The Perspective Shift needed to Unlock Positive Impact at Scale
Currently there is a surge of writing and talk about how we can best support purpose-led investors, entrepreneurs and their companies to scale. In this article I summarise existing approaches and make a case that although they’re helpful, it’s a shift in perspective that may help us more rapidly achieve the outcomes we want. What’s even better is there’s scientific proof that this shift in perspective and intention is in even greater alignment with how our brains are hardwired to work.
Let’s put aside the discourse which is focused on who’s best to raise support for purpose-led investments (government versus business) for a minute. Although there are differences in the needs across the broad areas of impact investing, strategic philanthropy, social innovation and social entrepreneurship, on closer inspection there are also some interconnecting themes which could help in the mission of scaling them all.
Broadly speaking, these interconnecting themes could be summarised into four areas:
1. Capacity building and creating better support networks for social entrepreneurs
2. Specific upskilling on designing financially prosperous business models, that create blended value and give back to people and the planet
3. Government and philanthropic support for existing intermediaries and efforts in this space
4. Refreshed quantitative data-driven frameworks to more meaningfully measure then monitor the positive planetary and societal impacts we are creating.
While there is no doubt about the need for each and every one of these things (and we are putting our shoulder to each of them at The Lever Room), it’s also true that, as highlighted by impact investing and entrepreneurship thought leader Jed Emerson, ‘much of the current work focuses upon refining and drilling into concepts and practices which firmly rest within what we have already come to define as our reality’.
Jed is not alone in this thinking, and many of us in sustainability sector are increasingly aware that the fundamental approach of the sector has not been adequate to the task before us. It’s time to step up to see a fresh view.
Success or failure on sustainability goals cannot be measured only in terms of profit and loss. It must also be measured in terms of the wellbeing of billions of people and the health of our planet, and the sustainability sector’s record in moving the needle on those goals has been decidedly mixed. While there have been successes, our climate, water resources, oceans, forests, soils and biodiversity are all increasingly threatened. It is time to either step up — or to get out of the way. ‘John Elkington’
Simply put, given the evidence that the financial markets are largely misaligned to planetary and societal needs, it’s time to reassess our approach.
While we might lay the blame on market short-termism, asset mispricing, and general lack of information, it is only when we take a step back that we see the true extent of the systemic barriers and solutions in front of us. Stepping back reveals a bigger picture and a more fundamental issue that if unlocked could help align capital and entrepreneurial efforts to propel us to the future we want, keeping us within planetary boundaries. I suggest that, if we are to make sense of this bigger picture, it’s helpful to apply systems thinking principles to more clearly understand the nature of the problem.
Many of us in the sustainability sector have already been proponents of applying systems thinking to solve a variety of local and global problems. The question becomes, what would it look like if we took our own pill (so to speak) by applying the principles to advancing the entire sector and mission? Taking heed of the thinking put forward by Donella Meadows in ‘Places to Intervene in a System’ we might order actions from lowest to highest leverage (in increasing order of effectiveness):
9. Constants, parameters, numbers (subsidies, taxes, standards)
8. Regulating negative feedback loops
7. Driving positive feedback loops
6. Material flows and nodes of material intersection
5. Information flows
4. The rules of the system (incentives, punishments, constraints)
3. The distribution of power over the rules of the system
2. The goals of the system
1. The mindset or paradigm out of which the system — its goals, power structure, rules, its culture — arises
It follows that if we were to map out all of the potential interventions of the investment and business, (including start-up) ecosystems we would see that those that give greatest leverage in, this case to create a force for good, are around the purpose, mindset or intention of that system. So instead of more refined sustainability frameworks, impact metrics or capability training, what we really need is a radical shift in the intention, goals and culture of our investment and business ecosystems, if we are to create a solid social foundation and stop from overshooting planetary boundaries.
However, right now, contrary to what seems to have been our initial intentions we are still running with an ill-serving definition of success in business — the pursuit and acquisition of financial profit above all else.
But isn’t this all just human nature? ‘Stockpiling resources and greed is necessary. Competition is natural and needed to get ahead. War is inevitable.’ Whether in political discourse or popular culture, human nature is often portrayed as selfish and power hungry when in fact science tells us we value, and our brains are hard-wired for, sympathy over self-interest.
University of California, Berkeley’s psychologist Dacher Keltner has shared research findings that say our brains are hardwired to feel compassion. “We’re wired to care. If you feel pain, a part of your brain lights up, and if you see someone have physical pain that same part of your brain lights up.”
Furthermore, the act of perspective-taking (imagining I was in your shoes) is summed up by one of the most enduring definitions of empathy that we have, formulated by Adam Smith as ‘changing places in fancy with the sufferer.’ Even Smith, known by many as the father of economics, understood that the concepts of self-interest and empathy don’t conflict.
a. The current strategies for scaling impact investing, social enterprise and purpose-led business are useful and necessary (some of these are listed in items 1–4 above), however aren’t resulting in the specific outcomes we would like to see.
b. If we are to truly shift the needle in a meaningful way, systems thinking approaches show us that we need to consider the intentions and goals of the system we are seeking to change. This means shifting the fundamental intention of normal mainstream investment and business towards the creation of blended value across communities, our biosphere as well as financial profit outcomes.
c. Shifting the intention of our entrepreneurial, business and investment efforts will strongly support closing the $2.5 trillion annual financing gap needed to meet the Sustainable Development goals and stay within planetary boundaries.
d. There is a current unspoken belief interwoven across popular culture that the financial profit motive is necessary and aligned with how humans are wired. This view is incorrect and needs to change. Humans are wired for empathy and compassion. Humans are hardwired to care.
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