New Capitalism
We started the discussion in Part 1 of this series by distinguishing “Sustainable Building” from “Regenerative Housing.” Recall some of the key differences as outlined by Systems Design and Regeneration pioneer, Peter Coughlan:
- Extractive versus regenerative
- Hierarchy versus networks
- Compete in existing markets versus collaborate to create new markets
- Independence versus interdependence
- Design of systems versus design of ecosystems
Corporations are beginning to understand this. From Salesforce Chairman/CEO, Marc Benioff, to Ford Foundation President, Darren Walker, business leaders agree that “Capitalism is in Crisis.” Fast Company’s Stephanie Mehta warns us that,
“The U.S., the paragon of capitalism, is experiencing crushing income inequality and struggling to provide affordable healthcare and childcare for working families as unprecedented climate change threatens even further disruption.”
Profits are important, says the New Capitalism, but so is society.
So with Regenerative Markets, does this mean we are talking about a fuzzier, friendlier way of doing business, or a more socially responsible set of business ethics, or a focus on producing impact rather than “surplus value”?
All of the above.
Some of the world’s largest corporations have begun putting big money (or promises) behind the fuzzy messaging about “impact.” Mastercard has created a Center for Inclusive Growth to advance “sustainable and equitable economic growth..”. Citi recently launched a $150M Impact Investing Fund, and Microsoft has pledged to “remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975,” by 2030.
In the same way that ConTech is transforming the construction industry from one of fragmentation to one that is vertically-integrated, new capitalism is transforming the way industry does business by moving from exclusive to inclusive.
Here’s another way to think about it:
Whereas Old Capitalism was infatuated with maximizing profits from a product, now the “product” is the positive impact that a series of well-designed inputs and people can have on environment, society and economy.
How Big is the Regenerative Housing Market?
The Regenerative Market is a marketplace of interdependent products, services and solutions. Consequently, its size could be calculated as a sum or exponent of its interdependent parts. One way to get a sense of the size, or opportunity, is to look at the 2025 forecasts for those markets that directly impact the future of housing, for example:
1. Education Tech - $342B
2. Clean Tech - $4.2T
3. Global Real Estate - $4T
Point is, the size of the Regenerative Market is in the many trillions, not billions. Experts have understood the significance of this for some time. As far back as 2006 in a book on Sustainable Production by Glen Toner, the estimated value of the market was $33T. It’s hard to wrap your head around such a number, especially when unlocking those benefits seem to be shrouded in scientific theory.
But housing offers us an opportunity to put that theory into practice on a large scale. And its benefits go way beyond the cost savings provided by the automation of production (of, say, of wall panel systems).
Housing can help us create new markets. But we need to make some changes in how we work first.
Home Building Industry: Rethink Your Growth Plans
Most innovative builders who pay attention to ConTech and its impact on the industry know that if they intend to remain operational, they need to rethink their organizations.
From organizational structure to business systems and people management to training, we need to step back and reassess our future. It’s time to Level Up our trades and skilled labor by partnering them with talent that has been historically absent from the construction industry, for example:
1. Client Experience Specialist
2. Product Manager
3. Data Scientist
4. Social Innovation Manager
Without this kind of collaboration, our traditional builders don’t stand a chance at addressing the needs of the market, let alone surviving as a business.
Case Study: Emergency Affordable Housing Project
Given all the media attention and political sensitivity around affordable housing in the last 6 months, it might be instructive to perform a comparison between traditional housing solutions and regenerative housing solutions from the perspective of the marketplace.
Let’s take a California city recovering from a season of wildfires. Naturally, the state and local governments will devote funding to a solution.
The Need:
Quickly-mobilized mass housing for the displaced and existing homeless population, while utilizing building technology that minimizes vulnerabilities to further disaster or environmental degradation.
Traditional Process:
RFP goes out to large developers who pitch the quickest and cheapest solutionLocal community protests the selected solution because it’s either really poor quality or too expensive to be considered truly affordable. Negotiations ensue, sacrifices are made on both sides
Traditional Result: Housing development is built. The developer makes some money, the government has solved that one problem, for now.
OR
Regenerative Housing Process - Government works with designers and local community to design a new market that:
1. Employs the displaced and homeless
2. Temporarily houses everyone in modular housing the can be reused in the event of future disasters
3. Upskills the displaced and homeless through building education programs taught by the most experienced local builders and trades people
4. Turns the training program into an Ed Tech platform created by local developers that becomes a “Continuing Education” platform for home construction, home maintenance and clean tech
4. Enables small business development funding via state and local investors supporting the housing communities new inhabitants to start these new Ed Tech, Clean Tech and Home Service businesses
Regenerative Result: Housing development built along with new local markets spinning off ROIs for investors and inhabitants.
New Capitalism = Markets That Multiply
In sum, the result of the traditional solution is to just build a house while the result of the regenerative housing solution is to build new markets for the new owners or new tenants that provide them with social-entrepreneurship assistance.
Housing is a human right, it shouldn’t be an end-product. It should be the entry point of economic development.
The Regenerative Theorists can’t do this alone. They need the participation and collaboration of our industries best builders to make this investment opportunity a reality.
Do you want to invest in Regenerative Housing? Or do you want to learn how your construction business can deliver Regenerative Housing? The Center for Infrastructure and Society is a good place to start.