This article was originally published by the World Economic Forum on January 27, 2021, as part of the Davos Agenda 2021 and as the first in a multipart blog series on a purpose-driven, collaboration-based solution to complex global challenges. In Part 1 below, we outline the key tenets of our solution, with applications of the solution to follow.
The challenges of 2020 have affected societies more than any crisis in modern history, exposing systemic fragility, and compelling organizations to re-evaluate previously ‘tried and tested’ ways of working. Based on Oliver Wyman’s discussions with dozens of world leaders and through our joint project with the World Economic Forum, we find rebuilding in today’s more complex and fragmented world will require broader collaboration among diverse stakeholders, underscored by a common purpose and incentivized participation.
A Complex And Rapidly Evolving Environment
Over the past few decades, the global economy and its highly interdependent systems have changed significantly, driven by international trade, capital flows, and technological advancements. Simultaneously, organizations have evolved – from conglomerates with diverse subsidiaries collaborating among themselves to more agile entities focused on their core expertise and contractually engaging with complementary players.
Now, industry leaders, policymakers, and their stakeholders once again face an inflection point, triggered by growing societal expectations coupled with increasingly undefined global and business boundaries.
This inflection point is occurring against a backdrop of long-term social and environmental challenges that accelerated in 2020, including resource scarcity, widening digital divide, inequality, and climate change. Many of these complex 'tragedy of the commons’ conundra are multi-faceted and often lack single-entity accountability. To address them, organizational leaders need to undertake systemic changes requiring skill, political will, and a long-term vision that motivates behavioral change.
Seventy-four percent of respondents believe CEOs should take the lead in creating change on complex issues rather than waiting for governments to impose it, according to an Edelman Barometer Trust Survey conducted across 34,000 individuals in 28 markets in 2020. Yet, unlike yesteryear conglomerates, most present-day organizations do not house all the technology, human capital, operational processes, or knowledge needed to single-handedly tackle them.
Multi-stakeholder collaboration offers an effective approach for organizations to reposition themselves in a more complex environment while playing their role in tackling global issues. However, traditional means of collaboration, structured around supply chain networks, industry-level agreements, or initiative-based public-private partnerships are insufficient to address today’s multi-part challenges at scale.
What the world needs now is a broader group effort that aligns business interests and societal needs.
What the world needs now is a broader group effort that aligns commercial interests and societal needs, tantamount to a mission-based ecosystem – a network of diverse players, bound by a shared mission to solve a complex problem, by co-creating a product or service solution that cannot be created as effectively in silos. One example of this new paradigm is the COVAX Facility, a global initiative to accelerate the development of COVID-19 vaccines and to guarantee equitable access to them. (See Exhibit 1.)
From our observations of existing mission-based ecosystems, we outline below three imperatives for success: a strong mission, incentivized participants, and complementarity across collaborating participants.
A Strong Mission
The main catalyst for every mission-based ecosystem is a strong cause that mobilizes players. Typically, a single organization or a group of leaders take on the role of an orchestrator. Orchestrators are responsible for setting up the ecosystem and rallying diverse players to collaborate on the same mission, taking into consideration their varied motivations. Strong orchestrators set a clear mandate for the financial and societal objectives of the ecosystem and ensure collaborators are aligned on their roles in achieving them.
For example, the fact that 3 billion people lack access to clean energy sources, of which 600 million people in Sub-Saharan Africa lack access to electricity altogether motivated software firm, PowerHive to mobilize a mission-based ecosystem that has deployed solar microgrids in over 25 rural African villages. A wide range of collaborators – energy giants, solar panel producers, crypto-currency start-ups, local governments, project developers, telecommunication companies, and customers came together because they all shared the mission to make clean energy sources accessible. The ecosystem has now gone on to create ‘connected villages’ that improve villagers’ access to better education and income generation opportunities.
For an ecosystem to be self-sustaining, participants need to be incentivized to collaborate over the longer-term. At a macro level, financial markets need to reward organizations’ efforts to build stakeholder value, while policymakers create supportive regulations and optimize the public-private split of investments to ensure all collaborators have skin in the game. At an ecosystem level, orchestrators need to implement mechanisms to measure participant contributions and distribute risk and rewards based on both individual efforts and collective successes.
For example, the 500-member European Battery Alliance (EBA), launched by the European Commission, is working to establish an EU-wide sustainable battery manufacturing sector and lower carbon emissions by implementing the right incentives and creating accountability. Private sector participants are motivated by the new battery market’s potential market value, expected to reach 250 billion euro annually by 2025, while public sector participants are incentivized to create more jobs and meet the EU 2030 target of having renewable energy sources account for at least a 32 percent share of its energy.
Finally, collaboration across participants with complementary strengths is required for a successful mission-based ecosystem, where participants stand to gain from open sharing of data, resources, and knowledge.
For example, French food services company Sodexo orchestrated a mission-based ecosystem with the collective aim to halve operational food waste each year. Sodexo rallied technologists and financiers who could provide products and services, outside of Sodexo’s core business capabilities. Seamless sharing of data among complementary participants further facilitated the ecosystem’s success. For instance, Sodexo shared its performance data with food waste prevention technology provider Leanpath and nine major banks who have backed a revolving credit facility that finances the ecosystem based on this data. Complementary partnerships in this ecosystem have enabled participants to move the needle on a global, societal issue that no single entity could have tackled on its own.
The Way Forward
With growing expectations from multiple stakeholders, both public and private sector organizations need to re-envision the future world they want to be in, and the problems they want to resolve. In doing so, they need to identify the role they are best positioned to play in an ecosystem – as an orchestrator, supply chain participant, solution partner, investor, or customer. Crucially, they need to identify the right, like-minded partners who share their convictions, structure incentives for sustained cooperation, and set ground rules needed for an effective ecosystem – one that brings purpose to life.
As Henry Ford famously said, “coming together is a beginning, staying together is progress, and working together is success”.