- Responding to the crises of 2020 requires broader collaboration among all stakeholders.
- Mission-based ecosystems – such as the COVAX Facility – bring together diverse players bound by a shared mission to solve a complex problem, by co-creating a solution that cannot be created as effectively in silos.
- Oliver Wyman identified three imperatives for the success of mission-based ecosystems.
The challenges of 2020 have affected societies more than any crisis in modern history, exposing systemic fragility and compelling companies to re-evaluate previously “tried and tested" ways of working.
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Based on Oliver Wyman’s discussions with dozens of the world’s top chief executives and through our joint project with the World Economic Forum, we find rebuilding in today’s more complex and fragmented world will require broader collaboration among businesses and other stakeholders, underscored by a common purpose and incentivized participation.
A complex and rapidly evolving environment
Over the past few decades, the global economy and its highly interdependent systems have changed significantly, driven by international trade, capital flows and technological advancements. Simultaneously, businesses have evolved – from conglomerates with diverse subsidiaries collaborating among themselves to more agile corporations focused on their core business and contractually engaging with complementary companies.
Now, business leaders once again face an inflection point, triggered by growing expectations from customers, employees and investors coupled with increasingly undefined global and business boundaries.
This inflection point is occurring against a backdrop of long-term social and environmental challenges that accelerated in 2020, including resource scarcity, widening digital divide, inequality and climate change. Many of these complex “tragedy of the commons” conundra are multi-faceted and often lack single-entity accountability. To address them, businesses need to undertake systemic changes requiring skill, political will and a long-term vision that motivates behavioral change.
According to an Edelman Barometer Trust Survey conducted across 34,000 individuals in 28 markets in 2020, 74% of respondents believe CEOs should take the lead in creating change on complex issues rather than waiting for governments to impose it. Yet, unlike yesteryear conglomerates, most present-day companies do not house all the technology, human capital, operational processes or knowledge needed to single-handedly tackle them.
Companies need to fuse the diversified strengths present in conglomerates with the efficiencies of more focused firms. Multistakeholder collaboration offers an effective approach for companies to reposition their business in a more complex environment while playing their role in tackling global issues. However, traditional means of collaboration – structured around supply chain networks, industry-level agreements or initiative-based public-private partnerships – are insufficient to address today’s multi-part challenges at scale.
What the world needs now is a broader group effort that aligns business interests and societal needs, tantamount to a mission-based ecosystem – a network of diverse players, bound by a shared mission to solve a complex problem, by co-creating a product or service solution that cannot be created as effectively in silos.
One example of this new paradigm is the COVAX Facility, a global initiative to accelerate the development of COVID-19 vaccines and to guarantee equitable access to them.
From our observations of existing mission-based ecosystems, we outline three imperatives for success: a strong mission, incentivized participants and complementarity across collaborating participants.
1. A strong mission
The main catalyst for every mission-based ecosystem is a strong cause that mobilizes players. Typically, a single company or a group of industry leaders take on the role of an orchestrator. Orchestrators are responsible for setting up the ecosystem and rallying diverse players to collaborate on the same mission, taking into account their varied motivations. Strong orchestrators set a clear mandate for the financial and societal objectives of the ecosystem and ensure collaborators are aligned on their roles in achieving them.
For example, the fact that 3 billion people lack access to clean energy sources – of which 600 million people in sub-Saharan Africa lack access to electricity altogether – enabled software firm PowerHive to mobilize a mission-based ecosystem that has deployed solar microgrids in more than 25 rural African villages. A wide range of collaborators – energy giants, solar panel producers, crypto-currency start-ups, local governments, project developers, telecommunication companies and customers – came together because they all shared the mission to make clean energy sources accessible. The ecosystem has now created “connected villages” that improve villagers’ access to better education and income-generation opportunities.
2. Incentivized participants
For an ecosystem to be self-sustaining, participants need to be incentivized to collaborate over the longer term. At a macro level, financial markets need to reward companies’ efforts to build stakeholder value, while policymakers create supportive regulations and optimize the public-private split of investments to ensure businesses have skin in the game. At an ecosystem level, orchestrators need to implement mechanisms to measure participant contributions and distribute risk and rewards based on both individual efforts and collective successes.
The 500-member European Battery Alliance (EBA), launched by the European Commission, was able to establish an EU-wide sustainable battery manufacturing sector and reduce carbon emissions by implementing the right incentives and creating accountability. Private sector participants were motivated by the new battery market’s potential market value, expected to reach 250 billion euro annually by 2025, while public sector participants were incentivized to create more jobs and meet the EU 2030 target of having renewable energy sources account for at least a 32 percent share of its energy.
What's the World Economic Forum doing about the transition to clean energy?
Moving to clean energy is key to combating climate change, yet in the past five years, the energy transition has stagnated.
Energy consumption and production contribute to two-thirds of global emissions, and 81% of the global energy system is still based on fossil fuels, the same percentage as 30 years ago. Plus, improvements in the energy intensity of the global economy (the amount of energy used per unit of economic activity) are slowing. In 2018 energy intensity improved by 1.2%, the slowest rate since 2010.
Effective policies, private-sector action and public-private cooperation are needed to create a more inclusive, sustainable, affordable and secure global energy system.
Benchmarking progress is essential to a successful transition. The World Economic Forum’s Energy Transition Index, which ranks 115 economies on how well they balance energy security and access with environmental sustainability and affordability, shows that the biggest challenge facing energy transition is the lack of readiness among the world’s largest emitters, including US, China, India and Russia. The 10 countries that score the highest in terms of readiness account for only 2.6% of global annual emissions.
To future-proof the global energy system, the Forum’s Shaping the Future of Energy and Materials Platform is working on initiatives including, Systemic Efficiency, Innovation and Clean Energy and the Global Battery Alliance to encourage and enable innovative energy investments, technologies and solutions.
Additionally, the Mission Possible Platform (MPP) is working to assemble public and private partners to further the industry transition to set heavy industry and mobility sectors on the pathway towards net-zero emissions. MPP is an initiative created by the World Economic Forum and the Energy Transitions Commission.
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Finally, collaboration across participants with complementary strengths is required for a successful mission-based ecosystem, where participants stand to gain from open sharing of data, resources and knowledge.
French food services company Sodexo orchestrated a mission-based ecosystem with the collective aim to halve operational food waste each year. Sodexo rallied technologists and financiers who could provide products and services, outside of Sodexo’s core business capabilities. Seamless sharing of data among complementary participants further facilitated the ecosystem’s success. For instance, Sodexo shared its performance data with food waste prevention technology provider Leanpath and nine major banks who have backed a revolving credit facility that finances the ecosystem based on this data. Complementary partnerships in this ecosystem enabled participants to move the needle on a global, societal issue that no single entity could have tackled on its own.
The way forward
As expectations grow that businesses will take the lead in creating change, companies need to re-envision the future world they want to be in and the problems they want to resolve. In doing so, they need to identify the role they are best positioned to play in an ecosystem – as an orchestrator, supply chain participant, solution partner, investor or customer. Crucially, they need to identify the right, like-minded partners who share their convictions, structure incentives for sustained cooperation and set ground rules needed for an effective ecosystem – one that brings purpose to life.
As Henry Ford famously said, “coming together is a beginning, staying together is progress, and working together is success”.