can deliver modern energy to local communities.”
While large government programs have certainly helped a number of people worldwide, there is definitely a certain appeal and freshness to E+Co’s model. How exactly does this model work and what makes it different? First, E+Co identifies potential entrepreneurs in communities around the world in need of energy services. Next, they work early on with the entrepreneur, providing enterprise development services in order to refine the technical needs, marketing and policy approach. This is done hand-in-hand until a functioning business model is developed. However, E+Co’s engagement does not stop simply at training. What makes E+Co different is after working with them to develop the business, they actually invest in it. In describing this process, Phil stressed, “so many programs teach them how to do something, for example to bake bread, however after-the-fact they do not provide them with ovens! You can’t just train them, you need to implement it – and you need to finance this implementation…To me this coupling of capacity building and investment seems like a no-brainer, however, this is actually the innovation of the E+Co model…The innovation is implementation and the payoff is immediate.”
With this model, E+Co has 180 investments in 30 countries providing over 2 million people with access to clean energy. The organization has 7 developing country offices in Central and South America, South and Southeast Asia, and Africa, all of which are run by locals. “E+Co is a 45 person organization doing about a 90 person amount of work,” he explains, “there is a lot of damage control and cheerleading, but we are in and promote a learning culture - when someone makes a mistake it’s a group mistake. As long as the risk was understood it is always considered a group mistake and we learn from this. That’s why we are still standing. Most graduate schools don’t incorporate this type of thinking into their business administration teaching, but they should.”
Regarding the success of the investments, as a rough guide, the majority of the companies will stay small, repay the investment and continue on providing local energy service without significant growth. Some will really take off and will serve as an inspiring example and point the way for other companies. There is some failure, of course, but this is considered part of the portfolio and usually there will be lessons learned from these examples. This portfolio approach, Phil explained, is a paradigm approach in contrast to the project approach.
This new approach is also at the heart of UNEP’s African Rural Energy Enterprise Development (AREED) program, an initiative with essentially the same goals as E+Co to provide sustainable energy enterprises that use clean, efficient, and renewable energy technologies to meet the energy needs of under-served populations. E+Co works together with AREED as if a normal business relationship. The two organizations delegate roles and responsibilities in order to tackle together these complex models which combine services, capital, entrepreneurs and investments. It was a difficult road with many bumps, however, the effect of the AREED program on local populations has been extensive. From an idea hatched in a bar in Marrakech to a successful collaboration 15 years later, Phil said, “the legacy of the AREED program is empowering entrepreneurs. We have made mistakes together but at the same time we have figured out how it works. Our partnership is no more different or difficult than a 20 year marriage.”
When asked what he appreciates most about the UN as a partner, he responded, “The UN has an unrivalled rolodex. When you want to do something, weave together pieces, or navigate the landscape, the UN system offers unrivalled potential…it isn’t just convening power as many people emphasize – it is CONNECTING power.” With this in mind, Phil also explained that while the UN has great potential in connecting people, one of the things he has learned through his work over the years is that implementation should always be carried out at the local level rather than top-down by the UN or other external programs. “This is the most effective and sustainable method and should not be messed with,” he stressed.
Phil LaRocco’s and E+Co’s approach supports the conclusion that the critical element of success is not simply money, an investment model, or developing procedures and practices, but rather finding and investing in men and women who want to make their livelihood supplying clean energy to their neighbors. Investing in that small- or mid-sized company is an indispensable step for sustainability and there is a huge potential of viable clean energy companies and an enormous pool of potential entrepreneurs. In closing, Phil added, “people are the only game in town - everything else is arithmetic. While, of course, the arithmetic is necessary, the interaction with the people is the most important. I could give you the numbers that it takes 2.75 years to see the benefit of what we have invested in, but in the end, the benefit and impact are immediate.”
For more information on E+Co and its work, please visit http://www.eandco.net/
For more information on UNEP’s AREED Program, please visit http://www.areed.org/
* The editor interviewed Mr. LaRocco over the phone
Link to article at: http://www.enewsbuilder.net/focalpoint/e_article001055912.cfm?x=bcnrPqP,b78KRrj4