Breakdown, Change-as-usual, Breakthrough! @BreakthroughCap


Breakthrough Capitalism: Business Leaders, Market Revolutions!

 – by John Elkington and Susie Braun – Volans

 

biz of biz is more then biz

 

 

“There’s not one business school with a total grip on this.”

 – Gabi Zedlmayer, Vice President, Sustainability and Social Innovation, HP

Business is increasingly critical in tackling the world’s great environmental, social and governance challenges. And at the heart of business sits the C-Suite, the grouping of senior executives who direct the enterprise. Breakthrough is addressed to them – and to those who advise them.

This report reveals both real frustration in business about government failures, and a growing appetite at the leading edge to drive systems-level transformations.

Breakthrough draws on over 100 interviews with key people in the field to sketch a Manifesto and linked agenda to help us move towards that change.

from denial to breakthrough

Three scenarios of how the future could unfold

  1. Breakdown: the almost unremittingly bleak scenario where early experiments fade in the face of wider incomprehension and resistance to change.
  2. As Usual: where earnest efforts are made but overall the outcome is little more than a set of patches of the existing, dysfunctional system.
  3. Breakthrough: Here innovators, entrepreneurs, intrapreneurs, investors and policy makers dare to create ventures with ambitious targets and then, over time, drive them to change the market and political systems within which they operate.

To push towards Breakthrough outcomes, initiatives need to be:

  • Future ready: Able to work well in a world of 7-going-on-9 billion people, providing affordable access to key products or services, while respecting planetary boundaries
  • Ambitious: Aims to transform key aspects of capitalism, and drive radically better outcomes across the triple bottom line
  • Fair: Helps tackle equity issues, including the transfer of intergenerational debt created by public borrowing, natural resource extraction and environmental destabilization
  • Disruptive: Has potential to constructively disrupt the current economic and/or governance orders, moving the needle from incrementalism to system change.

5-stage model Pathways To Scale

Running from the ‘Eureka!’ moment through to the point where a new way of doing things is endemic across the entire ‘Economy

Pathways to scale

Disruptive change is needed

Some problems can be treated with sticking plasters or acupuncture; others require radical surgery. Too many twentieth century institutions—and even models of activism — are now increasingly unfit for purpose. Among challenges that top the current agenda are new forms of accounting, integrated reporting, and incentives to drive longer-term investment, but disruption will involve many other vectors of change.

Global C-Suite in the three Scenarios:

  • Breakdown: Retrospective or short-term focus: Past priorities; how things were done; preservation
  • Change-as-Usual: Short- to medium term focus: Pragmatic accommodation to current realities; incremental change
  • Breakthrough: Focus on past, present and future: Long-term framing; ‘unreasonable people’; how things will be done; disruption

How to convert the CXO?

It is clear, however, that most CSOs start off in a difficult position. Even where they enjoy direct backing from the CEO, they must cajole different members of the C-Suite to implement relevant ventures within their own functions.

  • Breakdown: CSOs absent — or used as camouflage
  • Change-as-Usual: CSOs pursue incremental targets
  • Breakthrough: CSO stretch agenda, standard for all CXOs

Domains of system change

  1. Changing the numbers: subsidies, taxes and standards: Counter-intuitively, the least effective approach to system change can be trying to change the numbers. Numbers do matter. We must change the financial incentives, across markets and across businesses.
  2. Changing buffers, stocks, flows, delays and feedback loops: Meadows warned us that if you dramatically cut the information and money-transfer delays in the financial system, as IT and dark liquidity pools have done, you would be asking for exactly the sort of wild gyrations we ended up with.
  3. Changing information flows: In many markets, a key problem is that information flows via price signals. By contrast, information flows can help where they feed back into system dynamics in ways that help conserve stocks or maintain flows.
  4. Changing the rules: The rules of a system define its scope, boundaries, and resilience. Rules are often high leverage points, which is why constitutions (which set the rules for writing the rules) are so powerful — and why so much effort is put into lobbying politicians and legislators.
  5. Changing the system’s genetic code: The purpose of a system is crucial in determining its behaviour: if profit maximization is the sole purpose, the results will be very different than if there is a balanced scorecard, shared value or triple bottom line orientation. Leaders who can redefine the purpose of a society or a corporation potentially have a very powerful lever at their disposal. We must now pay much more attention to the genetic code that dictates how organizations and cultures operate. And a key part of that coding is the discipline of economics. Meadows again: “Any system, biological, economic, or social, that gets so encrusted that it cannot self-evolve, a system that systematically scorns experimentation and wipes out the raw material of innovation is doomed over the long term on this highly variable planet” — and, we would add, in fast-changing markets.
  6. Changing paradigms: Ultimately, this is the level at which the potential leverage is greatest, but where the resistance to change is often most intense. From our shared social agreements come our system goals, information flows, stocks, flows and feedback loops. Paradigms can be slow to change, because all those “infected” with an earlier paradigm must retire or die, but they can also flip almost overnight when incontrovertible new evidence crashes in. Ultimate power, however, flows from the ability to stand outside current systems and paradigms. And the ultimate characteristic of system mastery, Meadows concluded, is the capacity to “dance with the system.”

System Change 101

1. Science Breakthrough = new knowledge — and new routes to knowledge

  • Change Breakdown: 6 planets – endless resources assumed
  • Change-as-Usual: 2–3 planets – limits understood, but exceeded
  • Breakthrough: 1 planet – paradigm shift, anthropocene

2.   Activism Breakthrough = taking stands — lobbying for change

  • Change Breakdown: Intergenerational debt – Decreasing returns, debt cascaded
  • Change-as-Usual: Intergenerational equity – Intra- and intergenerational rights
  • Breakthrough: Intergenerational wealth – Creation of increasing, sustainable returns

3.   Institutions Breakthrough = old institutions changing, new ones evolving

  • Change Breakdown: Outsiders – activists shut out, ignored
  • Change-as-Usual: Outliers – activists engaged as lead indicators of change
  • Breakthrough: Insiders – global C-suite calls for market revolutions

4.   Access Breakthrough = an end to systemic inequities

  • Breakdown: Producers – Building a world for the super-rich 1%
  • Change-as-Usual: Consumers – Building a global middle class
  • Breakthrough: Prosumers/Makers – Building better futures for ourselves

5.   Finance Breakthrough = a shift to new types of impact investment

  • Breakdown: Negative externalities – Financial capitalism kills other capitals
  • Change-as-Usual: Reported externalities – Accounting goes multi-capital
  • Breakthrough: Positive externalities – Multi-capital, impact investors

6.   Economics Breakthrough = that economists must recalculate

  • Breakdown: Physics as model – Mechanical view of value creation
  • Change-as-Usual: Internet as model – Growing focus on network effects
  • Breakthrough: Ecology as model – Economies seen as living systems

7.   Culture Breakthrough = experimentation and a willingness to fail

  • Breakdown: Obsessed with past – Works for wealthy 1% of 1-2 billion people
  • Change-as-Usual: Driven by present – Works for 30–40% of 7 billion people
  • Breakthrough: Future focused – Works for growing majority of 9-10 billion people

Breakthrough - a revolution of Capitalism

The question now is whether CEOs and other business leaders will be content to remain part of the problem—or whether they have the will and the audacity to ride the rising Breakthrough wave. It must be our business to ensure they have little choice in the matter.

Breakthrough: Business leaders, market revolutions is available for download.

www.breakthroughcapitalism.com/breakthrough-video.html

Breakthrough Capitalism

Current models of capitalism are failing economically, socially and environmentally. As global governance structures weaken, can business be an effective force for change in ensuring a healthy, fair and affordable world for 9 billion people? The Breakthrough Capitalism program explores how business leaders can change the rules, and aims to catalyze the conversations that will make it happen.

More on Breakthrough Capitalism

Breakthrough Capitalism

www.volans.com

 

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[Corp. Sustainability]: Connecting to the Belgian front-liners in sustainability!


Interview with Ralph Thurm, Directeur Collaborative Sustainability & Innovation with Deloitte Nederland and owner consultancy A|HEAD|ahead

 

From less bad to good enough!

 

Sustainability is a journey!
First, directing the team towards sustainability, than approaching the customers, making them enthusiastic before they themselves do.

 

Corporate social responsibility and commitment to sustainability – International standards to distinguish between greenwashing and real sustainability!
Standards, guidelines, technical protocols and clear indicators are needed.
We have become less bad, but we do not really know what is good enough for our planet. We must move from efficiency-driven indicators to impact indicators. Especially now we have more and more data available, such as various aspects of the ecological footprint and monetizing ecosystem services. To be less bad is not good enough anymore. We have to learn to measure what is minimal good enough. As John Elkington advocates in his book Zeronauts: Breaking the Sustainability Barrier.

 

Actually, we want more: regenerative growth and positive impact growth (PIG)!
Give back more than what we take from the planet. Otherwise we are not sufficiently coping with the rebound effects from climate change and population growth.

 

The united strength of companies bigger than all the governments of the world together!
Despite the difficult economic and capitalist logic world in which we live now, there are today in all industries a number of leading players who say that we must act now if we are to avoid to lose much more in twenty years from now. Companies like Puma have a first environmental profit & loss account drawn up and they are working on a second with more aspects, not just around CO2, energy and water. With the risk that anyone can view and a lot of sensitive information disclosed, Puma does this so that everyone would understand why they do it and so others would follow their example.

 

Gradual process of change towards sustainability or a great revolution!
Do not expect a big swing, but relatively lots of earthquakes and landslides. It will not be all smooth. We are at the beginning of a transition phase. The interesting thing is that most of the social and economic transition phases in the past were preceded by financial crisis. Especially when it appears obvious that we cannot resolve the crisis with financial interventions only.
Also many other domino-effects play a role, such as the food and climate crisis. You will now see a real change in attitudes occurring.

 

Knowing that it is not going well with our planet, gives a great sense of responsibility and finding the right answers to our many questions remains a strong motivation.

A|HEAD|ahead

The following interview was first published in ARGUSactueel on 24th of January 2013. It was done a couple of days before my keynote speech in Antwerp at the Belgian Global Compact Network meeting on January 30, organized in collaboration with VOKA (the Chamber of Commerce for Vlanderen), and the Antwerp World Diamant Center. The text is in Dutch language. I thank the organizers for the wonderful opportunity to talk in front of more than 80 careful listeners, connect to the Belgian frontliners in sustainability, and finally visit Antwerp!

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