For a long time, talk about environmentally sustainable business practices triggered one or another stereotypical retort about how enterprise cannot thrive if asked to live by such standards. Now, we are hearing leading voices in business talk about the need to achieve a new standard of business-model innovation that comes at such a pace and with such agility it becomes integral to our definition of smart business.
Historically, complex civil structures were designed to facilitate the mass externalization of costs that innovative enterprise might find hard to carry. This model was driven by the view that resources are finite, and so value can only be distributed in ways that are ultimately unbalanced and unfair. So, some should be freed of uncomfortable burdens, and everyone else should carry them. This was the justification for absolute monarchy, and then for aristocracy.
That view holds only so long as we ignore three vital realities:
- Knowledge is a resource and knowledge generally expands.
- We cannot access value if natural systems collapse.
- Progress brings more efficient execution of greater capability.
History has taught us how to generate inequality and conflict, but it has also taught us that technical progress moves in the direction of ephemeralization (more capability, less material), acceleration, and enhanced verifiability and precision.
Doing more with less is not austerity; it is capability.
Doing more with less is what adds value and allows a business to out-compete its rivals. Information technology has demonstrated that we can do twice as much with the same material intensity, as often as every six months. Quantum computing promises to multiply that rate of ephemeralization.
Paradigm-shift technologies are “disruptive”, because they immediately change the qualifications for efficiency frontrunner. The avant garde gets out in front, because it harnesses these disruptions first.
What is competitive 21st-century enterprise?
First of all, it is a way of doing business that comprehends sustainability not as a “green” dream, but as a basic requirement for long-term viability. This implies many kinds of paradigm-shift thinking, but we can highlight a few here:
- Carrying costs makes you stronger and more resilient.
- Carrying costs and avoiding harm makes you more innovative.
- Business-model innovation is part of everyday life.
- Aversion to business-model change is a competitive disadvantage.
- Empowering your clients is a better sell than binding them.
- Long-term business resilience requires ecological integrity.
- There is no excuse for practices that harm others.
We are now learning there is a measurable carbon delta—the difference in value between an investment or portfolio free of carbon asset risk and one burdened by it. The rapidly escalating level of global value disruption from climate impacts is already outpacing new investment income. By 2050, an estimated $158 trillion in assets are at risk from flooding alone.
Mass externalization of cost and harm is no longer a viable strategy for building an agile, adaptive, resilient long-term business.
The world is too connected; our collective access to know-how is too pervasive; our ability to disrupt natural systems is too great. With supercomputing camera-enabled smartphones spreading into the billions, the idea that externalized costs will be absorbed without notice, or that no more efficient business model will arise, is just not reasonable.
Ephemeralization, carrying capacity (for inconvenient costs), and energy efficiency are becoming central to the planning of this kind of radical business model change. Fossil fuel extractors, for instance, under the right market conditions, may eventually move into molecular extraction of carbon resources (even from air and water), and production of advanced materials as their primary business model. (Synthetic hydrocarbon polymers are now produced as a byproduct in the refining of petroleum-based fuels.)
We will soon start to see portable computing and smart communications devices made of alloys and polymers that can harvest energy from their environment. All-electric, self-driving smart automobiles will raise energy efficiency standards to levels never dreamed of for internal combustion engines. These are just hints of the deeper shift that is taking place in terms of how we access, use, and share, both energy and value.
One more thing
In addition to being smart, lightweight, and adaptive, capable of comprehending and managing a regular pace of internal business-model innovation, competitive 21st century enterprise needs to be rooted in relevance. The centuries’ long trend toward end-user-friendly commerce is reaching an inflection point, after which the most successful ventures will reliably empower their clients to expand their own capability, liberty, and reach in the world.
Competitive 21st-century enterprise needs to know how to operate in this landscape of hyper-convergence, rapid-fire repeated disruption, and routine business-model innovation. Given all of these challenges, and the vast landscape of opportunity open to those who work well in this new kind of smart enterprise, two new indices will be of value for measuring cutting-edge business capability:
- Business-Model Innovation Index (B-MIX)
- Long-Term Business Resiliency Index (LTB-Rx)
Both of these will be developed in conversation with a network of partners. They will be intended to consider value as understood by investors, stakeholders, innovators, and responsible officers, from a variety of sectors. To ensure both adaptive capacity and practical applicability, this work will be done in a way that understands the marketplace in a more comprehensive, dynamic, interconnected, and evolving way.
Both the Business-Model Innovation Index and the Long-Term Business Resiliency Index will draw from and feed back into collaborative future-buidling projects like ACCESS to GOOD and the Accelerating Progress, Advancing Innovation dialogues. The aim is to ensure that while businesses compete to thrive in the extant and evolving market landscape, they also learn from best practices and begin to see over the horizon, to ensure we all have ready access to a smart, sustainable future, sooner rather than later.
21st-century smart enterprise is not the exclusive domain of wishful futurists or entrepreneurial geniuses. It is all of our business; it is a marker for responsible, creative future-building, and a light to guide us as we make our way into a future where cost, capability, and value, look very different than they did before.
For discussion, links, and updates, about smart, lightweight, adaptive 21st-century enterprise, follow: