The BBC reported on 16 February that Professor Chris Field, an author of a 2007 landmark report on climate change, says the severity of global warming over the next century will be much worse than previously believed.
The news on continuing environmental degradation seems to get worse with every passing day and each successive broadcast.
Most businesses still seem cowed and inert in their own responses to climate change.
If you work for a large organisation, it’s almost inevitable that someone, somewhere is making or forcing decisions that compromise the environment.
In a downturn, when everyone is feeling vulnerable and the pressure is on to cut corners, it’s perhaps more likely.
But, simply because most businesses have their heads down, it is important that we find out just which companies are and aren’t acting on purposeful innovation initiatives in their responses to climate change.
Until we see change and new behaviours emerging, certainly at business’s big end of town, we’ll see no different outcomes.
What follows borrows liberally from a 2003 Harvard Business Review article about companies’ vulnerabilities to change entitled, “Predictable Surprises: The Disasters You Should Have Seen Coming”.*
It exposes the vulnerabilities of large organisations to “disasters” of their own making, essentially through taking their eyes off the ball.
In the piece, authors Watkins and Bazerman talk about the vulnerabilities of all companies to surprise, and use the example of Shell Oil’s attempt to dispose of the Brent Spar, its obsolete oil-storage platform in the North Sea that its UK arm had planned to sink.
The story is detailed, but essentially at the planned time of sinking, Greenpeace’s activists brought with them members of the European media fully equipped to publicise the event, and announced that they were intent on blocking Shell’s decision to junk the Spar.
The result was a costly backdown for Shell, amid the sort of publicity few organisations wish to attract.
Australia saw a similar battle over the plans of the timber organisation Gunns, forced at least temporarily to back away from building a timber-processing plant in the Tamar Valley of Tasmania, over fears about the environmental risks posed by the plant’s effluents.
In that case, public sentiment pushed the Australia and New Zealand Banking Group also to withdraw its financial backing for the project.
Today, as activists learn how to use the web to get the news from inside miscreant businesses, organisations are even more vulnerable to leaks about the truth of their activities and about those responsible for making the decisions that bring them into being.
And as in the instance of the dumping of Shell’s Spar platform, they may simply be unprepared to deal with a group of true believers who are organised and opposed on principle to their actions and who can demonstrate skill in making emotional arguments that resonate with the public.
Climate change is also just the subject that might inspire a new generation of investigative business journalists to get to work on companies that refuse to act on its threat.
In it lies new scope and for the public record we must get our facts straight about who is and who isn’t acting on climate change.
In their piece Watkins and Bazerman point to the ways in which businesses can become their own worst enemies.
The very structure of business organisations, especially those that are large and complex, makes it difficult for them to anticipate predictable surprises.
Various people have different pieces of an emerging picture, but no one has them all, and the assumption is made that someone else is managing the problems that are out of sight to the individual divisional head at risk.
Where theory holds that senior management will play the role of synthesiser, bringing together fragmented information, in reality the barriers to this happening are substantial.
When businesses are divided into operational silos, the information those at the top need to see and assess about an approaching threat is often incomplete.
The bosses may only be shown information that has already been filtered and the bad news they most need to hear is hidden from them.
Information concerning risk becomes more dilute as it moves up through the different levels in the hierarchy, and that which is sensitive or embarrassing may not be forthcoming or can be spun in such a way that the threat it poses is no longer perceptible.
Coupled with this is the inevitable distortion that takes place within individuals through the imperfections of all human minds, each of which is subject to the “cognitive biases” that can lead each of us to misinterpret the information we receive. This may be a particular risk for managers who need to simplify the mass of complex data that presents itself to them each day.
According to Watkins and Bazerman, extensive research shows that the way we process information is subject to flaws that can lead us to ignore or underestimate approaching disasters.
Among the most common, they state, are:
• That we tend to harbour illusions that things are better than they really are. We assume that potential problems won’t actually materialise or that their consequences won’t be severe enough that we focus on taking preventive measures.
• That we give more weight to evidence that supports our preconceptions and discount evidence that calls those preconceptions into question.
• We pay too little heed to what other people are doing. As a result, we overlook our vulnerability to predictable surprises resulting from others’ decisions and actions.
• We are creatures of the present. We try to maintain the status quo while downplaying the importance of the future, which undermines our motivation and courage to act now to prevent some distant disaster. We’d rather avoid a little pain today than a lot of pain tomorrow.
• Most of us don’t feel compelled to prevent a problem that we have not personally experienced or that has not been made real to us through pictures or other vivid information. We act only after we’ve experienced significant harm or are able graphically to imagine ourselves, or those close to us, in peril.
The common ingredient in these biases is that they are all self-serving. We are predisposed to see the world as we’d like it to be rather than as it truly is.
As such it’s not much of a leap to recognise that amid such delusion lies one of the most significant barriers to managerial action on sustainability – everyone assumes it is someone else’s responsibility, and that action is taking place – somewhere.
We can also see that in many organisations will simply exist a failure to acknowledge that there is a problem here on which someone in the senior echelons really is going to have to get busy.
It is likely that few are the organisations that don’t have something they’d prefer not to see being made public.
Most of us outside those businesses would be satisfied to see any purposeful and coherent strategic innovation response to climate change on the part of big businesses.
The problem we can anticipate – the predictable surprise for the rest of us, if you like – and one that is based on our shared experience, is that most of the change that creates a tipping point for action across industry will likely need to be coerced.
The one trick that the world now has up its sleeve, however, is the web. Its power to adjust behaviour increases daily. In the web’s potency for delivering change lies the predictable surprise for managers.
And in a poor attitude on the environment lies a minefield of risk for everyone concerned in business: decision makers, workers, investors, insurers and the public alike.
Far better to get busy on the solution now, and we’d argue (shameless plug) that Accelerated Sustainability provides the most certain way of achieving risk insulation over short, medium and long terms.
To thrive, every company must eventually diversify and innovate, even if they must ultimately be pushed into it by market forces beyond their control.
And sometimes, executives have to make major organisational changes to guard against a potential disaster.
Such changes always create winners and losers and generate overt and covert resistance.
But in addressing the inevitable risks to reputation that are now emerging on the issue of climate change and the innovation response it demands, the first step is the simplest, Watkins and Bazerman write.
Ask yourself and your colleagues, “What predictable surprises are currently brewing in our organisation?”
This may seem like an obvious question, but the fact is, they say, it’s rarely asked.
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* Watkins MD & Bazerman MH, 2003, “Predictable surprises: The disasters you should have seen coming”, Harvard Business Review, vol. 81, no. 3, pp. 72-80
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