A change of eras: a unique opportunity

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a Change of Eras: a unique opportunity

Rotterdam, 18 mei 2015

We do not live in an era of change but in a change of eras

centralized

decentralized

top-downbottom-up

big organisations flat organisations & networks

systems & structures initiatives & humans

fixed & rigid fluid & flexible

directing government facilitating government

Old Society New Society

banks financial cooperations

energy companies google, tesla, van de bron

taxi companies Uber

hotel chains Airbnb

book stores Amazon

Old Economy vs New Economy

Shift in Values

Old Values New Values

effectiveness attention / time

efficiency trust

control, maintenance space

rules & laws choice of freedom

quantity quality

Paradigm Shift

old worldview new worldview

exploitation model co-operation model

economic profit societal profit

linear processes circular

deriving values creating values

individual-driven community-driven

Prevailing Human View

homo economicus

self-interest driven

rational decisions

selfish behaviour

maximising utility

Prevailing World View

world as a market

driven by growth

driven by innovation

driven by competition

optimizing welfare

Regular Economic Models

general equilibirum or optimization models

substitution of resources when market allows for it

substitution mechanism is price-driven

one type of actor that behaves in a (bounded) rational manner

is not able to represent a transition type of pattern

no suitable tools for modelling transitions

Idividual Agent

Repetition

Deliberation Imitation

Social comparison

Cognitive processingMemory (mental

map)

Constraints

Uncertainties

Social NormsGoals and Beliefs

Decision

Strategy

Perspectivesmacro-developments

Interestsregime developments

Local Situationniche developments

Transition Agent

Dilemma: Climate Change

short term solutions versuslong term solutions

reducing CO2 fast versusslowly reducing CO2

technological versuspolitical

Dilemma: Groningen Gas Winning

stop gas winning versuspursuing gas winning

importing gas versusshale gas

reinforcing houses versussustainable houses

Fossil Mausoleum

Green Economy = ca. 4% of Total Economy (GDP)

Clean Tech = ca. 2% of Total Economy (GDP)

by now 2-4% of total economy

in 2025 11 - 21% at 15% growth per year

in 2030 22 - 43% at 15% growth per year

Green Economy in the Netherlands

Investment in New Economy every dollar invested in the new economyyields three dollars added value in terms of:

innovation employment economic structure

every dollar invested in the old economy costs society two dollars

Dilemma: Port of Rotterdam

continuing oil terminals versusstopping oil terminals

investing in LNG versusinvesting in bio economy

reinforcing houses versusdeveloping nichestrategy

What is a transition?

Transition

fundamental change of structure, culture and practices in societal (sub)system

– structure: physical infrastructure, economic infrastructure (market, consumption, production), institutions (rules, regulations,

actors)

– culture: collective set of values, norms, perspectives, paradigms

– practices: routines, behaviour, ways of handling, at the individual level

incumbent structure, culture and practices need to bebroken down and new ones need to be built up

Transition is Evolutionary Revolution

evolutionary

old institutions die out, new institutions arise

labor unions, political parties versus communities and cooperations

revolutionary

process of radical, irreversible societal change

society 3.0 will become radically different: glocal, bottom-up, decentralized

Decay & Build-up

Transition = Power Shift

regime: dominant structure, culture and practices with power and vested interests

niche: emerging, divergent structure, culture and practices at a small scale level

niche wants to develop power and take over incumbent regime regime protects itself against this through absorption, assimilation or elimination of niches

transition = regime-change = power shift

Transition Governance

Transition Approach

provide incentives for radical innovation

create innovation spaces for radical innovation

bring together frontrunners in innovation spaces

start portfolio of transition experiments

Transition approach cycle

vision, pathways,transition agenda

transition arena

transition experiments

evaluation, monitoring learning

Transition Arena- long term- front runners- system innovation- problem / goal seraching

Different Arenas

Political Arena- short / medium term- peloton - incremental changes - problem- and goal oriented

Market Arena- short term- efficiency- profit / growth

facilitating

- creating radical innovation spaces

- removing barriers

- forming coalitions around frontrunners

- stimulating financial arrangements

Transition Policy

challenge market, mobilize society

phase 1 searching, learning, experimenting

phase 2 selecting, scaling up

phase 3 integrating in primary policy process

frontrunners

Transition Policy

New Role for the Government

Facilitating Role of Goverment

giving direction

&

providing space

Giving Direction

giving direction

clear and ambitious goals

sound rules of the game

fine-tuning developments in coherence

Providing Space innovation space mental space, juridical space, organisational

space

removing barriers

stimulating odd coalitions

70 barriers have been listed by private sector

operational, structural, fundamental and conflicting

23 operational barriers have been resolved

23 fundamental barriers have been discussed

9 conflicting barriers can not be resolved

Barriers

structural barriersresidual currents considered as waste in

law

fundamental barriersno level playing fieldimport taxes on bio-ethanol, not on naftano certificationno GMO possible

conflicting barriers risks of new chemical compounds and

mixturesgreen gas transport versus elektric

transportbio-products and food security

Barriers

Shift in Steering

old steering new steering

mono-actor steering networksteering

control, maintenance adaptive, anticipative

certainty uncertainty

simplexity complexity

directing facilitating

What does this mean to companies?

Dilemma: Multinational

old business model versusnew business model

cost-efficiency versusinvesting in many niches

traditional partners versusworking with start-ups

Dilemma: Start-up

traditional location versushub

collaboration versusindependent

growing big versusremaining small

bankruptcies of companies

OAD, De Harense Smit, It’s

reduced life expectancy of companies

last century: lifespan of 40-50 years

2013: lifespan of 15 years

Dutch companies NOT prepared

18-04-2023

Typology of Companies

risk avoiding behaviour

too little technological innovation

too much focus on existing clients

short term financial performance

Short term fixation

1 out of 3 companies neglects business model

implies downfall of companies

little innovation in business models: in construction, energy, transportsector

Traditional Business Models

Survival of the Fittest

not the biggest companies will survive,

also not the smartest companies, but

the most adaptive companies

Transition Strategy

external change strategy

cooperation with niche-partners

internal change strategy

freshlookers, crossthinkers, entrepreneurs

Transition Strategy

successful companies

reserve time for change

create space for change

from a longer term orientation

Companies

Philips transforms into care company

DSM transforms into fine/biochemistry

cleaning company steps into health care

energy companies go into insurances

transformative change strategy

new clients

new business models

new orientation

requires change in culture and structure

Transition Strategy

has different phases:

1. pre-development [ consciousness ]

2. breakthrough [ strategy / mission ]

3. acceleration [ DNA of a company ]

4. consolidation [ execution ]

Transition within a company

Transition Phases of a Company

Take off

strategy/mission

Acceleration

DNA

Pre-development

consciousness

Stabilisation

execution

time

Sustainable Company

Insights• Great Transition is transforming our economy & society

• requires a permanent change strategy

• demands a new role for the government

• demands a transition strategy within companies

• only the most adaptive, resilient companies survive