By John Parnell
Five years ago last week, BNP-Paribas kick started the mother of all recessions.
Unprecedented fraud, mindless greed and reckless gambling in the financial sector (and lets be honest, among certain sections of the public too) fed an incredible turn of events with banks failing, currencies sliding and in Europe, entire nations going tightening their collective belts.
The financial crisis is just one of many drivers that Giles Hutchins, author of The Nature of Business, sees ushering in a new era for business.
His message for leaders is clear. It’s time to learn from the natural world. You evolve or you die.
Hutchins is a management consultant, formerly of KPMG, who specialises in applying lessons from nature to help businesses boost their sustainability through practices like biomimicry and cradle-cradle production patterns.
“The downturn has been very positive in the long run. We need these shocks,” says Hutchins. “Quite a lot of corporate social responsibility (CSR) was shutdown because it wasn’t core to the business, those activities needed to change. These transformational times are forcing people to change.”
“The economy as it was is not coming back. The changes are needed.”
The result is that big business is now in a position where it wants to change. Companies like Unilever and Nike are held up as good examples by Hutchins.
Their stated aim is to not just reduce their environmental impacts but also to explore ways to improve the planet.
Biomimicry – inspiration from nature
One of the inspirations for ‘change’ was first observed by Charles Darwin. The natural world adapts to its surroundings.
Hutchins sees diverse and interlinked ecosystem-style operations replacing rigid, unresponsive management structures that seek only to grow.
“The previous paradigm was a relic of the industrial era where we tended to see businesses as machines,” he says. “And of course, the bigger the better. The focus is on short term gains for the shareholders.”
A combination of climate change, resource scarcity, the transparency created by the internet, and of course the recession are driving these changes.
“Businesses inspired by nature, a firm of the future is one that is constructive as well competitive we’re not saying there’s anything wrong with being competitive its about addressing the balance. It has to be dynamic and stable at the same time.”
In the book, Hutchins outlines six principles for business to take from nature, build resilience, optimise don’t maximise, adapt, integrate systems, navigate by values and support life.
One of the most interesting ideas is to support life. Instead of limiting the damage you do, companies should look at how they can make net improvements to nature.
This list of principles ultimately work as a process. If you know how you can support life, the means of doing that create your values. The systems within your business for achieving these are informed by those values. The fact that you have these systems rather than distinct, inflexible units means you can adapt.
This gives you the ability to make the best out of whatever situation the volatile world creates, ultimately delivering your resilience.
Back to the firms of the future
Inspiration from nature can be more direct.
The book is full of examples of products mimicking the natural world. He cites the Adnams Brewery in the East Anglia region of the UK as a company organised in an ecosystem-inspired style. Its values are prominent and its processes borrow from nature when they can (grass roofs, underground storage and converting waste to energy). The result was that it outperformed its competitors by 4%.
Unilever provides a more powerful example for Hutchins when he is talking to businesses about how they can change. The size of the company prevents the ideas being written off as “just for hippies” to paraphrase Hutchins.
But while Unilever’s efforts are well documented, he is quick to point out that they are not perfect.
“It’s a bit like the Olympics to be honest. The Olympics by its very nature is not sustainable and yet it is trying and has set out some accomplishments that will help drive the market towards better sustainability standards.
“That’s what Unilever is doing. The amount of palm oil it uses in its product by its very nature is not sustainable, but it’s trying to drive action towards sustainable processes for palm oil,” claims Hutchins.
“They are still in the early phases and yes they will still grow and yes they will increase their profits, but they are also looking to decouple that from environmental degradation.”
Unilever aren’t alone. Dow Chemical, hardly a favourite with environmentalists, saved $7bn from energy efficiency measures. Mining giant Rio Tinto has cut its CO2 intensity and has begun monthly emissions reporting.
If the firms of the future are indeed already with us, then the Rio+20 summit was their coming out party. The conference delivered perhaps the clearest signal yet of what the private sector can achieve with its new found motivation.
While politicians and diplomats struggled under the weight of self interest and external pressures in the negotiating rooms, business figures like Sir Richard Branson and Ted Turner were flexing their muscles on the sidelines.
“Rio+20 showed the old and the new sitting side by side. There was lots of talk and no ambition to change while on the fringes there was lots of positive moves and signs of the phoenix economy,” says Hutchins.
“People like Unilever’s Polman and Branson are stepping up and saying they’re fed up with governments not doing anything we’ll do it ourselves.” With more than a little inspiration from nature.
Giles Hutchins has over 15 years of business transformation experience and is now embarking on a BBC/Open University documentary of the same title and subject as the book. He regularly lectures at conferences and business schools, and blogs at www.thenatureofbusiness.org