Innovating Our Way to the Next Industrial Revolution

In many ways, the industrial age has been an era of harvesting natural and social capital in order to create financial and productive capital. So far, the New Economy looks more like the next wave of the industrial era than a truly postindustrial one. Why should we care? Because, say the authors, the basic development patterns of the industrial era are not sustainable.

In the face of this challenge, organizational-learning expert Peter Senge and former Volvo and IKEA senior executive Goran Carstedt hail the emergence of a new environmentalism driven by innovation, not regulation — radical new technologies, products, processes and business models. They describe how more and more companies are recognizing the business opportunities that a focus on sustainability creates.

Such a shift in thinking is already evident in many companies and industries. Xerox employed “zero-waste-to-landfill” engineering to develop its 90% remanufacturable Document Centre 265 copier. Interface Inc. is no longer just a maker of commercial carpet tiles, but now — as a provider of “floor-covering services” — leases products and later recycles them completely. Such companies are applying learning-organization principles to create sustainable business models. Simultaneously, they become inspirational, energetic places to work, where even relationships with customers and suppliers improve.

Nonetheless, ecoefficiency alone will not create a truly postindustrial age. Ecoefficiency gains are laudable but dangerously incomplete, say the authors, as is any strategy that fails to consider how the economic system affects the larger ecological and social systems within which it resides. Only a more integrated view will enable companies to innovate for long-term profitability and sustainability. Industrial-age systems follow a linear flow of extract, produce, sell, use, discard: the “take-make-waste” approach to economic growth. A systemic approach would reduce all sources of waste: from production, use and disposal.

How can managers adapt? In stark contrast to industrial-age, command-and-control management methods are the three core competencies that learning organizations must master to profit from sustainability. First, they must encourage systemic thinking so that they can sense the emerging future. Second, they must convene strategic conversations with investors, customers, suppliers and even competitors to build the trust needed to change outmoded mental models about what business success is. Finally, they must take the lead in reshaping economic, political and societal forces that stymie change. True learning organizations stand out by championing business models that foster sustainable growth. According to Senge and Carstedt, no time in history has afforded greater possibilities for a collective change in direction.