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Wicked Problems, Wiki Solutions
Are these the best of times or the worst of times? On one hand, todayâs grand global challenges, the consequence of unprecedented interdependence and resource guzzling, are daunting. But on the other hand, new ways of innovating promise robust solutions to such problems, solutions that may yet create the profitable industries of the future.
The advance of technology and the spread of globalization have helped improve the health of the worldâs population in numerous ways, ranging from the spread of HIV medicines and vaccines to the remote provision of care via telemedicine. Unfortunately, globalization and the march of development have also made it harder to tackle some global problems that experts thought they had gotten under controlâsuch as pandemic superbugs that have the potential to wipe out much of humanity.
Bacterial superbugs are a good example of what economists call a tragedy of the commons. The problem arises because a shared global resource (in this case, the effectiveness of antibiotics) is being diminished selfishly or unwittingly by some people to the detriment of allâincluding future generations.
The classic problem of this sort is climate change. Most environmental problems, be that smog in the air or pollution in waterways, are local and reversible. In time, as countries get richer and as technologies improve, these problems are generally tackled successfully: the air in Los Angeles and London, for example, is far cleaner than it was in the hazy 1970s, never mind how filthy Londonâs was back in Dickensian times. In contrast, carbon pollution does not automatically reverse itself the richer a country or region gets. Worse yet, there are irreversible triggers in the climate system that may be crossed off in coming years, leaving mankind unable to return to a safe climate no matter how great the willpower or how deep the pockets of future generations.
Getting a handle on such global public goods, which often fall between the cracks of national regulations and an imperfect system of global governance, promises to be one of the grand challenges of this new century. This chapter sounds the alarm bell about such scourges, examining in particular the threat of deadly pandemics, but it also brings good news from the front lines of many such battles. Bottom-up approaches, building on democratic technologies such as the Internet and mobile phones, offer hope that the world may yet overcome pervasive market and government failures in dealing with such challenges.
Can you change the world by changing your underwear? That is what Jeff Denby believes. A lanky young man with a fashionably disheveled look and little money in his pockets, he hardly seems like a revolutionary. But he is armed with a few things more important than money alone in todayâs innovation-driven world: passion, purpose, and a provocative idea.
While getting his MBA at the University of California at Berkeley, he realized that there was one essential industry that was just crying out for fresh thinking. He observed that the underwear business, a billion-dollar enterprise, is dominated by two types of firms: those that peddle cheap commodity briefs (think store-brand tighty-whities) and those that market underwear using fantasy hunks and babes (think Calvin Klein and Victoriaâs Secret).
Denby and Jason Kibbey, a fellow MBA from Berkeley, realized that there was a huge market opening. Informal polling and their intuition suggested that many people wanted underwear that was nicer than plain-vanilla briefs, but were nevertheless deeply unhappy that their only high-quality choice was underwear marketed with a frat-boy mentality. So they came up with the idea of socially responsible underwear and founded a company called PACT.
The firmâs philosophy of ethical business starts with the sourcing of its raw materials. Denby spent months researching the entire supply chain for undergarments. He settled on a supplier in Turkey who uses only cotton that is certified to be organic and who pays workers a living wage. In addition to the product being ethically produced, PACT also donates 10 percent of the profits of every sale to charity. The most striking aspect of the firmâs business plan is its marketing approach. The firm sells its products using not images of waifs but pictures of real people (including Berkeley graduate students) with realistic bodies wearing its stylish underwear.
The start-upâs novel approach so appealed to Yves Behar, a designer who runs a hip consultancy known as fuseproject, that he agreed to invest in the firm and to design its products. Noting that he has won numerous honors from design societies, the New York Times recently raved that Behar âhas helped create some of the most memorable designs of recent years.â He has worked for firms ranging from Herman Miller to BMW to GE, but he is best known for designing the rugged little computers distributed by the One Laptop per Child programâa charitable effort that distributes extremely cheap computers for use in schools in the developing world.
Now Beharâs team is coming up with a variety of novel and ever-changing designs for PACT. He explains that by bringing together sustainability and great design, the firm has been able to create an entirely new reason for people to purchase and wear a product that goes beyond traditional marketing. âAdvertising,â he insists, âis the price companies pay for being unoriginal.â Each design (his firm comes up with new ones every six weeks) is associated with a different charity that benefits from its sales. One style of underwear benefits the green charity started by Wangari Maathai, the Kenyan Nobel Peace Prize winner, for example, while another supports Oceania, a nonprofit that works to conserve marine ecosystems. Other designs support literacy projects, endangered forests, and so heartwarmingly on.
Unlike multinational clothing giants with rigid supply chains, the firmâs nimble manufacturing platform is able to make small batches of underwear in those unique patterns. That allows it, like the Swiss watchmaker Swatch, to change its designs frequently. Denby hopes that this encourages customers to change their underwear just as frequently, improving the world a little bit as they do so.
Sustainable underwear may seem trivial in the grander scheme of things, but in fact the PACT story gives a glimpse into the way that the new tools and rules of innovation promise to tackle the worldâs grand problems. Globalization and Googlization are essential enablers, of course, as Denby would not be able to manage his foreign supply chain and market his wares globally from California without them. However, the essence of this firmâs strategy is to persuade customers that its purpose is worth supporting. That purpose, as demonstrated by the firmâs embrace of sustainable agriculture and its no-sweatshops policy, is the improvement of the planet and respect for people everywhere. People plus planet means purpose, the firm is betting, and they hope this will translate into profits too.
Greed for Good
The rise of social entrepreneurs like Denby, a theme explored in full in the final chapter of the book, is but one facet of the ongoing innovation revolution. However, any celebration must be tempered by the fact that humanity is also entering a period of dramatic global challenges. The world economy is undergoing unprecedented changes due to several powerful trends that are amplifying the disruptive impact of 24/7 global connectivity and rapid technological change.
One such trend is the transformation of humans into a primarily urban species. For the first time in human history, more than half of mankind lives in urban areas. Within a few decades, that figure will approach three-quarters of the global population. Most of these people will live in the sprawling megacities of the developing world, not just the familiar Shanghais and SĂŁo Paulos but the dozens of other less well-known cities in China with a population already bigger than Philadelphiaâs.
Mass urbanization will both demand faster and deeper innovation and provide the means for getting it. It will demand innovation because crowding ever more people into megacities will strain urban infrastructure, political systems, and civility to the breaking point. That requires imaginative responses. Happily, this migration promises to spark many new waves of innovation, as cities have long proved essential crucibles of creativity. Geoffrey West of the Santa Fe Institute has found that the average city slicker is three times as creative as the average country bumpkin. He also found that the creative output of a city scales nonlinearly. A city that is 50 times the size of a village nearby is, on the average, 130 times as innovative on such measures as creative output, research budgets, inventions, and so on.
Another of the big trends demanding a global innovation response is the rise of China, India, and other giant economies of the emerging world. The striking economic gains posted by the BRIC economies and their less-famous emerging brethren are surely to be applauded, for two reasons. Within one generation, more than a billion people have been lifted out of the most grinding poverty imaginable into lives of relative comfort. That is something unprecedented in human history. More amazingly, the rise of those economies raises the tantalizing prospect of eradicating of global poverty within the lifetimes of those born today. And the rapid rise of the middle classes in those countries could prove the salvation of companies in stagnant or slow-growing economies of the developed world.
But again, that silvery cloud comes with a dark lining. The economic growth in these developing economies is guzzling precious resources such as oil and commodities, raising concerns about food scarcity and greatly fueling global warming and local environmental crises. If this astonishing demographic and geographic transformation happens on business-as-usual trendsâif development follows the worst examples from the rich world (think American-style exurban sprawl)âthis is an ecological and human tragedy waiting to happen. That is because public policies, technologies, and markets are not organized to deal with the kind of stress that is about to be put on the worldâs essential infrastructure, ecosystems, and resource base.
The most difficult aspect of the resource puzzle is that many different pieces of the puzzle actually fit together in ways that make simple, siloed solutions irrelevant. Energy issues could be more easily solved, for example, if many forms of energy conversion did not consume and pollute huge amounts of water. Water scarcity could be dealt with by desalination, but the equipment for removing salt from seawater uses enormous amounts of energy. Lack of fresh water and freakish droughts (aggravated by climate change) are a big reason food prices are upâbut in turn, most of the worldâs fresh water is consumed in highly inefficient fashion by the agricultural sector, not by heavy industry or thirsty urban households. The World Economic Forum has dubbed this the âwater-energy-food-climate nexusâ and has set up a high-level group of experts, government leaders, and corporate bosses to come up with possible solutions. One of those heavyweights is Indra Nooyi, the chairman of Pepsi, and she argues that âthe only way to measurably and sustainably improve this dire situation is through broad-scale collaborative efforts between governments, industry, academia, and other stakeholders around the world.â
These grand global challenges certainly add up to a mighty headwind for the global economy, but Nooyi is right to suggest that these challenges can be overcome if creative and collaborative solutions are advanced to identify and reward innovations that tackle societyâs big problems. This distinction matters, because innovation is not always a good thing. For example, a lot of technological invention is directed at coming up with gadgets and gizmos of negligible business or social value. And the drug lords and mafias of the world are often highly entrepreneurial, but their business-model innovations are hardly to be applauded.
William Baumol, a distinguished economist at New York Universityâs Stern School of Business, has spent a lifetime studying this topic. He argues that, without innovative entrepreneurship, the growth miracle of the last two centuries would not have happenedâbut he hastens to add that entrepreneurial activities are not always productive and growth-enhancing. In fact, across almost all of history, most such efforts were directed at redistribution rather than at producing new wealth: aggressive warfare, larceny, bribery, and rent-seeking litigation, among many others. Autocracy, the absence of the rule of law, and prevailing cultural norms allowed elites and free riders to capture most of the gains produced by innovative entrepreneurship throughout history. But starting at some point before the industrial revolution, most notably in Florence and Antwerp, attitudes and institutional arrangements changed so that productive capitalismâwhich enhances the general welfare, even as it enriches the individual entrepreneurârather than rent-seeking and deviant entrepreneurship came to be prized and rewarded. That as much as anything explains the transition from millennia of stagnation, disempowerment, and oppression to the economic dynamism, social mobility, and democratic advances seen in the last few centuries.
Now it is time to double down on that tried-and-true pathway to growth by using the tools of innovation to turn the worldâs grand challenges into this centuryâs greatest economic opportunities. The key is for society to find ways to reward socially useful innovation. That is not to say that the inventor of the next Pet Rock or erection pill should not be handsomely rewarded: if such inventions satisfy unmet consumer needs, they do represent value-creating innovations and therefore deserve market success. But plenty of other unmet human needs also require urgent attention, ranging from fresh water and affordable food to protection from climate change and pandemics. Unfortunately, the free market does not currently provide adequate returns for innovators who work on such difficult problems.
That argues for a rethink of public policies, which need to roll in the externalities of such actions as burning fossil fuels through carbon pricing and other mechanisms that will reward investments in clean energy. It argues for corporations to think beyond quarterly results to creating long-term value, which can be done only if the true social and environmental impacts of business are taken into account. And it calls for individuals to be more mindful of their consumer choices, which can have unintended ripple effects across the global supply chain. If the growth to come in this century follows such a thoughtful path, one that is mindful of ecosystem impact and human health concerns, one that leads with innovation rather than blundering and blustering ahead with business as usual, then the current challenge turns into an extraordinary opportunity for economic growth and human advancement.
For that to happen requires a radical rethink of why and how to innovate. Todayâs understandable concerns about managing security and fixing finance must be seen through that prism. The world has spent the first decade of this new century fighting conventional battles, looking in the rearview mirror. The two grand global challenges taken on thus far are terrorism after 9/11 and the financial crisis after the collapse of Lehman Brothers. These are necessary battles, of course, and at the moment they seem to be the most important ones imaginable. But they are not, in fact, new ones: political terrorism has been around for more than a millennium, and capitalism has always gone hand in hand with global financial crisesâjust think of the South Seas bubble and tulip mania of yore.
Look from the perspective of the children born today, and it becomes clear that terrorism and financial panic are not the most difficult of the global challenges. Seen from the vantage point of 2050 or 2100, the big challenge for current generations is the handling of the unprecedented demographic, economic, and environmental transformation that is happening on this watch.
Larry Brilliant is a big believer in inno...
