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Breakthrough Capitalism

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.