At the end of November, I had the honour of giving the Keynote speech at the Ceylon Chamber of Commerce Best Corporate Citizen Sustainability Awards 2017. I was there as an affiliate of Good Karma, a Sri Lankan consultancy I’ve had the pleasure of working with this year. You can read my speech below on why economic transformation is inevitable, the best way to win the future is to invent it; and, that Sri Lanka can choose to grow towards a sustainable future.
“Rather than burden our children with our mistakes, we can inspire them with our example.”
Honoured guests, ladies and gentlemen, it is an honour and delight to speak to you this evening. I had hoped to come to a cricket-mad country and enjoy an England recovery in the Ashes. Instead, they collapsed. Then I was hoping to watch Sri Lanka do well in India. Instead, they collapsed. It is fantastic that our two island nations can learn so much from each other; hopefully there will be more this evening.
I first came here in 2013, around the time of the Commonwealth Heads of Government meeting. I have been lucky enough to come back several times, working with some large apparel companies. The last four years have clearly been a time of rapid change, economically, socially, politically and environmentally.
This evening, I will say more that change is coming, to Sri Lanka and to everyone.
My themes will be: transformation is inevitable; the best way to win the future is to invent it; and, that Sri Lanka can choose to grow towards a sustainable future. The challenges are daunting, but the ingenuity and drive here in this country is inspiring. Ultimately, we can choose our future.
Let’s imagine 2030
Let’s start by imagining a possible world in 2030. Now, that is 13 years in the future – and it is worth remembering how much change has happened in the last 13 years. Now, 2004 was the year of the tsunami, the Athens Olympics, and the last year of Tillakaratne as Test captain. It was before the iPhone, Obama or Twitter.
Now, imagine you are in 2030. You wake up in your apartment complex. You pick up this morning’s deliveries, including your clean clothes for the day. Your self-drive car arrives just when you need it (and your concierge AI anticipated), and you share with some other passengers who have a similar route.
You settle into your co-working space, which has fantastic Virtual Reality suite, where you can interact with people in India, China and the Up as if they are right next to you. As an engineer and knowledge worker, you have several projects at the same time, each for different worker-owned, cooperatives. You are attracted by the quality of the people, and the AIs. All your contributions are recorded, so that you get paid on the basis of your element of the final design.
That’s the first stack of your livelihood. You also get cash from various digital platforms who use your data. Every time Facebook or Google sell advertising using your data, you get a cut. The third stack is a local currency, where you earn credits for the solar microgram, visiting some local retirees, and gardening the vertical farm. You send these on babysitting and local shops. Your final stack is a Universal Basic Services, which gives a social safety net and so you have the confidence to take part in these payment-by-task jobs,
You get home from work to find another of the regular deliveries, that evening’s meal is there, ready-to-cook. You have camping gear from a subscription service, the latest kit for the weekend trip. Also, the 3D printer in the apartment block has made some plates, replacing the ones your son broke yesterday.
Next week, you are going on a rare work trip abroad, but you don’t have to take any luggage. The apartment block you are staying in has the same subscriber services you have at home.
The digitally-enabled ‘access economy’
Let’s come back to today. What was all that illustrating: a digitally-enabled, access economy. Now, forecasting is difficult, especially about the future. So, the specifics in will be wrong, but the trajectory is clear.
Digital technologies mean that massive copying, tracking and surveillance is here to stay., as is ever-improving AI, which is always learning.
We are moving to a time of constant flux. Services will be more important than products. We are moving from car to transportation service, clothes to clothing service, music to streaming service.
Futurist Kevin Kelly writes more about this in his book ‘The Inevitable’ explains how we are moving from the time of nouns to verbs, to becoming, dignifying, accessing, sharing, re-missing, interacting, tracking and more.
Notice that is not more owning. Instead, we will more and more able to conjure up the tool that we need in that moment, thanks to AI prediction, and then move on.
All this means profound economic change, which industries thrive, which transmute and which decline. It is all underpinned by three things.
- Circular. In an access economy, we will reduce the total amount of material needed, and then re-use, repair, re-manufacture and only then recycle.
- Renewable energy. Bloomberg New Energy Finance, the leading energy analytics firm, have shown that wind and solar power have come down in cost a great deal over the last decade. New renewable power is already cheaper than building a new coal-fired power station. In the coming decade, new renewable power will become so cheap that people will start closing down old fossil fuel sources of electricity.
- Digital infrastructure. Broadband and similar will be vital to a functioning economy.
Understanding technological revolutions
In order to understand why, we need to take a step-back and look at technological revolutions. You may have heard the World Economy Forum, who run the annual Davos event, say we are going through the Fourth Industrial revolution. Prof Carlotta Perez has researched these and found that all have a common pattern,
First, there is an Installation Period, which lasts 20-30 years. There is a rapid growth as the new technological infrastructure is rolled out. There is a frenzy of speculation and then a crash. This a turning point, with recession and a sense of crisis. Then there is a 20-30 year Deployment Period, where the technology is rolled out, all funded by profits.
This pattern has played out in the past with steam and railways, steel and heavy engineering and also oil, electricity and mass production. In that last example in the US, there was the Roaring Twenties, the Great Crash of 1929, and then the Great Depression of the 1930s. We only came out of that time because of the New Deal, government policies that supported suburbanisation and the space race.
Those policies gave a direction to innovation and growth. Without them, individual private investments were scattergun. With the direction, the individual efforts started to align. My investment in fixed assets, helps your innovation pipeline, which helps your other customers demand similar things, which helps me concentrate on growing the right capabilities. There are synergies of supply and demand markets, and a reinforcing positive feedback loop.
Now, for Perez, we are on the verge of another Golden Age. The technological infrastructure is there. We’ve had the speculative bubble, with the crash of 2007. We now need to give our growth a direction, to trigger the positive-sum game of the deployment period.
The potential? Cheap, universal digital technologies enable billions to liver higher quality lives because of green growth.
We need this profound change
Boy, do we need this change. Currently billions of people don’t have the quality of life they deserve. For instance, 1 billion people don’t have access to electricity, and 3 billion don’t have clean cooking.
Also, the natural world, on which we rely, is in great peril. The most well-known issue is climate change. Mark Carney, the Governor of the Bank of England, has said “Climate change is a tragedy of the horizon which imposes a cost on future generations that the current one has no direct incentive to fix…Once climate change becomes a clear and present danger to financial stability it may already be too late to stabilise the atmosphere at two degrees.”
And the latest science is saying we need to have peak emissions within the next 5 years, and then reduce by at least 5% each year after that for decades – and still have new industries that pull greenhouse gases out of the atmosphere at great scale. There is a pressing need for urgent action.
But climate change is just one of many ways ‘human forcing’ is putting nature, and therefore ourselves, in peril.
To give a sense of how much we dominate the natural world, consider this. When it comes to land mammals, by weight 30% are humans, some 67% are our livestock and only 3% are wild.
In short, business-as-usual would be a disaster. More growth that either puts more pressure on the natural world, or which leaves people behind would be a disaster.
Examples of digitally-enabled green growth
Let me give you just two examples from many which show how we are beginning to go in the direction of digitally-enabled green growth.
Take M-Kopi Solar. Rural Africa is too cast ti easily roll out an electric grid, and people too poor to afford to install solar power themselves. So, M-Kopa doe the installation, with a smart meter. People are charged in small amounts over a mobile payments platform. If they can no longer pay, then M-Kopa can stop them using the renewable energy. This is riding off some big trends: ubiquitous mobile coverage, the rise of online payments, the internet of things (where every device can be online) and the rise of Pay-As-You-Go business models.
Now M-Kopa has such great insight into its half-a-million customers that it can extend into being a credit ratings agency and bank. Meanwhile, the people have electricity and access to finance for their homes and their businesses.
A different example is precision agriculture. This aims to get the right amount of fertiliser and water to the right plant at the time, using satellite positioning data, remote sensing and more. For example, Blue River Technology’s equipment can detect, identify and make decisions about every plant in a field. Netafim’s service Netmaize is a tailored drip irrigation programme that can precision control the environment for roots during the critical growth phase, using information from the farmer and weather forecasts.
We can trigger digitally-enabled green growth
Growth is not just an amount, it is also a direction. If you take one thing from my talk, please let it be that. The questions become: what direction, and how to guide growth that way?
We already have the direction. In 2015 governments made two agreements: the Sustainable Development Goals, which describe where we need to be in 2030 on a wide range of economic, social and environmental issues, and the Paris Agreement on climate change, which commits the world to “holding the increase in the global average temperature to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels.” Both of these are widely agreed, drawn together by governments and businesses. While neither is perfect, they are a massive step forward from before.
If we are willing, they provide us with the direction for our innovation, our investment and our growth.
When it comes to being an innovative economy, there are some things economists call ‘horizontal conditions’ that you need to get right: skills, infrastructure; science and research, competition, to keep everyone on their toes; and a finance system for investment. But these are not enough alone, as they do not provide a direction.
The latest on how to give that direction comes from Prof Marianna Mazzucato in what she calls ‘mission-orientated innovation policy’.
You need to set a distinct mission, like ‘put a man on the moon by the end of the decade’ or ‘give us a permanent technological advantage over our enemies’. This ’north star’ aligns many different companies, entrepreneurs, investors, scientists and so on. Then you also need the institutions that can support those ecosystems of actors. Those institutions need to be held accountable for outcomes over the long-term, but given the resources and freedom to avoid micro-management, avoid politicians picking favourites, and to attract top talent.
We also need to support the losers in the profound change. I’m afraid this is where successive UK governments have failed, and the average worker has seen no wage growth for decades. This was a key driver of the Brexit vote, and is one part of the rise of populism across Europe and the US. Our error: believing that ‘any growth’ is ‘good growth’.
Let’s make Sri Lanka a glimpse of a better world
I was thinking of the missions that would give the right direction to Sri Lanka. As well as addressing the SDGs and climate change, they have to help you export goods and services, and they need to attract investment, companies and tourists.
So, let’s imagine Sri Lank was a world leader in:
- Agricultural productivity. Increasing the yield from each tea bush and other plant, using less fertiliser and water.
- Water. Providing clean water and sanitation for all.
- Gender equality. The evidence shows is an enabler of so many other benefits.
- Low-impact, high-value manufacturing. Continuing to perform higher value-add parts of manufacturing but with much less environmental impact
- Community and biodiversity resilience. Because there will be more environmental shocks to adapt to.
All these provide more goods to export, ore skills to sell as services to parts of the world with similar challenges. more people with higher earnings. They make Sri Lank more attractive, and more resilient. They can drive a tourism which endures. They give a direction for more profit and more growth.
Imagine the rest of the world saying “we want to be like Sri Lanka. We want more profit, that helps people and preserves the planet”.
Corporate citizens can choose too
You can choose innovation choices that use your competitive advantage to deliver the SDGs and the Paris Agreement. These will be different by sector, and by company.
But you should ask yourself how you can trigger that positive-sum game. How can you incentivise and align your suppliers, your staff, your investors, your distribution channels and your customers in the direction you need?
Tonight we have imagined 2030, a digitally-enabled access economy.
We’ve seen how we are part way through an economic revolution with digital technologies and renewable energy.
We need that revolution because billions are deserve a higher quality of life, and the natural world is in great peril.
We need to give direction to innovation and growth, so that there are synergies across companies, customers, entrepreneurs and more.
Sri Lanka can choose to be that glimpse of a better world, attracting investment and tourists as well as gaining the skills for exporting goods and services.
Individual companies will succeed by choosing innovation that uses their competitive advantage for delivering the SDGs and the Paris Agreement.
In closing: this is the task of our generation
The challenges we face are daunting. But this is the task of our generation. We have a fantastic choice. Rather than burden our children with our mistakes, we can inspire them with our example.
Because, we realised transformation was inevitable, and we choose growth that delivers for people, for planet and, yes, for profit. We choose our future: thriving businesses, in a successful Sri Lanka in a sustainable world.