[adapted from a blog post at skoll world forum]

Wade Davis and others like him are initiating timely conversations about how bio/ethno diversity can inspire and potentially drive prosperity in the modern world.  Looking through the lens of social enterprise, opportunities are rapidly emerging to combine social and ‘soft’ technologies to form new experiences (beyond the story) that connect consumers, children, teachers and elders in demand economies with artisans, producers, entrepreneurs and elders in traditional cultures. The tide is turning, as our modern society confronts natural resource depletion and chokes on its own waste, and (hopefully) as we dismantle price distortions that create and perpetuate those problems.

So where do we see ancient wisdom driving not just social value, but also financial prosperity in modern society?  [For if such wisdom is to proliferate and transform the modern world, financial alignment is a helpful, if not vital.]

One example of a social enterprise that has achieved breakthroughs, but which still has major potential to expand impact, is Indigenous Designs.  Indigenous was a client of mine for many years, and is the leading purveyor of handmade, organic, fair trade apparel in North America. Over the past fifteen years, they have developed relationships with hundreds of family groups organized into dozens of cooperatives throughout the Andes from Ecuador to southern Peru. Indigenous works with SEY'05 Root Capital to provide the highest quality materials and low cost financing to artisan co-ops who produce premium quality apparel designed and branded by Indigenous for modern lifestyles.

Indigenous presents a fascinating story and creative combination of ancient and modern innovations…if you’re interested read on!

Much of what Indigenous does is more than meets the eye, which is where opportunity lies to create a more direct connection (an experience altogether beyond the buyer-seller paradigm) between the proud owner of an Indigenous garment and the artisans who created it...providing us with something we can savor, use every day, and share with others why, in our own experience and words "ancient wisdom matters in the modern world" (part title to Wade Davis's latest book).

Exhibit 1: the art of fiber blending. By using different fiber combinations (organic silk, wool, cotton, alpaca, tencel, bamboo, etc.) and textural treatments (twisting and combining fibers in various densities and patterns), Indigenous is able to create a wide variety of garments with different textures, performance characteristics (e.g. outdoor vs. intimate), weights and colors, that are luxurious to the senses.

Did you know that alpaca is the only natural fiber that grows from whitest white to blackest black, and if used wisely can significantly reduce the need for dyes?  Don't worry; most major fashion houses don't either! The art of fiber blending is an ancient one that Indigenous takes to a whole new level…but the artisans understand, they've been doing it for thousands of years, and those skills are thriving through work and trade with Indigenous!

Exhibit 2: the quality of craft(wo)man ship. We took the entire senior design and production team from NY fashion house Eileen Fisher (a company of extremely high quality, with such senior management as "Vice President of Hand and Feel") down to Peru to inspect the process, and they were astounded at the detail, sometimes not even being able to conceive how a particular stitch was made.

Traditional tailoring must survive the elements, and so many Indigenous garments remain a reliable favorite for many years. Few companies offer such quality, and their brand loyalty prove its importance…and is why Eileen Fisher chose Indigenous as exclusive production partner for all its organic, fair trade knits.

Exhibit 3: a phenomenal production scheme.  Borrowing brilliance from Incan system (which connected far flung peoples under the largest territorial empire on earth), every month or so artisans descend ancient trails from Andean foothills to village hubs to deliver finished Indigenous goods, and collect new patterns and materials for the next production cycle.  Because Indigenous consolidates yarn purchases across its network for quality control and certification purposes, artisans obtain yarn at value and quality sight unseen in such remote regions, some of which they can use for personal needs.  The co-ops provide rudimentary banking/savings services, and while in town artisans often trade and purchase other goods.

The system is innovative in several ways. Each family group typically produces one size, one color of a particular garment run, which simplifies specialized instructions, quality control and inventory tracking. Co-ops typically work on receipt based-systems, which reduces the risk carrying cash and provides working capital in form of materials for artisans. Co-ops are artisan owned and democratically operated with lean administration, ensuring as much money as possible gets to the artisan. Indigenous and partner Root Capital confirm this annually through field visits. More importantly, however, artisans (typically women) can create valuable goods given modern designs and good materials, while remaining in their villages, thus maintaining the social fabric of the community. For over fifteen years, despite many hardships, Indigenous has provided stability for hundreds of families and communities throughout the impoverished Andes.

Exhibit 4: solving for pattern; financing the missing middle by networking elements into a cohesive whole. Despite all its innovations, after ten years (when I first began working with them) Indigenous was struggling to scale and profit. The model relies on production distributed across a dozen cooperatives (representing hundreds of family and village groups) spread over a thousand miles of rugged mountain terrain.  None of its co-ops were bankable, requiring Indigenous to provide its own financing in the form of cash advances on production. Meanwhile it was carrying interest on cash it disbursed, while waiting for retailers to pay on net 30-60 days typical in hyper competitive apparel markets…effectively putting it underwater.

The solution was a groundbreaking financing and networking platform co-designed with Root Capital.  It was Root’s first foray into value-added handcraft production financing (outside commodity harvest financing), and created a remarkably successful and elegant solution to a classic challenge of “missing middle.” The key was getting the cooperatives to see the value of developing financial literacy and capacity to manage their own working capital instead of relying on Indigenous, which reduced its ability to invest in design, sales and marketing to increase trade.  The next challenge was to get all cooperatives on the same system and terms, so no one received special treatment. 

Once achieved (through creative education and diplomacy), the platform transformed the entire process and eliminated Indigenous’ dead working capital weight.  It returned to profitability, grew 350% and expanded production in what is now the largest integrated network of fair trade artisan apparel producers in the world.  For their part, the co-ops are transforming into formal sector SGBs (small growing businesses), which affords them access traditional financing and even investment for expansion to serve wider community needs such as healthcare and education.

If you venture into the Andean foothills, you'll see women knitting while tending herds or with a baby on their hip...they could probably knit in their sleep! There is a virtually inexhaustible supply of highly skilled labor, not just throughout the South America, but throughout the world.  And not just in apparel, but in dozens of trades.  If more social entrepreneurs can find ways to tap such skill and creativity the way Indigenous has – without the financial and political risks of building centralized production, costs for which are inevitably forced upon workers who emigrate from native villages, which tears apart the social fabric and defeats the entire purpose – the potential for sustainable and symbiotic development for modern and ancient cultures is vast.

Still, there are opportunities for greater impact.  Indigenous co-founders, Scott and Matt, have discussed creating a foundation to acquire land, convert it to organic production, and transfer ownership over time through a production earn-out scheme to the farmers, thereby not only securing the most reliable, low-cost source for their yarns, but also positioning them to become the first truly certifiable fair trade apparel company in the world.  No standard in fact exists, because in an un-networked (interest misaligned) system it is cost prohibitive to certify and monitor each step from farm to mill to producer to retailer.  Now that Indigenous is stable and growing, Scott and Matt might just be able to pull it off, and set yet another standard to which others should aspire.

Perhaps an even more compelling opportunity, however, is for Indigenous to create a new experience - not just a value exchange, but a value(s) exchange - through hang-tags, retailer training, point-of-sale kiosks and web tools that directly connect the hearts and hands of the lucky owner with those of the artisan who created their cherished good.  Few, if any, companies have created such an experience. World of Good comes close, but Indigenous garments are more highly prized and well crafted…elevating native artistry to a level that competes directly with the machine precision and large budgets of global apparel cos. Kiva (SEY’08), lovingly called by Skoll Foundation’s Dan Crisafulli the “gateway drug” to social investing, also comes close in terms of the experience people come away with.

So there’s vast potential it seems. If you’ve come this far, you’re a real champion. I look forward to hearing more examples of how creative integration of ancient wisdom and modern innovation can positively transform our world!