Rethinking Impact
Part I
A fish is swimming along one day when another fish comes up and says “Hey, how’s the water?” The first fish stares back blankly at the second fish and then says “What’s water?”
The hardest part of building something new is to challenge our own thinking. To sustainability problems this matters a great deal, because we get stuck in old paradigms if we don’t. Innovators shouldn’t spend all their valuable time and effort strengthening or improving the villains of society. They should also be building new systems and paradigms.
Rethinking Impact is based on insights from Iterate, a venture builder supporting innovation talent on their journey from idea to scale and beyond. What we have learned so far: Giving people the freedom to build what they are passionate about is a path to products, businesses and systems that are smarter, more sustainable and better aligned with the longterm interests of humanity and the planet.
Why
When the Ever Given on March 23 2021 ran aground in the Suez Canal, we were made aware about an indispensable wheel in the machinery of the world economy: Enormous container ships that bring us an abundance of affordable products, produced far away from home. While the products are great, it’s easy to forget that the container ships themselves are a major source of pollution: They run on bunker fuel, the lowest quality fuel derived from oil production, and it takes a lot of it to move 200,000 tons of steel 10.000 kilometres over water. While pollution from containerships has been reduced over the last 10 years, they remain energy inefficient (as for instance compared to railroad), they pose risk of oil spills, they release ballast water with invasive species, they contaminate harbour sediments and more.
Say we wanted the world’s innovators so solve these problems: What kind of projects and goals do we support? Many of us would prefer projects that aim for measurable improvements: Lower emissions, better fuel efficiency, stronger hulls, less spills, etc. It's actionable and motivating: Every decrease in emissions is a victory, and the harder they work, the more impact they make.
However, before we invest all our money, let’s consider a more radical goal: What if we instead looked for innovators who wanted to eliminate our need for these ships all together? These innovators wouldn’t mitigate the problems— they would remove them (and consequently also render technologies like fuel efficient engines, scrubbers or sails obsolete). It would however also be a massive undertaking that would require fundamental changes on a macro economic level. Here, unlike the improvement projects, nobody could possibly know what a solution would look like. Even though a successful outcome would make everyone on the planet far better off, this venture is so complex that nobody (in their right mind) would be willing to put their time, money or reputation on the line to support it.
This is where our thinking is flawed. Because the solution is impossible to define, we act as if it’s also impossible to do. This is a denial of how human creativity works: Our great discoveries and inventions have almost never emerged as a result of chartered work or predefined goals. They are far more likely to appear by accident or as a side effect of something else we’re doing. Darwin was by chance asked to join a mapping expedition to South America where he stumbled upon the Galapagos islands, Einstein started tinkering with ideas about space-time after reviewing clock patents, and during WWII idle airplane mechanics were playing with an engine without propellers (it took another decade, and thousands of high speed planes in the sky, before scientists could explain why this “jet engine” at all worked).
Why do we focus so much on improvements? It’s true that we sometimes have to cure symptoms because the symptoms themselves are inflicting a lot of damage. Technologists working diligently to reduce problems with container ships are an obvious example. But such work is far from enough. If we really want to make an impact, as innovator, investor or both, we need to make a conscious choice about what strategies to support:
Improvement strategies are about patching or fixing existing regimes. The starting point is often an observable problem, like for instance hazardous emissions. The strategy then tells us to find ways to mitigate these problems, by creating policies that force or incentivise “bad” players to improve, to develop and implement new technologies, or both.
For instance, we make a push for companies to strengthen their environmental, social and corporate governance (ESG). While it’s a great intention, it's difficult to ensure the right outcomes: Companies like Coca Cola, with products that lead to obesity, diabetes and other major health problems, score high on ESG, because they've improved they way they produce their (unsustainable) products. Last year, even the tobacco giant Philip Morris made its way into Dow Jones’ sustainability index of America.
An example of a technology driven improvement strategy is the shift to clean energy. This also might not be as easy as it sounds: Wind and solar power are plagued with environmental problems of their own, like biodiversity problems. The manufacturing of solar panels takes a lot of (not so clean) energy and the finished product contains toxic materials that must be handled when they expire (with a 20–30 years expected lifetime, toxic waste from solar panels is another problem we leave for our children to handle). In the meantime both wind and solar are 100% dependent on the weather. Without effective energy storage technology, they paradoxically drive the need for fossil gas, one of few power sources that can be switched on and off instantly, to stabilise the grid when there's no wind or sun. There are also problems outside wind and solar: In Europe, large areas of farmland are being acquired by impact investment funds that convert them into mono-culture corn production facilities that displace diverse and local food production. The corn isn’t eaten- it’s used as raw material for EU subsidised biofuel.
To be clear, I do believe in responsible companies. But no matter how many policies we create, established systems will always resist change (as opposed to creating change). Yes, they have internal heroes who strive to make their company better. But at the system level their companies are still highly unlikely to pull their wheels apart simply because someone or something tells them to do so. Even if they wanted to, successful turnarounds of big companies is a severely complex and difficult task in itself (more on this in Part III).
I also believe clean energy has a role to play and further innovation might solve some of the above mentioned problems (although we are unlikely to be able to control the weather in any foreseeable future). But no matter how much effort we put into clean energy technology it will never solve the deeper problem: That we consume way too much energy in the first place.
Disruption strategies are about leaving what we already have behind, in favour of new systems that are smarter, less resource consuming and provide higher value to customers, partners and society. Building such systems is much more chaotic, unpredictable and serendipitous than that of improvement strategies: Innovators play with things they don’t fully understand, they experiment more randomly and they continually take advantage of new trends, technologies, infrastructure and other opportunities that emerge as along their way. Here, most innovators aren’t even aware of the potential of their work in the beginning. Disruption strategies still have a massive advantage: They are much faster.
It might sound counterintuitive: Surely, it must go faster to improve the fuel efficiency of ship engines than to disrupt the global economy? Yes, of course, but the analysis is incomplete: That new engine was just an improvement. Go to the Suez Canal, and you will still see containerships filled to the brim with barbecues, sun loungers, swimwear, lawnmowers and camping equipment — only this time consuming slightly less bunker fuel. If we were to eliminate the problems with container ships using improvement strategies, we would have to build containerships that use 100% renewable energy (a technology we currently don’t have), have zero release of spills or alien species and have zero impact on harbours. It’s an ambition so uncertain that we might as well consider disruption strategies instead.
Too many innovators are stuck in improvement strategies. It’s an opportunity cost neither we nor future generations can afford. It comes from a determination to act rationally, where we limit our work to what we can rationalise. It slows down progress and it severely inhibits our thinking and our creativity. And it’s not rational.
In his book Homo Deus, Yuval Noah Harari explains how any human system eventually develops a will of its own that doesn’t represent any single human inside the system. Most industries and systems behind today’s sustainability problems have since long become obsolete, but they continue to be big and powerful simply because they already are big and powerful. It’s time to accept they are beyond control: No single entity has the power or influence to draw the curtains, wake everybody up and have them reassemble their inner workings.
The only fights we should pick with these systems should be firefights: When they pose immediate harm that has to be handled to avoid longterm consequences. Beyond that, the most effective and peaceful way forward is to disrupt them with something that’s superior both in customer value, business value and environmental footprint.
Sustainability challenges are in essence sociotechnical challenges. They are complex in nature and deeply intertwined with how economies, businesses and societies work. To solve them we need support systems that accept more open-ended and fuzzy approaches to problem solving. Where innovators get time to explore radical ideas, and get access to the right network, ideas, training, capital and mentorship. Where people develop a culture for “feeling the water”.
On this path, they will not only build new technologies, products and businesses, but at the larger scale also establish new paradigms, value chains and social systems.
Implementing such systems is the topic for Part 2 - How and Part 3 - What (to be published).