Revolutions typically erupt bottom-up, but top-down dynamics also play a critical role in transforming economic systems. Unfortunately, there’s little evidence of that happening at the necessary scale. Visionary, effective leadership is conspicuous by its absence--a problem painfully underscored by the continuing turmoil in the Eurozone, the ongoing hangover from the financial crash in 2008, and the failure of the UN Rio+20 summit earlier in 2012.
In times of dramatic change, those at the top of the pile are often dangerously insulated from the grim realities tormenting the less fortunate, spurring increasingly angry dissent. But now and then a small number of leaders gets wind of the impending shifts and helps direct and channel them.
As the Rio+20 summit fades into history’s footnotes, the voices that continue to resonate are not those of politicians, who mainly kept their heads down, but those of business leaders. Three stand out for us as robust examples of top-down leadership, with clear links to bottom-up creativity:
- Paul Polman of Unilever, who is championing a new set of Sustainable Development Goals to replace the UN Millennium Development Goals (due to expire in 2015).
- Pavan Sukhdev, a former managing director at Deutschebank, who led The Economics of Ecosystems and Biodiversity (TEEB) study for the UN, which began the task of putting a price tag on nature.
- Jochen Zeitz, chairman of Puma, who used the Rio platform to promote the potentially disruptive Environmental Profit and Loss accounting method that the sportswear company has pioneered with Trucost and PricewaterhouseCoopers.
Seriously, how many CEOs would volunteer the information that in a single year their value chain had imposed environmental costs valued at 145 million Euros--or around half of its profits that year? Zeitz and Puma did that in 2011. And now Zeitz is working with Richard Branson to create a new business organization, the B-Team, to inject this thinking deep into the heart of the capitalist system.
Incremental steps will always be necessary, no question, but there is a growing need for more drastic measures. For example, David Blood--previously the CEO of Goldman Sachs Asset Management--underwent a personal transformation and now is working to create breakthrough change alongside Al Gore at their investment management firm Generation Investment Management, which was founded in 2004 and advocates for a new kind of sustainable capitalism.
Key among Blood’s and Gore’s priorities: the need to end quarterly earnings guidance and to push towards new forms of integrated annual reporting; to better link senior management incentives with non-financial outcomes; and to get a grip on the nature and scale of the "stranded assets" that will come to haunt investment portfolios as challenges like climate change systematically disadvantage certain sectors of industry.
As creative destruction sweeps through one sector after another, a new set of people and priorities rise to the top. Several of those presenting at our Breakthrough Capitalism Forum operate a different version of the top-down model: Instead of waiting to become CEOs of giant incumbent companies like ExxonMobil or Shell, they are setting up their own ventures and running them as CEOs, or equivalent.
Among them is Tim Helweg-Larsen, CEO of Energybank, which is developing a radically different business model for tackling climate change. This startup plans to empower households across Britain to take a stake in the nation’s clean-energy infrastructure. In the process it aims to unlock capital flows towards getting this infrastructure built. The model would even allow people to pass on their renewable energy entitlement to their children.
The popular bottom-up surges of the last few years, many of them featured in Paul Hawken’s great book Blessed Unrest, now include the Occupy and Arab Spring movements. They signal powerful new forces being unleashed, for better or worse, as system dysfunctions become clear to ordinary citizens.
These people take their inspiration from all over: from big companies, like Puma and Unilever, from smaller companies like Patagonia, from the growing surge of high-performance social entrepreneurs, and from the DIY generation of "makers" harnessing new technologies like 3-D printing; from deeper history of social movements, and from up-to-date companies like Apple. It’s time for the worlds of government and governance to play catch up.