Complex Adaptive Integrity is the New Bottom Line

Bottom-line thinking is about whether your way of doing business has a future. Common practice is to treat a high volume of accumulated profit or cash as a proxy for operational sustainability. But the history of empires, and of financial crashes, tells us this is not the case.

Lean bottom-line management is one example of another approach. Deficit spending goes further, guided by the idea that investment value and accounting priorities push toward different end goals. In both cases, structural specifics matter a lot.

What we know about successful — thriving and sustainable — ecosystems is that they are complex adaptive systems. Complexity is vital, because no one actor, methodology, or level of influence, is predictive of and responsive to all possible threats.

Adaptive capacity flows naturally from cooperative complexity. Resources exist, because at least two different kinds of behavior, from two different perspectives, come together in relationship. What exists fits somehow into the needs of another, or a grouping of others.

Industry is the application of that reasoning to intelligent production of new value. We are “industrious”, because we solve problems by coordinating between and among these kind of resource-application relationships.

“World-around” technologies, communications, collaborations, politics, and trade, mean that what we project out toward the other also shapes the world that comes at us. This has always been true in the more intimate reaches of human experience, but our world-around civilization has globalized our relational-ethical imperatives. In other words: we cannot afford to act toward natural resources, ecological systems, or the health and wellbeing of people on the other side of the planet, as if they all afford us a way to hide the costs of our industry. Degrading any of these works against our wellbeing.

The period in our collective history when “climate risk” was mostly a question of whether advocates for environmental protection would “win the argument” in the near future (policy impact risk) has given way to a new age of pervasive Earth-system feedback risk. There are now so many ways human behavior puts natural systems at risk that any business model that cannot survive without degrading natural or human capital risks becoming obsolete.

We don’t “price” the value of pollinating bees, regular seasonal rainfall patterns, major regional wind currents and banded persistent climate zones, but all of these determine whether we can grow food, or access fresh water. Increasingly, markets are required to find ways to absorb climate shocks, as crop failures hit not one or two nations at a time, but dozens across multiple continents, and for different reasons.

Nonlinear climate-transmitted financial risk is accelerating faster than our ability to cope with it. In 2017, the United States spent as much money in disaster relief as in the three decades from 1980 to 2010. And the amount it spent was larger than the annual GDP of nearly every country on Earth.

Complex adaptive integrity is the new bottom line. If you are able to interact with nonlinear spontaneous disruptive innovation in a way that either protects or improves your way of doing business, then you are more “solvent” than a rival with more cash but little or no complex adaptive capacity.

In the old economy, it was possible to put relational dynamics after core operational considerations. It was possible to put the bottom line before the public good, and the wider world would either not know this is the case or be resigned to the trade-offs. In the new economy, the need to operate in such a way is an existential liability.

Everyone has a right to select against unaffordable impacts. This is, actually, the foundational logic of market-driven economics. The technologies and business models are now emerging to make that selective capability available to any person, anywhere, at any time.

The complex adaptive capacity of the marketplace is more advanced and spontaneous than ever before. As we learn how to value non-linear threats and ecological and socio-economic degradation from industrial inefficiencies, the “policy risk” question goes away. The big risk is not getting smart enough fast enough. People will simply choose what’s next.

To be part of what’s next, find what complex adaptive integrity you have, and “grow your business” by growing that capability.

That means building natural capital and human capital beyond the scope of your operations. It means generating value for society in subtle, layered ways that won’t all go away if tides turn against a major part of your business. And, it means making sure you are on the positive side of the collective work of macro-critical resilience-building.

We are entering a phase in global economic development when the highest-value investment opportunities are tied to building human capital while achieving planetary security. Being a competitive innovation leader means aligning with those complex interactions, before everyone else gets there.

[ The Note for April 2018 ]

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