BA 850
Sustainability-Driven Innovation


Channel Innovation



Channel innovation is another type which is far-reaching and frequently triggered with other types of innovation. When we examine channel innovations, consider not just the core offering, but also complimentary products or offerings which may undergo channel innovation as a byproduct of other innovations. A very basic example could be that the advent of the automobile allowed myriad channel innovation in the delivery and fulfillment of non-automobile related products, such as milk, ice, or beer. In a more modern example, we may someday see channel innovation in the delivery of emergency medical supplies as a byproduct of the advent of the modern drone.

From The Ten Types of Innovation:

Channel innovations encompass all the ways that you connect your company's offerings with your customers and users. While e-commerce has emerged as a dominant force in recent years, traditional channels such as physical stores are still important— particularly when it comes to creating immersive experiences. Skilled innovators in this type often find multiple but complementary ways to bring their products and services to customers. Their goal is to ensure that users can buy what they want, when and how they want it, with minimal friction and cost and maximum delight.

Channel innovations are particularly sensitive to industry context and customer habits. Flagship stores can be an extremely valuable Channel innovation, creating signature venues that showcase a firm's brand and offerings, while pop-up stores may be useful for a short, sharp splash at the holidays. In contrast, selling directly through e-channels or other means can reduce overhead costs, maximizing margins and cost advantage. Or you might pursue indirect distribution or multi-level marketing, either of which recruits others to shoulder the burden of promoting and/ or delivering an offering to the end customer.

Channel Innovation in the Sustainability Space

Vermeer BP714 Block Press

While a block press may sound terrifyingly uninteresting to the majority of us, Vermeer has created a tool born from the sustainability efforts of the Vermeer Charitable Foundation which allows those in need to create incredibly strong bricks on site using soil and a small amount of water and cement. This makes structurally-reliable buildings a possibility in places where the transportation of building materials–let alone brick–would have been virtually impossible in the past.

So we could consider the true innovation of the Vermeer BP714 to be that it changes the channel through which building materials can be acquired by those in remote or desolate villages.

From an Equipment World profile on the machine:

"The BP714 takes these materials and presses them into 4″x14″x7″ blocks that when cured nearly rival the strength of traditional concrete block. It cranks out three blocks a minute which are stacked and cured for 28 days. The blocks have an interlocking design so you don't need mortar to secure them. There are also cavities designed into the blocks for running rebar, roof tie downs, electrical conduit and plumbing. The blocks don't have to be fired to cure, so kilns and all the energy they require are not needed.

According to Terry Butler, operations manager for Vermeer, the Vermeer Charitable Foundation provided the impetus behind the project and currently has four projects going on around the globe. The foundation also supported the creation of a separate entity called Dwell Earth, which provides technical support and ancillary equipment necessary to set up and run a portable block plant."

Please watch the following 5:40 video.

Click for Transcript of VermeerPress Video

Okay we're making bricks. We've made, oh I suppose, around sixty or eighty this morning already. I’m told we’re making one every 35 seconds. You can see a number of them coming in here. I'll walk you through the whole process from beginning to end, and I'll show you the whole process. We’ve got a lot of people working here.

Moving around, there you see the machine working, but that's the end of the process. Let’s walk down here.

We begin the process down in this little hole. Here these guys - they're digging out the clay that we need for the bricks. Wave at the camera! All right! Wave at the camera! Yea, that’s right!

They’re digging the dirt out. Then they carry it over here and it gets put in the wheelbarrow. And then it gets sifted. This gentleman here is sifting it through a quarter inch screen. We have a screen on either side. Usually we have two people here. Barry’s down there digging up the extra to get rid of it. You can see we’ve got two sides to the screen. So we have one on either side sifting through the dirt.

At the same time we sift the sand right here. It’s a different kind of setup. But that's also a sifting unit. So we sift the sand. We need three buckets of dirt to one bucket of sand. Then we carry it up here. We mix the dirt and the sand all together on the board. And after they get it mixed up good, we put in cement and they mix the cement in. They just turn it over and over and over again until it’s mixed in good.

And after they get the cement mixed in, they’ll add water. We have a little problem with the water content.  When it’s sunny it dries out. When it’s cloudy, then we’re a little wet, so we’ve got to keep adjusting to get just the right amount.

They’ll shovel that over and over and over again until it’s all one color. Then they’ll add a little bit of water to it.

When they get the water done they’ll carry it up to the machine. We have two of those outfits going. Here’s another crew just finishing up with the mixture. They’ll pour it in the bucket. Then they’ll carry it up here to the machine. Then they put it in the hopper like he’s doing now. This young man is learning to run the machine. Wayne’s helping him.

There comes a brick. Wipe the excess off the top. And then these other two gentlemen carry the brick up and put it in place. Meanwhile he goes back to make a new brick.

And there comes another brick. Brush it off, and then we're back where we started. It gets carried up to the brick pile. We have to put plastic under it and then plastic over it. It can’t dry out too quickly. It takes seven days to cure. We’ve got, I think, 20 bricks in a line. 1, 2, 3, 4… Four complete lines and starting the 5th. So we’re approaching a hundred bricks. We’re at 80-some.

The idea is to keep the machine working all the time. The operator is still learning to do it. It looks like they had a broken brick here they’ll have to put back in the hopper.

We can see these guys. They've added the cement mix now. So they're going to be ready to add water. Looks like they’re gonna add water right now.

Okay, signing off.

Kiva Microfinance

In developing countries, small business loans can be scarce, and those available may have obscenely high interest rates of 90% and higher annually. Needless to say, this can put small business owners in developing countries under the influence of what amounts to predatory loan rates. The goal of Kiva, and most microfinance, is to circumvent that predatory lending channel of finance altogether and allow small business in developing countries to thrive with reasonable loans.

While in existence for decades, microfinance, or the practice of small peer to peer lending, gained significant traction in 2006 when the founder of Grameen Bank, Muhammad Yunus, won the Nobel Peace Prize "for their efforts to create economic and social development from below."

Kiva is one of the most popular peer-to-peer, not-for-profit microfinance operations now, though it may seem that there could be a shift in coming years as for-profit microfinance has begun to appear in Mexico and other countries.

Please watch the following 5:05 video.

Click for Transcript of The Power of Kiva Video

What I get excited about is how technology can connect us in ways that were previously unimaginable. It's allowing people who were previously left out of the financial services system to actually get access to quality, affordable, ethically provided financial services like a microloan through

Behind us you have some of the best banks in Nicaragua but they will not make a loan to her. She seems too risky. But she’s now taken six loans through a Kiva field partner. She’s paid them all back in full

If you're poor you don't actually have a lot of options. If someone's going to give you an option at an affordable price, you’re going to steward that money very carefully, you are going to be very judicious about how it’s used, and you know that not only is your future loan access dependent on it but everyone else in your community is counting on you to pay it back so that they can get access to the Internet communities capital.

To give you a sense of the growth of Kiva, in their first year we raised four hundred fifty thousand dollars in twenty five dollar increments from the Internet community and now we raise one million dollars every three days. It's accelerated in the last six years at an incredible rate and we're really hopeful that more and more people will want to get involved.

My name is Marvin. I am Nicaraguan. I have been running this farm for fifteen years. I work 12 to 15 hours a day. My family is my wife and three children. The youngest one is 4 years old. Her name is Jimena. As long as I am able to support my family, this is my struggle, my work, so that they have everything. In Nicaragua it is important to have outside help because if you're with your hands like this and you don't have anywhere to go, you can't do, you can't act. Kiva provided the loan that allowed me to increase my crop. I have more income and we are improving and that is why I feel grateful.

Kiva is looking for the small ones to lift them up, to support them. It is a big deal because this does not happen here in Nicaragua. What I can't tell, I feel here, I feel it here that Kiva is great. I feel that my daughter now has a future.

When I go around the world and visit micro entrepreneurs, what you find is a ton in common with entrepreneurs right in Silicon Valley or New York City or all around the world who are building for-profit businesses that scale to affect hundreds of millions of people. I think being an entrepreneur is fundamentally about believing tomorrow it's going to be better than today even if there's an insurmountable challenge whether it's feeding your family or actually changing the way something works that really needs to be improved. I think entrepreneurs are fundamentally optimistic people. They're willing to take risk and they're willing to bet on themselves and basically on humanity in order to create a better world.