Written by Jessica Groopman, Jaimy Szymanski, and Jeremiah Owyang
Current “sustainability” efforts aren’t just the beginning of the end of “business as usual,” but the critical bridge to building resilience for the long-term. The next generation of business and technologies are regenerative, designed to align markets in service of people and planet.
The modern organization faces a world of constant change. While businesses have traditionally been structured for stability, predictability, and specialization, digital, environmental, and societal disruptions of the last decade are forcing organizations to reckon with the fact that traditional methods aren’t working.
Compounding global forces stress systems, catalyze change
It is clearer now than ever that companies and their stakeholders exist within complex systems– systems which are dynamic and require flexibility and resilience. In 2020, the fragility of our interconnected fabric of systems– economic, logistical, social, ecological, health, political, trust, and technological– was laid bare. Businesses scrambled not only to meet customers’ shifting needs, but those across all stakeholders: consumers, partners, supply chain, market, community, state, society, planet. Compounding forces prompt an inflection point for business transformation– one that demands more from “digital transformation.” Pragmatic organizations recognize the “new normal” requires a shift in mindset and designs, but are struggling to activate, not to mention understand the critical role of technologies and data play. Digital transformation itself has shifted, as consumers (and employees) are voting with their footsteps; a digital business in service of what? Harmful to whom? Using what resources?
Beyond sustainability: bridging from CSR pledges to regenerative ecosystems
A shift in market logic is at stake. A linear, mechanistic, zero-sum logic is at odds with the natural systems on which the market itself depends. To date, companies have treated this tension like another “part” of the machine, relegating Corporate Social Responsibility (CSR) efforts to marketing, PR, and Environmental, Social, and Governance (ESG) initiatives.
Indeed, ESG investment efforts have surged 10x in recent years (investors contributed $51B to sustainable funds in 2020, compared to less than $5B five years ago, according to Morningstar). Yet these efforts are often focused on “doing less harm” or worse, to “greenwash” corporate reputations. Neither is strategic; “offsetting” extractive practices with “green” investments fails to bridge the organization’s purpose, value, relationships, or technologies to build resilience for the future. Nature provides the template for resilience: regeneration.
What does “regeneration” mean?
Regeneration has a couple of different meanings:
- In nature: regeneration is the process of renewal, restoration, and regrowth that makes genomes, cells, organisms, and ecosystems resilient to fluctuations or events that cause disturbance or damage. For example, forests have symbiotic nutrient and information exchange networks made up of mycelium fungi – unironically coined the Wood Wide Web– which help the forest respond to pressures and replenish life.
- In design: “regenerative” describes processes that renew or revitalize their own sources of energy and materials, creating sustainable systems that integrate the needs of society within the boundaries of planetary resources. For example, a global beverage manufacturer partners with a company called Cambrian to use their technology to treat wastewater contaminated by industrial processes, not just turning it into clean water, but even producing biogas that can be used to generate clean energy.
“It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.” — Charles Darwin
Shifting Market Logic: From Extractive to Sustainable to Regenerative
Resilient organizations are adopting regenerative business models to align profit models that contribute value to their ecosystems rather than constantly extracting from it. This strategic shift spans the entire organization.
As part of our ongoing analysis of business technology urgencies of the pandemic era, new Kaleido Insights research is exploring how digital innovations support regenerative business models. Emerging technologies play a critical role in accelerating and scaling these models–models critical to sustain life on the planet– far beyond “net zero”. We will be exploring how data, machine learning, sensors, distributed networks, tokens, synthetic biology, among many other technologies are powering transitions to new energy systems and unlocking new markets.
Numerous scholars, institutions, and start-ups have researched and published pioneering contributions to “regenerative” models– particularly in organizational, agriculture, and medicine. But this design paradigm is now rapidly gaining traction across retail, food/beverage, fashion, finance, and beyond. The time is ripe for innovation leaders to harness emerging technologies to align business value with societal and planetary priorities.