The breakthrough challenge
Interview with John Elkington
John Elkington is a strategist, writer, thought-leader and a serial entrepreneur. He is best known for coining the famous concept of the “Triple Bottom Line (TBL)” in 1994. Elkington is a founding father of the advisory firms SustainAbility and Volans and of the Environmental Data Services (ENDS).
People, profit, planet — the famous triple bottom line. How has this concept evolved, and maybe even changed, since you first coined the phrase in 1995?
Elkington: Indeed, we have had 20 years of mutation since then. At the time, the key sustainable business concept was eco-efficiency, which meant making or saving money through resource efficiency and better products. So thinking in terms of a triple bottom line (TBL) was slightly heretical.
The idea that there was not just financial but wider economic dimension to value creation, and also destruction, encouraged companies to take a wider view of their contributions, while the social dimension was a considerable shock to some business leaders — particularly in the USA. Think of Walmart post-Hurricane-Katrina: they went for an eco-efficiency version of sustainable business, not the full TBL approach.
One of the thrills of recent years has been to see a fair number of social entrepreneurs talk about their TBL inspirations — and also to be part of Sir Richard Branson’s B Team as it embraces the People, Planet, Profit formulation.
In your experience, are ESG (environmental, social and corporate governance) indicators currently playing a role in corporations when it comes to their business models, processes and products?
Elkington: I think the efforts of organisations like the Global Reporting Initiative (GRI) and the International Integrated Reporting Council (IIRC) have mainly led to better, if increasingly complicated, accounting, reporting and verification. None of that is bad, of course, but to date the direct impact on the underlying business models has been small. A few outliers pioneered, among them Patagonia, Interface and large corporations like Unilever. But the most striking business model innovations are coming from companies like Tesla and Uber, who don’t strike me as ESG junkies. They are simply responding to the zeitgeist, the growing sense that the future the sustainability movement warned us about is here, whether it’s drought in California and Brazil, or for different reasons the swelling northward surge of economic and soon climate migrants into Europe.
You are often referring to the next ten years until 2025 as the “Breakthrough Decade”. What does this decade stand for — and why is it coming up now?
Elkington: Futurist Alex Steffen put it succinctly in a May 2015 tweet: “What happens in next 40 years [is] critical for all humanity for centuries to come. What happens in next 10 years sets [the] range of what’s possible.” Our sense is that the next decade will determine whether we make this work for our and other species, or not. The aim is also to inject a greater sense of urgency into the discussion, given that many people are setting their targets out to 2050 or even 2100. The next decade will also see the Millennials beginning to take over from the Baby Boomers, which is a huge demographically-shaped opportunity for culture change.
In The Stretch Agenda , one of your latest publications, you decided to write about corporate transformation for this “Breakthrough Decade” in the form of a play. Why did you choose to write about this topic in such an unusual format?
Elkington: Partway through the project, one of my colleagues said, “Everyone’s writing reports these days, but no-one’s reading them! Why don’t we do a play?” My initial reaction was, “What a stupid idea! Impossible!” But then we thought it through — and concluded that this might be a way of creating the business equivalent of a Trojan Horse. It’s only just out, but it’s interesting that we have already people like a major Italian bank and a Sri Lankan cell phone company saying they are keen to use the play in executive education and training.
One character in the play says, “many companies are reporting their sustainability numbers — and setting targets — with little or no reference to the wider context.” How can this issue be resolved?
Elkington: Much corporate reporting is about integration across various forms of capital, but gives the reader or user no sense of how what the company is reporting fits into a wider context. We use an aircraft to show that there is a horizontal dimension to all of this — integrating across physical, financial, natural, human, social and other forms of capitals. Additionally, a vertical dimension is increasingly linking from the field or factory out to the biosphere or atmosphere, and a longitudinal dimension with most reporting on a quarterly or annual basis, when we ultimately will need to report over decades-long timescales. Because those are the timescales over which the most critical trends are developing — whether it be global competitiveness or climate change.
“Today’s unmet needs are often tomorrow’s markets,” is another interesting statement in The Stretch Agenda. Do you have an insight into one such unmet need that could develop into a future market?
Elkington: We are fascinated by the way that cell phone technology is enabling breakthrough business models that help bring finance, solar lighting and education to some of the world’s poorest communities. We have begun to map and quantify some of the emerging ‘Sweet Spots’ in this space in our Breakthrough Forecast.
Change happens on a timetable and people need constant wakeup calls to breakthrough to new forms of behaviour and economic activity. What is currently the most important wakeup call that needs to be amplified and heard by everyone?
Elkington: I’m not religious, but the Pope’s recent encyclical is as great example of a leader calling out the nature and scale of the challenge, particularly in respect of climate change. But there has been little mention of population, as yet. Since I was born in 1949, 4.8 billion people have been added to the global population. This has already had major consequences, and forecasts that we are headed to up to eleven billion people suggest that the pressures can only intensify over time. And all of this at a time when the global governance mechanisms we have inherited from the post-WWII era are sadly, despite huge efforts from those involved, no longer truly fit for purpose.
You said that we are waiting for the next big sustainability “wave” to come. Prior societal pressure waves changed businesses and markets drastically. What could trigger such a wave, and how can businesses prepare for the inherent change coming with it?
Elkington: The diagram shows a series of great wave structures in the OECD world since 1960, when I first started getting interested in all of this. In 1961, for example, aged eleven, I raised money for the World Wildlife Fund in its first year of existence.
The first wave focused on the environment and the role of governments, the second expanded to a wider green agenda. Our own Green Consumer Guide sold around one million copies in the late 1980s. Then the beginning of a third, anti-globalisation wave in the late 1990s, but that was cut back by the events of 9/11. More recently, we have seen wave four focusing on sustainability, with surveys showing very high proportions of CEOs around the world saying they have already embedded the concept.
We don’t think so, as explained in a recent book, The Breakthrough Challenge , I wrote with Jochen Zeitz, former Chairman and CEO of Puma, and now co-chairman of The B Team with Richard Branson.
It is no accident that this expanded agenda is increasingly pushing up to the Board and C-suite levels in companies. This is now a strategic agenda about how we create and grow the biggest markets of the 21st century.
The Baby Boomer generation of leaders and executives still struggles to see how they can adapt incumbent business models to the new realities. But the Millennials, who are heavily represented among the most interesting innovators, are not going to wait. Whether they Uberize the competition because of a desire to save the world or to make money doesn’t really matter. Joseph Schumpeter would have recognised them as the agents of the next wave of creative destruction. The question now is do we back the future, or cling on to the wreckage of the past?
(Interview with John Elkington in August 2015)