27 June 2023 – A report by the team behind the Prince of Wales Global Sustainability Fellowship in Radical Innovation and Disruption examines how systems thinking can help businesses and other stakeholders characterise, anticipate and influence low carbon market disruption.
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About
Successful business, finance and governance require the ability to make sense of the world’s complex, interconnected and ever-changing systems. This is particularly critical for approaching societal challenges such as climate change mitigation, which demands overarching and economy-wide transformation. As history shows, transformation processes produce opportunities and risks —and winners and losers. Indeed, achieving global decarbonisation goals will necessarily entail disruption—existential challenges to incumbents which cannot be overcome through incremental means—in numerous economic, technological, business, institutional and cultural systems.
We present a framework for characterising, anticipating and influencing market disruption. This dynamic system drivers (DSD) framework focuses on five system drivers which can either promote or hinder system disruption: planet, technology, government, finance and citizens.
The system drivers have three key properties.
- Each system driver can both sustain and disrupt the status quo. Indeed, the drivers generally exert simultaneous sustaining and disruptive influences along different system dimensions.
- In periods of equilibrium, system drivers tend to sustain incumbent systems on balance, but during disruption events they can flip to exert a net disruptive influence. These flips can serve as bellwethers of broader disruption.
- The system drivers are highly interconnected. This gives rise to balancing and reinforcing feedbacks between them, which in turn produce non-linear system behaviour.
As governments, citizens and many businesses coalesce around the Paris Agreement targets, low carbon disruption seems increasingly inevitable. Industries and firms that are currently responsible for greenhouse gas emissions will have to adapt their technologies and—in many cases—their core strategies and business models; otherwise, they risk obsolescence.
This is not simply a moral imperative: in numerous sectors and socio-technical systems, low carbon technology clusters and paradigms threaten incumbents with advantages in cost and other attributes. Newcomers and established businesses alike can capitalise on the low carbon transition by embracing and innovating toward the opportunities it provides. Conversely, those who resist change may be left behind.
Our report demonstrates how the DSD framework can be operationalised to analyse low carbon disruption processes in three sectors: electrical power, road transport and agriculture. For the past century, these systems have been dominated by emissions-intensive incumbents: coal and gas in power generation, oil-powered internal combustion engine vehicles in road transport, and conventional protein production from methane-intensive industrial livestock agriculture. These incumbents now appear vulnerable to disruption, though the immediacy, certainty and magnitude of this disruption vary between the sectors.
Key findings
- Success in business, finance and governance requires the ability to make sense of the world’s complex, interconnected and ever-changing systems.
- The dynamic system drivers (DSD) framework incorporates ‘systems thinking’ into decision-making, helping to characterise, anticipate and influence disruption.
- The framework is straightforward to operationalise; as an example, we do so for the power, road transport and agriculture sectors.
- Doing so shows that low carbon disruption is already underway or appears inevitable due to both science and economics. However, its nature—including winners, losers, extent, barriers, risks and opportunities—is in some cases uncertain.
Citing this report
Ball-Burack, A., Salas, P., and Whyatt, J. (2023). Navigating low carbon disruption: Systems thinking and dynamic system drivers in power, road transport and agriculture. Cambridge: Cambridge Institute for Sustainability Leadership (CISL).
