How we value time frames our outcomes and incentives.
I am aware that a human limitation is our understanding of time. Time itself is something that humans have created to help us comprehend the rules that govern us. Whilst society is exceptionally good at managing short-time frames (next minute, hour, day and week), it is well established that humans are very bad at comprehending longer time frames (decades, centuries and millenniums). Humans are proficient at overestimating what we can do in the next year and wildly under-estimate what we can achieve in 10 years. (Gates Law)
Therefore, I know there is a problem when we consider how we should value the next 50,000 years. However, we are left with fewer short-terms options each year and are left to consider longer and bigger - the very thing we are less capable of.
Why 50,000 years
The orange circle below represents the 6.75 trillion people (UN figure) who will be born in the next 50,000 years. The small grey circle represents the 100 billion dead who have already lived on earth in the past 50,000 years. The living today is 7.7 billion, the small dot between the grey and orange.
The 100 billion dead lived on a small blue planet (below), which we have dug up, cut down, moved, built and created waste - in about equal measures. These activities have been the foundation of our economy and how we have created wealth thus far. We realise, in hindsight, that our activities have not always been done in a long-term sustainable way. Susutainble here should be interrupted as the avoidance of the depletion of natural resources in order to maintain an ecological balance.
Should we wish for future generations also to enjoy the small blue planet, a wealth or value calculation based on time will not shift the current economic model. We need to move the existing financial model based on exploiting "free" resources to new models focused on rewarding reuse and renovation; how we use discount rates as a primary function for justifying financial decisions works in the short term but increasingly looks broken because it does not support long-term sustainability thinking as part of any justification. Time breaks the simplicity of the decision.
Therefore, we appear to face a choice; that can be summarised as follows:
If we frame #esg and #climate in the language of money and finance, the obvious question is how do we value the next 50,000 years, as this would change how we calculate value - in the hope that it would move the dial in terms of investment. We need to upgrade the existing tools to keep them relevant.
If we frame #esg, #climate and our role in caring for our habitat as a circular economy (a wicked problem) and not a highly efficient/ effective finance-driven supply chain, we need a different way to calculate value over time economically.
Should we search for the obvious over wicked complexity?
Many deeply intellectual and highly skilled disciplines instinctively favour complex explanations that make their voice sound more valuable and clever. (Accounting, AI, Quantum Physics, Data Analysts, Statisticians, human behaviours). A better solution may lie in something seemingly obvious or trivial, which is therefore perceived to have less value in the eyes of the experts. We can make #ESG and ecosystem thinking very complex, very quickly, but should we rather be asking better questions?
We know that better science and more data will not resolve the debate. When we use data and science in our arguments and explain the problem, individuals will selectively credit and discredit information in patterns that reflect their commitment to certain values.
Many of the best insights and ideas are obvious, but only in retrospect as they have been pointed out, like the apocryphal story of "The Egg of Columbus". Once revealed, they seem self-evident or absurdly simplistic, but that does not prevent their significance from being widely overlooked for years.
Can data lead to better humanity?
We are (currently) fixated on data, but "data'' has morphed from "useful information" to refer to that unrepresentative informational lake which happens to have a numerical expression for everything and hence capable of aggregation and manipulation into a model that predicts whatever outcome you want. It is very clever, as are the people who manage and propagate it.
ESG, climate and the valuation of nature has become "data" - hoping it will improve decision-making and outcomes. Using data, we have already been able to put a value on most of our available natural resources, including human life (life insurance). Whilst we can value risk and price in uncertainty, we have not found or agreed on how to measure or value "the quality of life".
Right now, businesses can only decide based on their data and financial skills. This makes leadership look cleaver and capable in the eyes of an economist, but we are at risk of acting dumb in the eyes of an ecologist, anthropologist and biologist. Reliance on data can make you blind to the obvious. Jeff Bezos commented, "When the anecdotes and the data disagree, the anecdotes are usually right". Our climate challenge might not be about data but reframing to make the obvious - well, obvious. Perhaps we should stop asking leadership to decide everything based on data or value and instead demand they care for our natural world if it was their only job!
Perhaps we should stop asking leadership to decide everything based on data or value and instead demand they care for our natural world if it was their only job!
Imagine two models; in the first, you have one pen for life, and in the second, you have a new pen for every event. One model supports "growth", and the other a more sustainable ecology. One helps support secondary markets such as a gift economy and can make an individual feel valued. The other is a utility, where the pen has no instinct economic value beyond function but has an unmeasurable sentimental value.
If the framing is growth and profitability, then the former model appeals to investors as there is a growing demand for more pens. This also drives innovation and differentiation, and so emerges an entire pen industry. (telegraph road - dire straits) Employment and opportunity are abundant, but so is the consumption of the earth's resources, and no one cares if a pen is lost or thrown away. Related industries benefit from gifts to delivery - a thriving, interconnected economy.
If the framing is for a sustainable ecology, pens are just a means for an entire ecosystem to develop. One pen for life means it is maintained, treasured and repaired. There is no growth in the market, and innovation is hard; there are few suppliers with cartel-type controls. Transparency and costs might not be a priority. However, if those who made the pens could also benefit from the content/ value/ wealth created by the pen, such that the pen is no longer stand-alone but tiny incremental payments over life - everything changes. Value is created by what people do with the pen, not the pen itself. Pick axes in the wild west railways is a well-documented example, what would have happened if they were given a percentage of train ticket prices?
Where does this shine a light?
It appears that decision-making and the tools we need for a "sustainable" age are different from what we have today. First, we need to ask questions to realise the tools we have are broken; however, all our biases prevent us from asking questions we don't want the answer to.
Below are five typical questions we often utilise as aids to improve decision-making. What the commentary after each question suggests if that our framing means we don't ask the right questions, even though we are taught these are the right questions.
Have I considered all of the options or choices? Too often, we assume that there are no additional alternatives and, therefore, the decision has to be made from the choices you have right now. We also discount alternatives that appear more difficult. If the choice we want is available, we ignore others.
Do I have evidence from the past that could help me make an informed decision? We will never change if we depend on history because we reinforce past experiences as conformational guidance and reassurance.
Will I align with this decision in the future? To answer this, you need to have imagined and articulated your future and then tested it to check that it is still valid with how others see a future. It is far too easy to make wild assumptions and live a fantasy. How you see the future might be wildly different from those, you need support from to be able to deliver the future.
What does this decision require from me right now? This is a defence question to try and find the route of least resistance and lowest energy. We use this as a way to justify efficiency and effectiveness over efficacy.
Is this a decision or a judgement? We find some facts and data are preferable to a route we find too hard, so we ignore them and say it is a judgement call or a gut feeling. When data shows us a path we don't like, we tend to find reasons to take the path we want. (re-read that Jeff Bezos quote above)
These simple questions highlight that we have significant built-in path dependency, which makes asking new questions and seeing the limitation of our existing tools hard. A wicked problem emerges because our existing tools and questions largely frame outcomes to remain the same.
It follows that purpose should bound strategy, and both should frame structure. Without purpose, strategy is just a list of tasks and activities; determining what you do leads to a better outcome is somewhat impossible. We obviously value time, as it frames our strategy, outcomes and incentives.
Therefore the question to comment on is, "how should we measure the quality of life today, and how will our measures change over the next 100 years?"