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Get Ready For The Breakthrough Decade…

by John Elkington 29 May 2014

And prepare to change your theory of change

‘What happens in next 40 years is critical for all humanity for centuries to come. What happens in next 10 years sets range of what’s possible.’

Alex Steffen, Worldchanging, on Twitter, 10 May 2014

 

Two years on from our Breakthrough Capitalism Forum in May 2012, Volans is working to declare the period 2015-2025 the ‘Breakthrough Decade.’ Since effective, sustained action generally requires a coherent theory of change, we are working on a Breakthrough theory of change — which will help business and investors play a key role in shifting behaviours and mindsets. Before digging into that though, here are some immediate action points for readers:

  • If you are not yet familiar—or up to date—with our Breakthrough Capitalism Program, please visit the website
  • If you are interested in learning more about our emerging thinking—and the linked book (The Breakthrough Challenge) and Breakthrough Decade—please read on
  • And if you are interested in how to engage with this agenda, as an individual, organization or industry, please contact John Elkington (john@volans.com) or Sam Lakha (sam@volans.com)

 

OK, but who needs a theory of change?

As business leaders come under growing pressure to move from incremental solutions to full-blown system change, they could usefully take a lead from the world of social innovation and entrepreneurship. Leaders in these fields typically work outward from a clearly defined theory of change. As to the question in our sub-title, a fuller set of answers can be found here. But key characteristics of any self-respecting theory of change include the following:

  • It should define the key building blocks required to bring about a given long-term goal
  • It should map one or more change pathways, the trajectories that the processes of change must follow, as we did with our Pathways to Scale work back in 2009
  • It should identify the types of interventions needed to drive the outcomes required along the selected pathway(s)
  • And it should identify and analyze the key assumptions that the main stakeholders use to understand and manage the change process.

The past decade has seen growing interest in so-called theories of change, particularly in the fields of social entrepreneurship and venture philanthropy, but it’s clear that theories of change are themselves subject to change. Below we highlight some of the theories of change that have shaped leadership thinking over the 70 years since the end of World War II.

The shifts since 1960 are covered by the four societal pressure waves mapped to date by John Elkington, first at SustainAbility and later at Volans (see Figure 1). The focus throughout has been on the processes that are driving deep-seated paradigm changes, linked back to the work of people like Thomas Kuhn and Joseph Schumpeter.

Figure 1: Societal pressures waves, 1960-present day

CVC_societal pressue waves© Volans 2014

Our own thinking about how to drive system change is still evolving, and—no question—we need to do more work on the building blocks, pathways, interventions and assumptions. But, that said, we expect the transition from change-as-usual to breakthrough strategies to be spurred by a growing recognition that much of what has happened in Waves 1-4 was unduly incremental. There is no blame attached to past change initiatives that were designed to boost the efficiency, transparency and fairness of the current system, the status quo, it’s just that to ensure a desirable, sustainable future quo we need timely, effective system change.

 

How has our thinking about change evolved since 1945?

Before looking at our plans for the next decade, let’s look back seven decades. In the post-World War II era, the main focus-understandably—was on reconstruction. With world population still less than 2.5bn in 1945, this era can be said to have run from 1945 through to the late 1960s. Early on the focus was on the Greatest Generation in the US and their global counterparts, but 1968 marked a break point as the anger of younger generations boiled over in the streets of Europe and the United States.

The environment was a very low-level consideration at the time, though incidents like the Great Smog in London and the writing of people like Rachel Carson helped drive early environmental legislation—as we now see happening again in China. The prevailing theory of change at the time, both in the ‘free’ and ‘communist’ worlds saw governments as central, with the Cold War spotlighting the role of the evolving UN system. In an era of ‘Big Iron’ computing, dominated by IBM, the focus of business analysis was on a single, financial bottom line—and economic growth was the ultimate goal.

 

From Wave 1 to Wave 4

The first societal pressure wave (Wave 1, keyword Environment) built through the 1960s—and peaked between 1969 and 1972. World population had reached 3.7bn by 1970, with much talk of the Population Bomb. The NASA images of Earth from space helped drive the rise of the environmental movement.

The space missions spurred the developed of computer and microprocessing technology, leading to the proliferation of personal computers, and the rise of companies like Microsoft, Apple and Dell. Industry was seen as the villain—and the predominant theory of change stressed the need to regulate and control miscreant corporations.

Business analysis began to involve the use of new tools like environmental impact assessments and audits. The first downwave (Downwave 1, running through to 1987) saw a massive wave of regulation across the OECD world, with business largely on the defensive, forced to comply.

Wave 2 (keyword Green), peaking between 1988 and 1991, saw the collapse of the Soviet-centered Communist bloc. World population had reached 5.2bn by 1990. In parallel there was a new focus on moving business ‘beyond compliance.’ This period saw a growing emphasis on a new theory of change, with a much stronger emphasis on the use of market mechanisms, with movements like green consumerism impacting retailers and producers on much truncated timescales.

One result was the launch through the subsequent downwave (1992-1998) of a range of new, voluntary market standards such as AA1000, the Global Reporting Initiative (GRI), ISO14000 and SA8000. Business analysis embraced total quality management (TQM), triple (and then double) bottom lines, and environmental and then sustainability reporting.

The focus of Wave 3 (keyword Globalization) included many Waves 1 and 2 agenda issues, but increasingly in the context of the processes of globalization, liberalization and privatization—with a very different agenda surfacing around the anti-globalization movement. World population reached 6.1bn in 2000. Globalization weakened governments, as did the hyperpower status of the United States.

A key milestone here was the 1999 WTO summit on Seattle, best remembered as the Battle of Seattle, thanks to the protests it attracted, with NGOs and unions (unusually) joining forces. As markets and supply chains globalized well ahead of governance systems, the spotlight was on the increasingly important roles of multinational corporations, particularly their stumbles, as with companies like Monsanto, Nike and Shell.

Theories of change during this period focused more on how to use societal pressures on business than on regulation, with the rules often relaxed to accommodate the needs of MNCs. Institutions like the World Economic Forum (WEF) began to pay more attention to issues like climate change and natural resource security. Business analysis focused on managing complex supply chains and shifting the center of operations toward emerging markets, particularly China.

Then, after Wave 3 was cut short by the events of 9/11 2001, the third downwave (2002-2006) focused for several years on much narrower definitions of security, with the United States increasingly bogged down in its wars in Iraq and Afghanistan. There was a significant growth in interest in the role of the BRICS, while the post-WWII institutions (e.g. UN, IMF) increasingly struggled to influence events.

Wave 4 (keyword Sustainability), which peaked around 2010-2012, saw a growing use of the S-word—with many business leaders saying that they had already embedded it in their business agendas. World population reached 6.8bn by 2010—and we saw the beginning of a generational handover as the Baby Boomers began to retire—and Gen X and Y made their priorities felt. New forms of social media and social networks began to transform not only business (e.g. Amazon, iTunes), but also activism (e.g. 350.org, Avaaz, 38 Degrees).

With governments at all levels distracted by the Great Recession, we saw the emergence of multiple theories of change, including a growing emphasis on the role of entrepreneurs (e.g. cleantech, social, venture philanthropy), plus a growing interest in the implications of the continuing rise of the BRICS and MINT economies, particularly China. Business analysis increasingly embraced concepts like Integrated Reporting and Shared Value, but organizations like World Economic Forum signalled the many ways in which a systemic crisis was building across what it called the Water-Energy-Food-Climate nexus.

Economic growth has remained the objective throughout Waves 1-4, though we have seen growing concern about the consequences of unbridled capitalism—as evidenced in the emergence of the various critiques of capitalism, among them the Conscious, Inclusive, Regenerative, Responsible and Sustainable capitalism agendas.

Through this period, Volans was evolving its Breakthrough Capitalism agenda. As part of this process, we began to think in terms of shifting our work from observing and mapping the Waves and Downwaves to creating the conditions in which the next upwave would be more like a rising tide[1].

 

The Breakthrough Decade

This new perspective will be at the heart of Phase 3 of our Breakthrough Program, which aims to get a better sense of the economic, social and environmental upsides of at least some of the global market shifts that are now building[2]. One key trend we foresee is a growing interest in numbers and data. This is a theme that we begin to explore in our latest report, Investing in Breakthrough: Corporate Venture Capital.

More broadly, we conclude that we are now seeing major shifts in relation to the sustainability agenda. Once, this mainly focused on downside risks, was largely driven by people outside the economic mainstream and was fuelled by bottom-up rather than top-down pressures. Now it is increasingly embraced by insiders, driven by top-down dynamics and, critically, focuses on future market opportunities—not just tomorrow’s bottom line but also on tomorrow’s top line and growth opportunities.

These are themes we pursue in our latest book, due out in September. This is The Breakthrough Challenge: 10 Ways to Connect Today’s Profits with Tomorrow’s Bottom Line. It has been co-authored by John Elkington of Volans and Jochen Zeitz, former Chairman and CEO of PUMA and now co-Chair, with Sir Richard Branson, of The B Team.

With the timing of any Wave 5 (possible keyword, Breakthrough) still highly uncertain, we plan to give things a nudge by declaring a Breakthrough Decade, running from 2015 to 2025. This will coincide with the next round of the UN Millennium Development Goals, the Sustainable Development Goals, but go wider, deeper and longer. By way of context, world population is now forecast to reach 7.3bn in 2015—and is expected to hit 8bn by 2024. Our sense is that we will either now see pan-generational alliances or inter-generational tensions and conflict, a theme explored by Karl Wagner in 2052, a recent set of projections edited by Jørgen Randers.

By way of context, the IT environment is likely to morph substantially over the next decade, with ubiquitous computing, smart buildings and infrastructures, the Internet-of-Things, wearable IT technologies, novel sensing technologies and radically different business models built around the integration of Big Data sets—the sort of trend that is driving the acquisition of early stage companies in the area by the likes of Google and Monsanto. Increasingly, too, we will see powerful cross-connections between increasingly personalized technology and the outputs of Earth system science. In parallel, we expect related trends to begin powerfully reshaping the master discipline of Economics.

 

Breaking Through

We are convinced, albeit mainly because of the current weakness of the other options, that our focus must remain on business and financial sector leadership for the moment. But with a growing recognition that individual companies can only do so much, we also expect to see a rapid growth in interest in pre-competitive collaborative initiatives and platforms designed to tackle key elements of the agenda. Recent examples here would include The B Team, the Sustainable Apparel Coalition and the Zero Discharge of Hazardous Chemicals platform.

We conclude that numbers and data, and how we use them to inform critical business decisions, will be crucial as we make ever-greater investments in more sustainable economic, social, environmental and governance outcomes. Inevitably, the needle will shift from values as a driver of change to valuations. That is why Phase 3 of our Breakthrough Program focuses on the market data and intelligence needed to inform tomorrow’s Breakthrough decision-making.

Ultimately, however, we urgently need a wider acceptance of the fact that effective, efficient and legitimate politics, government and governance are also essential to success—which will require new forms of all of the above. As a result, the Breakthrough Decade must see business leaders not just playing an increasingly active role in politics themselves, but also calling for politicians to play their part, too, and helping them to do more, better, faster.

 

Footnotes:

[1]That said, we have been instrumental in mobilizing change movements in earlier waves and down waves, in such areas as green consumerism, sustainability reporting and social innovation and entrepreneurship.

[2] A background document is available on request from Sam Lakha (sam@volans.com).

@volansjohn:“Within the Next 30 Years: Humanity Will Be Transformed by Exponential Growth” by @singularityu medium.com/singularityu/w…
@volansjohn:Big Antarctic iceberg edges out to sea bbc.co.uk/news/science-e…, @BBCNews

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