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Known unknowns

We’re in strange times, and they could get a lot stranger. How do you plan for the unknowable?

We’re in strange times, and they could get a lot stranger. How do you plan for the unknowable?

Chris Tobias

[Strategy]

In July 2008, oil reached an all-time high of US$148 a barrel. While many dwell on the financial shenanigans that contributed to the recession, what escaped many is a simple economic fact: spikes in energy prices have come shortly before every recession in recent modern history.

Oil, in many ways, is our economy. What played out last year is an interesting case study of what is to come. Many predict the cost of oil will reach over US$200 per barrel in the years ahead, due to its depletion as a resource. But it’s not the only commodity price heading skyward, and certainly not the only macro factor at play in our global economy.

How will our business models evolve in an uncertain future? How can our current challenges, as well as evolving issues like climate change, be taken into account in planning business strategy?

I discovered one unexpected answer while researching something totally unrelated: permaculture. It’s a design system based on ethics and principles that can be used to establish, design, manage, and improve all efforts made by individuals, households and communities towards a sustainable future. It started in the 1970s with the groundbreaking work of Australians Bill Mollison and David Holmgren.

While it might sound a mouthful, permaculture uncovers a certain innate logic that can be used beyond merely understanding the ‘natural’ world. Harnessing this logic is critical as everything is connected. According to Holmgren in a recent Celsias.com interview, “The key is to look at the whole system rather than breaking things down into a narrow view.”

“Permaculture is a thinking tool to how we examine issues in a deeper way, using it to get past cultural blind spots,” he says. “It’s how we think into new situations where we don’t have any models or examples to work from—or in other words, our future.”

Over the years, permaculture design principles have been applied to a diverse array of disciplines, from agriculture to community development. With tools such as The Natural Step and Cradle to Cradle creeping into industry practice, could this 30 year-old design strategy have relevance in the business environment?

Rob Hopkins, the celebrated creator of the Transition Towns movement, thinks so. He’s likened some permaculture ideas to the Natural Capital business strategies proposed by Paul Hawken, Amory Lovins and Hunter Lovins.

Betsy Kettle, a tutor at NorthTec, agrees. “When it comes to a business tool, the process of analysing a problem and being able to judge the appropriateness of the alternatives and solutions is critical,” she says. “Permaculture design methodology is a useful ethical and environmental tool that expands the narrow scope of economic planning that usually limits a business plan.”

The sidebar shows 12 main principles, some more radical than others. Take observe and interact, for example. Businesses often use research and customer comments to guide development of new products and services. There is a competitive edge to understanding the operating market; being interactive is essential to an informed business. Apply self-regulation and accept feedback would seem similarly straightforward. Budgets, reporting, and client feedback all fall neatly into this category.

Where permaculture starts getting really interesting is with principles like produce no waste. It neatly encompasses the logic of Michael Braungart and William McDonough’s Cradle to Cradle (Buy@Fishpond) design strategy, one that businesses from Nike to Interface have rushed to embrace.

Use small and slow solutions might seem counter-logical to conventional notions of business growth, but ‘big is best’ needs challenging. As we’ve seen with the faltering giants of Lehman Brothers, Bank of America, AIG and others in recent months, you might say not being rushed by greed into unsustainable directions might be one positive outcome of this principle. How about just conducting business in an honest, ethical way and reaping the rewards steadily over time?

Rob Sperber, who runs the Auckland-based consultancy Earthwhile, sees the principles as a way to innovate. “Using permaculture as a set of criteria creates a picture of the robustness and sustainability of that organisation. Single line accounting is only one aspect,” he says. “These principles also provide a creative platform for finding new solutions that may not have evolved out of a more traditional approach.”

This eludes to where the bulk of the value will be in the future—and where most businesses will either live or die—in creatively using and responding to change. Will climate change drive up the price of a key material in your products, or will you recognise the risk in time and innovate your offerings? Will your business be held over the oil barrel, or will you streamline your supply chain to the most efficient one possible and reap the benefits of lowered operating costs? And of course, as you adapt and grow your business, how will you communicate these changes to customers and stakeholders?

Business as ‘unusual’ will be the way of the future, but that doesn’t mean we’re left without intelligent ways to adapt and prosper.