Synergy: The Driver of Integrated Value in the New Nexus Economy

First published by HuffPost, 10 April, 2017.

We are at a unique moment in history, when five economic trends are coming together into a Nexus Economy that is rapidly transforming our world for the better.

Source: Wayne Visser (2017) Nexus Economy Framework

The Resilience Economy includes all the defensive expenditures and investments that lower risks in society, from property insurance and health and safety controls to flood defences and emergency response training. The Stockholm Resilience Centre defines resilience as “the capacity of a system, be it an individual, a forest, a city or an economy, to deal with change and continue to develop. It is about how humans and nature can use shocks and disturbances like a financial crisis or climate change to spur renewal and innovative thinking.” As we enter a period of greater turbulence, we expect the resilience economy to grow as a strategy to survive and thrive.

The Digital Economy includes all the technological expenditures and investments that increase connectivity and intelligence in society, from high-speed internet and The Internet-of-Things to MOOCs (massive open online courses) and artificial intelligence. The increased use of digital technologies could add $1.36 trillion to total global economic output in 2020, according to a recent study by Accenture and Oxford Economics (that’s the same size as the whole South Korean economy). The World Economic Forum calls this the Fourth Industrial Revolution and describes it as a “blurring the lines between the physical, digital, and biological spheres”, which is growing exponentially.

The Access Economy includes all the expenditures and investments on shared services that increase efficient utilisation of assets, resources and capacity, from car-sharing (like Zipcar) and “couch surfing” (Air BnB) to entertainment streaming (Netflix) and crowdfunding (Kickstarter). The access economy (a term promoted by Harvard Business Review to suggest that customers increasingly want utilitarian value from accessing benefits from a product or service, rather than social value from intimate exchanges) is also known as the sharing economy, peer-to-peer marketplace, or collaborative consumption. PwC estimates the access economy may be worth $335 billion by 2025.

The Circular Economy includes all the expenditures and investments that decouple economic growth from environmental impact by ‘closing the loop’ on resource and energy flows, from waste recycling and biodegradable plastics to renewable energy and biomimicry designs. The circular economy draws on an evolution of concepts and practices since the 1960s that include ‘spaceship earth’ thinking, eco-balance, life cycle analysis, industrial ecology, industrial symbiosis, cleaner production, eco-innovation and cradle to cradle. In the book Waste to Wealth, based on analysis by Accenture, the circular economy opportunity is valued at $4.5 trillion by 2030.

The Wellbeing Economy includes all expenditures and investments that increase human health and happiness in society, from stress-relief practices and life coaching to plant-based diets and solutions to social diseases (like crime, inequality, suicide, domestic violence). There are various national indicators that have been created to demonstrate the limitations of economic growth as an indicator of progress in society, by measuring human wellbeing instead, such as the Social Progress Index, the Happy Planet Index and the OECD Better Life Initiative. As we become more conscious of the health impacts of lifestyle, consumerism, diet and pollution, the wellbeing economy is set to grow rapidly.

Each of these economic trends have spawned an aligned business strategy in response to the opportunities that they represent. Each on their own is a strategy for future-fitness.

Source: Wayne Visser (2017) 5-S Synergies for Creating Integrated Value Framework

A Safe Strategy is one in which our organisations, communities, cities and countries do not damage our health and wellbeing; rather, they minimize our exposure to toxins, sickness, disease and danger, allowing us to feel physically and psychologically secure. The test question is: to what extent does your organisation protect and care for us, i.e. your stakeholders? Keywords are: healthy, secure, resilient. Example indicators include: occupational health & safety, toxicity, risk, and emergency preparedness.

A Smart Strategy is one in which our organisations, communities, cities and countries use technology to better connect us to each other and allow us to share what we value most, and facilitate more democratic governance by allowing us (as customers or citizens) to give direct, immediate feedback. The test question is: to what extent does your organisation connect and empower us? Keywords are: educated, connected, responsive. Example indicators include: connectivity, access to knowledge, and R&D investment.

A Shared Strategy is one in which our organisations, communities, cities and countries address issues of equity and access by being transparent about the distribution of value in society and working to ensure that benefits are fairly shared and diversity is respected. The test question is: to what extent does your organisation include and value us? Keywords are: fair, diverse, inclusive. Example indicators include: value distribution, stakeholder participation, and diversity.

A Sustainable Strategy is one in which our organisations, communities, cities and countries operate within the limits of the planet by radically changing resource consumption and ecosystem impacts, with a shift to renewable energy and resources, closing the loop on production and moving to a low carbon society. The test question is: to what extent does your organisation protect and restore our environment? Keywords are: renewable, enduring, evolutionary. Example indicators include: externality pricing, footprint analysis, and renewability.

A Satisfying Strategy is one in which our organisations, communities, cities and countries produce high quality services that satisfy our human needs, as well as enabling a lifestyle and culture that values quality of life, happiness and other indicators of wellbeing. The test question is: to what extent does your organisation fulfil and inspire us? Keywords are: beneficial, beautiful, meaningful. Example indicators include: quality standards, levels of satisfaction, and happiness.

Source: Wayne Visser (2017) Strategic Value Creation Matrix

When an organisation, community, city or country pursues one of the 5-S strategies, they are making themselves future-fit. There are four strategic value-creation options available: singular, focused, diffuse and integrate value.

Singular Value is when an organisation focuses on one of the 5-Ss as its strategic goal, but does so in an incremental way. This means they will have a management system (objectives, targets, programs, KPIs, reporting, audits, etc), but they are content to make a marginal contribution on the issue. The potential for synergy is low, because they are only focused on one S. For example, a chemicals company may decide that a Safe strategy is key for their success.

Diffuse Value is when an organisation focuses on multiple of the 5-Ss as strategic goals, but does so in an incremental way. This means they will have a management system, but they are content to make a marginal contributions on the issues they have prioritised. The potential for synergy is high, because they are looking to leverage more than one S at a time. For example, a mining company may decide that a dual Safe and Sustainable strategy is key for their success.

Focused Value is when an organisation focuses on one of the 5-Ss as its strategic goal, but does so in a transformative way. This means they will have a disruptive innovation approach, and they will only be content with rapid, scalable change on the issue, especially within their industry. The potential for synergy is low, because they are only focused on one S. For example, a food and agricultural company may decide that a Shared strategy is fundamental and they wish to completely transform the lives of farmers in their supply chain.

Integrated Value is when an organisation focuses on multiple of the 5-Ss as strategic goals, but does so in a transformative way. This means they will have a disruptive innovation approach, and they will only be content with rapid, scalable change on the issues, within and beyond their industry. The potential for synergy is high, because they are looking to leverage more than one S at a time. For example, an electric car company may adopt an integrated 5-S strategy that takes Safe, Smart, Shared, Sustainable and Satisfying to a completely new level of performance.

The way in which Integrated Value manifests – when more than one of the 5-S strategies is applied simultaneously in a transformative way – is through synergy, which American professor Russell Ackoff described in his studies of purposeful organisations as “the increase in the value of the parts of a system that derives from their being parts of the system”. We know this more commonly by the catchphrase: the whole is greater than the sum of the parts. Synergy is the driver of the new Nexus Economy and will be the key to competitiveness in the coming decade.

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Visser, W. (2017) Synergy: The Driver of Integrated Value in the New Nexus Economy, HuffPost, 10 April, 2017.

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To survive in a volatile world businesses must build in resilience

To survive in a volatile world businesses must build in resilience

Article by Wayne Visser

Part of the Unlocking Change series for The Guardian.

In a changing world it is not the fittest who will survive; it is the most adaptable.

If you have landed on this page wearing your superhero outfit – and I admit, I may be partly to blame – I’m going to have to ask you to remove your mask, cape and tights now. Don’t get me wrong, when the world needs saving and I’m done paying off my mortgage and carrying out the trash, I’ll be the first one to dial-a-superhero. But in the meantime …

You see, the world has this nasty habit of changing without our permission; in fact, without us having so much as poked it in the eye. And so we – as individuals, organisations or whole nations – often find that we are no longer the agents of change, but rather its victims. Change happens! And we are left somewhere between mildly irritated and battling for our very survival.

According to Business Week, the average life expectancy of a Fortune 500 company is between 40 and 50 years. One-third of the Fortune 500 companies in existence in 1970 had vanished by 1983 – acquired, merged, or broken to pieces. Looking across the full spectrum of companies, large and small, the average life of companies may be as low as 12.5 years.

Can we really afford to talk about long-term sustainability, when short-term survival is so hard to achieve? The sobering fact is that we face a future in which saving the world may have to wait, while we save ourselves first. Chances are, we will even have to give up the smooth and swanky practice of sustainability, while we get down and dirty in the trenches of rough, rude resilience.

The bad news is that our silky green spandex outfits are probably not going to survive the trip. The good news is that resilience can be learned and planned for in advance. In a world of increasingly volatile sustainability challenges, there are five strategies for resilience that can dramatically increase our chances of survival when the waves of disruptive change come crashing in. They are to: defend, diversify, decentralise, dematerialise and define.

A defensive strategy can take on many forms, the most obvious of which is to insure against catastrophe, whatever form that may take. This only works if the crash is not systemic, but it is a good start. Other tactics include having a crack-squad of trouble-shooters trained to respond in times of crisis, and building up reserves for the proverbial rainy day, which may turn out to be a tsunami.

A diversification strategy applies to people, products and markets. For example, if you bet your corporate life on being a fossil fuel company, rather than an energy company, or if you are locked into a local market without any global investments, you are highly vulnerable. Likewise, if you hire an army of clones, your lack of diversity will leave you brittle in the face of change.

A decentralisation strategy is based on the same rationale that inspired the Internet. By decentralising information and building in redundancy on local servers, the internet is far less vulnerable to being taken out in a single hit. In the same way, by decentralising operations, infrastructure and solutions – as with decentralised energy for example – we can be better prepared to cope with disruption.

A dematerialisation strategy means moving to an industrial model that reduces dependency on resources. The only viable way to do this in the long term is to shift to renewable energy and to optimise the circular economy. Hence, anything we can do to decouple economic growth from environmental impacts is a step in the direction of greater resilience.

A defining strategy is about giving people a purpose to believe in. Victor Frankl, survivor of four Nazi concentration camps and psychiatric author of Man’s Search for Meaning, gives compelling evidence that our resilience under extreme circumstances often comes down to having an existential belief about something worth living for. Can sustainability offer us this compelling cause?

By pursing these five resilience strategies, individuals, organisations and even countries will be much better placed to endure the creative destruction to come. However, preparing for change is not the same thing as surviving it. Resilience is not a strategy, but an ability – one which is shaped and tempered in the fire of extreme experience.

At its heart, this ability to be resilient is about adapting when everything around us is changing – like an aspen tree. Aspen forests are able to survive frequent avalanches that literally flatten them. The trees survive and spring back up because they have an interconnected network of underground roots and their trunks and branches are highly pliable.

This brings us back full circle to the message of my first article on unlocking change, namely that the secret to transformational change in the world is connectivity – to which we can now add that dexterity is also absolutely critical. After all, Darwin never claimed that the fittest would survive, only the most adaptable.

 

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[button size=”small” color=”blue” style=”download” new_window=”false” link=”http://www.waynevisser.com/wp-content/uploads/2014/01/article_unlocking_change5_wvisser.pdf”]Pdf[/button] To survive in a volatile world businesses must build in resilience (article)

Related websites

[button size=”small” color=”blue” style=”tick” new_window=”false” link=”http://www.waynevisser.com/books/the-quest-for-sustainable-business”]Link[/button] The Quest for Sustainable Business (book)

[button size=”small” color=”blue” style=”tick” new_window=”false” link=”http://www.csrinternational.org”]Link[/button] CSR International (website)

Cite this article

Visser, W. (2013) To survive in a volatile world businesses must build in resilience. The Guardian, 28 October 2013.

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