I went recently to hear the futurist and sustainability adviser David Bent talk on ‘business policy and transformation’ at the Bartlett School in London. David worked at the Forum of the Future for a decade or so, and these days mixes up some teaching with advisory work. The slides from his talk—some of which will be threaded through here—are on his website.

There was quite a lot in his talk, and so I’m going to try to pull out some themes here rather than try to recap the whole thing.

From CSR to ESG to ‘purpose’

It’s possible to be gloomy about the progress of ‘sustainability’ as a business idea, but it’s also clear that as the climate emergency has become more imminent attention has been increasing. David’s characterised his engagement, over the last 20 years, as corresponding to three ages of awareness. The dates here may be approximate.

The first, from 2003–when he started doing this work—to 2006, was about stopping your negative impacts, and taking responsibility for your externalities. The second, from 2006 from 2013, was about ‘the issues will come and get you’. The third, from 2013 to now, and I’d say still continuing, is about ‘system change not climate change’. Knowledge has deepened and activity has become more urgent and more political, even inside businesses.

‘Net Zero is everywhere’

He also characterised this with a couple of quotes: the first era was marked by a partner at the accounting practice where he worked in the early 2000s asking ‘what is this climate change?’. The third is that ‘Net Zero is everywhere’, and that ‘our commercial success relies on this’.

In the middle, somewhere, he told a story about a Pepsico executive upbraiding him when he was at Forum for the Future for what they regarded as sloppy scenarios construction. Scenarios were supposed to be different, he complained, but “You have climate change in all of your scenarios.” (It’s easy to miss the idea of ‘predetermined elements’ if you think that scenarios are all about uncertainty).

Where we are now is that governments that understand the risks of climate change are just starting to create policy frameworks—if imperfect ones—that enable progressive businesses to act. This is the idea behind ‘mission-oriented’ policy. This then unlocks investment and growth that reinforces the policies. The EU’s Green New Deal and the USA’s Inflation Reduction Act can be read through this lens.

Getting to transformation

Separately, David and I have had the same intellectual journey about scenarios and uncertainty, and both from thinking about Jim Dator’s ‘alternative futures’ scenarios archetypes. The archetypes are ‘growth’ (here called ‘continuation’; ‘transformation’; ‘discipline’; and ‘collapse’, shown here in an adapted version produced by the Foresight University.

Looking at the future through this lens, there’s not much uncertainty at all. ‘Growth’, in a world of limits, either gets stuck in the ‘Discipline’ scenario, which is usually about constraints to limit adverse impacts, or it goes to Collapse. Discipline is also constantly at risk of collapse. The only scenario that gets you through to an increasingly narrow pathway to a sustainable world is some kind of version of ‘Transformation’, as any reading of the recent IPCC report reminds you. Scenarios aren’t about uncertainty any more. They are about understanding the options that get you to that path.

And one of the things I took away from the remarks from businesses about ‘Net Zero is everywhere’ and ‘our commercial success depends on this’ is that businesses understand this intellectually and emotionally, even if, in most cases, their systems and underlying operating assumptions haven’t started to catch up yet.

I read this—partly—as an encouraging sign, in that when that kind of a gap opens up between what people say, think and feel, and the actual outcomes of what they do, change can happen quite rapidly once it begins.

So what do businesses do?

The other thing that I found encouraging was that there is no shortage of ideas about how businesses should adapt, a veritable Cambrian explosion of models and frameworks. David threw a whole set of these up on some slides, noting that the academic ones tended to be more robust but the business ones were more colourful.

But the framework he paused on was David Snowden’s Cynefin framework, which in its current iteration is built around five domains which each start with C: Clear, Complicated, Complex, and Chaotic, with a ‘Confused’ domain in the middle where different types of system interact and need to be untangled.

The implication of this is that businesses need to explore new practices, or adapt existing ones to new ends (which is what is meant by the ugly neologism ‘exaptive’). My perspective on this is that businesses—especially large ones—aren’t very good at doing complex. They were mostly built in the days when the external environment was less turbulent, and you could get by being complicated.

The trouble with complexity is that it requires businesses (in Ross Ashby’s framing as the law of requisite variety) to increase the amount of ‘variety’ they are able to absorb. Businesses that are merely good at doing complicated will break under the strain—or simplify the way they do business. A more pessimistic way of reading the plethora of models and frameworks about business transformation is that businesses just don’t know how to manage a complex and turbulent environment.

Building a new model

But let’s not get too depressed too quickly. David offered some hypotheses about the changing environment that I’m going to reproduce here on his slide rather than type them all out.

Some of these might be thought to be controversial. We’ve all had drummed into us that democracies can’t deal with crises because politicians want to be re-elected, although the pandemic maybe demonstrated that they can deal with crises but at the last minute.

Incumbent businesses, with easy access for lobbying purposes, tend not be fans of anti-monopoly. So far, we’ve seen populists tell a story that’s easier to understand about security and control than the kind of story more progressive politicians have to weave to connect security with a more inclusive politics. Again, there’s some literature now on mobilising around positive stories than negative ones. And so on.

All the same, in this turbulent world of climate change, security will be at the heart of the story, so progressive politicians need to get onto this story quickly. David’s final proposition was a draft version of what some of this might look like—headed, I should add, ‘wrong but hopefully useful’.

(Source: David Bent)

Redefining ‘security’

There was some discussion of this idea of ‘security’ in the discussion afterwards, which turned out to be a bit of a testimony of how the word has been captured by the right and associated authoritarians in the last 80 years.

One of the ideas that emerged from the scenarios work I did with Chatham House on post-Ukraine war futures last year was that governments are already under pressure to revalorise the idea of security, to include food and energy rather than just being about personal safety. In this, governments become more important—something that governments in the immediate post-World War II world have understood immediately. Looking at the issues in the diagram above, redefining security to help people ride the coming social and economic turbulence seems like the single most important task for all of right now.

One of the long wave patterns in futures work, associated with Strauss and Howe, is that we go from ‘crisis to crisis’ across four generations in around 80 years. Rebuilding—they called it ‘High’, confusingly—follows the crisis, so maybe the timing is about right.

Businesses also have to choose, of course. At the moment most are in an internal fight between their investors and the pursuit of short-run returns, and their employees and customers, who would rather they took a longer term-view. Efficiency versus effectiveness, to borrow a line from the diagram above.

————

A version of this article was also published on my Just Two Things Newsletter.

I came quite late in life to questions of knowledge management, and my first exposure was to the work of the Japanese professors Nonaka and Takeuchi, and their ‘SECI’ model, which argues explicitly that knowledge in organisations moves repeatedly between the tacit and explicit.

SECI stands for the four corners of their knowledge spiral: Socialisation-> Externalisation-> Combination -> Internalisation, in which knowledge dances between the individual, the group, and the organisation in different combinations.

Saying and knowing

No one really disagrees that that’s how it works, but different people have different versions of it. Dave Snowden, who did knowledge management at IBM before developing his own theory of different types of knowledge, has a memorable phrase about this:

We can say more than we write, and we know more than we can say.

This leads, incidentally, to his more radical observation—that you can’t conscript knowledge workers. You can only invite them to volunteer.

The SECI model was also known as ‘Ba’, a Japanese word that translates into English very, very, loosely as ‘place’. Snowden’s model has a Welsh name—Cynefin—that also translates very, very, loosely into English as ‘place’. It was a deliberate choice.

Social learning

The other writer whose work I came across as I was trying to understand how knowledge moved around organisations was that of the late Max Boisot, who had a model of the social learning cycle that also moves between tacit and explicit.

A lot of Boisot’s work is about innovation, and he developed this two dimensional model into a three dimensional space later on. I use this model in futures training to help people understand the place that futures work fits into the knowledge cycle of the typical organisation. (It’s the upward line on the left hand side.)

The idea of tacit knowledge comes originally from Michael Polanyi, who developed it in the 1960s as part of a theory about how scientific discovery and innovation worked. Anthony Barnett suggested to Naughton that Mike Cooley developed it as a “working concept” in his book  Architect or Bee in the 1970s. Cooley is a neglected figure now, but he was an influential advocate then for using technology (and manufacturing capacity) for social benefit, as in his work on The Lucas Plan.

Organisational knowledge

It is certainly the case that organisational knowledge rests hugely on forms of tacit knowledge. One of the reasons that the idea of ‘Business Process Redesign’ was a colossal failure in the 1990s was that it focussed on material flows and ignored the unofficial (i.e. tacit) ways in which knowledge flows around.

Anyway, the reason why Naughton was interested in the role of tacit knowledge was that it turns out to be absolutely critical to the manufacture of semiconductors and related processes.

He’d picked this up in a review of Chris Miller’s book Chip War, by Diane Coyle:

lots of great examples of the difficulty of copying advanced chip technology because of the necessary tacit knowledge: for instance, every AMSL photolithography machine comes with a lifetime supply of AMSL technicians to tend to it. This is either hopeful – China will find it hard to catch up fully – or not – the US or EU will not be able to catch up with TSMC because of the latter’s vast embedded know-how.

The TEA-laser

AMLS is the Dutch lithography company that develops and makes the photolithography machines that are used to etch the most advanced silicon ships in our computing devices. TSMC in Taiwan, is the world’s leading semi-conductor ‘foundry’. Naughton’s point is that the knowledge in the heads of the staff is also a critical part of this advanced manufacturing infrastructure.

In his first post, Naughton goes back to the work of Harry Collins, who studied how an item of lab equipment, the TEA-laser, migrated from lab to lab:

There was very good information in the journals about how to build such a laser. But anybody who tried to put one together using written articles failed. They had something that looked like a laser on their bench, but it wouldn’t lase. What people didn’t understand was that the inductance of the leads was important. If you’d been to somebody else’s lab, you would build a complicated metal framework to hold a big capacitor close to the top electrode. But if you were working from just a circuit diagram, you naturally put this big heavy thing on the bench, and the lead from the capacitor to the top electrode would be too long and have too high an inductance for the laser to work.

Up to speed

One of his readers responded to his first post by explaining how Intel had spent significant resources moving its fabrication engineers from plant to plant,

to ‘enskill’ local teams in a new Fab (fabrication) process. At any one point they were re-settling 50 odd people (and their families) from Israel to Leixlip, and then in time moving the Leixlip team to Arizona or Portland to bring the next team up to speed. They could ‘copy exactly’ the fabs but it was the people they needed to make the new equipment faultlessly churn out the wafers.”

There’s an important point here about the role of knowledge generally in high value production processes. And relatedly, in how productivity increases in leading edge economies. This is what piqued Naughton’s interest:

I regard (tacit knowledge) as a radically undervalued phenomenon that is relevant to all aspects of the computerisation of work, and of course to many of the arguments currently going on about so-called ‘AI’.

High value work

Naughton’s particular interest is in digital technologies, and how they work (or don’t work) socially. But there’s a much wider point here. Almost all high value work—perhaps all high value work—depends on tacit knowledge. There’s not space here to explore David Snowden’s Cynefin model, but it connects different types of knowing to different types of external environment.

The only space where you can really draw up clear instructions to get things done—i.e. formalise the knowledge processes—is in the ‘Clear’ space in the bottom right, where rules work well as an instruction set. In all of the others, and especially in the ‘Complex’ and ‘Chaotic’ spaces on the left hand side, the ‘sensing’ function comes after some form of complex human activity. In other words, people have to use their knowledge and experience to interpret what’s happening.

Heart of value

I wrote about this a few years ago when I did a project on high value work for the Association of Finnish Work. In that piece, I talked about our finding that high value businesses “have human capabilities at their heart… People, in short, are at the heart of value.” This is the reason that most credible stories about the impact of AI in the workplace see the future of AI as being augmenting human work. And so far, of course, one of the dirty secrets of AI is that people sit behind the automata, filling the gaps, often with the soft knowledge that is the essence of tacit knowledge.

Harry Collins, as it happens, had a memorable metaphor for the difficulties in translating and recording tacit knowledge—trying to make it explicit, in other words:

In formal knowledge-engineering exercises in the 1980s, researchers would interview experts to try to extract the rules or heuristics that they employed in their work — and then try to express those in computerised ’expert systems’ which would supposedly work, but often didn’t. Harry’s metaphor was that such interviewing methods are like straining dumpling soup through a colander: you get the dumplings, but you lose the soup. And it’s the soup you really need, because it’s the tacit knowledge.

——

A version of this article was also published on my Just Two Things Newsletter.