The Five Forces of Survival & Thrival

There are various external forces controlling different aspects of our lives, affecting our ability to survive and thrive.?In the standard model of particle physics, these are the four fundamental forces of nature governing the natural world and the visible universe.?In the business world, there is an emerging five forces systems model that will dictate how businesses survive and thrive over the coming years and decades.?Their fate will depend upon how they navigate and respond to each.

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sur·vive

/s?r?vīv/?

verb

1.?????continue to exist, especially in spite of danger or hardship.

???????????“startups that survive the pandemic have shown determination”

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thrive

/THrīv/

verb

1.?????prosper; flourish.

???????????“we predict the businesses that will thrive in the future"

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COP26 and Covid-19 have underlined a need to quicken the pace of adopting innovations for both people and planet.?During the opening ceremony of COP26, HRH The Prince of Wales told delegates that time had “quite literally run out.”?This unavoidable truth places immediate pressure upon the current system and the businesses within it to learn and adapt at light speed.?It emphasises a need to align and collaborate like never before.

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Failure is not an option.?

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Yet, by all relevant measures, we have been failing.?The urgency of the pandemic illustrated how governments and the media can influence ‘thinking’ and - by implication - behaviour.?However, this ‘influence’ has been slow to be used for positively influencing behaviour on the most critical emergencies of our time. This may be why Prince Charles indicated the impetus for action is upon the private sector, indicating that each sector needs to speed up the process of?bringing innovations to market.?But just how simple is this and what forces govern our ability to achieve it?

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Businesses need to be aware of the emergence of five systemic forces influencing survival and thrival:

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1.?????ESG (Environmental, Social & Corporate Governance)

2.?????People & Government

3.?????Finance

4.?????Technology

5.?????Data

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The forces do not work independently of one another, they interlace and interact in complex and nuanced ways.

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1. ESG

We have become blind to the wisdom of our ancestors and the indigenous peoples of the world.?To survive and thrive, we must reconnect with this wisdom, living in harmony with the natural world and with one another not by paying homage to the false idols destructing our collective evolution.

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All businesses and all industries need to be protective of people and planet.

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The Wall Street Journal bestseller “Humanocracy: Creating Organisations as Amazing as the People Inside Them”, by Gary Hamel and Michelle Zanini, outlines the feeling du jour, why businesses need to change and how to do so to survive and thrive in the future: “Our organizations are failing us. They're sluggish, change-phobic, and emotionally arid. Human beings, by contrast, are adaptable, creative, and full of passion. This gap between individual and organizational capability is the unfortunate by-product of bureaucracy - the top-down, rule-choked management structure that undergirds virtually every organization on the planet.”

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In a letter to the CEOs of some of the world’s largest companies in 2018, Blackrock CEO Larry Fink outlined, “Society is demanding that companies, both public and private, serve a social purpose”.?Fink’s 2020 letter advised that Blackrock was making sustainability their new standard for investing and reported in 2021 that they completed their goal of having 100% of “active and advisory portfolios ESG-integrated”.

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Many corporate pledges have been made at COP26 and they are sure to come under greater scrutiny as the messaging continues to get amplified.?Pledges need to include meaningful action and be backed by proper systems of measurement & accountability to ensure authenticity and avoid more accusations of greenwashing.?For example, some of the largest software companies in the world have made bold pledges yet cannot currently provide their customers with basic emissions data from usage of their tech stack.

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The pandemic has accelerated future-of-work trends that will require companies to carefully consider new working models (office, work from home, or hybrid), all of which intersect with sustainability and impact in areas like employee wellbeing.?There is a lot of nuance to consider.?Once we move on past the pandemic and the dust settles, the new model of working will start to take shape and the conversations and thinking will continue to evolve.?Major systems level change is already happening and companies that don’t commit to integrating meaningful sustainability goals simply won’t survive in the long-term.?Companies who thrive will be those demonstrating authentic goals that make a meaningful impact for both people and planet.?The leading companies are those involved in collective action.

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The steep learning curve for many businesses provides opportunities for sustainability and impact experts to provide guidance and can be expected to spur its own wave of innovation.?Many online resources already provide opportunities for inspiration and learning.?One of the world’s leading resources for climate solutions is ‘Project Drawdown’, a non-profit organisation, that is focused on “drawdown”, which they define as arriving at ‘the point when levels of greenhouse gases in the atmosphere start to steadily decline’.?The organisation has emerged as a leading resource “for information and insight about climate solutions” and is a good starting point for learning.

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2. People & Government

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“The thing you should keep your eye on is what government spends” - milton friedman

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Including loans and guarantees, Governments have spent $17trn on the pandemic (or 16% of global GDP) and the size of the State has grown substantially.?Net-zero emissions targets will increase government debt as a ratio of GDP over the coming decades as growth slows and decarbonisation subsidies are prioritised.?This creates an obvious challenge whereby future generations, who have no responsibility for climate change or the sovereign debt situation, are burdened with the choices and perceived excesses of previous generations.?Some prominent economists, such as James K. Galbraith,?may argue one way to deal with such a situation is to reset the whole financial system with a ‘debt jubilee’, forgiving all debts.?This can be a common viewpoint when sovereign debts balloon but the situation is far more nuanced than this as outlined in the FT ‘Sorry, but debt forgiveness is not going to happen .’

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Big government will create public concern, particularly among libertarians, who will be weary of the associated inefficiencies, corruption and bureaucracy that come with a bloating system of government.?Hal Brands, writing an opinion piece in Bloomberg asks whether we are entering a new dark age or an era of global harmony after 2020? ?How we navigate existential threats - propagated by the pandemic and climate change - will likely give us the answer.??It is unclear whether we are entering an epoch where public consensus is for big government to meet expectations in respect to infrastructure, universal healthcare, fair & equitable societies, education, and climate change, or whether it leans towards decentralised power and more personal autonomy.

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As democracy, scientific rigour, free-speech, critical-thinking, and truth all come under fire, questions are afoot as to what extent governments should be involved in areas such as personal health, travel, wellbeing and personal freedoms.?As the ESG force identified, there is both a demand and urgent requirement for a rebirth - a systems level change - but rebirth is beginning to look like either authoritarianism or libertarianism.

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In authoritarian or libertarian scenarios, there will invariably be friction between and amongst people and government and such friction can create increased uncertainties for markets and businesses, hampering innovation and progress.?Personal freedoms limiting the ability for some employees to travel could burden some businesses more than others and lead to challenging ethical dilemmas for many leaders.

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“The Children cannot live on words and empty promises.?They are waiting for you to act.” - Elizabeth Wathuti, Founder, Green Generation Initiative (COP26 SPEECH)

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In the lead up to COP26 there was scepticism towards the ability for country Leaders and the fossil fuel industry to agree to meaningful action.?Some of that cynicism seems well-founded based on some of the specific outcomes:

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???more dialogue is needed to reach agreement on new emissions pledges

???revised emissions reduction targets are not legally binding

???there is uncertainty over measuring progress on deforestation

???the worlds most coal dependent countries (Australia, India, China and US) and the worlds biggest emitters of methane (China, Russia, India) have not agreed to join with 100+ other countries on cuts

???moving away from fossil fuel usage does not include oil and gas

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Existing investments have created a legacy issue around fossil fuels and they are more profitable than many renewable energies at this time.?Investments into fossil fuels since the Paris climate agreement actually increased from the biggest banks in the world, which means governments - perhaps fuelled by increasing public dissent - need to take action to restrict future investments into fossil fuels if we are to achieve net zero by 2050.?During COP26, Bill Gates highlighted the issue whilst expressing doubts about limiting global warming to 1.5 degrees, “What happened with solar panels, where they were very expensive and now they’re cheap, we need to do that for about six other technologies.”

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More broadly, governments can play a role in sparking innovation by creating an ecosystem that supports innovation and growth, the two main characteristics of startups.?Innovations need to be sufficiently original and useful that large numbers of customers will adopt them, and the market needs to be large enough to fund the ability to scale.?Mariana Mazzucato, writing for the World Economic Forum believes governments play a critical role in sparking innovation and has outlined how the US government has acted as a strategic investor in Silicon Valley “through a decentralised network of public institutions: The Defense Advanced Research Projects Agency, NASA, the Small Business Innovation Research program (SBIR), and the National Science Foundation.”??

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Commitments from governments can be hindered by protectionist policies and a deep sense of nationalism, which creates an argument for increasing collaboration and supporting initiatives on the regional and global levels, rather than simply local.?This is a difficult balance for governments who need to consider the social impact of how local innovation drives employment at home (a reasonable societal consideration) whilst supporting global innovations that have the highest potential impact for people and planet (a reasonable consideration for the entire human race).?

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The ability for large proportions of the labour market to work remotely could spark collaborative efforts for governments to open up a global workforce, mobilising global talent and opportunities to solve some of the worlds greatest challenges by combining minds across borders and cultures.

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As revolutions, demonstrations and protests throughout history have shown us, people have the power to effect change.?This is as relevant to changing the policy of businesses, through the freedom of association, as much as it is relevant to changing government policy.

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The Climate Solutions At Work: An Employee Guide to Drawdown-Aligned Business report outlines how businesses can unleash people power, enabling their employees to be instrumental in ?the way their companies function, innovate and survive through uncertainty.?The report indicates that everyone has a part to play and “every job must become a climate job”.??Private sector employees may encourage their companies to take a more active role in startup investment, supporting new non-competing value-add innovations as part of their ESG commitments.

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3. Finance

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Finance is a key driver of innovation across all businesses, but it is particularly important for new and growing businesses who often need to raise equity finance rather than funding research & development (R&D) through the cheaper option of debt.?The focus of the finance force is therefore more centred upon startups and SMEs, starting with the question… how can innovators access finance more quickly and easily to survive and thrive?

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Change is the only constant in the universe.?Innovators thrive off of the status quo, embracing change to facilitate progress but the financial status quo threatens the ability for many innovations to take-off.?

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Surviving long enough to gain market adoption and - in some cases - ‘product-market-fit’ through regular testing, validation and iteration requires adequate access to various financial instruments.?

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Despite the many opportunities that change provides, innovators who survive and thrive are quite rare.?Roughly 90% of all startups fail and roughly 50% fail within the first 5 years.?Access to capital is a prominent reason for failure and whilst it is unlikely to be the single reason for failure (it’s much more nuanced than that), access to early-stage (seed) capital across the ecosystem is a common complaint amongst startup founders.

Whilst conversations at COP26 focused around innovation, impact investor Micol Chiesa rightly posed a fundamental question:?where were the VCs at COP26? emphasising their critical role as an early-stage believer and supporter of new innovations yet querying the disconnect because there was no formal VC industry representation and an absence from the conversation at the conference.?Cynicism often spreads when actions don’t match words and cynicism can lead to apathy and inaction.??Apathy can be more dangerous than anger.

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The overall message coming from the conference, from Leaders, Prince Charles, and Mark Carney (the former governor of the Bank of England), was to leave it to the market.?Speaking to BBC News, Simon Youel, Head of Policy & Advocacy at Positive Money UK, stated “we are still relying on these market-based solutions, such as information gathering [and] disclosure, which are based upon the efficient market hypothesis and the assumptions that led to the last financial crisis.”?The theory is that “if we just increase the amount of information, the market will be able to efficiently and rationally realign but we’ve seen over the past decade, or decades, that financial firms have known about climate risk and have done very little.?The markets are still aligned with global heating far above what the climate agreement dictates States are committed to.?We need a lot more action from governments to be leading the way in driving this transition.?We can’t just leave it to the private sector and the market to fix.?We can’t privatise the green transition, it’s far too important for that.”

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The responsibility gap Youel outlines is a friction point that may lead to inaction and finger pointing if the world gets too caught up in arguing over responsibility and accountability.?Let’s be clear.?EVERYONE is accountable: governments, people, and businesses.??

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A multiple faceted approach is required to enable early stage and scale-up companies to access capital.?Finance has to be directed towards allowing new innovations solving the problems of our time to be adopted quicker.?Businesses can do this, employee power can encourage it, but governments can regulate.?A collaborative balance will achieve desired outcomes quicker.?

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Organisations, such as Top Tier Impact are a welcome facilitator of knowledge exchange and connectivity, focused on accelerating global adoption of impact and sustainability initiatives, advancing thought leadership across the impact space and connecting leading funds with the most impactful companies.?

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The VC landscape has been shifting, with Sequoia Capital pioneering a rethink in the venture capital model by changing their investment ethos and model to enable more patient capital.?There are more funds focused on diversity and minority owned businesses, and an increasing amount of capital being channeled into sustainability and social impact.?Ahead of COP26, a new €350M climate VC fund ‘World Fund’ was announced with the aim of being a “role model” for climate tech funding across Europe, where investors are typically much more risk-averse than their North American counterparts. US investors are more willing to back innovators with less proof points but a large enough market, credible idea, team, timing, and ambition.

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4. Technology

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Technology pervades all industries, and all industries are effectively tech industries.?Each industry encompasses tech companies who provide innovations that improve several functions of an industry and/or organisation.?Digitisation was accelerated by the pandemic with laggards fast having to catch up with technology adoption to survive.?Whole industries need to become adopters of enabling technologies - high on capital expenditure but also high on value creation - as climate tech investor Daniel Vi?evi? outlines in ‘How the transport sector will (have to) change to tackle the climate crisis ’, part of his series on sector transformation towards a regenerative world.

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In their book ‘Solomon's Code: Humanity in a World of Thinking Machines', M. Nitzberg and Olaf Groth, outline that we are living in a “5th seismic shift moving from purely linear computing systems to more cognitive and human-like technologies.”?

Various technologies have the power to shape how we survive and thrive, with one nascent technology after another becoming the latest buzzword included in startup pitch decks and investor portfolios.?

Our belief at virtuall , where we authentically transform any industry through the creation of innovative products that connect the world in a sustainable and profitable way, is to be tech agnostic and allow the problem to drive the solution.?If you try to awkwardly match a specific technology to a problem, you’ve probably not fully understood the problem.?

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“If I were given one hour to save the planet, I would spend 59 minutes defining the problem and one minute resolving it” Albert Einstein

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As the pace of technology innovation intensifies, we have to be mindful of how such technologies could have a more nefarious bent.?Artificial Intelligence (AI) and Machine Learning (ML) are two such technologies that attract fierce debate.?

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“To a great extent, we do get a better world.?But even so, far-reaching ripple effects and unintended consequences make these advanced cognitive technologies both a panacea and a Pandora’s box.” - Admiral James G. Stavridis

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The pace of technological change and the need for more rapid adoption of innovations means that the regulation, legislation, and protective controls that need to be in place may not be able to keep up.?To what extent the technology itself may be able to do some of the regulatory and legislative thinking is untested but the urgency of tackling climate change may create somewhat of a Hobson’s choice.?Businesses in the fields of advanced Robotics and AI, for example, may be grappling with a host of ethical conundrums as they develop their innovation.

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“Now I am become death, the destroyer of worlds” - Robert Oppenheimer

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Physicist Robert Oppenheimer, the “father” of the atomic bomb, agonised over the devastation his genius had helped to unleash, having been fooled into thinking the very destructiveness of his invention would make war obsolete.?Innovators need to be mindful of how their innovation could open said pandora’s box.

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5. Data

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“In God we trust, all others must bring Data.” - W. Edwards Deming

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Whilst the five forces don’t operate in any order, data underpins each of the other four forces and can be a critical component of success.?Data is insight.?Date is intelligence.?Without it, you’re operating blind and hindering your chances of success.?If you can improve the quality of your data, you can decrease risk and can make better informed business decisions leading to improved results.?Therefore, you may have heard data referred to as the new “gold”.

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A Deloitte report indicates that by 2030 “data collection and analysis will become the basis of all future service offerings and business models.”?So, if you’re not already thinking about what unique data your business collects, its value and how it can be packaged, it’s time to start.

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Business intelligence takes multiple different forms and ensuring you have the right metrics for your own survival and thrival requires thorough analysis and validation.?Too many businesses become obsessed with ‘vanity metrics’ that add zero value, wasting precious time and resource.?

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Taking the time to understand the factors that impact the success of your business, by engaging all key stakeholders will help you to formulate the correct data points that lead to success, enabling you to pull the right levers at the right time.?A workshop with a proven product validation business, such as Maverick Disruption , is a good investment to help businesses stop wasting time and resource, assisting to focus quickly on what’s most important.

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The formulation of the correct insights bespoke to your business can ensure alignment with, for example, your ESG goals and allow your organisation to demonstrate accountability.?Developing accurate and meaningful measures is a key challenge for many companies when considering the formulation of their ESG goals.?It’s important to have clear impactful goals, but they also need to be easy to measure, track, report and make sense of.

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Data usage has been under the spotlight because of high-profile data breaches and misuse but there’s no doubting the benefits.?Within the governance section of your ESG policy, it’s important to have established standards to protect the data of your customers and be clear about how you use and share data with any third parties.?

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There will be emerging best practice and innovations to support businesses regarding business intelligence and sustainability reporting.?B Labs recently announced the co-launch of the Impact Management Platform , a collaborative project with leading providers of public good standards & guidance that outlines the core actions of impact management and links to resources to help practitioners implement them.

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Storytelling to Quicken the Pace of Adoption

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We have established that many startups and SMEs rely heavily on rapid adoption of their ideas and innovations for success with many perfectly good ideas not achieving critical mass quickly enough, leading to failure.??Whilst patient capital can help good ideas achieve longevity, how do we quicken the pace of adoption whilst acknowledging the various regulatory, legal, and protective implications of new innovations?

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The Law of diffusion of innovation is a key component of behavioural change developed by Everett Rogers that explains the rate at which new ideas and technologies spread.?The ‘Diffusion of Innovation’ is a bell curve model illustrating how innovation is adopted over time.?Critical mass occurs when the number of individual adopters allow the innovation to be self-sustaining, typically at some point after the early majority (34%) join the innovators (2.5%) and early adopters (13.5%).

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To achieve momentum and diffusion, focus needs to be concentrated on identifying the Early Adopters as they are the most influential people in any market.?They are known as the ‘thought-leaders’ and may be very active on social media, often promoting new ideas, innovations and testing them out themselves.?It is typical that early adopters will have a reasonable risk appetite for trying new things but backed by reasoned decision-making that sets them apart from ‘innovators’ whose risk appetite is much higher.?The adoption curve may be best viewed in terms of appetite to risk, with the risk appetite diminishing as we move through the adoption cycle.?

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To quicken the pace of adoption, storytelling becomes a critical success factor in achieving critical mass.?Information, case studies and proof points are all important factors in formulating a cohesive story that will enable the critical mass to adopt innovations more swiftly by validating and justifying the innovation quicker.?

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This requires skilled storytellers who can craft a compelling, authentic, and clear narrative across a multitude of different mediums to trigger positive intention, energy, and action.

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With such a demand for the greatest storytellers the world has ever known, wouldn’t it be remarkable if, for example, the entertainment industry made a collective ESG commitment to commit ‘xyz’ days per year to help promising sustainability & social impact startups and SMEs to gain traction quicker??

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Collective action and responsibility is our most promising route to success and evolution.

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It’s time for action and real change.