Andrew Winston: The Big Pivot

an old friend of mine who's a cardiologist told me something shocking 40% of first heart attacks are fatal for some people this comes as a complete surprise but for many there were warning signs diabetes obesity family history you know luckily many people react to these warning signs before it's too late Men's Health mag magzine runs this regular story called The Belly off club which features someone like this man Tom who lost 150b every story includes what the magazine describes as the wakeup call that pivotal moment when the man realized something needed to change he was

out with his kids and was out of breath or his doctor told him he would die people do change sometimes dramatically they do what's required to thrive now we as a business community and as a species are getting wakeup calls will we listen the first call record setting heat droughts floods and storms are becoming the norm last year Australia had to change their maps to reflect temperatures ranging from 50 to 50° Centigrade up to nearly 130° fhe the comedian Steven coar commented at the time that's in January imagine what it's like in the summer it

is the summer in Australia in case you know kidding aside the the scientific community and the business Community are telling us that extreme weather is already costing us billions of dollars climate change is not some model or future prediction to debate we are now living in a hotter more volatile world the second wakeup call the rising price of resources as a billion more people enter the middle class demanded more of everything in one year China built 17 billion Square ft of new space now picture all of the commercial buildings in Manhattan in that one year

China built not one commercial Manhattan but the equivalent of 30 this Relentless rise in demand for resources is causing a change a fundamental shift in how the world works during the 20th century according to McKenzie analysis the cost of everything going into our economy the Commodities that we call metal and food and energy dropped steadily with exception for some world wars but in this Century the prices Rose dramatically wiping out a 100 Years of productivity gains in just 10 we are living in a scarcer more expensive time and the third wakeup call a is a

multiplier on the other two radical technology-driven transparency is opening up to public scrutiny everything about how a company does business including its suppliers and its Partners around the world we can now ask and answer so many questions about every product where did it come from who made it where they paid a living wage what's the carbon footprint did it use toxic elements or scarce resources this hotter scarcer more open and connected World presents enormous risks but huge opportunities trillion dooll markets in energy buildings Transportation consumer products and finance are all in play I think business

is uniquely qualified to tackle these challenges but it's going to require a very deep change in how we do business what I'm calling the big pivot now today companies maximize short-term earnings and then get to these big shared environmental and Social Challenges when there's easy wins or there's enough pressure from Outsiders we need to flip our priorities ities and operate in a way that tackles our largest challenges first and then work Works back from there to find a way that uses capitalism and markets and all of the tools we have to do it most profitably

this is about resilience when Hurricane Sandy hit New York we learned how fragile we really are the Seas rushed into Lower Manhattan and a part of the electric grid a transponder exploded plunging Lower Manhattan the the heart of the business world the heart of the financial world into darkness for 4 days we need to lessen our dependency on Old Technologies and ancient fuels Europe is waking up to the fact that onethird of its coal oil and natural gas comes from this man this is my favorite picture of a world leader ever Europe has not been

resilient to Hurricane Putin as I like to call it now Germany and Switzerland and other countries they're moving away from fossil fuels as fast as they can and companies around the world are realizing they need to move quickly to the clean economy as well Walmart is the largest buyer of solar power in the country outside of the military and when they announced an increasing commitment to Renewables one of the top Executives said hey this keeps US Open and running no matter what the weather is no matter who else might be down this is strong resilience

aggressive resilience we can sell more stuff because we're independent and we're flexible but how do we capture this this resilience and the big pivot well out of 10 strategies that I think are required I'm focusing today just on three really critical issues that change how we see the world our vision and our perspective first we need to fight the plague of short-termism in business corporate leaders are trying to please wall Street which is now more of a casino than a market where over half the shares are bought and sold in milliseconds less than a blink

of an eye how can that be about fundamental value a few CEOs like Unilever Paul Pullman are fighting short-termism by changing the conversation with Wall Street or by stopping those quarterly meetings with investors that don't care about real value creation second we need to set bold science-based goals in business we set our targets bottom up asking everybody how much they think they can do but now imagine we were all in a boat and it was filling with water what we would not do is ask everyone how much do you think you can bail today how

much do you feel like you can do no we'd start bailing immediately and we'd figure out how much we have to bail to stay afloat we now know how fast we need to go on carbon in particular the the numbers guys at p WC have calculated that we need to reduce the amount of carbon per dollar of GDP by more than 6% per year indefinitely it's far faster than we're going today now a few companies have done what's required and set their goals based on science Ford Motor Company figured out what its Vehicles would need

to look like in the coming years to help the world meet the carbon reduction goals better engines biofuels electrification and much more this strategy led directly to the announcement that the F-150 for 2015 would be 700 lb lighter due to a shift from steel to aluminum this is risky heretical work for Ford I mean this is their number one bestselling most profitable vehicle that they're fundamentally altering it's a pretty big pivot but consider now also Tesla the most successful maker of electric cars that's asking an even more heretical question why do we need an internal

combust buus engine and this brings me to my third strategy which is asking heretical questions that challenge the way we do things can we collaborate with our direct competitors or even with our bitter critics to solve big challenges can we operate with no fossil fuels or water this building the bullet Center in Seattle generates more energy than it needs so can we build so-called regenerative businesses and products that through their existence improve the world yes can we challenge business models CVS a major drugstore chain with 125 billion in sales stopped selling tobacco recently and renamed

itself CVS Health they asked a heretical question can we stop selling products that don't fit with our strategy of improving People's Health or stop supporting products that have no place in a thriving prosperous World some companies are trying now to connect their products to purpose a larger purpose purpose like bringing energy or water to the developing world or teaching young children handwashing skills to save lives like Unilever is doing now this may sound like philanthropy and on some level of course it is but there's also a cold hard business logic here if children don't survive

easily preventable diseases they can't grow up to contribute to society or become part of the marketplace as customers or employees if people have no water or energy they can't buy detergent or computers as many wise people have said business cannot Thrive unless society and the planet are thriving as well we're not separate our Mega challenges and our economies are all connected so let me ask you how will you challenge how you live and how you do business to deal with the realities we face and take advantage of the opportunities we need business to innovate and

create new products new business models that bring about a thriving future we need Business Leaders to think with their heads and their wallets for sure but also with their hearts what's your heresy what if our future and our lives depended on the answers because they do thank [Music] you