Wearth Strategy Collective: LONO Cote d’Ivoire - ``Sustainable Pioneers & Frontrunners``

“Sustainable Pioneers & Frontrunners” series – LONO Cote d’Ivoire interview (April 2020)

Intro & highlights

LONO is an enterprise from Côte d’Ivoire that is scaling up locally and internationally. It has developed a successful business model that helps farmers, cooperatives and agribusinesses by tackling a waste stream that is widely available and underutilized in Africa: organic waste. They were the runner-up for the EDF Pulse Africa Award; Total’s Start-up of the year in Côte d’Ivoire and won FCIAD’s Soil Fertility Innovation Prize. We had the pleasure of speaking to co-founder Loes Bijleveld. She shared with us the challenges they encountered when building a business that is entirely new to local communities, in an environment with little supporting infrastructure for innovative, ambitious sustainable companies.

LONO transforms green (solid and liquid) waste from agriculture or cooking into value (compost and energy). With their highly efficient composting products and solutions, they reduce composting time to less than 4 weeks (normally multiple months). They cater to small farmers (to turn their own green waste into compost and bio-fertilizer), large agro-companies/-cooperatives and major municipalities. On these larger scale projects green waste can be turned into biogas and biodiesel. Lastly LONO has an advisory service on biomass, fertilizer and green waste recycling matters.

We realized that many of the challenges LONO has overcome, and the dilemmas they faced, are similar to those of sustainable start-ups in Western economies, and to those of larger, established companies that pivot towards a sustainable business model.

Here are the 2 main lessons and insights from the interview:

  1. Having a strong and appealing purpose is important to get started and attract a solid, focused team. But leadership determines the success of the sustainable business model. Any business is bound to experience setbacks, or stumble upon shortcuts that look appealing but are not in line with the purpose. At moments like these, it is up to the company’s leadership to stay the course and make tough decisions.
  2. Addressing a small element of a large value chain can have a massive impact. Through partnerships with ‘traditional players’ (e.g. fertilizer suppliers) you can create a win-win situation that opens their eyes for sustainable alternatives and the whole value chain can become green(er).

Read the full story in the publication below and soon on our new website.

Interviewers: Willem Bijleveld & Casper ten Kate

Structure / interview method

We use our Value Creation LoopTM and Sustainability VisorTM to structure the interview’s. It results in 7 questions for the interviews in this ‘Sustainability Pioneers & Frontrunners’ series:

  1. Sustainability meaning & benefits
  2. The Why
  3. The How
  4. The What
  5. With Whom
  6. Trade-offs (4 P’s)
  7. Next horizon

1. SUSTAINABILITY (1) – What is LONO’s take on sustainability? What is the added value?

We do not position ourselves as a ‘sustainable company’. We see ourselves as a mission-driven enterprise and believe our actions show our sustainability focus. We strive to add value to both planet and people, without harming other value-generating systems or local businesses. That’s why we focused on the green waste stream. This was an untapped area. So every job and dollar that we create in this sector, truly is new. It creates a value chain that doesn’t replace other value chains. Plus: we are independent from other countries for the supply of raw materials (waste from cocoa, manioc, banana, etc. is readily available). We measure our impact on 3 levels:

  • What happens to the waste if it’s not being used; what is the impact on land usage and how is that changed through our offering? – We measure the quantities of waste treated that would otherwise end up in landfills or be burned before and after our products were implemented
  • To what extent do we improve the soil quality & what is the impact of this improvement on the ecosystem? – We examine soil samples in labs and measure nutrient levels. We see that compost brings structural change to the soil, whereas effects of mineral fertilizer are often temporarily. This structural impact leads to a reduced need for water, fertilizers, etc. and it provides more and better crops per square meter
  • What is the socio-economic impact for the users? – We assess the impact on the income of individual farmers, the extended value chain and the return on investment from larger projects.

2. WHY – purpose-driven company: How and when did this come about?

Our mission is to offer sustainable and affordable solutions to transform waste into value. We do see that this ‘sustainable purpose’ grows our market potential:

  • It is a topic that is ‘hot’ and has a growing market: The momentum and awareness for sustainability are clearly on the rise
  • It is a prerequisite in a B2B setting: customers and sometimes even suppliers tend to set sustainability standards, as a requirement to do business with them

Our mission helped us to attract the team that we wanted to launch our venture, and it created a shared understanding: we work on something we all believe in.

We see evidence for the success of our mission on 3 levels:

  1. Both our small customers and large B2B clients are able to generate new revenue/value streams through our service
  2. The quality of the soil is largely and structurally improved as our biofertilizer and compost is used. This boosts productivity and reduces usage of water, chemical fertilizer and pesticides; this effect is lasting and not a short-term boost.
  3. We managed to validate our value propositions and reach profitability – being profitable is vital, as it provides us with the means to realize our mission

As with any new concept or technology, we had to prove ourselves. In our context that means that we had to show it in a live (& participative) setting to clients, so they see the impact with their own eyes. But that would have been the same for a non-sustainable offering.

The fact that there is limited industry in our country to process raw (agricultural) materials, results in relatively small margins on its exported produce. It makes it hard to reduce poverty, especially in rural areas. We envision an industry beyond harvesting raw materials to elevate the entire country. We wanted a business model, that is green and contributes to the development of an entire sector. Thus contributing our little piece to further developing Côte d’Ivoire and its economy.

3. HOW – Developing and deploying the organization: Which elements (2) were/will be crucial for LONO?

An appealing purpose is important, but in my opinion it is not enough to keep your team on board, as you will encounter setbacks. That’s when having strong and caring leadership within your organization enables you to keep the team motivated and stay the course. So leadership is probably the most important element when you set out to build a sustainable organization. When the going gets tough, people will try to deviate from the mission that was set. Not out of malevolence, but because mission-driven enterprises often have complex choices to make. They have to balance their objectives on profit, people and planet. A leader’s primary task is to ensure a solid balance and to keep inspiring and motivating the team. Especially when faced with tough decisions.

For a growing company like ours, it is crucial to build a strong organization. Including procedures, team structures, incentives, etc. Without this it is impossible for our team members to take ownership of their part of the business. In a culture that is used to strict hierarchies within businesses, that is challenging. But we are making good progress. Now that we are expanding with international projects we must establish a new ‘middle management’ layer.

4. WHAT (source, create, sell & use, re-value en move) – which ‘value chain/loop’ elements have provided the biggest challenges? Did these challenges evolve over time?

For local agricultural value chains, we aim to play a vital role in closing their loop (nutrient cycle) by transforming organic waste into bio-fertilizer; ‘re-value’ in the Wearth framework. This aligns well with our ambition to promote local industries and reduce dependence on imports, such as chemical fertilizers.

For the manufacturing of our own product lines (such as Kubeko for compost, fertilizer and biogas production) we currently have our assembly done locally. But our suppliers source many of the components internationally. This is not ideal, and certainly not in line with our purpose, but it is something we cannot change yet.

A challenge to scale further, is that we sell directly to users, instead of through a B2B model; many users have limited disposable income and savings. Even though our products are relatively low-cost with a long lifespan, they are a substantial investment for many farmers. We offer leasing models and support farmers and cooperatives to collectively invest, to reduce the threshold.

5. WITH WHOM Stakeholder landscape – which forces (3) supported or hampered LONO? How important is ‘participation’?

Our ‘pioneer customers’ proved to be a very important stakeholder group. Not only did they provide us with our first revenue stream, but more importantly: they enabled us to collect data on the real-time impact of our products. We had tested the technology extensively, but seeing it functioning in the field and receiving users’ feedback is what provides real insights. And it builds the business case for new customers. For bigger projects we create partnerships with (local) governments and companies. This way, we hope to achieve systematic change by sharing a common interest; turning waste into value.

It was a disadvantage that we had no local competitors for our product line. We had to create and prepare our own market, without any benchmark or reference for customers. The limited level of industrialization in Côte d’ Ivoire results in a system that is not geared towards enabling entrepreneurs to launch new hardware products easily or assemble prototypes in industrial settings.

Traditional fertilizer manufacturers did not try to oppose our initiatives. We have been able to create partnerships with them: we create a win-win by generating new revenue streams for their customers (allowing these customers to buy other products) and by elevating the entire agricultural sector.

6. TRADE-OFFS – finding a balance across the 4Ps (Planet, People, Profit, Participation)

Having to import the raw materials for our machines is not ideal in two ways: Firstly, it adversely impacts our carbon-footprint. Secondly, we want to support the emergence of a local green industry, so ideally most of our production process takes place locally. For now we have to accept this as an enabler to operate. But we look for ways to partner more with local suppliers.

Because we are a young company, none of our machines have met the end of their life expectancy yet. But this will be another challenge: currently, materials are chosen based on practical and cost-efficient rather than sustainable considerations. We offer maintenance services to extend the life time of the machines. In designing the next generation, we are looking for materials that will last even longer and/or can be reused. These materials are often more expensive, so this is a balancing act, as we want to provide an affordable product to a large group of customers. For small farmers this means that we have to keep the cost low, or extend alternative business models like leasing. This requires significant working capital; another balancing act.

7. NEXT HORIZON – what are your ambitions and what impact would you still like to make?

We want to increase our impact. To do that, we must offer our products & services at a minimum viable price, whilst realizing an even higher ROI for our customers, the planet and people in general. It also means that we look for even better materials to construct our machines; which in turn help extend their lifecycle. Our focus is therefore on achieving scale in our production process, and we will launch a new line soon. This will also help us with our international growth.

Next to that we look for additional partnerships with (traditional) players in the extensive agricultural sector. This is essential to create a system change.

(1) Definition used by Wearth Strategy Collective, based upon the ecological sustainability definition: “The properties and abilities of systems to remain diverse and productive indefinitely”

(2) Leadership, Strategy, Innovation, Organization, Assets & Risk; Metrics

(3) Customers & Society; Authorities & Science; Investors & Shareholders; Competitors & Cooperation