How do we go about effectively tackling major complex global challenges such as climate change, rising inequality, obesity and dementia? One thing is for sure, it won’t be with the same mindsets, systems and tools that got us here.
A fascinating event last week by Collaborate CIC brought together UCL Professor Mariana Mazzucato, Grant Thornton UK CEO Sacha Romanovitch and CEO of Barking and Dagenham Council Chris Naylor, under the engaging moderation of Lord Adebowale to talk about “collaborative missions” – ways to harness public and private innovators behind a shared societal level goal. The classic example being JFK’s project to put a man on the moon, and bring him safely back. Today that looks innocent and almost quixotic. The urgent missions of today are existential – in a world being rocked simultaneously by the disruptive megatrends of globalization, ageing populations, urbanization and exponential technologies, our missions include preventing global climate catastrophe, reducing eye watering inequality, stemming massive immigrations, building an inclusive multigenerational society that works for 8 year olds and 108 year olds, and many more.
Prof Mazzucato is well known for her work with Entrepreneurial State where she pricks the self important bubble of some of the tech entrepreneurs who are convinced of their own genius, laying out how much of the investment, risk bearing capital and intellectual work was from government programmes that brought us the Internet, GPS etc. In the Value of Everything she pricks the finance industry, who have convinced society that the more money they extract in their role of intermediaries (often just pushing money to each other rather than creating value in the real economy) the more valuable they are to society. Just months after the devastating financial carnage of 2008, the Goldman Sachs CEO was saying that we pay the biggest salaries so we make the most value to society. Instead Professor Mazzucato says high wages are economic ‘rent’ that doesn’t just fail to support the real economy but actively damages it. Her new mission-driven collaboration framework that she developed as part of work to support the €100bn European innovation program, provides a framework to think about how to identify and act on the big projects that political leaders, the financial sector and industry have failed to do.
We need missions because an over-financialized economy isn’t addressing new investments. David Ricardo pointed out back in 1817, that technology and automation will allow businesses to become more efficient and make significant profits, but that’s ok, as long as the profits are reinvested back into new projects. That‘s what happened during the previous industrial revolutions, when displaced farmers found jobs in newly built factories. That’s not happening today as profits are being dispersed to capital holders and shareholders in unprecedented amounts and the real income for the middle classes is stagnant and declining. Prof M. noted Steve Jobs Apple never did a share buy back, but Tim Cook’s spent over $100bn on its own stock. Meanwhile, there are big, gnarly challenges to address – for example, according to the latest IPC report, we have 12 years, if that, to act to prevent climate change disaster, yet it’s estimated that we’re only doing around one fifth of the investment necessary to make an impact.
Todays typical approach suggested for governments is by and large rather boring – governments should ‘fix’ market failure. Government should level the playing field, set the rules of the game, be the lender of the last resort. All phrases smack of a very different age where governments were run by efficient, independent functionaries, who would keep crony capitalists in their place (e.g. breaking up the robber barons). It was not an age of regulatory capture and Citizens United – before corporations began writing their own rules.
As Peter Thiel points out in Zero to One, competition and capitalism are contradictory, though often conflated. A good capitalist, he points out, works very hard to build a monopoly and create a defendable moat. Adam Smith’s invisible hand metaphor has been widely misappropriated for political ends, somehow suggesting unfettered private selfishness will somehow deliver an optimal society. A more accurate representation was by Keynes – regulators should think of private companies as ‘domestic animals’ that needed a firm hand.
Governments as simply fixers of market failures are not going to get us to radical solutions. Markets are built, designed and created. Prof Mazzucato would like to see governments as investors of the first resort. Prof Mazzucato mentioned Charles Leadbetter’s article – movements with missions make markets, which traces the connections between social movements and concrete market outcomes, using the case of the birth control pill. This is an important contribution as it shows a path from a passionate, bottom up movement to significant market impact. It was very interesting that the pill succeeded because the broad mission united many different stakeholders, but their individual agendas were all quite different – the devout Catholics teaming up with the liberal sexual freedom fighters, both realizing that the pill could serve their different personal agenda.
The Grant Thornton UK’s MD called for three things to change in the context of our economy, which would be compatible with a new mission-driven approach:
(Side note: I was as surprised and inspired by Ms Romanovich’s bold, visionary thinking as I was disappointed to learn that she’s announced her departure as CEO, due to it seems some insiders unhappy with her not focusing 100% on profit.)
The final speaker, Chris Naylor, shared some powerful stories from Barking and Dagenham – a London borough facing numerous challenges and some depressing stats, such as how 237 children from 71 women were removed from their mothers and placed into care upon delivery, female healthy life expectancy is 53, and when surveyed, 38% of teenagers thought it was ok to slap their partner if they ‘misbehaved’. At the same time there were clearly success stories and a dynamic and committed local council ready to engage with the bold thinking represented by these collaborative missions.
Overall an excellent session – kudos to Collaborate CIC. However, I was left wanting more – in particular how does business get involved and what is the roadmap for action? How do we move from missionary zeal shared by the social sector to a new scalable way to run ethical businesses? I asked this to Prof Mazzucato and her response focused on the need to split between short and long term thinking, and benefits for individuals vs society. In the longer term, collaboration towards a societal end will lift all boats, whereas there may indeed be short term losers. What she didn’t say, but is the natural corollary, is that we need political leaders to step up and say things that are hard. Churchill talked of sacrifice, but few have since. RSA CEO Matthew Taylor notes in a podcast with Azeem Azhar that he regretted not telling people we couldn’t ‘have it all’ (e.g. strong growth, low taxes and social harmony) when he was head of policy under Tony Blair. More recently, the inability of UK politicians to be straight with the electorate about the false promises of the Brexit campaign has led us to today’s crisis point. Economics used to be called political economy, and perhaps it should be so renamed, to remind us that you can’t have one without the other.
In a world reeling with negative news and internal bickering about Brexit, picking big positive challenges is a welcome change of tone. The UK Industrial Strategy Grand Challenges is one of the more inspiring, bold examples here, and the new UCL Commission that Prof Mazzucato and David Willets are leading seems a promising start. Let’s hope it has the ear of the government and more attention is focused on this topic in general to turn a fascinating idea into a new way of doing business and running our society.