It's a sign of the times when a leading business guru uses the word "Sustainability" in the title of their latest book. Sustainability has gone from being a preoccupation of the Green fringe to a core business concern. Company failures like Enron and Tyco followed by the fallout from the more recent credit crunch (Northern Rock, Fannie Mae, etc) are making it clear just how important building sustainable, resilient businesses is. The impact of resource shortages (oil, water, metals, topsoil), climate change, pollution, species extinction, population growth, and Asian economic growth will soon make it an imperative.
So it is interesting to see that Peter Senge has named his newest book The Necessary Revolution: How Individuals and Organisations Are Working Together to Create a Sustainable World. As ever, Senge is interested in the quality of our thinking. He reminds us of the metaphor of the Bubble. This metaphor was invented by economic historians to make sense of the recurring puzzle that financial overexpansion and collapse occur time and again, drawing otherwise bright and clever people into ruin. Bubbles occur because during periods of expansion two parallel realities develop, one inside the bubble and one outside - and both feel equally real to those who live within each. But the more the bubble grows, the more those within it are drawn into its powerful reinforcing beliefs and perceptions, becoming increasingly disconnected from the reality outside the bubble. But eventually this larger reality asserts itself and, unable to continue expanding indefinitely, the bubble bursts - as, for example, the dot-com bubble did in the late 90s.
Senge suggests that our current economic model - the extractive "take-make-waste" economy - constitutes such a bubble. This bubble is driven by a set of deeply embedded assumptions of which perhaps the most damaging is that we are separate from nature and can thrive and prosper, whatever damage we do to the planet. In fact, the more we inflate the bubble, the more we compromise the basic conditions that support and generate life.
When bubbles burst (as the extractive "take-make-waste" bubble will), there is instability and uncertainty. And because bubbles often collapse far quicker than people expect this can cause huge social and economic damage. But, precisely because of the discontinuity, there are great opportunities for those who see the collapse coming and plan for it. For example, in the 1970s Shell famously moved from being the eighth largest oil company in the world to the second largest in just 2 years because its use of Scenario Planning had prepared it for a whole range of possible futures - one of which was, against the conventional wisdom, a sharp increase in the price of oil. In October 1973 there was just such a surprise price rise and, of the major oil companies, only Shell was prepared for the change.
The questions leaders should be asking themselves are:
- What are the possible futures after the bubble bursts?
- What can we do to prepare for these futures now?