It’s Time for Business to Earn a License to Lead | Paul Polman.
The acronym VUCA — Volatile, Uncertain, Complex, Ambiguous — may have its origins in the military, but it is increasingly clear that it applies to all aspects of our lives today. The fact is we operate in an age of fast-moving and increasingly unpredictable change. No one country, society, industrial sector or individual organisation is immune. We are all impacted. Navigating this new reality is made even more challenging by the increasingly interdependent nature of today’s world.
The issues and predicaments we face are linked inextricably as never before. There is no better or more dramatic illustration of this than the food, water, energy and climate nexus, so effectively highlighted over recent years by the World Economic Forum and others. How do we guarantee food security for a rapidly rising population in the face of growing water and energy constraints, many of them directly attributable to climate change? No wonder one leading scientist has warned of a ‘perfect storm’ of global events. Increasingly, business has found itself in the eye of this storm, mistrusted by large sections of society and seen, with some justification, as part of the problem and not part of the solution to many of today’s challenges. This has to change. Business can no longer afford to be a bystander, content to sit on the sidelines doing the minimum necessary to acquire its ‘licence to operate.’ The challenges require — and citizens demand — a different approach.
Permissible growth in the future has to be based on sustainable and equitable models. Having acquired a license to operate, it’s time for business to earn a license to lead. The military and defense officials who first identified the VUCA world used to speak of the need for ‘burden sharing’, for sovereign nations to spread more evenly the responsibility for defending freedoms around the world. It’s a military parallel that also has resonance today. For its part, business has to accept a much greater share of the responsibility for everything that goes on within the length and breadth of its value chain. Putting your own house in order is a necessary — but insufficient — condition for developing sustainable growth models.
This is the essence behind the Unilever Sustainable Living Plan, which gives expression to the company’s commitment to double its size while reducing its overall environmental footprint and increasing its positive social impact. It’s a plan that covers the entire value chain, from sourcing to manufacturing to the way consumers use our products.
This requires the kind of holistic, systems-based thinking that Andrea Bassi and Gilbert Probst argue needs to become mainstream, in their book Tackling Complexity: A Systemic Approach for Decision Makers. The book adopts systemic thinking to solve complex problems in socio-political as well as business environments, turning them into opportunities.
The main innovation that systemic thinking introduces — the emphasis on defining the problem-creating system, which is made up of interacting parts, rather than prioritizing events that need immediate fixing — can be used to better understand reality and its complexity. Tackling Complexity proposes a five-step technique with which to better understand problems and the context in which they arise, and tools to directly inform each step of the decision-making process. Practically, systemic thinking can be used to identify problems, analyze their boundaries, design strategies and policy interventions, forecast and measure their expected impacts, implement them, and monitor and evaluate their successes and failures.
If we get this right we can make a difference. However, the sheer size and scale of the challenges we face means that even the largest and most internationally dispersed businesses and organizations are limited in the scope of what they can achieve. System-wide changes rely on a critical mass of interested parties, all willing to enter into deep partnerships and collaborations, founded on new levels of trust and a commitment to action, not debate.
There is still a long way to go. We are far from reaching the tipping point that is needed, though the tide is certainly turning, in my view. The commitment to put an end to illegal deforestation and develop sustainable alternatives for commodities like palm oil and soy, for example, is an inspiring illustration of what can be achieved when governments and industry partners come together determined to bring about transformational market-wide changes. None of this is easy. Everything carries a risk. Taking the first step is often the most difficult. It takes courage and a willingness to focus on long-term horizons, not short-term results. Systemic changes therefore require new forms of leadership from men and women — and especially women — willing to be the vanguards of change. For them, Tackling Complexity provides an invaluable route map of what it takes to drive change and succeed in the VUCA world that is undoubtedly here to stay.
A couple of thoughts about the argument presented here. It is typical of some, but particularly economists, to believe that sustainable growth is possible.
First, it may be just a matter of semantics, but the words sustainable and growth should never be used together. Sustainable means to be able to last or continue for a long time, or in perpetuity. The growth that is ‘required’ in economic systems is exponential growth, that is growth that grows on top of previous growth (linear being a constant rate on the original number). But, exponential growth cannot continue in perpetuity. It is impossible on a finite planet and we are already experiencing certain peak resources, especially conventional crude oil.
Second, the belief that we can pull certain levers in a complex system and control the outcome is just hubris. A truly complex system, economics, can never be properly understood; it is not a science where all the variables can be controlled or even calculated. So, even with the best of intentions, policies that impact part of the system cannot avoid negative unintended consequences. We are seeing a great example played out before us with the repeated asset bubble-blowing by the US Federal Reserve over the past several decades and the trillion dollar losses attributed to one of those bubbles, subprime mortgages, popping only a few years ago.
Finally, I think we’re very close to a tipping point; but I think we’re probably thinking different scenarios. I’m thinking economic collapse…