Why choose transformative over sustaining innovation?

“For both the poor of the world living in largely degraded ecosystems and the so- called wealthy in the developed world, transformational change now seems to be required. Humanity cannot survive without functional ecosystems, and the actions of all people are needed to act together as a species on a planetary scale.” — John D. Liu (2011: 24)

Clayton Christensen (1997) identified two fundamentally different kinds of innovation. The most common kind simply aims to keep ‘business as usual’ going on for longer by improving upon already established ways of doing things and existing systems structures. It helps a company, organization or culture to keep doing what it is known for and used to without fundamentally changing services, products or the system’s structure and identity. Christensen called this ‘sustaining innovation’, not because it is ‘sustainable’ but because it sustains ‘business as usual’ and helps established systems to function in the way they are used to.

The second type of innovation described by Christensen is ‘disruptive innovation’. He identified a wide range of cases where companies were caught out by competitors that had invented a completely new kind of service or product that made the offers of ‘business as usual’ companies in their industry sector obsolete. This kind of innovation is a game changer.

Disruptive innovation can lead a company to compete with its own ‘business as usual’ offer in a disruptive way. The challenge becomes how to introduce the disruptive innovation in a sequenced way that allows the company to keep the lights on while preparing to phase out obsolete ways of working and technology and, at the same time, phase in the innovation that reinvents, redesigns and redefines the ‘new business as usual’.

Taking a closer look, we can distinguish between two qualitatively different kinds of disruptive innovation. There is the kind that makes certain technologies and products obsolete by offering an improved and innovative way of obtaining better results than the old system. A simple example would be the change from magnetic tapes to compact discs as devices to store music. This fundamentally disrupted the business of those who were still trying to sell tapes, but the companies distributing the music were able to stay more or less the same. Another kind of disruptive innovation not only makes older technologies obsolete but initiates a process of transformation that leads to companies innovating a whole new way of doing business and providing service and value.

The change from compact disc to digital media files downloadable from the Internet led to fundamental changes in the music industry. Established companies were forced to transform themselves in order to stay alive and companies like Apple and Spotify were able to capitalize on these fundamental changes by taking the first mover advantage.

In other words, one form of disruptive innovation leads to a change in technology without fundamentally transforming the industry in itself. The second type offers a bridge into a deeper cultural transformation that will lead the company, community, or society to transform and reinvent itself.

Building on Christensen’s work, the International Futures Forum distinguishes a third type of innovation that describes the long-term innovation process of fundamental changes in culture and identity. In the context of sustainability and the transition towards a restorative culture, it is this kind of ‘transformative innovation’ that is particularly of interest to us.

How do we keep the lights on, avoid revolution and turmoil, keep children in school and people in work, yet still manage to fundamentally transform the human presence on planet Earth before ‘business as usual’ leads to run-away climate change, a drastically impoverished biosphere, and the early demise of our species?

Metaphorically speaking we are challenged to redesign the plane we are on in mid-flight. How do we keep the basic needs met while we are preparing and experimenting with the kind of transformational change that will make ‘business as usual’ obsolete and offer a qualitatively different alternative?

Only by experimenting with and accepting change can we bring about transformation. Transformative change requires us individually and collectively to live differently, rather than to continue repeating unhealthy patterns of behaviour and ways of thinking that no longer serve us.[This is an excerpt of a subchapter from Designing Regenerative Cultures, published by Triarchy Press, 2016.]

We have seen how we are living in between two narratives — separation and interbeing — and we will have to carefully evaluate what aspects of the old story can continue to serve us once we re-contextualize them from the more inclusive and integrative perspective of the ‘new story’ of interbeing.

We would be unwise to dismiss all our current systems and processes outright. In this time of cultural transition, we have to live the questions more deeply rather than jump into answers and solutions too quickly. Innovation for cultural transformation towards a regenerative culture is about finding the right balance between envisioning and designing our common future and letting it simply emerge while we pay close attention to how we relate to ourselves, our communities and the world.

One of the questions we should keep asking is whether these relationships are nurturing, loving and healthy, or whether they are stifling, aggressive and pathological. Transformative innovation is as much about deep listening into what wants to emerge as it is about conscious and intentional interventions on the path from our current industrial growth society and culture of competitive individualism to a life-sustaining society and truly regenerative cultures.

We live in extraordinary times

We are living in extraordinary times and transformation is already happening and accelerating all around us. In almost every area of our lives old structures are breaking down as we witness the unfolding impacts of unprecedented technological innovation. All of this is happening within the context of an expanding human population, profound societal and economic transformation on all continents, and — most urgent of all — a dangerous destabilization of global and local climate patterns.

There is a scientific consensus that we need to take immediate action if we are to avoid catastrophic climate effects on the future of humankind, the diversity of life and the entire planet. Already hundreds of thousands of people die every year due to climate change-related extreme weather events and millions lose their homes, go hungry or are forced to migrate.

Ecosystems everywhere, and the biosphere as a whole, are reaching dangerous tipping points. The prolonged impact of an industrial growth society addicted to fossil fuels and the rapid extraction of non-renewable resources is pushing against planetary boundaries.

Our current economic system is structurally committed to ever-increasing economic growth and intertwined with a financial system based on debt, and currencies that are not backed up by real material value. Attempts to resuscitate this structurally dysfunctional system are getting more and more expensive, as the cycles of economic crisis and costly (temporary) recovery are getting shorter and shorter.

Continuing economic crisis, along with fear of war and terrorism have effectively kept climate and environmental issues at too low a level of political priority. Whether our structurally dysfunctional economic system can ever deliver sustainability is being questioned more and more. Not just anti-globalization activists but people in institutions such as the World Bank (Soubbotina, 2000), government think tanks (Jackson, 2009a), academia (e.g. Victor, 2010, Jackson 2009b) and the World Economic Forum (2012) are questioning the economic growth paradigm.

At the same time, the evidence that inequality has devastating social and health impacts is mounting (Wilkinson, 1996, 2005, Wilkinson & Pickett 2011, Stiglitz, 2013); yet the gap keeps widening globally. Demographic changes are challenging some countries, such as Germany and Japan, with the effects of over-ageing populations, while other countries in South America, Asia, Africa and the Middle East have a growing population of disenfranchised youth with poor economic prospects and inadequate education, facing a century of potential turmoil.

Rising fundamentalism and resource conflicts over oil, water and land have led to a series of wars which have caused humanitarian crises in the Middle East, Africa and Europe as rising numbers of refugees herald another era of mass migration. Environmentally, politically and economically induced migration are on the rise, driving potential conflicts between immigrant and resident populations, and adding to a resurgence of xenophobia just at the time when humanity has to pull together in order to successfully chart the turbulent waters ahead.

Food, water and energy supply issues are already leading to localized scarcities, famine and conflict in many parts of the world. Nevertheless, some predatory multinational corporations are still actively exacerbating these problems in the interests of a few, rather than helping to find solutions that protect the global commons and ensure basic access to essential needs for all of humanity.

The root cause of this misguided behaviour is the narrative of separation that justifies aggressive competitive behaviour and generates artificial scarcity. This ‘old story’ still fundamentally informs our culture.

Education and health systems the world over are stretched to their limits as they are forced to reinvent and restructure themselves while at the same time maintaining and improving their services in a difficult economic climate. Even in the privileged and wealthy nations most education systems have not been able to come to grips yet with the profound reorganization of their mandate since information and knowledge is now more accessible than ever due to new information technology.

Most university graduates are equipped with outdated knowledge and skills by the time they graduate, and are unable to grasp the big picture connections of the world they inhabit. Overspecialization has limited their capacity for integrative, lateral and holistic thinking.

It is true that many generations before us have thought of themselves as ‘living in extraordinary times’, yet never before in human history have there been so many of us on Earth, nor have we ever been in possession of such powerful technologies capable of affecting large scale catastrophic change based on only a very few ill-fated and misinformed decisions.

Transformation is inevitable and already under way

The transformations afoot today will reshape the human presence on Earth in less than a century, and if we want to have a ‘snowball’s chance in hell’ we need to learn how to see all the diverse change processes and transformations as part of a systemic transition which we are unable to control but which we can navigate more wisely if we learn to ask the appropriate questions.

If we nurture the ability to see the interconnections between the different crises we are facing, if we learn to pay attention to the underlying systemic structures and narrative that drive our current deeply unsustainable behaviour, we may be able to equip communities everywhere with the ability to respond appropriately to the challenges ahead at their local and regional scale, while offering them a global context for collaboration in the transition towards regenerative human cultures.

We live in a time of extraordinary opportunity. The Renaissance and the Enlightenment were relatively minor variations on an already existing theme in comparison to the transformation that is now under way. The birth of regenerative cultures and a regenerative human civilization is the most profound transformative innovation that our species has undergone since we started to turn from nomadic hunters and gatherers into settled agriculturalists some eight to five thousand years ago.

The ancient Greeks had two words for the concept of time: chronos — sequential, quantitative, chronological time — and kairos referring to extraordinary periods when culture transforms qualitatively and profoundly as individuals and collectives seize the transformative future potential of the present moment.

The fall of the Berlin Wall and the Soviet Union, Nelson Mandela’s transformation from prisoner to president, and the end of the British Raj through non-violent direct action led by Gandhi are all examples of kairos moments that affected the course of history. We are now in the midst of a kairos moment at the level of our entire species on a planetary scale. Transformation is inevitable and already under way.

The Three Horizons of innovation and culture change

In the autumn of 2009, I was invited to join the International Futures Forum (IFF) as one of a small group of ‘next generation’ members. The IFF is an international collaborative network of people committed to pooling their experience and insights to explore “the complex and confounding challenges that our world faces”, to “support a transformative response to those challenges” and to “enhance our capacity for effective action”.

One common perspective shared between the members of the IFF is that we need a more systemic approach to the complexity of the interconnected problems and opportunities that we face. Another shared belief is that, in order to appropriately respond to the changes around us, organizations, communities, businesses and governments must not only pay attention to possible short-term responses to symptoms of these crises, but must also address the underlying structural and systemic causes that drive these symptoms.

In addition, working with complex systems requires us to befriend uncertainty, change and unpredictability. We aim to engage communities in the deeper cultural dialogue that asks the kind of questions and proposes the kind of provisional answers that drive cultural transformation and continued learning.

IFF members and other futures practitioners (see Hodgson & Sharpe, 2007; Curry & Hodgson, 2008; Sharpe 2013) developed the ‘Three Horizons’ framework collaboratively over the last 10 years. ‘Three Horizons thinking’ is an effective method for making sense of and facilitating cultural transformation and exploring innovation and wise action in the face of uncertainty and not-knowing.

The framework has been applied in a variety of contexts, including the future of intelligent infrastructures in the UK, technological foresight in the IT industry, transformative innovation in the Scottish education system, the future of Alzheimer’s research, rural community development, and executive leadership programmes. It is a versatile methodology for inviting people to explore the future potential of the present moment through a number of perspectives that all have to be considered if we are to steer our course wisely into an unpredictable future.

The ‘Three Horizons’ framework is a foresight tool that can help us to structure our thinking about the future in ways that spark innovation. It describes three patterns or ways of doing things and how their relative prevalence and interactions evolve over time. The change from the established pattern of the first horizon to the emergence of fundamentally new patters in the third occurs via the transition activity of the second horizon.

The model not only makes us think in interactive patterns, but more importantly “it draws attention to the three horizons always existing in the present moment, and that we have evidence about the future in how people (including ourselves) are behaving now” (Sharpe, 2013: 2).

The Three Horizons of innovation and culture change (Illustration Flavia Gargiulo adapted from International Futures Forum with permission, in Designing Regenerative Cultures by Daniel Christian Wahl)

The framework helps us to become more aware of how our individual and collective intentions and behaviours actively shape the future today. By mapping three ways of relating to the future from the perspectives of the three horizons we can bring the value of each of them to the conversation in a generative way that fosters understanding and future consciousness as the basis for collaborative action and transformative innovation.

I believe the three horizons offer an important framework for thinking about transformative innovation that can be used to facilitate the transition towards regenerative cultures. It can help us to structure our collective exploration as we start living the questions together as conscious participants in this transition. In this context, the first horizon (red) represents the currently prevalent systems that are beginning to show symptoms of decline and shortening cycles of crisis and temporary, but never fundamental, recovery.

In other words, Horizon 1 is ‘business as usual’, or ‘the world in crisis’ (H1). It is characterized by ‘sustaining innovation’ that keeps ‘business as usual’ going. Horizon 3 (green) is how we envision a ‘viable world’ (H3). We may not be able to define this future in every detail — as the future is always uncertain — yet we can intuit what fundamental transformations lie ahead, and we can pay attention to social, ecological, economic, cultural and technological experiments around us that may be pockets of this future in the present. Horizon 2 (blue) represents ‘world in transition’ (H2) — the entrepreneurial and culturally creative space of already technologically, economically and culturally feasible innovations that can disrupt and transform H1 to varying degrees and can have either regenerative, neutral or degenerative socio-ecological effects.

At the point where these H2 innovations become more effective than the existing practices, they begin to replace aspects of ‘business as usual’. Yet some forms of ‘disruptive innovation’ ultimately get absorbed by H1 without leading to fundamental and transformative change, while other forms of ‘disruptive innovation’ can be thought of as a possible bridge from H1 to H3.

Within the context of the transition towards regenerative cultures we introduce a value bias into our use of the Three Horizons methodology: solutions that create conditions conducive to life and establish regenerative patterns are valued more highly than those that don’t. Throughout this book I refer to H3 as perspectives and patterns that intend to bring about a ‘viable world’ of regenerative cultures able to creatively transform in continuous exploration of the most appropriate responses to a rapidly changing socio-ecological context.

[This is an excerpt of a subchapter from Designing Regenerative Cultures, published by Triarchy Press, 2016.]

Note: Bill Sharpe and I are co-teaching a 5 day course at Schumacher College in November (20th to 24th) entitled ‘Three Horizons: A pathways practice for sustainability and transformative innovation’.