‘Are we solving the wrong problem perfectly?’ And other notes from our systems transformation and strategic recovery sessions
High level recap of our four part (virtual) series
“Systems can’t just jump, they evolve gradually, what scientist call ‘adjacent possibilities’. What are the transformation strategies that are available?” — this provocation emerged during our first kick off session led by Dominic Hofstetter of Climate KIC. Understanding that indeed ‘there is no systems change unicorn’, in August, our teams set out to learn from those testing change where it counts- from the field and ecosystem at large. Below is an overview of what we covered and why.
As the broader effects of the COVID pandemic continue to unfold, countries are exploring different strategies to respond through their stimulus packages even while aid is projected to decrease, the question of how to finance systemic ‘transitions’ — from green economy to digital disruption- is increasingly salient.
The UNDP Innovation Networks of the Asia Pacific, Europe and Central Asia joined up to host a virtual series focused on the nexus of emergent approaches to funding system change and ways to build a suitable pipeline of interventions based on system transformation logic. Across the month of August we hosted a multi-part series to draw upon emergent models and propositions.
In Part A, held during the first half of August, we focused on transformation capital- exploring a new lens to finance, investment, portfolio logic and collaboration among systems entrepreneurs. For the latter half of August — Part B- we highlighted concrete cases examples of mobilizing systems change with a mission oriented approach out of Indonesia, related to waste, plastics and the circular economy; we then capped the series with a deep dive into complexity, risk and uncertainty.
Session 1: The Portfolio and Transformational Capital Case — insights from EIT Climate-KIC
Only have a moment? Here’s what we covered: After almost 10 years of pursuing a traditional supply-driven innovation model focused on single-point solutions, EIT Climate-KIC has recently adopted a new strategy based on demand-led, mission-oriented systems innovation. Central to this strategy is a portfolio approach, through which context-specific innovation portfolios are designed and curated to test possible transition pathways and enable learning. (See the very latest, published September 1st here).
Most systems in which this approach, intending to catalyze transformative change, also depends on the deployment of significant amounts of investment capital in pursuit of their sustainability agendas. With this in mind, EIT Climate-KIC has recently set out to develop an investment logic capable of underpinning mission-oriented change initiatives in place-based systems: Transformation Capital. In this session Dominic Hofstetter, Director of Capital & Investments, walked us through:
- how the financial sector at large (and many sustainable finance approaches) are limited in their potential to fuel transformative change;
- why the transformation of place-based systems require a different investment logic;
- and how “Transformation Capital” responds to this need
“One thing that is important, yet often overlooked: how do we create change at the scale that matters? The only thing that has potential to scale is an idea.”
“You can’t design at the white board- you have to go to the field and test it”
“… climate finance is often done through debt lending, but there are many other instruments that we could tap into. We have to move away from a single asset paradigm — which is why systemic investing is great for portfolio approaches.”
Session 2: The Role of Social Capital Infrastructure and Systemic Entrepreneurs
Only have a moment? Here’s what we covered: In early 2020 the ‘Embracing Complexity — Towards a Shared Understanding of Funding Systems Change” report was released at Davos; a large scale manifesto drawing on the collective voice and insights from the social sector. Since then “Catalyst 2030” has launched as a platform to coordinate a global movement of Social Change Innovators. In July, the “Getting from crisis to systems change: Advice for leaders In the time of COVID” report became public with a fireside chat with the UN Deputy Secretary-General Amina J Mohammed. In the lightning panel session, for this series, we heard from those driving voices behind the scenes, including Ashoka and Schwab Fellow Jeroo Billimoria, as well as Odin Mühlenbein and Olga Shirobokova of Ashoka. They shared more about ‘systems entrepreneurs’, bright examples of how they managed to change systems for the better in partnership with government, and other opportunities for organizations to accelerate the collective intelligence and social capital networks that exist.
“Acknowledging power dynamics — may sound like a soft factor, but it’s really important for collaborations and we can’t stress that enough.”
Session 3: Exploring a Mission Oriented, Multi-Stakeholder Approach to Complex Challenges — the case of Plastics in Indonesia
Only have a moment? Here’s what we covered: We know that single point solutions are of little help when it comes to driving systems change. In this session we explored the emergent case of a mission oriented approach out of Indonesia to deal with growing waste and plastic pollution through transition to the circular economy. How do you mobilize ecosystem to ensure 70% of plastic pollution is gone by 2025? We learned from the work in action on the ground from Ben Dixon, partner with SystemIQ, Kirana Agustina of the World Resources Institute and Sanderine Van Odijk of Enviu — they shared their journey that started with a mandate to avert the plastic pandemic. The story of the Zero Waste Living Lab also provided us with concrete insights into this story of transformation.
“We were guided by two big questions: what happens to plastic pollution in Indonesia if we go along with business as usual? Second: how do we bring the levels down to 70% by 2025 and near zero by 2040?”
Session 4: Navigating Risk, Complexity and Uncertainty
Only have a moment? Here’s what we covered: We capped our month-long series with a deep dive into complexity, risk and uncertainty with Torben Juul Andersen, financial economist and commercial banker, now a professor of Strategy and International Management and director of the Global Strategic Responsiveness initiative at the Copenhagen Business School. He shared his insights on approaches to dealing with emergent crises based on his academic practice and business experience. He also discussed the central role of innovation and experimentation in tackling radical uncertainty and how organizations such as UNDP might go about integrating this in their work to fund systems change.
“the only way to deal with the unexpected is to invest in experimentation…risk is a measurable uncertainty — it requires that you deal with events and circumstances; uncertainty is unquantifiable and can’t be measured.”
“on extreme uncertainty: we need to experiment and learn by doing; if we don’t know where things are going we need to experiment, try things out… that needs to be done in a particular way so we don’t need to over commit- it’s about optimized resources”
“In modern portfolio theory- we are really talking about risk diversification- and by having a portfolio of investments you can element the systemic risks.”