It's Time For Breakthrough Capitalism

Instead of slow, incremental change from the business community, we need to fundamentally reorder the entire system. And right now may be the only opportunity.

There are periods of creative destruction when an old, dying order comes apart at the seams, opening up the space for a new order currently struggling to be born. That’s what the Austrian economist Joseph Schumpeter told us, mapping the cycles. And now here we go again.

A decade or two from now, the "long year" straddling 2011 and 2012 will likely be seen as one of those pivotal transitions, like when the development of "breakthrough" steam engines fueled the Industrial Revolution. The question is whether our incrementalist mindsets (think of the disappointingly weak outcomes of this year’s Rio+20 summit) will trigger a vicious downward spiral toward breakdown—as seems possible in the Eurozone crisis or with oceanic fisheries—or whether the crisis will spark a positive spiral of innovation which delivers breakthrough business solutions and, ultimately, true system change.

But where is all of this on business radar screens? Still often just winking at the edges, it seems. When Accenture and the UN Global Compact polled 766 CEOs a couple of years back, we were delighted to see 93% saying that they understood that the "sustainability" agenda would be key for their businesses in the future, encouraged to see 88% saying they understood new requirements and specifications had to be pushed through their value chains, and outraged to see 81% reporting they had already "embedded" the new agenda in their businesses.

Whatever it is that they think they have embedded, it definitely isn’t system change. It’s now blindingly clear that the global C-suite mindset needs rebooting. So that’s what we set out to do late last year, shifting the focus from what we dub Change-as-Usual approaches—typified by old models of citizenship, CSR, and philanthropy—to genuine breakthrough strategies.

The B-word is used often, but for us Breakthrough is about making the sort of bets that got astronauts to the Moon in 1969, or that created the Internet. Now in its fifth year, Volans took its own, smaller gamble late in 2011, betting heavily on the need to convene unusual suspects to work on ways to break out of the trap we have created for ourselves and in May 2012 we held a Breakthrough Capitalism Forum in London. The language derives from three scenarios informing our work:

  1. Breakdown is the unremittingly bleak scenario, a world in which early experiments and enthusiasm fade in the face of wider incomprehension and resistance to change. Our businesses, cities, and economies overshoot ecological limits, bringing the planetary roof down on our heads.
  2. Change-as-Usual is the scenario where change does happen, but political leaders, investors, and the global C-suite proceed at a dangerously relaxed, incremental pace. There are plenty of projects designed to boost efficiency and effectiveness, to satisfy and even exceed customer needs and wants; but the need for system change is largely ignored.
  3. The Breakthrough scenario, by contrast, assumes that with the usual ups and downs and ins and outs, the trajectory of our societies and economies is pointed toward a very different set of outcomes—in fields as disparate, but still intimately interlinked, as population growth, pandemics, poverty, pollution, and evolution of new forms of global governance.

The epic nature of the challenges we face are outlined by two Volans co-founders, John Elkington (one of the co-authors) and Pamela Hartigan. A former managing director of the World Economic Forum and now director of the Skoll Centre for Social Entrepreneurship at Oxford University’s Saïd Business School, Hartigan underscores the power of narrative and effective storytelling. In that spirit, she characterizes our current task as taking a "Humpty-Dumpty economy" that can’t be put back together in the old way—and rendering it fit for purpose in a world of nine to 10 billion people.

Our own Breakthrough narrative is building by the day, but so is our sense of the complexity of the challenge. As a recent WEF mapping underscored, everything now seems to be linked to everything else. While the Change-as-Usual community focuses on (admittedly important) issues like corporate transparency and accountability, key fundamental issues go largely unaddressed. The science of economics, for one, is fundamentally flawed. It’s based on outdated assumptions and systematically fails to take account of emergent realities generated by seven-billion-and-counting people with an appetite for five—or even six—planet lifestyles.

Two key Breakthrough Capitalism Forum presentations on this theme come from David Orrell (author of Economyths) and Dimitri Zenghelis, who headed Lord Stern’s office during the inquiry on the economics of climate change (which flagged climate change as potentially our greatest-ever market failure) and who is also Cisco’s chief climate economist.

Our economic models, Orrell stresses, also "encode a story," with mathematical models in particular based on "a lot of assumptions, a lot of them not true." Increasingly, we need to model our economies as if they are living systems—far from equilibrium and characterized by growing degrees of uncertainty as the economic transformation proceeds.

Zenghelis agrees, stressing that we are at a "breakthrough moment," but warning that the window of opportunity won’t last long. Now is the perfect time to lay the foundations for a greener, fairer economy, he says, "with little call on the public purse."

When people like Chuck Yeager tried to break the sound barrier, there were those who thought it a physical impossibility, but he pushed right on through. In the same way, others argued that breaking the four-minute mile was a physiological impossibility, before Roger Bannister got out there and did it. Today there are plenty of people who dismiss the possibility of at least some of our economies breaking through the Sustainability Barrier. But the innovators, entrepreneurs, and investors pushing towards Breakthrough Capitalism think it’s not only possible but inevitable—and they want to be first into the new opportunity spaces.

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  • MadSat

    The universe will eventually burn out.  The earth will die.  The sun will expand.  These are known facts in this universe.  The entire concept of "sustainability" is built around ignoring the fact that the universe is not sustainable over any long term.  In fact, estimates of how long before solar expansion makes earth unhabitable in the current sense run as short as 60 million years.  Sustainable in terms of "don't eat the seed grain" or "don't cut so many trees you ruin the rivers and the hills" makes sense.  But many are promoting sustainable as "it has to last forever and never be a net negative to any degree".   That's counter to nature, nothing will last forever, and the stars themselves run a net negative in those terms. 

  • John Elkington

    Thanks for the comments. As a sidebar, it's interesting how the Twitter commentary is wildly more positive than the direct commentary. Indeed, we have always found it fascinating that most of those offering constructive comment in such forums identify themselves, while most of those wanting to vent don't. Our position: very happy to engage with those with a name and a face, whatever they may say. 
    Breakthrough to a more sustainable future depends on transparency, responsibility, accountability and radical innovation. Yes, at least in a competitive economy, there may be good reasons for stealth as companies near market with new solutions which need a degree of protection, and with a movement like Anonymous there may be, too. But, at least for us, in public debate stealth speaks of something else.

  • ibor

    Sure wish I could understand what this breakthrough capitalism is!  I feel--as I often do these days--that you have to be an insider to understand what this sort of technologically driven writing  is all about.  Someone say "speaking  to the choir"?  Is breakthrough capitalism going to be  democracy-driven?   Or is it the sort of insider thing that's  been going on  these past 40  years or so?  Say about the time Ronald Reagan, hero to many capitalists--breaking through or otherwise, I suppose--took over in the White House?

  • Gr1phn

    As a sustainability professional "insider" I must agree with you.  Too often we get lost in the language of the narrative ... trying to find fancy ways to tell the story ... when what is really required is to break it down into the key ideas and concepts.  Regrettably, the field of sustainability, though in its infancy, is already subject to the limitations placed on it by the realms in which primarily operates; specifically, academia, government and big business.  

    If we want real substantive change, then we must throw definitions, statistics, indicators and benchmarks out the window and start re-imagining what capitalism and global markets could look like.  At the very least, it is encouraging to see that a dialogue on the idea of a systems (interconnected) based economy is taking place. 

  • Guest

    This kind of change will require a change in the demand side of the equation. The customer has more power than they are now applying. Demands from them in what they buy and the types of business models they wish to support can force the breakthroughs. People can refuse to buy gas guzzlers and demand electric cars that pull into the station to swap drained batteries for fully charged ones much as they would pull in to fill the tank. People can refuse to buy from companies who lay off employees, dumping huge work loads on those who remain and support companies who hire (Ford announced they are moving a production plant from Mexico back to Michigan). Market demand can be used by the buyer, not simply manipulated by the seller, to drive change.

    Case in point, before the Titanic sank arguments for crushing cost burdens of safety equipment rang through halls of government on both sides of the Atlantic. After the disaster, prospective passengers were looking at numbers of lifeboats, double-bottom hulls. Suddenly, not having such equipment could cost you the business on a large scale. Shipyards were busy for months with orders for refits by companies responding to the change in demand.

    So, fellow customers, let's not wait for a disaster to insist on changes, OK?

  • Optimist

    The business community will always favour "slow, incremental change"; they are invested in the status quo and spend big bucks on lobbyists charged to defend the ways things are and their business model annuities.

    However, the market (as distinctly opposed to big business) is awesomely powerful in self-organising and adapting to changes in incentives. So the challenge is putting these incentives in place.

    Assuming that a ground swell in consumer behaviour is still unlikely we are talking about changes to taxation, and regulation brought about by a politician who is willing to lead from the front  and defy the vested interests that funded their re-election . Second term President with nothing to lose?

  • Blaec von Kalweit

    This is a line of thinking that will open doors to new opportunities throughout the world -- not just in emerging markets. We need a global restructuring of the way things are done. People are calling for it. It's time business answered that call. Keep it going. 

  • Reprobate

    Blah, blah, blah....  Lot's of words, but nothing of interest was said. What a waste of electrons!