4 Lessons learned from building a sustainable business model

EO is an avid supporter of the UN Sustainable Development Goals (SDGs)―17 goals and 169 targets to eradicate poverty, reverse inequality and halt climate change by 2030. Entrepreneurs are uniquely positioned to transform our world. EO has a framework for sustainability and how it will become net positive by 2030.

James Keirstead, an EO Edmonton member, is a former EO External Relations Sub-committee chair. He is also the president and CEO of Levven Electronics Ltd, a company that makes home ownership more sustainable and affordable. James shared his journey around establishing a viable, sustainable business:

As a Canadian born in the late 1960s, I grew up in the land of abundance. I was fortunate to land in an industry that was taking off at the beginning of my career, and I’ve learned a lot about manufacturing. Looking back, I would say that, growing up in Canada and manufacturing a product―hot tubs―that represents the height of consumption, I never truly considered the impact of our company on the world. Hydrotherapy benefitted people with disabilities, physical challenges and those who needed to relax, and that was enough for me.

When I left the hot tub industry to pursue a new manufacturing venture in electronics, global climate and waste issues inspired my thoughts around pursuing a path that would contribute to reducing carbon footprint while being a viable, sustainable business. We had developed considerable intellectual property in connecting spas to the internet before it was coined the Internet of Things (IoT). While doing so, we had researched the residential construction industry because home automation was gaining momentum and represented a much greater market.

To develop a business model that would meet my goals of reducing climate change (SDG No. 13) while building sustainable cities and communities (SDG No. 11) is no easy task. We chose an industry that had not significantly changed the way it wired a home in the last 100 years, nor were builders and tradespeople very interested in changing their proven process. The even bigger issue to making home automation ubiquitous is cost: Since 2000, the cost of homes has outpaced household income in all but the years 2007–2012. So, home affordability is a real issue that is top of mind of every production builder in North America.

In the end, it was our lean manufacturing ideals applied to this problem that helped us find an opportunity to meet our sustainable development goals with the goal of making home automation available to the average homeowner. Lean manufacturing prepares value stream maps for every product we produce, looking for waste. Among other benefits, reducing waste in production increases output and improves gross margin which is imperative to remaining competitive. 

Finding a sustainable business model

We applied the same mindset to wiring the control layer in a home, for which the common light switch is the most abundant control device in an average home. As we investigated, we found if we were able to develop a wireless switching control system that removed the wire between the switch and the power load we wanted to control, the savings would be sizable.

The deeper we dug, the more evidence we unearthed that the potential savings were even greater than originally anticipated. Our concept would eliminate one-third of the building wire, virtually all the switch boxes, plus staples and wire nuts.

Not only that it would save 30% of the labour to wire a home, but also significant downstream savings for all the trades that must work around the switch box in new home construction. The savings were so significant that it more than offset the cost of the technology. We had found our sustainable business model!

Now I won’t lie: Gaining adoption has been challenging. The electrical codes in North America had no provision for networked radio frequency switching. We’ve had to adapt our sales process to include installation comparisons to prove the savings to builders and trades, but adoption is growing. 

Incremental savings add up

If all the homes in North America alone move to this technology, it would result in removing 35% of the building wire and saving 30% of installing labour. This equates to saving:

• Enough copper wire to circle Earth eight times every year
• Steel and plastic switch boxes that, if laid side by side, would go from New York to San Antonio, Texas
• Enough staples and marrettes (a twist-on wire connector) to fill an Olympic size pool

On top of that, we would empower the homeowner to reduce their energy consumption for the lifetime of the home. If we compare operational savings of homes wired traditionally versus homes wired with new technology, energy savings is at least 4% (annual usage). Considering that approximately 1.6-1.8 million new homes are built in North America annually, new technologies like this can result in huge energy savings!

The Brundtland Report defined sustainable development as development that meets the needs of the present without compromising the ability of future generations to meet their own needs. I like this definition because it honours the fact that for something to be sustainable it must also be presently viable.

4 Lessons learned on my sustainability journey

I learned several things through the journey this past few years:

1. It is possible to develop a business model that is both profitable and sustainable
2. Innovation moves way faster than people and the systems we are embedded in, so patience and perseverance are necessary traits for any entrepreneur embarking on world-changing innovation
3. There is no substitute for in-depth research of the value stream to unearth opportunity
4. At the end of the day, the two things that move people to action are pain avoidance and money. Develop an innovation that helps them avoid a perceived pain and saves them money and you have a potentially sustainable innovation.

We are still early in our journey toward making new homes more sustainable and enjoyable for buyers, but the early signs are positive that we can be profitable and make a positive impact on the world.