INTRODUCTION: Signals from a New World
The vast challenges of this fundamentally changed world can be broken down into three mega challenges that we now must face: (1) climate change, (2) resource constraints and rising commodity prices, and (3) technology-driven demands for more transparency. These three mega forces are what I'm calling "hotter, scarcer, and more open." Consider the first two forces as nonnegotiable system conditions, which we have to manage for our own survival and prosperity. The third pressure, a profound new level of openness, is more like an enforcer or multiplier, which allows everyone to see (and judge) how companies and countries are handling the first two.
The three mega challenges working in concert are dramatically changing "business as usual" and even what we'd consider "life as usual." Because they're growing stronger every day, executives must quickly figure out how to navigate these pressures.
The fundamental biophysical, technological, and economic realities hitting us create deeply dangerous pitfalls for all organizations, but also vast canyons of opportunity for those who understand and skillfully ride these shifts. Each mega challenge comes with a built-in complementary mega opportunity: (1) the fight against climate change is one driver of the rise of the clean economy (currently about a $250 billion-per-year global investment), (2) resource constraints are happening because of the rise of a new middle class demanding a higher standard of living and more products and services, and (3) connectedness and transparency are also tools of open innovation, driving new ideas and creativity.
Unfortunately, today's organizations are not up to the task of managing and profiting from shifts this large. Even putting aside nature's extremes, the business world has been struggling to manage constant, disruptive change. The big threats to business that students learn about in business school are still going strong: new entrants with disruptive business models, increasingly complex supply chains, growing requirements from fickle customers, and new demands from millennial workers who want meaningful work. As John Kotter, a renowned professor from Harvard Business School, wrote recently, "We can't keep up with the pace of change, let alone get ahead of it. The stakes—financial, social, environmental, and political—are rising. The hierarchical structures and organizational processes we have used for decades to run and improve our enterprises are no longer up to the task of winning in this faster-moving world."
Whether you take a purely fiscal view of these challenges or look through a human-focused lens, one thing is clear: we've passed the economic tipping point. A weakening of the pillars of our planetary infrastructure—a stable climate, clean air and water, healthy biodiversity, and abundant resources—is costing business real money. It's not some futuristic scenario and model to debate, but reality now, and it threatens our ability to sustain an expanding global economy.
We need a new approach to prepare for, avoid, manage, and even profit from the challenges we're facing. We need to build organizations that help bring about the necessary changes in our economic system, but from within. These new companies will be more resilient, robust, and able to thrive in fast-changing times. They will be what Nassim Taleb, an author and an expert on uncertainty calls "antifragile." But to get there, companies must shift how they operate in fundamental ways, starting with a deep change in perspective.
The Big Pivot
We can't pretend there are two sides to every issue. Of course, details of how the mega challenges will play out are hazy, but they are happening, full stop. If you don't believe—or you're not at least willing to consider—that climate change and resource constraints are very serious problems, then this may not be the book for you … just yet. If you don't see that these challenges also create enormous opportunities as we try to figure out how to support what will be 9 billion people, all getting richer and freer and demanding more of everything, then you may not be ready for these ideas today.
This book is for those who know (or are starting to sense) that the pressures we face are so large and intertwined, and the time growing so short, that addressing them aggressively represents the only logical path forward for humanity and for every government, community, business, and individual.
In short, if you believe that these pressures are real, then what has until now been called green business, or sustainability, cannot be a side department or a niche conversation in commerce. Instead, we must pivot—sometimes painfully, always purposefully—so that solving the world's biggest challenges profitably becomes the core pursuit of business.
We're now testing the limits of all the natural systems that support our economy and society. Thus, we need to establish a new paradigm for how companies operate. This book is an attempt to answer a fundamental question: If this hotter, scarcer, more transparent, and unpredictable world is the new normal, then how must companies act to ensure a prosperous future for all, including themselves?
Asking whether it makes business sense to tackle the mega challenges is no longer the relevant question. Instead, we must ask ourselves some new core questions, such as, "What do we need to do to manage our businesses effectively in light of these challenges?" Then, and only then, do we figure out how to profit massively from the journey. Profits will still drive much of corporate action—an unprofitable model won't survive—but ultimately it's ludicrous to prioritize short-term profit at the cost of our very survival.
We need a major shift in perspective to see that we can deal with the challenges profitably. It's a both-and argument, not the usual false either-or hurdle that's placed in front of advocates for change. Organizations can no longer afford to address massive issues like energy, climate, water, and global development and poverty only when every initiative on the table meets some predetermined, somewhat arbitrary hurdle rate. We have to flip these priorities on their head.
That's the Big Pivot … and it's nonnegotiable.
Big-Pivot strategy represents a major shift in consciousness for the private sector, but it's not entirely radical. In fact, this kind of thinking is highly conservative, with a major dose of self-interest. We need to conserve the planet's capacity to support us for our own good.
Reprinted by permission of Harvard Business Review Press. Excerpted from The Big Pivot: Radically Practical Strategies for a Hotter, Scarcer, and More Open World. Copyright 2014 Andrew S. Winston. All rights reserved.
This article was originally published on Stanford Social Innovation Review and it is available here.
The Big Pivot: Radically Practical Strategies for a Hotter, Scarcer, and More Open World
INTRODUCTION: Signals from a New World