Resilience in a Hotter World

Reprint: R1404C

As the planet warms, storms and floods are becoming wilder—killing thousands, disrupting supply chains and power grids, and causing billions of dollars in damage. Meanwhile, supplies of all kinds of resources are dwindling, and demand is rising. These two megachallenges—extreme weather and resource scarcity—could have an unprecedented impact on corporate profits and global prosperity, warns Winston. To manage these threats, companies must do what he calls “the big pivot.”

The big pivot represents a radical change in strategy, operations, and mind-set. Instead of focusing first on short-term earnings and treating environmental challenges as niche issues, firms must prioritize tackling the world’s big problems and use the tools of capitalism to do so profitably. That means taking new approaches to vision, valuation, and collaboration: Companies must set long-term goals based on science and pursue innovations that seem heretical (dyes that don’t need water, say, or services that replace products). They’ll need new ROI tools that factor in unpriced costs and benefits. And they’ll have to work with other organizations, including competitors, to reduce resource dependency (for instance, sharing methods for reducing energy use).

By making these moves, firms will increase their resilience to volatile resource prices, electrical outages, and shifts in customer needs. They will improve business performance while advancing the common good.