Back to basics (11): Sustainability – the next Kondratiev supercycle?

The last edition of “back to basics” did focus on the ongoing discussion about managerial trends and was proposing that sustainability needs to get into the DNA of management practice, starting from the Board room and supported from bottom-up, which will of course only happen if management theory accepts sustainability as a principle that keeps the organization alive (license to operate) and embeds the opportunity to prosper (license to grow). It remains to be seen what the consequences will be for Weber-type demand and control hierarchy, for the ongoing increase of workload for less staff in efficiency driven management programs, the ongoing ‘parallel worlds’ corporate governance, strategy development and sustainability management, Taylor-style way segmentation of work packages and one-way communication to customers. The champions of the last decade, including Google, Starbucks, Yahoo, ebay, but also Gore, Timberland and others throw a lot of this over board, use seamless stakeholder engagement and web 2.0 technology to enable internal and external networking communities and shape their business models. The internet development marks the most important milestone of the 5th Kondratiev supercycle, and at the same time shapes the path into the 6th Kondraftiev cycle; maybe this next supercycle will carry the name “sustainability cycle”?

Here’s a quick Wikipedia explanation of the phenomenon of so-called Kondratiev cycles (http://en.wikipedia.org/wiki/Kondratiev_wave): “The Russian economist Nikolai Kondratiev (1892-1938) was the first to bring these observations to international attention in his book "The Major Economic Cycles" (1925). (…) According to the innovation theory, these waves arise from the bunching of basic innovations that launch technological revolutions that in turn create leading industrial or commercial sectors. (…) Most cycle theorists agree on five waves so far since the industrial revolution, and the sixth one to come. These five cycles are:

1. The Industrial Revolution—1771,
2. The Age of Steam and Railways—1829,
3. The Age of Steel, Electricity and Heavy Engineering—1875,
4. The Age of Oil, the Automobile and Mass Production—1908,
5. The Age of Information and Telecommunications—1971.”

All new supercycles are normally aligned by recessions, a tendency currently eminent. It is clear that from a technology perspective this next supercycle will focus on technologies that aim to sustain human life on this planet; health care, biotechnology (biomimicry etc.), next generation renewable energy and also – although conflicting - gene technology are subcategories. Even visionary concepts for the next generation internet is taking biological processes as the basis for further adaptation.

For all of us working in organizations and dealing with management issues one of the most important questions will be: will biology and its inherent logic of adaptation and communication also bring about a new mangement style? Will the next Kondratiev cycle include innovation in technology AND management? Will we see a continuous flow of newcomer organizations becoming big in short time just simply because the earlier cycle champions became to slow to adapt because of their structure and size?

You may aks ‘what does all of that has to do with GRI and is G3 Guidelines?’ Well, first of all the existence of GRI itself is a logic answer of interested stakeholders – like many other GAN’s (Global Action Networks) - to the slow adaptability of world trade mechanisms, governments and companies with regard to the overall transparency needs of a fair and successful implementation of globalization. The idea is that world markets can simply function better (and will survive) if sustainability is accepted as the roadmap and the necessary transparency needed is available. This will increase the speed into the next Kondratiev supercycle.

GRI’s G3 Guidelines purposefully ask in great depth what management’s reaction to these new challenges is. Is sustainability part of Board room discussions and is the organization aware about its impacts on sustainability issues? Vice versa, how do sustainability problem areas already affect strategy and business models? (see GRI G3 chapter on ‘Strategy and Analysis’). G3’s Disclosure on Management Approach then asks how the results of this analysis are translated into the management system implementation. Last but not least G3’s indicators ask about the performance achieved and the targets and objectives aligned to them. In that sense using G3 and implementing a proper reporting process are a useful means to increase the above described adaptability into an age of high speed change.

Back to basics (5): The Law of Jante

In one of his last books* Paulo Coelho explains to the reader the meaning of the “Law of Jante”, first introduced by the Scandinavian writer Aksel Sandemose in his 1933 novel A Fugitive Crossing His Tracks. In short the Law of Jante means something along the lines of “You are worthless; no one is interested in what you think, therefore you had better opt for mediocrity and anonymity. Do this and you will never face any major problems in life.” Coelho continues by saying “that it is thanks to the Law of Jante that the world has been manipulated in all kinds of ways by people who often end up achieving their own evil ends; we see the great gap between rich and poor, see social injustice, violence and people who are forced to give up their dreams.”

What will happen a couple of generations from now when people will look back at the beginning of the new millennium? Will they realize that civil society, business and politics, although knowing all the facts that have been presented by the IPCC and clearly communicated by leaders like Al Gore, haven’t really done enough to prevent climate change, so that everything got worse and made life impossible in many areas of the planet, causing huge migration waves and decimation of humankind by until then unknown diseases that appeared because of an immense number of people living on very limited space in megacities of 50 million citizens and bigger? Will they simply say “well, blame it on the Law of Jante?”

I prefer Paulo Coelho’s proposal to create an “Anti-Law of Jante” to prevent things from getting worse: “You are worth much more than you think. Your work and your presence on this earth are important. Of course, such ideas could land you in a lot of trouble breaking the Law of Jante, but don’t be intimidated. Continue to live without fear, and you will triumph in the end.”

With Al Gore and Rajendra Pachauri (for the IPCC) receiving this year’s Nobel Prize for Peace the Nobel Committee in Stockholm has sent a clear wake-up call to the world today: let’s not allow this to happen. All necessary information is transparent; let’s fight the Law of Jante now!

We in GRI are proud of having had the chance to hear Al Gore at the first GRI Global Conference on Sustainability and Transparency in 2006 and are already looking forward to the second conference in May 2008 when Mr. Pachauri will be with us.

* Paulo Coelho: Like a flowing river, HarperCollins Publisher, 2006

Climate change: driving disclosure?

What a week it has been for climate change advocates. This morning the Intergovernmental Panel on Climate Change released its report on "The Physical Science Basis" which found that humans are, indeed, to blame for changes in the climate tracked thus far and for future damage predicted on the short and long term horizons.

Add this to yesterday's nomination of Al Gore for the Nobel Peace Prize for his work on the subject (interestingly, a co-nominator was a representative of Inuit groups in the north worried about their cultural viability), and Wal-Mart's agressive stance at a press conference in London where it promised to flex its muscle and reduce climate impacts via its operations (eco-efficiency solutions) and products (sales of energy saving bulbs).

Working back one day further, we get to Wednesday, when the US groups Ceres and Calvert released the findings of their recent study on the state of climate oriented disclosure among the Fortune 500 companies. Although they did find that nearly half are beginning to get active via the GRI Guidelines or the Carbon Disclosure Project, a full 30% still cite "confidentiality" issues as the reason they dont disclose their climate oriented data.

What will it take to transform issue awareness and acceptance into action, and specifically accurate management, measurement and disclosure of risks and opportunities? How much longer will policy makers, investors, citizens, employees, and others allow companies and organizations of all shapes and sizes to get away with citing confidentiality issues as a way out of rigorous disclosure?