Radical is the new Normal

Rod Oram’s presentation to the

World Business Capability Congress

Auckland, December 5th, 2012

Fast-forwarding the world’s economic transformation, sustainably

Kiwiki on Facebook / Twitter @RodOramNZ

oram@clear.net.nz / +64 21 444 839

Agenda

• World

• Radical

• New Zealand

• Paradox

• Revolution

• Complexity

Then…. …Now

• 2007-09

• Sudden liquidity crisis

• Big, quick fix

• Pump in lots of money

• Lots of political will

• Lots of public support

• Worked fast

• Markets re-assured

• Moved on to current phase

• 2009-20??

• Long-running structural crisis

• Big, slow fix

• Restructure economies

• Lack of political will

• Lack of public support

• Will work slowly

• Markets fearful

• Very, very stuck

Saving Europe is simple

• All it would take is:

• French reform

• German extravagance

• Italian maturity

• …as The Economist opined May 12

World Economic Forum: Global risks

• To ensure human needs are met, we need radical new technologies

• We need to develop and deploy them on a scale and at a speed like never before

• …and with much greater complexity and risk

• …and with a need for public understanding and support

• …and ways to respond far better when things go wrong

• This is a fundamental shift in risk and risk management

WEF: Risk map

WEF: seeds of dystopia • …e.g. is The Occupy Movement an anomaly?

• Or a harbinger of social unrest?

• ...the latter, it concluded

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Rio 2012 – Two views • “The fact that we have a consensus outcome document at all,

and the 283 statements within it, is truly testament to the abilities and goodwill of everyone who attended.”

• Environment Minister Amy Adams, Aug 6, 2012

• At the Environmental Defence Society conference “Growing Green”

• What the text actually contained:

• The 283 paragraphs cruelly exposed governments’ lack of ambition & commitment

• 99 times – “we support”

• 50 times – “we encourage”

• 5 times - “we will”

• 3 times – “we must”

• “The longest suicide note in history”

• Kumi Naidoo, Greenpeace International’s executive director

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The rise of civil society… • …birth of a new democracy:

• People-led • Not politician-led

• Locally-driven • Not centrally controlled

• Interactive • Not authoritarian

• Creative • Not restrictive

• Networked • Not hierarchical

• Learning • Not stagnating

Rise of civil society • At Rio:

• More than 700 formal commitments by organizations and companies were registered

• They pledged more than US$500bn to sustainable development actions, many were addressed specifically to fighting climate change.

• Examples

• The 1,800 largest companies listed on the London Stock Exchange committed to disclose their greenhouse gas emissions

• Mayors from 58 megacities, meeting as part of the C40 Cities Climate Leadership Group, agreed to actions which could reduce greenhouse gas emissions by over a billion tons by 2030

Voluntary action

• US Natural Resource Defense Council’s Cloud of Commitments

• http://www.cloudofcommitments.org

Business action

• World Business Council for Sustainable Development…member commitments

• http://www.wbcsd.org/rio-20/membercommitments.aspx

Natural Capital • Many global corporates committed to it at the UN’s 2012 sustainability

summit in Rio

• www.naturalcapitalproject.org

Agenda

• World

• Radical

• New Zealand

• Paradox

• Revolution

• Complexity

People, planet • Vision 2050 • A very challenging roadmap

for corporate development by World Business Council for Sustainable Development

• …NZ version just released

w • q

Cradle to Cradle • One product gives rise to the next

• …waste, by-products and recycling of one, become materials for the next

• …emulating nature’s cycles

Re-conceiving…biomimicry • Imitating nature

• …the technology discipline pioneered by Janine Benyus

• www.biomimicry.net

• Fans, propellers like nautilus shells

• Wire ropes as strong as spider webs…

• …made in cold biochemical processes

• Prof Neil Gershenfeld, MIT…TED talk http://bit.ly/MI7Eur

…when information meets atoms

The next 10 years • Finance and capital conditions

• Finance more expensive and less available • Market and regulatory constraints

• Less benign economic conditions

• Higher economic volatility; Increased risk

• Low carbon-economy • New disciplines & technology • Far greater resource efficiency • Technology change accelerating

• Public losing trust in business

• Scepticism over Anglo-Saxon model • More government intervention

• Social and demographic change

• New responses to retirement, pensions • New business & government solutions • E.g. more flexible working practices

“The Shape of Business” Confederation of

British Industry

www.cbi.org.uk

New management disciplines

• Relationships: from transactions to partnerships • …particularly highly strategic ones

• Innovation: from incremental to radical

• To meet new needs…in new ways • Open innovation and other forms of collaboration • New opportunities for NZ companies to partner with global ones

• Management: from tactical to strategic

• Need to collect, interpret and act on real-time data • Everything we do today is a piece of our big picture

• Sustainability: from fringe to mainstream

• Measuring and managing environmental flows through our businesses • Push down the road to true sustainability

Agenda

• World

• Radical

• New Zealand

• Paradox

• Revolution

• Complexity

…but we suffer from slowth • We’re still recovering slowly …

…helped by rebuild of Christchurch

• Growth in year to June 2012 was 2.0%... ..could peak at 3% next year …dominated by Christchurch

• But will then sink back to its long-run slow growth average of around 2%

• Why can’t we grow faster, longer by earning a bigger living in the world economy?

Government Strategy Mk III

• “Business Growth Agenda”

• 6 ingredients of business growth

Agenda

• World

• Radical

• New Zealand

• Paradox

• Revolution

• Complexity

Paradox

Abundance Scarcity

Poverty

Cows Scientists

Poverty

Tourists Engagement

Poverty

Sustainability

Weak Strong

Re-invention

Scarcity Abundance

Wealth

Lacto-pharmaceuticals Milk powder

Wealth

Travellers Tourists

Wealth

Sustainability

Strong Weak

NZ Vision 2050

• …by a group of young leaders…

• …under the NZ Business Council for Sustainable Development…

• …which morphed into Business NZ’s Sustainable Business Council

• Download at:

• http://bit.ly/PxiG1B

• NZ site coming soon at:

• http://www.vision2050nz.co.nz

• Vision 2050 Global report at:

• http://bit.ly/Ox0HsK

Agenda

• World

• Radical

• New Zealand

• Paradox

• Revolution

• Complexity

The green imperative…NZ’s opportunities • Authoritative analysis from Pure Advantage

• …business research group led by Tindall, Fyfe, Morrison, Ross, Mills and other NZ business leaders

• Building business buy-in on seven initiatives in existing sectors:

• Housing

• Geothermal

• Biofuels

• Waste to energy

• Smart grid

• Agriculture

• Biodiversity

• Available at www.pureadvantage.org

LanzaTech…clean tech leader • Commercialisation agreement with:

• Chinese Academy of Sciences

• Baosteel; next pilot plant in China

• Makes biofuel from industrial waste gases • Turns greenhouse gas liability into profit

• World pioneer of the science

• Auckland-based; NZ Steel pilot plant

• Big venture capital backing

• US$100m of capital so far • NZ: Stephen Tindall

• US: Vinod Khosla

• Chinese and Malaysian investors too

Urban New Zealand • As a nation, we largely define ourselves by our rural and wild parts

• …and we believe rural business underpins the national economy

• Yet, we’re one of the most urbanised populations in the world

• …87% of us live in towns and cities

• …most people earn livings far removed from the rural economy

• Our urban places are in trouble….

• …their built environments are increasingly unsustainable

• …their economies anemic, inward looking

• Christchurch pre-earthquake had a lot of marginal businesses, buildings

• Auckland mainly serves only its own population

• Wellington’s tourism & events strategy earns little; public sector shrinking

• Dunedin is slipping away

• …and every smaller town has its own story to tell, positives & negatives

• Challenge:

• Reinvent, reinvigorate our urban communities and economies

Yes…

• Radical?

• No

• Zero energy?

• No

• Growth?

• No

• Sustainable?

• No

• 21st Century city?

• No

…but

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…instead, how about creating global centres of excellence in: - Dairy nutrigenomics - Earthquake prediction, rescue & recovery - 21st century city systems - Antarctic research

Agenda

• World

• Radical

• New Zealand

• Paradox

• Revolution

• Complexity

Explosive growth in technology

• Paradigm shift rate…

• …the overall rate of technical progress

• …is doubling every decade

• …and impact is doubling too

• 20th century: – about 25 years of progress at today’s rate

• 21st century: – progress equal to previous 200 centuries

• So, 21st century will see 1,000x as much progress as 20th century

• In the next 10 years, we’ll see 80x the technological advancement of past 100 years

www.ted.com/talks/matt_ridley_when_ideas_have_sex.html

Poverty

Simplicity Complexity

Poverty

LGA, RMA, EEZ Society

Wealth

Complexity Simplicity

Wealth

Society.....................LGA, RMA, EEZ

Our future…and the ultimate complexity

• NZ Land: 270,000 sq km

• Australia’s 28x NZ

• NZ Oceans: 5.8m sq km

• 5th largest in the world • Australia’s 1.4x NZ’s

• Huge responsibility:

• …to nurture

• …to use responsibly

• …to sustain us

• …we get $184bn of ecosystem services for free

• We need new values, systems,

learning, collaboration:

• …to be sustainable

• …to offer hope to the world

“You’ll have no future…

…if you don’t make one for yourself”

…Johnny Rotten: