By Bjørn K. Haugland & Erik Rasmussen
How can we use the pressure from global risks such as extreme weather or water scarcity to create new sustainable business opportunities?
This might be the single most important question for any company today.
In current strategizing and business developing, we are very good at spotting risks associated with the sustainability challenges facing us. Markets will change, access to critical resources might dry up, and politics and regulation remain unpredictable. This gives many of us daily worries and makes planning for the future of our businesses hard.
The Nobel Prize winning economist Daniel Kahnemann is well known for his work showing how we give a lot more attention to avoiding losses than to creating new gains. This is especially true, when we are faced with complex risks that we cannot fully comprehend. This is basic human psychology and we bring it with us to office space of our companies. Unfortunately, this also means that we are not nearly as good at seeing the opportunities for creating sustainable businesses as we are at spotting the risks. Our inherent loss aversion clouds our outlook and carries the risk of stifling our potential to act and invest in a sustainable future. A sad loss for innovation and society at large.
Question is; how do we change this? How do we adopt a lens for the strategic outlook of our companies that enables us to see the opportunities and take the leaps needed to seize on them?
The Opportunity Hunt
The answer to these questions has been refined for centuries. Tools and mechanisms have been developed to handle the risk of losses and overcome barriers for action. Mutual insurance is a good example. Distributing the individual’s risk over a larger group of people makes it less threatening to invest or engage globally. Ancient Greek merchants already had this system in place. They dared to face the risks of loosing a cargo, because they knew the other merchants would share their potential loss. By way of mutual insurance, they had bigger incentives to seek the chance, ship off their goods and reach for the benefit. By sharing the risk, they has bigger incentive to seek the opportunity, ship off their good and reach for the benefit than the alternative of backing down in the fear taking a loss.
Companies and societies today must start doing exactly that. Just as the idea of mutual insurance set the Greek merchants free, we need a new tool to help us focus on the benefits of a transition to a more sustainable society. A tool that can unlock our interest in hunting the opportunity and enable us to act on the sustainability challenges ahead.
That work begins now.
From 5 risks to 15 opportunities
Coming to Abu Dhabi September 9th, is the new initiative Global Opportunity Network that begins where traditional risk reports stop. Initiated by DNV GL and Monday Morning Global Institute, the work aims to demonstrate how five global risks can be turned into 15 sustainable opportunities.
Over the next two weeks, academics, innovators, business leaders, public officials and representatives of youth organizations will convene at workshops in San Francisco, Sao Paulo, London, Johannesburg, Oslo, Abu Dhabi, Mumbai and Shanghai to identify tangible opportunities related to five risks threatening our communities: Extreme weather; continued lock-in to fossil fuels; urban break down; lack of fresh water; and continued rise in non-communicable diseases.
Each of these risks puts a lot of pressure on our existing way of living. Extreme weather is by far the most costly type of natural disaster. Non-communicable diseases have become the number one killer in the world putting healthcare systems on the brink of collapse. And decreasing supplies combined with increasing competition for water reserves can soon result in water resources not meeting demands.
Later this fall, a group of experts will review the identified opportunities and distilled them into 15 tangible opportunities. These will then be tested in a global survey with about 5,000 private sector decision makers to determine how compelling the opportunities are when seen as investment areas.
With the work of the Global Opportunity Network, we aim to enable us all to look at the pressure these global risks impose with a specific set of lenses: The kind that magnifies what new demands, behavior patterns and market disruptions these risks create, and convert this knowledge into sustainable opportunities – for societies and for business. If we succeed, the work will demonstrate that the greatest risk we run is not seeing the opportunities at hand.
Bjørn K. Haugland is Executive VP and Chief Sustainability Officer at DNV GL & Erik Rasmussen, CEO of Monday Morning Global Institute
The Global Opportunity Network was launching in Johannesburg, August 27 and will visit 8 cities. The final report on 15 sustainability opportunities is due to be released January 20, 2015. Behind the initiative is Monday Morning Global Institute and DNV GL.
For more information, see www.globalopportunitynetwork.org/ and on Twitter @OpportunityNetw
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