What a Futuristic Mindset Means for Sustainability

Roger Spitz:

Technology in its own right is not gonna be enough. It can play a very important supporting role along the kind of different levers for change. So all of these are initiatives which support different levers, and none of them individually are gonna be the panacea and some are gonna be more important impacts than others.

Michael Torrance:

Welcome to Sustainability Leaders. I'm Michael Torrance, chief Sustainability Officer with BMO Financial Group. On this show, we will talk with leading sustainability practitioners from the corporate, investor, academic, and NGO communities to explore how this rapidly evolving field of sustainability is impacting global investment business practices and our world.

Disclosure:

The views expressed here are those of the participants and not those of Bank of Montreal, its affiliates or subsidiaries.

Jonathan Hackett:

Hi, I'm Jonathan Hackett. Today I'm joined by Roger Spitz, futurist, CEO of Techistencial, former head of technology M&A BNP Paribas, and recently author of Thriving on Disruption, now on its fourth volume disruption as a springboard to value creation. Thanks for joining me, Roger.

Roger Spitz:

Great to be on Sustainability Leaders, Jonathan. Thanks for having me.

Jonathan Hackett:

So why don't we start with just a simple overarching question. What is a futurist?

Roger Spitz:

Yeah, it's a good question. I'm gonna start with the elephant in the room, which is futurists don't predict the future, nor do they seek to. So it's a common misconception, I guess, for the foresight field that futurists are seeking to predict. In effect, what we're looking for with what I call foresight, is the capacity to explore the possible futures systemically looking at the drivers for change and all of that is really to inform short-term decision making. So you're looking at how might the futures of ahead basically defer from the present, what are the possible futures that might pan out and what are most importantly the preferred futures we may wish to sort of create? And we have agency for,

Jonathan Hackett:

How do you think about the energy transition as a futurist, where we use a lot of those words in many in our everyday parlance?

Roger Spitz:

Yeah. I'm gonna kind of answer in a slightly specific way as well as a more business practical way. The specific way I want to kind of touch upon is, is maybe interesting as background and for the debate in terms of the future studies in relation to the Anthropocene. And then we'll look more specifically at, at the answer on the energy transition. And I just want to introduce that because it's subject to debate even within, you know, the futurist field as to how you should think about alternative futures when there's something so existential. And one of the papers that that started debate is one by Richard, Richard Slaughter, who's a sort of very known scholar in future studies. And he wrote a paper called Farewell Alternative Futures. And in that paper, effectively he was questioning whether what he called the master concept of alternative and preferred futures was still relevant given that there was something so existential, was it appropriate to think about possibilities or scenarios whereby climate was not being addressed?

It was so existential and so binary that effectively he challenges that concept for futurists, which we, we dear to us of achievable alternative options. And really acknowledging that any imagined futures which are lacking recognition of the anthropogenic kind of climate change will seem increasingly kind of shortsighted. And so effectively that is an important debate as to what agency do we have, what are the possibilities, what are the pathways? And how many alternatives are there to think about the world, which, which don't address that. So in terms of more specifically your question, you know, how would a futurist think about the energy transition? For me, I think about it very much in terms of systemic change, but really thinking about in a complex world, what are the levers for change? If you think about, you know, Don la Meadows, which allow us to drive change effectively in complex systems and their, you know, education mindsets, structures, patterns, different type of interventions will have different efficiencies in terms of levers, and they're not all kind of made equally.

Jonathan Hackett:

So following in on that theme of systemic change, in your book, you discuss the idea that everything is hyper connected and that therefore systemic change requires adaptation to build resilience. Can you elaborate on what that means and maybe share an example?

Roger Spitz:

It's a key theme indeed. It's really one of those areas which, which we're not always cabled or organizations to think about. That degree of hyper connectivity is often quite specialized and like it or not. And that's one of the, the challenges, climate is fundamentally complex. So the solutions are on a straightforward, and, and to your point, you know, everything, whether it's infrastructure, transport, manufacturing, supply chains, the cities themselves are extremely connected. And I think when you, when you looked at, for instance, in Europe, just take it as an example. Unfortunately there are many examples more and more, but uh, in Europe last summer in 2022, you know, thousands of people across Europe, um, died when the temperatures sawed above 40 degrees. You know, and there were wild wildfires and the uk, which is, you know, not the hottest place in the world most of the time is issued an unprecedented, you know, red risk to life, threaten warning and hotel rooms had air conditioning explode.

And then that started happening across, you know, China, Asia, US, et cetera, you know, middle East, north African, everywhere. And what one started realizing is that what these unprecedented levels of heat, and, you know, they were record, but they're different degrees of extreme, right in terms of if you pan out the possibilities and the infrastructure is not adapted to such temperatures. So you had crazy things, you know, some are more obvious maybe the transport systems break down in the uk that happens even when leaves fall on the rails. So it, you know, it's not unusual, but airport runways, um, literally melting UK cloud servers, Google and Oracle breaking down. So then you no longer have information or access to certain things. So when you think about it like that, you're rarely thinking about, I guess is the three buckets of, of climate risk, which you, you know, I guess you're, you're very tuned into, but for those who aren't, you know, the transition risk, the physical risks and the liability risks.

So really for those to, to answer your question, the adaptation that's required is to think about this in terms of climate aligned decisions. When you're making decisions, you need to think about those to our earlier discussion, those discussions and interconnections, right? And you need to, in a way enable that adaptation to build that climate resiliency. So the examples un unfortunately are, are considerable because it, it can affect absolutely everything. And in a kind of old school, hyper optimized follow the strategic consultants kind of playbook world, um, that hyper optimization is extraordinarily fragile. And so it's at the opposite <laugh> of what really one should be doing to, to build adaptability. So that's, that's kind of how we think about it.

Jonathan Hackett:

It's interesting, you know, I heard you talk a lot about the idea of the different pieces that could drive this, whether it's communities, whether it's companies, and often we talk about the energy transition as something that's really driven by policy, at least that the investment is in the near term versus a lot of the outcomes in the climate side are driven truly by force of nature and are happening essentially independent of policy or independent of choices you used to sit within really the space centered on technology itself. How do you think technology plays a role in achieving systemic change on something that does have this broad based form, but also that's being driven today by policy?

Roger Spitz:

Yeah, so different aspects of the question. I think the first one is really just thinking about the role technology plays and the role, how does one address complex problems such as climate? And there, just to, to touch upon it very briefly in relation to to policy, if you go back to the levers for change, we talked about with Donal Meadows, effectively policy will affect underlying structures which incentivize the system. Okay? And so that's sustainable, I guess it's regulation to your point, you know, whether it's tax incentives or what have you, I think there's a stronger lever before you get to that, which is education, which is where foresight also plays a role, which is shapes actually the mental models and the ways of thinking about life. And then to answer specifically your question, but I just wanted to kind of frame it because with the levers for change and, and the mindsets and the assumptions and the worldviews and then, you know, the different hierarchy of levers for change, then I think once you kind of understand that technology in its own right is not gonna be enough, it can play a very important supporting role along the kind of different levers for change.

And so I personally see it intervene in two kind of areas, which are very important. One is supporting climate aligned decision making for adaptation and resilience. I personally believe that climate intelligence does in a way allow you to have up to date information despite the deep uncertainty of possible events in the longer term. So in a way it's kind of supporting decision making on things that are deeply uncertain and potentially long timeframes, and that is supported by technology. I think the second aspect is to enforce sustainability, but again, you're dealing with reporting disclosures, you're not dealing necessarily with the underlying biggest lever for change, but it's still important. So here, whether it's supply chain intelligence with, you know, AI powered geospatial analytics from people like orbital insight, whether you're looking at, you know, fleshing out transgressions in terms of, you know, just simply the storytelling that can go around, which is not substantiated by organizations. So there are a lot of companies, very interesting ones, is a company called Ellipsis that does drone imagery to track, you know, plastics and that. So all of these are initiatives which support different levers for, for addressing the problem. And none of them individually are gonna be the panacea and some are gonna be more important impacts than others.

Jonathan Hackett:

So maybe to touch on one of those challenges around the scaling of technology solutions in this space, we often think about we know what we need, we need plentiful power, we need things that remove carbon from the air. We need technologies that allow us to understand calm, complex, scaled supply chains end to end so companies can make appropriate decisions. And all of those really do suffer from the kind of commercialization value of death that you discuss in your book. The idea that, you know, you might know that this is the right technology, but you need it to have a hundred customers, not one you need it to be on, you know, 10th of kind, not first of kind for it to make commercial sense. How how do you see, you know, a path to getting the capital needed to have these companies overcome that, that valley of death and be what we need them to be in the future, knowing where we're going, knowing what the likely pathways are, but also knowing that the answers today may not be the right answers if you view them in isolation.

Roger Spitz:

Yeah, it's a pretty key question, right? Because you know, however much I kind of am passionate about the <laugh> understanding the different ways of infecting change and thinking systemically, et cetera. At the end of the day, each individual or organization, however well intentioned and and thoughtful around thinking systemically and longer term and all that, you have a scope of responsibility and capability that is specific. And so normally what happens, I guess with just a normal startup is that you have what's called the technological value of death. In other words, you've done it in a control en environment, you deploy it and the real asset test is the commercial viability. And then if you have people sign up, et cetera, and it's scalable, then you're kind of good to go. And that technological value of death is really getting the funding for the technologies once you have the proof of to concept once it's demonstrated and basically to get it to the market and to scale.

What happens beyond that for, for climate I guess, is that that deployment is in, in a complex real world environment where basically there's some critical challenges that are specific to, to climate tech or green tech. And the way I guess to go around them is first of all to understand that the nature of the beast is different. So to understand that most likely you're gonna be very good at mastering hard way and soft way, which is actually, you know, between you and me and you know, I know you're cando, which is very innovative part of the world. I'm in San Francisco, which is also not bad, but candidly not that good when it comes to software and hardware combined. And that's where I think there's an important role that Europe is playing and, and can, can play even more and any part of the world because that combination is very difficult when infrastructure meets physical products and hardware as well as software ai, et cetera.

So that's my first element is understanding that you've gotta master both and all that. The second one is, is really just ecosystem cooperation. You might even need to compete with your, your competitors as in cooperation. In other words, the degree of collaboration across emerging ecosystems is huge and that's where it's very different from some of the point solutions. So you are gonna need to basically in, you know, operate, test, deploy with a lot of parties, innovate with them and have feedback loops in an emergent way because you get used to sort of seeing whether what in a combined way works. And that is very different from a lot of point solutions in tech. And I guess the two other elements I would add both as to the problem, but also as, as ways of resolving it and addressing it is one, understanding to your early point public policy alignment is required if you have the right incentives like India does for hydrogen or other countries do for different initiatives, and those are correctly incentivized, that public policy alignment can be helpful with whatever anyone else is doing in terms of technology developments. And then the final thing is the kind of capital requirements which are different and which again, you need investors support systems multipliers.

Jonathan Hackett:

Yeah, I think that's one where I'll die trap for a moment, but really, you know, we see this issue of the line between venture and growth depends on what you're doing. And you can talk about being a, this is a calibration for software, this is a calibration for hardware, this is a calibration for something that gets deployed on infrastructure, but at some point it feels like you're doing a sample set of one and it's really why do you need the money and you know, who's the right investor to partner with you at this scale? You spend a lot of time with venturing growth investors. Do you think they're approaching this the same way that they've approached things in the past where this is my, my swim lane, this is my zone and I'll find things that fit in? Or are they looking at each, each opportunity really on a how do I fit in, what do I bring and what does, what is the way I can support these kinds of companies in order to find new ways across their traditional hunting grants?

Roger Spitz:

Yeah, it's, it's tricky, right? And I don't report to have, um, a complete view on what everybody is doing, but my sense is that there's a bit of everything. In other words, I think they, they are still invariably gonna be some funds, especially maybe, you know, two, three years ago that raised funds for climate tech that are still addressing it as they would an app, um, as a point solution and not really appreciating fully the degree of interrelationships with ecosystems and, and the complexity of that and the degree of, of different elements. There's also a lot of activities where there's a strong involvement from people who are very experienced, have deep understanding of these things, who can understand the feedback loops. If you look at possible future disclosure and reporting, what does it mean for the way you might disclose things? How you provide that feedback to, to policy, how you then monitor the policy and that.

So I think long story short is you are gonna find, you know, these are trillions of dollars where there's all kinds of gonna be shifts in terms of value creation and value destruction and invariably it's gonna attract a lot of financing. I think that the bar went even higher over the past kind of 12, 18 months in terms of the technology cycle, the VC cycle, Silicon Valley, the, the challenges to point solution and not to mention geopolitically a number of events which have made it more difficult for financing environments. At the same time to our earlier discussion, the reality on the ground of the need to build resiliency and adaptation at like extremely short term as in now. And that urgency is so real that it accelerates trillions of dollars being deployed and being created or destroyed for the right actors. So I think in a sense, if I were to wrap up, I, I personally believe that the triage and the sort of doin law of selection will mean that hopefully there are a number of actors who are tuned into this and able to kind of think about it in, in the right way.

Jonathan Hackett:

So, so you briefly mentioned point solutions there. I want to touch on that a bit more because it's one where we, and I think we've danced around this bit in this conversation, but we, you know, there are real challenges on solutions that require mass adoption all at once for scale to be meaningful. I think we're, we're finally maybe in a world where you can believe that EVs are getting there where, you know, you can drive from charger to charger and get a pretty far distance, but also that more and more people are just opting into that, that technology. But it's something that I think we face over and over again, whether it's hydrogen, whether it's, you know, some of the scale up that needs to be done across the grid in multiple points or requires mass adoption into a space like the grid. How do you think about, you know, and you can use mobility a as if if you want, but you know, how do you think about some of these spaces that do require not just point adoption but mass adoption and how we can try to incentivize people to make those changes?

Roger Spitz:

I think there are multiple virtuous inflection points which are kind of approaching and in a way they kind of have a multiplier effect in my mind. So, you know, once a number of regions or countries start putting legislation as to what type of cars can drive or not, once there's the funding with like the US Inflation Reduction Act, you kind of have the carrot and the stick number one. In other words, those companies who don't, will kind of be out of business <laugh> in the next five, 10 or 15 years. Those who do, there's, there's a lot of transfer of value they can, you know, try and benefit from you then have the, the different points of intervention across the system because as part of the US Inflation Reduction Act, there's a lot of policy and legislation which hopefully will, will incentivize the system in achieving certain outcomes.

So that can be more helpful than just the sort of slightly more rhetoric e s G investing because here you're directly looking at at potential outcomes as opposed to just ticking a box. Um, and then you're looking at the policy. And then I think that there's certain, you know, initiatives that can be very helpful. I think you use the word get people to be behave in a certain way or whatever. Either they have to because you know, you can't buy a car with gasoline in California after 2035 or whatever the date. So that's kind of like you don't have a choice or you kind of incentivize through through rebates or tax or what have you. So if you then look at specific examples, I mean you mentioned mobility, I think there's some of that that's happening on mobility, on the electrification and with the many challenges which we could spend hours on at every possible level around ability to scale, have the right, you know, raw materials, the social ecological, human impact of, of the extraction.

So there, there's a lot going on there. But you know, I like to also think about for instance, you know, as simple as as the rail, you know, you can go down the Hyperloop road and sort of say, this is amazing and we should all have hyperloops and I hope it's the case and effective and fast. But you can also just acknowledge that, you know, Europe as it is, has trains that can go very fast and that, you know, I mean when I used to work in London, I used to go to Paris for, for lunch and that, and you know, these, this was all the trains. So there's certain parts in the world, especially the us which to be honest, or North America, I guess Canada's pretty similar where to be honest, I never really understood. I'm pretty international and I try and understand a lot of the world, but I cannot understand this reluctance to, to not have infrastructure for high speed rail.

And of course transport is a big chunk of greenhouse emissions. So there's some fixes that are quite easy in certain ways. I'm sure people would be delighted to go to LA from San Francisco in one hour and a bird on a comfortable train, and then it's more in the hands of the government to, to build infrastructure or you have things like hydrogen. Just to wrap up, I think hydrogen's interesting, I I am actually a partner of the venture capital fund who raised 125 million for the future of mobility. So I, I kind of have a sense from a VC hat, and I understand hydrogen today is not obvious, you know, in terms of just <laugh> checking VC money into hydrogen. But, but more fundamentally, it's interesting, you know, the, the cost can can lower over time. The technology's improved. There's, there's an abundance you can move to potentially green hydrogen.

So I'm very interested when you see some of, um, what India's doing as a government incentives for hydrogen. So I find this quite promising that maybe it's hydrogen is better suited for aircraft and, you know, jet engines and rail is, is better suited for addressing some of the infrastructure issues. And then there's the EVs for the cars. So again, I think it goes to this understanding that there's no easy solution, that there's no kind of point solution, whether it's a technology or whether it's kind of, you know, all the different aspects which, which make these work. So that's kind of what's at stake. And then you can go through the same kind of discussion. We use mobility, but for, you know, food, agriculture and water, which is probably 25% of the global emotions, we can then take a step back and have a similar kind of discussion with examples where, again, it's not just one company or one technology that that's gonna kind of, you know, fix anything or move the needle. Right.

Jonathan Hackett:

So let's to close, maybe flip the perspective around, cause we've talked a lot about it from the perspective of investing in and companies, but we're really thinking about how business leaders should understand this and how do you think about the lessons that a business leader can take to approach disruption a and how to harness it to create value creation.

Roger Spitz:

So thanks for the, the question we put a lot of thought into it doesn't mean it's the right answer, but indeed our, I think you mentioned it at the beginning, our kind of fourth volume is really thinking about disruption, which we use a in a broader sense than just tech. It's systemic disruption, and b, it's kind of neutral. Often it's the depends how you perceive it, prepare for it and, and respond to it. So in the configuration where trillions of, of value will be transferred, you know, created, destroyed, or just simply transferred, it's very important to, to realize that beyond the kind of existential debates and the right and wrong and what terrible things humanity has done, and that from a business perspective, there's a lot of scope to, to create or value. Otherwise, I think the different filters we, we spend time thinking about, the first one is what we call actually our own, you know, AAA framework.

So the first A is really just an anticipatory, it's really what we talked about earlier with the opening question, what does a futurist do? Well, he doesn't assume that the world is linear, predictable and controllable. He thinks a bit more broadly including the unimaginable or the unthinkable or what have you. So the first thing is anticipatory, you're thinking longer term time horizons and you're thinking about next order implications. The second day is really anti-fragile. It's foundations, you know, borrowed from lat lab that you understand that non prediction allows emergence. You understand that trial and error is necessary because they unknown unknowns. You don't have an answer to everything. You understand that you need to build optionality for what ifs that is asymmetric, you know, in non-linear complex configurations, our world is non-linear and complex. There's asymmetrical, you know, 1% risk can wipe you out. So you're not thinking just in terms of probabilities, but in terms of outcomes.

So you're doing a number of things which are anti-fragile, which is the second day. And the third one is what we call agility or agile, which we use in a, in a sense of being agile. The ability to zoom in and zoom out between the long term and the short term, acknowledging that really only the present exists and you need to emerge and make decisions today. And then the final thing I would say is, you know, we kind of thought about a value creation framework, then you can feed a number of things into it. It's more kind of adapted to experimentation, to less expensive development, to a lot of the developing regions of the world for which, which are affected a lot. Then there's ideas like reversible versus irreversible decisions, you know, integrating the fact that disruption is a constant and not a one-off event.

Climate intelligence we talked about to, to sort of give yourself the ability to make climate aligned decisions today. And basically to kill that idea, which, you know, made billions of dollars for, for some consultants, a lot of which were not contributors to value creation of, of a hyper optimized world. I mean, you know, if you, if you build in more redundancy and slack and inefficiency, basically it can deal with different outcomes. And so in our view, some of these are mindsets, some of these are foundational, some of these are organizational, you know, there's a lot going on in what we talked about. But if you have the capacity building to have an organization to be more capable of thinking like that, of deciding like that in terms of decision making and building the resiliency for, for shocks, we feel that overall you can to our title, treat disruption as a springboard to value creation.

Jonathan Hackett:

Very fair. Roger, thank you so much for joining us today.

Roger Spitz:

No, it was, it was a great pleasure. Very important topic and thanks for having me, Jonathan.

Michael Torrance:

Thanks for listening to Sustainability Leaders. This podcast is presented by BMO Financial Group to access all the resources we discussed in today's episode and to see our other podcasts, visit us at bmo.com/sustainability leaders. You can listen and subscribe free to our show on Apple Podcasts or your favorite podcast provider and we'll greatly appreciate a rating and review and any feedback that you might have. Our show and resources are produced with support from BMO's marketing team and Puddle Creative. Until next time, I'm Michael Torrance. Have a great week.

Disclosure:

The views expressed here are those of the participants and not those of Bank of Montreal, its affiliates or subsidiaries. This is not intended to serve as a complete analysis of every material fact regarding any company industry strategy or security. This presentation may contain forward-looking statements. Investors are cautioned not to place undue reliance on such statements as actual results could vary. This presentation is for general information purposes only and does not constitute investment legal or tax advice and is not intended as an endorsement of any specific investment product or service. Individual investors should consult with an investment tax and or legal professional about their personal situation. Past performance is not indicative of future results.