ARASH AAZAMI
Episode 5 features an interview with Arash Aazami, founder of Dutch energy supplier BAS, which turned the industry on its head in 2010 by adopting a model to "Benefits All Stakeholders." This approach helped customers become less reliant on fossil fuels and the grid. Now a consultant for small businesses, Arash talked with Mindsailing about the Business of Good.
As referenced in the podcast, you can read more on his blog about why he believes alternative energy, is not alternative, or watch his TED Talk here.
Podcast Transcript
MINDSAILING: I want to welcome you back to a really special edition of the Currents and Currencies podcast, a really exciting conversation for us here. As you know, this is the podcast for leaders who are navigating market sea change in a number of different fields. This podcast is produced by the team at Mindsailing, an innovation agency based in Minneapolis that helps brands sail industry and cultural sea change with marketing communications and innovation strategies. I'm joined today by Arash Azami, who's an amazing entrepreneur of sorts. He's currently running an outfit called Beyond Boundaries, which helps consulting with start-ups, and I'm talking to him right now from the rooftop of a startup building in Nairobi, Kenya with the aid of Skype. So, Arash, thank you so much for joining us today on this podcast. We're really glad to have you.
ARASH AZAMI: Thank you for having me. I've been trying to read a little bit into your work, and I believe it's amazing. As you just mentioned, I am somewhere in downtown Nairobi watching a fantastic sunset as it is early morning for you guys. And I'm really looking forward to what we're going to do now.
MINDSAILING: Awesome. So maybe just to set the stage, I had the chance to dig into a lot of the things that you've been up to previously. But that maybe set the stage how you got involved in the field of energy and what some of the more recent projects you've been working on?
ARASH AZAMI: In 2006, I became Managing Director of an energy supply company in the Netherlands. And I basically took four years as a part of the system to learn a lot about it and to also learn about what could be better and decided to flip the model over. And that's what I did in 2010.
MINDSAILING: I think specifically you're probably talking about BAS, if I'm not mistaken. Can you tell listeners just a little bit what that organization was of about?
ARASH AZAMI: Yeah, so what I did in the energy sector-- I was managing an energy supply company. And what does a company like that do typically? They earn money through selling kilowatt hours, and the more they sell, the more they earn. And I came to the conclusion that selling more kilowatt hours was actually detrimental to most of the stakeholders involved, because eventually the environment will suffer. But also the customer will remain at least as depending on fossil fuels as they used to. So I thought, would it be possible to design an energy company in such a way that it can actually earn more money when it sells less energy? And I founded BAS-- which is B-A-S; it stands for Beneficial to All Stakeholders-- in 2010 to try and validate that kind of business model. People around me believed it couldn't be done. I somehow had crazy enough people around me to assure me of the fact that I should pursue the challenge. And it's 2015 now, and the company is growing, and it's actually expanding into North America. So it can be done.
MINDSAILING: And this is really a novel concept. I mean, Arash, you spoke to it just so very matter-of-factly. But this is a huge idea. As I was looking into the website, it's really speaking to how does a company partner with an end user to ultimately equip them to be more energy independent? How does an energy company essentially help them chart their own energy destiny? Is that a fair way to describe it?
ARASH AZAMI: It is a better way to describe it than I would have used right now, so thank you.
MINDSAILING: Again, it's an amazing concept. But I think it speaks more broadly to this topic of energy abundance and maybe energy dependency as well. What are some of the philosophies that you have that have tied to that business model?
ARASH AZAMI: Well, what I very firmly believe in is that one cannot be a proper supplier if they don't put the end user in the center point of focus. And what most energy suppliers tend to do is to look at the amount of kilowatt hours that they can sell. And in fact, I have never had any customer come up to me and say, Arash, could you please send another kilowatt hour to me because I need to do my laundry. It just doesn't happen that way. So I analyze what people actually need and what they're actually asking for, and they're asking for only four things. Typically, an energy customer-- an end user-- asks for lights. He asks for heating. He ask for comfort. And he's asking for an amount of productivity. And these are the four things that we are supplying energy for. And then I thought to myself, would it be possible for a customer to provide in their own lighting needs, to actually fulfill their own needs in heating, and all these other things, and also productivity? And rather than making money on supplying them, which is actually upholding this whole dependency, why not enable them, empower them, to become less and less dependent and make money along the way doing that?
MINDSAILING: That's a really interesting idea. I was digging into some of the blog posts on your blog, which are just fascinating. One of the things that I came back to was this idea that we really have a horizon in terms of how soon we need to be energy independent. Yeah, fossil fuels are only going to last us so long. And I think you mentioned somewhere on there we have about a generation left. I'm wondering if you could talk a little more about that idea.
ARASH AZAMI: Well, you know, I was being optimistic when I said we have one generation left. Because if I extrapolate the energy consumption in regions such as China, India, Brazil, and also the increasing requirements we have in energy in other parts of the world such as Kenya, where I am right now, but also in Europe and America, then we are still exponentially growing our energy needs while we are almost through diving into our savings account, which is the fossil fuel base that we have in the Earth's crust. So that means that time is really pressing.
We've been using, consuming all these fossil fuels for about 150 years now. We've been consuming more, and more, and more of them. And I believe that every human being should be entitled the same rights to access energy sources, and right now we see 4.3 billion people that are depending on fossil fuel resources for 85% of all their needs, and another $2.9 billion people that do not have any access to energy except for finding biomass to do their cooking on. That's just unfair. And I believe that as the sun is shining on all of our heads, that we are all entitled to have the same rights of accessing energy resources. So looking at that, we would actually need to vastly increase the speed at which we're dipping into fossil fuels would we not radically choose to get all our energy from renewable resources. And that goes not only for the Americans and Europeans but for all the inhabitants of planet Earth.
MINDSAILING: And so I guess as you're talking about this, it's obviously interconnected with so many other topics that are being discussed. It's to a certain extent in the media, but I think in the minds, in the social discourse that's happening online of the more socially conscious populations I think we have around the world who are acknowledging and say, look, guys, this is a real issue. This is something we need to be thinking about. How do you take that idea, which obviously you're very passionate about and have an amazing wealth of knowledge, but how do you take that idea and distill it down for audiences? How do you really break that idea down into its simplest parts?
ARASH AZAMI: I think the answer is rather simple. You just mentioned this is something we really need to get thinking about. I believe we need to take it one step further. We're done thinking about it. We have to start acting about it. Now, how does that apply to a typical Dutchman, or a half-Dutch half-Persian man as I am, or a typical person from Minneapolis? We are right now, if you make the whole thing less scientific, and you're really going to calculate how much energy are we actually using. And if all that labor, all that energy would actually be generated by people, each one of us in Europe and America as full time, 24/7 employ around 20 people to heat their homes, to do their laundry, to cool their food. That's crazy. We're employing 20 people in energy equivalence, each one of us. And there is just not that much of energy in the world, especially not in fossil fuels, to power all of us. So we need to think about saving, but that's only part of the solution. And I believe in this thing that I call the economy of abundance. Right now, the sun is shining 1,400 times the amount of energy that humanity is consuming on our heads. So what if we just cut down on using fossil fuels anyways rather than just saving them, but replace all the production facilities that we have by renewable ones? And in the end, all energy resources are solar powered in some way, even coal, and oil, and gas, are basically compressed, processed forms of solar energy. Because it's the sun that has been shining on plants, and animals, and humans, and then after they die, converted them over billions of years into oil, and coal, and gas. And if you look at other resources of energy, geothermal energy is from solar energy also. I mean, the Earth is basically a little bit of sun that was thrown out in the universe, and all this solar heat that we have within the Earth can be utilized also.
MINDSAILING: When you say it like that, it really puts everything into perspective. I mean, how close all of these answers are, right at our fingertips. Even though I think I read in one of your other blog posts, the series you had about paradigm shifts, which we'll for sure link to in the podcast notes. You mentioned this idea that alternative energy is not really alternative, because it's been around forever. It was the thing that was here before this little blip of time where we figured out how to use fossil fuels. That's really at the crux of this is that it has been here since the beginning of time and will be here long after we run out of fossil fuels.
ARASH AZAMI: Absolutely. What we call alternative energy right now is mainly associated with wind and sun, and the wind then the sun have been present forever. But not only that, they have been utilized by humans for as far as we can remember, as far as recorded history. So for instance, in the 1650s in the Netherlands, we had a town called Zaandam. And Zaandam was powered by 650 windmills, and they fulfilled all their energy needs. I mean, we had a double redundant renewable energy economy in a Dutch town in the 1650s. So let's not fool ourselves by thinking that we need to rely on fossil fuels, because there is an abundance of renewable resources all around us right away. The only question that we need to answer is what exact technologies are we going to deploy? And it's never one technology, because there is not one problem that requires one solution. There is a multitude of problems that require a multitude of solutions. So I believe in every technology that empowers us to make use of resources of which nobody can say, that is my resource.
MINDSAILING: I was just going to add that with what opposition there is out there to the ideas of alternative energy, it really puts a fine point on it that if a 16th century Dutch community could figure this out, we should be able to as well.
ARASH AZAMI: Definitely, definitely.
MINDSAILING: At Mindsailing we talk a lot about this idea of being in the business of good. So in other words, great companies, great brands, are the ones who have their sights firmly set on how are they doing the most good for their customers, their communities, and ultimately all of us at large. This idea of being in the business of good, how does that play into the ideas that you've been talking about here? And specifically what I might ask is how have you found that positive benefit for all stakeholders? How has that played into your viewpoints for how a company can be successful?
ARASH AZAMI: Well, what I may do is tell you a little bit about how I came up with that model, or not how I came up with it but how it came to me. I like nature. I believe that all the answers that we need to find are to be found in nature. So I went into the woods when I was about to found my new business in 2010. I was just sitting there in front of a number of trees, and I was amazed by the effectiveness of the economic model of those trees. I mean the biodiversity, but also how every stakeholder surrounding these trees is benefiting from the fact that they exist. Squirrels eating nuts, not paying the tree back, but paying the tree forward by spreading them over the parameters so that the tree itself could ensure offspring. But also, the circle of life within the tree where all these leaves of the tree would die off at one point, and then fall down on the ground, and then provide food for new life. And then in the end the tree itself will fall down, and then you see this beautiful trunk with dozens of fungi and whatever creatures living and thriving there. And I thought to myself, wow, this is actually an economic model where everybody benefits. And that's how I came up with the benefits all stakeholders model, and I tried to figure out what stakeholders we have in businesses. And typically you have shareholders, and of course every business wants to serve their shareholders in a proper way. And then you have customers, and of course you want to do something good for them. But it goes a lot further than that. How about employees? And then how about the families of the employees, which I believe is an under-emphasized stakeholder group? And then we have the suppliers. If they benefit from what we're doing, we can actually build up sustainable relations with them. And then finally, there is this thing called society that has to benefit from the existence of your company also, in whatever way possible, and the environment. So there are seven stakeholder groups. And I believe that all seven of them, that every company actually has the power within its own structure to do something that is beneficial to all seven stakeholder groups.
MINDSAILING: Wow, that's fantastic. The next logical question I'd have is if you have companies that are hearing this, that are listening to these ideas, what's some of the steps? What are some of the things that you could suggest or pass along for them to start understanding how that change could transpire within their organization? What are some of the things that they could pursue to start making real change?
ARASH AZAMI: Well, one of the things that we did in my previous company-- I'm also helping other companies right now applying these rules. Once you're about to make a strategic decision, it's rather easy to audit that strategic decision along the lines of the seven stakeholders. Does it actually positively benefit them? Yes or no? And if it's only one out of seven, then don't do it. But even if it's only six out of seven, eventually it's going to bite you in the back. So how can we design our business in such a way that every stakeholder benefits and that we incorporate a culture where everybody actually takes into account the required benefits for every stakeholder and incorporates that into their own company culture?
MINDSAILING: That's well said. It feels like a very socially accountable and thoughtful approach to doing business. And I guess on that note, Arash, I've covered the topics I wanted to cover. But I would be remiss if I didn't say is there are other pieces of this that you feel like we haven't talked about that you would say are kind of important to the topics we've covered?
ARASH AZAMI: Just a very short thing that I'd like to share is that we have this whole thing going on in the Western world that we call CSR, corporate social responsibility. I sometimes go on stage when I do a keynote for a company like that, and I and I congratulate them of course on doing their whole CSR stuff. But then again I say, if any activity that you deploy is not SR, why make it into a C in the first place? Because I believe that fundamentally, every activity that we deploy should be socially responsible and should be done in such a way that everybody-- it should be a source of happiness, essentially. If it makes other people happy, if it makes the world happy, if it makes planet Earth happy, then go on and do it. And also create wealth it, because there is nothing wrong with that. There is a lot of beauty in that. The thing is that we should really try and build up business models that are contributing to the advancement of humanity and the advancement of the world. And I firmly believe that all of us can do that.
MINDSAILING: Very well, Arash. Again, I appreciate these insights, and I want to sincerely thank you for joining us on the Currents and Currencies podcast. I would encourage our listeners to keep checking back and subscribe, and listen for upcoming episodes where we'll explore more ideas related to innovation and navigating market sea change. In the meantime, you can learn more at mindsailing.com