For the next five years, Hawken earned his living as a writer and consultant while he shaped and tested his strategic principles for small business. He successfully took on three corporate turnarounds for companies in the fuel, adhesives, and jewelry businesses, occasionally sifting through the ashes of his Erewhon years to find lessons. He also served on the board of a number of not-for-profit agencies, such as the Farallones Institute, Ecology Action, and The Point Foundation. They had begun to look for ways to become self-sustaining, and Hawken tutored them on how to set strategies for entering the marketplace and build cost controls into their philanthropic work. "The challenge was to sharpen their business sense without weakening their spirit of service," he says.
He also met David Smith, now 41, his future partner in Smith & Hawken. Smith was managing a cooperative store, Briarpatch Market, and Hawken was a member. They began to spend a morning a week at a diner called Late for the Train, where they would counsel small business owners who came to them with problems of all sorts.
Through social ties, meanwhile, Hawken began to kibitz with a circle of futurists at SRI International, the vast think tank in Menlo Park. Eventually, Hawken worked with them to think through and write up a series of strategic studies of the future. This circle was working on SRI contracts for such clients as Ford Motor Co. and Royal Dutch/Shell Group of Cos.
As Hawken and others immersed themselves in huge pools of information and analysis for SRI's large corporate and government clients, they decided they should find a way to put that sort of knowledge into the hands of ordinary people and smaller organizations. Hawken quietly disputed one of the vital but unspoken premises in the work they were doing: namely, you had to be big and official in order to be strategic in your view of the future. "We were serving the institutional market for the future, but we knew there was also, of course, an individual market for the future" -- and for ways to get a strategic handle on it, Hawken says. Further, he believed that individuals and small businesses, especially existing or likely startups, were more likely than large institutions actually to act on such strategies.
Consequently, Hawken and two SRI staffers, James Ogilvy and Peter Schwartz, decided to write a popular paperback to equip ordinary citizens to do their own strategic thinking. Although Hawkens estimates that it has sold 40,000 copies, Seven Tomorrows isn't truly a popular work, since some of its concepts and passages are difficult for the lay reader to follow. However, in setting the stage for The Next Economy, it does argue for an appreciation of how economic change occurs chiefly from the bottom up through small organizations, rather than from the top down, through large organizations.
"There comes a point of diminishing returns beyond which the economic and political advantages that accrue to larger organizations are offset by organizational inefficiencies resulting from sheer size," say the authors.
The Next Economy, a solo performance by Hawken, begins to answer this call. It credits the vitality of bottom-up change through smaller businesses, breaks older molds of economic thinking, and roots much of its analysis in realities of ecology and the energy supply. More to the point, it sets forth Hawken's own strategic principles for small business to apply in addressing a changing economy. His thinking can be broken down into five broad and simple propositions:
* Pay attention. Be open to all the evidence. Search for it as widely and deeply as you can. After Erewhon began, Hawken realized years later, he saw and credited information that he would have missed in a traditional business setting. "Because Erewhon was without precedent, there were no rules to guide us," he says, "and this meant there were no blinders on us, no reason to ignore some things or trivialize them reflexively."
* Be direct. Middlemen waste time and money and block the flow of vital evidence into the eyes and ears of the entrepreneur, argues Hawken. Try to collapse as many functions as possible into your business. Do this to get closer to your suppliers, closer to your customers. "It's important for small businesses to grow not so much in sheer size as in sophistication," says Hawken. "They should strive to become more highly differentiated organisms by broadening their scope to embrace more functions."
* Understand the basic shift in the economy, from mass to information. As his book explains, every product or service is made up of two elements, mass and information. The mass is the physical stuff, usually matter and energy. Hawken defines the information as the design, utility, durability, and knowledge that are added to the mass. For the user of Hawken's principle, the key is the relationship of the two elements.
Since the oil crises of the 1970s, mass's costs have jumped as the costs of energy and energy-related materials have jumped. This puts a premium on the other element, the information. Success in the emerging economy, argues Hawken, depends on the ability to use far less mass and far more information. The market already displays a behavioral grasp of this change, contends Hawken: "Consumers wanting to preserve their standard of living are choosing those products that conform to this adaptation while shunning those that ignore it."
The sheer dollar leverage of the big company doesn't help here, Hawken goes on: "One of the reasons U.S. business is slow to grasp the kind of changes necessary to make the shift . . . is that no one can buy what is needed to make the transition. . . . To make a company more intelligent, to bring a work force together, to create and design better products, to eliminate waste, and to solicit innovative techniques and ideas from employees -- these are elements that cannot be purchased like new plants, machines, or licenses. These changes are not forbidden to big business, but they are more difficult to achieve in a large company that does not already strive for these qualities than in a smaller and newer company."
