Venture onto the top floor of many corporate HQs and the silence, the deference, and the sense that the air is thinner can be disconcerting. Most Boards and C-Suites live in reality bubbles, which may—or may not—reflect existing or emergent realities. Exxon CEO Lee Raymond famously presided over the 'God Pod'—the bubble within which his executive office operated with near divine powers. More recently, one doesn't need to look further than what went on at the top of companies like Enron, Lehman Brothers or Bear Stearns before they hit the wall. Trying to engage C-Suite leaders on wider environmental, social or governance issues at such moments can be a Sisyphean task, if indeed you can even get through the door.
But the world is changing—and at an accelerating pace. You can sense the change in many C-Suite conversations and agendas. And a key catalyst is the growing sense that there is now real money to be made in tackling the linked sustainability and social innovation agendas. Examples include GE's commitment to develop its Ecomagination portfolio, and GSK's leadership in providing access to medicines to base-of-the-pyramid markets—both covered in blog 3.
Of course, the incoming future may be hard to spot if your radar screens are tuned to the business-as-usual frequency. There's a critical lesson for top management in Pablo Picasso's observation that, "I am always doing that which I cannot do in order that I may learn how to do it." As C-Suite thinking morphs from citizenship to an increasingly strategic assessment of risks and opportunities, that's also likely to be good advice for business leaders.
Forget the failed Copenhagen climate summit—and the weak-kneed, myopic failure of so many world leaders to lead. Politicians are often among the last to spot oncoming bouts of creative destruction. Their instincts—like those of too many business leaders—are to patch over cracks in existing systems, rather than evolving new business models fit for a very different world.
Transformative change generally comes from the margins of the existing system, not from incumbents. Bill Hewlett and Dave Packard founded Silicon Valley from a nano-garage. Still, some incumbent leaders can see elements of the future coming, particularly business leaders. Earlier in 2010, for example, 29 global CEOs launched the latest study from the World Business Council on Sustainable Development (WBCSD), called Vision 2050.
Rather than slumping into post-Copenhagen gloom, they set out a vision of how a dangerously expanded population could enjoy health, food, shelter, energy, mobility, education and other basics of life by mid-century.
The WBCSD findings resonate with those from IBM's Global CEO Survey: Enterprise of the Future report, which collected feedback from around 1,000 CEOs. Among the conclusions: the C-Suite is 'hungry for change' and, perhaps surprisingly, is 'disruptive by nature'. As KPN Telecom CEO Ad J. Scheepbouwer explained, "We have seen more change in the last 10 years than in the previous 90."
Speaking for the WBCSD team, Syngenta CEO Michael Mack warned that "humanity has largely had an exploitative relationship with our planet; we can, and should, aim to make this a symbiotic one." In the Vision 2050 scenario, global society achieves this standard of living without further harm to biodiversity, climate and ecosystem services.
But there's a catch: "The radical changes highlighted in Vision 2050 demand a different perspective from business leaders, requiring them to rethink how they operate to stay on-track for a sustainable future," warned Samuel A. DiPiazza Jr., former CEO and Chairman of PricewaterhouseCoopers.
What WBCSD is calling for is "a radical transformation of global markets, governance and infrastructure, and a re-thinking of our ideas of growth and progress. To make all of this possible, corporate Boards and C-Suites are going to have to work out how to incorporate the costs of externalities, starting with carbon, ecosystem services and water, into the structure of the marketplace. They have to work out how to double agricultural output without increasing the amount of land or water used. And, among many other things, they have to halve carbon emissions worldwide (based on 2005 levels) by 2050.
Happily, history suggests, the bigger the stakes, the greater the risks the best leaders are willing to take. So, as the cards are dealt, a question likely to be on everyone's minds is: How big is this pot—or market reward—going to be? The WBCSD CEOs conclude that, "a shift toward sustainability will trigger trillions of dollars in new investments in infrastructure, technology and human services, creating new opportunities for business to thrive and grow." A study commissioned from PricewaterhouseCoopers indicates that this investment could reach US$ 3-10 trillion per annum in 2050.
C-Suites are waking up to the fact that there are huge opportunities here for new products and services, for tapping into (or creating) new markets, for differentiating the business and brand, and for powerfully engaging present and future employees. No wonder, then, that a growing number are buying into the defining high-stakes market game of the twenty-first century. But how ready are they to build winning hands?
[Image by carmen zuniga]
John Elkington is co-founder and executive chairman of Volans Ventures and co-founder and director SustainAbility. His most recent book was The Power of Unreasonable People: How Social Entrepreneurs Create Markets That Change the World (Harvard Business School Press, 2008). Charmian Love is Chief Executive of Volans.