By Edward di Collalto, Sustainbiz

 5 February 2013 — With space needed for 2 billion more people in the next 30 years, how will the building industry cope and what will the impact be on the planet’s sustainability?

Australia’s population is not a natural phenomena but a consequence of policy. Specifically, Australia’s population is more an ad hoc side effect of vested interest immigration than a coherent, coordinated and integrated policy in the national interest.

This policy vacuum is placing Australia on course for a population exceeding 35 million by the middle of this century. And why stop there? Why not a population of 50 million, 100 million or as in the United States, 300 million? The notion that Australia could sustain such populations is founded on a level of technical optimism bordering on the foolhardy coupled with an economic concept of “substitutability” where substitutes do not exist. This is 19th century thinking in a 21st century world and such thinking must be challenged.

The building industry’s response to sustainability issues such as population can be segmented into two categories: those firms or individuals who are compliance orientated and those who are strategically orientated. For those that are compliance orientated, the response is simple; lobby for more of the same and respond only when you have to, no need for innovation so save the money. For those that are strategically oriented, do the analysis first so that you are in a better position to change before you have to.

There are a couple of matters to consider when undertaking this analysis for strategic innovation. Firstly, we need to look at strategy as options.

The World Bank has warned that we’re on track for a 4°Celsius warmer world marked by extreme heat-waves, declining global food stocks, loss of ecosystems and biodiversity, and life-threatening sea level rise. This plethora of so-called “greenie” type problems (and there are many more), arise from the way we generate our economic wealth.

Note that I am not saying the generation of economic wealth is bad, merely that we currently do it in a way that causes these problems. So solving these problems will require structural change unlike anything we have faced over the past 200 years of economic history. That’s because business strategy founded on the same assumptions that created the problems, cannot solve the problems.

Start thinking of strategy not as the plan, but rather, as a portfolio of strategic options, as a population of competing business models or as a continuum of risk/return experiments. In other words, when faced with higher levels of ambiguity and uncertainty from problems such as global warming, establish an internal market for the evolution of competing business plans. This is innovation at the strategic level.

Next look at present and future strategy. When establishing this internal market for competing business plans, segment the portfolio of experiments on the basis of those individuals or teams that are oriented towards the present and those that are orientated towards the future. Why? Because some people can only make sense of the big picture through the detail, while others can only make sense of the detail through the big picture.

We need both but not in the same room, otherwise it’s the urgent that gets done and the important that gets shelved.

In 2006-2007, the construction and demolition sector accounted for more than a third of Australia’s waste and just under half of that waste went to landfill. In a world where externalisation of costs such as landfill will become increasingly problematic, the present team could work on waste minimisation through cradle-to-grave concepts while the future team could start at the design stage and rethink the whole notion of waste in terms of cradle-to-cradle or biomimicry designs.

The focus of the former is efficiency, being better or strategy as fit. The focus of the latter is effectiveness, being different or strategy as stretch. You need both in order to expand the population of competing business models: this is innovation at the strategic level.

In summary, solving these problems will require a level of disruptive change unlike anything we have faced over the past 200 years of history. Why? Strategy founded on assumptions that created the problem, cannot solve the problem. Strategic innovation is about pragmatically increasing the odds for success through many present and future small bets, rather than one or two big bets.

Edward di Collalto will be a keynote speaker at the Hargraves Innovation Development Forum in Sydney 12-15 March.