Agility Update July 2021
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Agility Update July 2021
With the Great Resignation sweeping across the US, UK and Europe and Australia once again in lockdowns, Agility Update July presents 3 articles that suggest it’s time to jettison old mindsets to seriously embrace the future. In a nutshell, the articles basically say traditional work productivity metrics and HR practices are close to obsolete; the world is moving inexorably to sustainable practices in investing, manufacturing and consumption; and the coming fourth industrial revolution based on designing and operating at an atomic level will wrought a disruption greater than the digital revolution. We are living in interesting times indeed.
From Productivity Measurement to Leadership Development
The shift to remote work a year ago has made “productivity a burning issue and a constant topic of conversation” at Gallup’s CHRO Roundtable, the largest group of big-company Chief Human Resource Officers around the world who oversee human capital in companies that average 80,000 employees and over US$20B in revenue. With new remote and hybrid work models, companies will need to rethink how they measure productivity because traditional metrics – and views that real work can’t get done outside the office – will no longer cut it.
According to a Harvard Business Review study, 86% of employees said they would prefer to work for a company that prioritises outcomes or impact they can deliver to the business in a holistic sense over output or volume. But just 69% of HR directors say their company currently operates in this way. And half of HR directors say their organisation would be more productive if employees felt that their employer/senior management team trusted them to get the job done without monitoring their progress.
While the jury is still out on how to best measure productivity and whether productivity can be measured at all, decades of research point to the key role that managers play. Gallup reports that managers are responsible for creating the conditions that spur productivity or squash it. McKinsey adds “when managers spend the majority of their time coaching and leading, we see real returns”.
However, most managers are not trained in coaching or leadership skills – a market gap that entrepreneurs have been quick to leap into. Tracxn reports that corporate learning is one of the most active sectors for investors, with more than a third of its overall funding of US$7.7B in 900+ companies raised in the last 2 years (2019-2020). Examples include soon-to-be-unicorn BetterUp (in which Prince Harry, the Duke of Sussex is the Chief Impact Officer) that provides one-on-one coaching using evidence-based assessments and machine learning to match professionals with coaches; and high-growth early stage Sharpist which offers a mobile-based mentorship platform.
On the reverse of the coin is the role HR must play. More than 98% of the CHROs McKinsey interviewed said they were thinking about how HR can shift from mechanistic skill and talent management to addressing the employee experience that takes a broader view of diversity, equity, and inclusion (DEI) and their sense of purpose. This shift is likely to create a desire for more data sources beyond the traditional workforce analytics data encompassing the employee life cycle (attract, onboard, engage, develop, release) to inform and measure impacts. Click here for a curated list of performance management startups, and here for user reviews.
Accelerating Green Growth
Instead of fading into the background in the wake of the COVID-19 pandemic, focus on sustainability has surged, raising new concerns and responsibilities for company executives, directors and boards.
Global investment company BlackRock, which has around US$7T in assets under management, noted investors in mutual funds and ETFs globally invested US$288B in sustainable products between January and November 2020 representing a 96% increase over the whole of 2019. This “tectonic shift” is reallocating global capital towards sustainable assets in a transition to net zero that will fundamentally reshape the world economy. And “contrary to past consensus, we expect this shift to help enhance returns” stated BlackRock, which pointed out that “94% of the sustainable indexes … outperformed their parent benchmarks during Q1 2020”.
Such capital reallocations as well as government recovery plans to push through existing environmental policy priorities post-pandemic. Could spark massive green growth opportunities – as well as disruption – across sectors like energy, mobility, and agriculture plus create up to 20 million jobs worldwide by 2030. For example, the Biden administration in the US plans to spend US$1T on climate-related policies over the next 8 years.
But poor quality or availability of Environmental, Social, and Governance (ESG) data and analytics presents a significant barrier. Over half (53%) of respondents to a BlackRock global survey of 425 investors with US$25T in assets under management cited poor data as the biggest barrier to deeper or broader implementation of sustainable investing. A separate study, by UK’s Quilter Investors which manages over £100B of investments, found “greenwashing” at the top of the worry list for investors with 44% concerned that ESG investments were not what they claimed to be.
Also, new expert opinion cautions that greenwashing could expose companies (and directors) to “acute litigation risk”. The authors’ opinion is that the standards with respect to climate change has risen and looks set to continue rising. In practice, directors are now expected to ensure that active steps are being taken not only to identify but to manage the risks posed by climate change. Read the Minter Ellison opinion for suggested steps that directors and companies can take to minimise or mitigate this risk.
For more, see Deloitte’s articles Sustainability – Much more than a reporting challenge, 2021 Climate Check: Business’ views on environmental sustainability, and the World Economic Forum’s How to spot greenwashing – and how to stop it
Coming Soon: Nature’s Industrial Revolution
“Nature co-design” defined as the harnessing of nature’s design principles and manufacturing capabilities to design and operate at the atomic level of organic and inorganic matter will drive a fourth industrial revolution, says the Boston Consulting Group (BCG).
BCG has estimated that nature co-design will affect more than US$30T of economic activity over the next 30 years, the equivalent of 40% of current global GDP. Estimates by the World Economic Forum point to disruption that could generate annual business opportunities worth US$10T and create 395 million jobs by 2030. The coming disruption is likely to be greater than anything that digital technologies have wrought in industries like pharmaceuticals, chemicals, agriculture and food supply, and advanced materials and manufacturing.
Leaders in this revolution include publicly traded companies such as Berkeley Lights, Checkerspot, and Twist Bioscience and nature co-design unicorns such as Ginkgo Bioworks.
A real-world example of how nature co-design can upend the old industrial development model reliant on the extraction and refining of raw materials is in the agriculture and fertiliser industries. A key input into agriculture is ammonia and nitrogen fertilisers that rely on the Haber-Bosch production process – largely unchanged since 1913 – that consumes 3-5% of the world’s natural gas supply and around 1-2% of the world’s total energy supply. Incidentally, more than 50% of the nitrogen washes off crops, contaminating water sources.
Leveraging the principles of nature co-design, Pivot Bio and Joyn Bio (a Ginkgo Bioworks–Bayer joint venture), have used gene-editing techniques to design and identify bacterial strains that can fix nitrogen directly on the roots of plants and so reduce agriculture's reliance on nitrogen fertiliser, cut greenhouse emissions, reduce water pollution, and increase agricultural efficiency. This could also disrupt the global ammonia market, which Grand View Research valued at US$48B in 2016 and estimates will reach US$77B by 2025.
As science will be the next transformational dimension, industries – and indeed, countries – that have under allocated funds to R&D will face a serious challenge. For those willing to lead and broaden their minds to consider what could be there instead, nature co-design opens massive opportunities that could add some US$100T to the global economy by 2040 according to biotech accelerator IndieBio.
Read Looking to Nature for the Next Industrial Revolution and download the BCG report here.
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