Creating Leaders Great at Performing in Uncertainty without a Clue as to Why

There is an interesting phenomena going on in some of the major business schools in Europe. In some – you are not allowed to mention environmental factors as a major catalyst for new business models/thinking. It is “understood” that as a lecturer, you inspire the students with fresh thinking but only so far. Go further, and people just roll their eyes and pigeon-hole you as a treehugger.

Here are three quotes from top business leaders:

“The era of ‘abundance’ is over. The future will see our natural resources, from oil to food, having some level of restriction placed on them.”Andy Bond, CEO, Asda (May 2009)

“We must rapidly wean ourselves off our dependence on coal and fossil fuels.” – Richard Branson, announcing investment of all profits from Virgin transport business, estimated at $3 billion over 10 years, to be invested in fighting global warming. (21 September 2006)

“Sustainability is here to stay or we may not be.”Niall Fitzgerald, UK CEO, Unilever

Now, none of these guys are particularly treehuggy. And most MBAs would give their eyeteeth to fill the shoes of these guys – and yet – in many MBA programs – coverage of sustainability issues is absent, apologetic, sidelined, or sketchy.

Let’s stop tiptoeing around the obvious. Business leaders can handle the truth. Though there is uncertainty on what the impact will be, climate change is a global issue that will impact business. Period.

In 2008 the US Director of National Intelligence (DNI) presented to Congress the DNI report National Intelligence Assessment on the National Security Implications of Global Climate Change to 2030. Here are a few excerpts:

“The United States depends on a smooth-functioning international system ensuring the flow of trade and market access to critical raw materials such as oil and gas, and security for its allies and partners. Climate change and climate change policies could affect all of these—domestic stability in a number of key states, the opening of new sea lanes and access to raw materials, and the global economy more broadly—with significant geopolitical consequences.”

“In addition, anticipated impacts to the Homeland—including possible increases in the severity of storms in the Gulf, increased demand for energy resources, disruptions in US and Arctic infrastructure, and increases in immigration from resource-scarce regions of the world—are expected to be costly. Government, business, and public efforts to develop mitigation and adaptation strategies to deal with climate change — from policies to reduce greenhouse gasses to plans to reduce exposure to climate change or capitalize on potential impacts—may affect US national security interests even more than the physical impacts of climate change itself.”

“Climate change is a threat multiplier in 
the world’s most unstable regions.”

“From a national security perspective, climate change has the potential to affect lives (for example, through food and water shortages, increased health problems including the spread of disease, and increased potential for conflict), property (for example through ground subsidence, flooding, coastal erosion, and extreme weather events), and other security interests.”

These leaders are talking about fundamental shifts in ‘givens’ that require action, a joined up way of behaving, new ways of thinking, and new approaches. And our top business schools should be on the leading edge.

I first got interested in business schools ignoring the big elephant in the classroom two years ago when I was delivering a course on dominant business metaphors and implementing change. I wanted to say one line – one sentence inviting students to ponder how the nature of sustainability planning would be different if organisations, in addition to approaching business as a ‘competitive sport’, also approached it as a living organism. The professor who brought me in said ‘no’ – that the MBAs would feel they were being hijacked away from the course they had paid for. There was a specific elective for sustainability – and outside of that – best not to mention those issues.

Over the past few months, I’ve been speaking with several top MBA programs in Europe. Each is saying that leaders need, more than at any other time in history, to be able to lead in the presence of ambiguity, and to be able to perform collaboratively with high levels of uncertainty. Applied Improvisation skills are rather good for that, which is why I’m there in the first place.

What I find interesting in talking with these top MBA programs is that many are not contextualising the WHY of this new emphasis. Not addressing why managers/leaders would need to be so good at ambiguity.

“Growth for the sake of growth is the ideology of the cancer cell.” – Edward Abbey

I sat up when I saw this quote. It was refreshing to see in a lecture to potential MBAs at a leading business school in the Netherlands a few weeks ago. During my time at the school, two of the guest lecturers talked about sustainability – kind of…

The first lecturer used the Abbey quote (Abbey is a renown outspoken sustainability activist) and talked about the need to create ‘sustainable businesses’ quickly dismissed the notion of ‘sustainable’ as being linked to any ‘environmental’ issues… – it was about a business which can keep going, despite ‘adversity’. Given what scientists are saying about increasing disruptions over climate change, peak oil, peak minerals, peak water, how could adversity due to these factors not be mentioned?

The other lecturer had just hosted a biomimicry event two weeks before and deeply cared about the environment and sustainability. He works with top leaders in the best companies around the world on developing leadership skills. In his session, he talked about the profound need for leaders to be comfortable leading in the presence of ambiguity, but didn’t say why. In the break he confided that there are some groups with which you cannot talk about the environment directly. He had been gently testing the water with that day’s group and found he could mention it a bit…but only a bit. Several people were there for the express purpose of earning more money with an emphasis on value extraction, not particularly wealth creation/exchange.

Contextualising is a vital part of learning. The military does this routinely in their simulations – creating real world scenarios in the classroom. If we are facing a series of challenges (climate change, scarcity of water, oil, minerals, etc.) we must mention that as part of what leaders will face.

One initiative that gives me hope is the UN Principles for Responsible Management Education (PRME) initiative. The head of a leading MBA program in the UK turned me on to it. Finally – a global effort is being made to transform business schools and the Assocation of MBAs is part of it. In theory – that should mean that the taboo-ness of sustainability issues being explicitly mentioned, or mentioned only in specific electives – disappears.

As I continue to work with MBA programs, I will keep you posted on what I see going forward in this arena. And if you know of any best practice in this area – please post it here. Let me know!

“Unless we change direction, we are likely to end up where we are going.” – Chinese proverb

© July 2010 by Belina Raffy

Water Scarcity in the US

When I talk with groups about water, here are some factoids that usually surprise:

  • By 2020, California will face a shortfall of fresh water as great as the amount that all of its cities and towns together are consuming today.
  • By 2025, 1.8 billion
 people will live in conditions of absolute 
water scarcity, and 65 percent of the worlds population will be water stressed.
  • To grow a ton of wheat uses 1,000 tons of water. The US is the largest exporter of wheat to the world. When we export a ton of our wheat, we are effectively including 1,000 tons of water in the bargain.
  • In the US, 21 percent of irrigation is achieved by pumping groundwater at rates that exceed the water supplies ability to recharge.
  • There are 66 golf courses in Palm Springs.  On average, they each consume over a million gallons of water per day.
  • Lake Meade (the source of 95% of water for Las Vegas) will be dry in the next 4 to 10 years (see picture below).

Water scarcity is a global problem and is not confined to “poor” nations.

Global Water Stress
Global Water Stress (scource: World Resources Institute)

In the US, we are now seeing headlines about droughts in places like Florida, Georgia, etc. – not your traditional areas of drought. A powerful way to understand the pervasiveness of America’s water scarcity problem is through the following pictures.

This first picture shows areas of the US that are experiencing moderate (yellow), severe (red), and extreme (purple) drought.

US Drought Map (source: NOAA)

The picture above is constantly updated, and now, in fall 2011, Texas is experience unprecedented drought. I was driving through Texas a few weeks ago, and at that time, local radio stations talked about how Austin, as just one example, had experienced 72 days in a row of 100 plus temperatures. Here’s a picture of the current (September 27, 2011) drought situation throughout the US. Note that drought levels in most of Texas are at level D4 – “Exceptional.”

US drought map
US drought map - September 29, 2011 (source: NOA, NESDIS, NCDC)

These dry conditions have fostered endless fires that are sweeping across Texas and throughout the Southwest. Predictions are that the drought will likely last for years. Planners will need to make sure public policy on water conservation are in line with emerging water scarcity conditions. When does a drought become a desert?

Shifting the lens toward the Southwest, here’s a picture of Lake Meade, boating haven and water source for Las Vegas. Current estimates predict it will be dry in the next 4 to 10 years.

Lake Meade water scarcity
A picture of the fast disappearing Lake Meade taken in 2007

Food production in the “breadbasket” of the US depends on water from the Ogallala Aquifer.  The picture below shows where the sharpest declines in water level are occurring.

Ogallala Aquifer water shortage
Ogallala Aquifer (source: USGS)
well-level changes in aquifer - Lamb County, Texas
(source: USGS)

The USGS monitors over 9,000 wells throughout the aquifer. Zeroing in on Texas again, here’s a picture of a typical well in Lamb County, Texas. Monitoring of this well started in about 1950, when irrigation began. This well shows a water table that has fallen steadily, and at current draw rates, this well will be dry in the next decade or so. How will farmers, who depend on a reliable source of water to grow crops and ride through accelerating drought, stay in business? How will the drying of the Ogallala Aquifer effect America’s ability to feed the nation?

A recent article in The Texas Tribune sets out the impact Ogallala water scarcity will have on Texas.  This story is not unique and is being played out throughout the 8 state region covered by the Ogallala.

Highlights of the Tribune article:

  • The Ogalala aquifer stretches across 8 states and accounts for 40 percent of water used in Texas.
  • The Ogallala’s volume will fall a staggering 52 percent between 2010 and 2060.
  • The use of big pivot irrigation — the lifeblood of the Panhandle — could be cut back severely in 10 to 20 years.
  • Texans are probably pumping the Ogallala at about six times the rate of recharge.
  • Water conservation and regulation policy is difficult to implement because Texas views groundwater as essentially a property right.
  • T. Boone Pickens business Mesa Water and other companies are buying up water rights, and looking to market water to cities like Dallas.  This is creating a variety of court challenges in the struggle to define the line between public and private water rights.

For more information on the critical issues around private and public access to water, read the well-researched Blue Gold by Maude Barlow and Tony Clarke.

Climate Change May Reduce Protein in Crops

The concentration of carbon dioxide in Earth’s atmosphere may double by the end of the 21st century.

In a recent Science Magazine article, scientists at University of California, Davis discovered that increased levels of carbon dioxide in the atmosphere can reduce the protein content of crop plants by as much as 20 percent.  Their research shows that high CO2 levels interfere with the ability of plants to convert nitrates into proteins, thus reducing plant productivity and food quality. Increasing nitrogen fertilization might compensate for slower nitrate assimilation, but such fertilization rates might not be economically or environmentally feasible.

Food = Energy

Most crop fertilizers are produced from oil. As oil supply tightens, the price of oil will rise.  The price of fertilizer will track that increase.
About 17 percent of fossil fuels are used to produce our food.  The most energy intensive activities are:

  • Fertilizer & pesticide production
  • Irrigation
  • Transportation
  • Processing

Fertilizer and pesticide production accounts for 31 percent of fossil fuel usage in food production.

Business Impact

Big Ag should be concerned about this.  They are the heaviest users of fertilizers and pesticides.  It’s time for them to think about how to adapt to this.  Organic farmers should be in much better shape. They avoid the use of fossil fuel-based fertilizers and pesticides.  Organic sources of nitrogen, such as compost and manure, are their soil amendments of choice.

Community Impact

Food cost represents from 16% (developed nations) to over 60% (developing nations) of a family’s budget. As climate change reduces food quality and oil inflation drives up the cost of food production, family’s will struggle – receiving less nutritional value, at greater cost.

Government Impact

Looking at this news through the lens of government, three issues rise to the top:

  1. If you need to feed a lot of people (think India and China), it’s all about efficiency.  A 20% drop in protein production is a big problem.
  2. Make sure your Department of Agriculture and extension agents are at the top of their game, developing and disseminating best practices for our climate changing world.
  3. If your state/country produces a lot of food (think California, the grain belt, Canada, Europe and the UK), think about ramping up non-fossil fuel-based sources of nitrogen.

One clever approach to producing organic nitrogen – use farm animal waste to generate biogas for energy production, and use the resultant nitrogen-rich composted manure to amend farmland soil.  The benefits?

  • Less dependency on oil.
  • Strengthen the local economy through local nitrogen and energy production.
  • Capture the methane in animal waste before it enters the atmosphere.
  • Healthier food

The Effects of Climate Change on Agriculture, Land Resources, Water Resources, and Biodiversity in the United StatesTo learn more about Climate Change impact on food production, read the US Department of Agriculture’s report The Effects of Climate Change on Agriculture, Land Resources, Water Resources, and Biodiversity.  It is an outstanding example of government in action:

  • Recognizing the fundamental importance of food to a functioning society.
  • Laying out the impact climate change will have on food production.
  • Detailed guidelines for farmers – how to mitigate impact and plan for changes to crop strategy as global warming and rainfall patterns shift.