We are not just living in an era of changes, but rather in a change of an era. During the last decades we experienced tremendous changes, while we rapidly moved to a new economy. Global economic growth in recent decades has been accompanied by the creation of immense environmental and societal risks that literally threaten the survival of humankind on planet Earth. These threats grew as a result of the use of metrics that focus merely on the economy and on economic growth – nations are still striving to increase their GDP, and firms concentrate on increasing their (short term) profitability and wealth.
Metrics do not merely serve as a tool for measuring results. They actually act collectively as a compass – as a dashboard, leading us on our way! At present we serve the economy rather than having the economy serve our values! Using inappropriate metrics leads us to the wrong directions. There is no way to solve a problem by maintaining the same principles that created it. In order to move the world to a corrective path, there is an urgent need to add non-economic dimensions to the “dashboard”. Embracing such metrics creates a paradigm shift from an industrial world to a post-industrial world. We must replace the current sole goal of “maximization of economic values” with a multi-dimensional framework that includes Economic as well as Societal, Environmental and Consciousness considerations (“ESEC”).
Attempts to mitigate climate changes, to handle environmental issues, and to correct societal issues require united global efforts, and have started already at the Rio 1992 UN Summit. But only the 2014 agreement between China and the USA, the two countries that are responsible for a large part of the global pollution, paved the way to the 2015 Paris Accord.
The UN suggested a new set of 17 quantitative and qualitative Sustainable Development Goals (SDGs) that could serve as a set of new metrics. Maybe these 17 are not the ideal metrics, however we can’t let the excellent be the enemy of the good. At the end of 2015, 193 states accepted and committed to reach these targets by 2030. Reaching these ambitious targets requires major efforts, new managerial tools, and investments of trillions of dollars per annum.
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The relevant planning horizon of most leaders and executives is quite short. Moreover, they typically think in terms of hundreds of millions or billions, but seldom in terms of trillions of dollars. Leaders and executives must learn to operate with new metrics on a completely unrecognized 1000X scale; where more and large infrastructure projects have to be initiated and built within a short period. In order to achieve the committed targets by 2030, there is a need to reach in the near future, say by 2020, an interim goal and change the scale of thinking from billions of dollars to trillions of dollars and acquiring the needed managerial skills and tools to activate the reform. We called it “from B to T by 2020” (and the discussions around the UN summit in September 2017 used the term over and over). If we do not accomplish this interim goal by 2020, there is no chance to reach the committed outcomes by 2030 as we are talking about big projects that typically take long planning and building periods. These processes must be started as soon as possible. Reaching the goals by 2030 is quite ambitious. And a delayed start means even harder efforts. Up to a point that it will become impossible to achieve the goals, and it will be beyond a point of no return. This is only the first phase, yet a critical and urgent stage in the corrective path.
The educational challenges at this stage are centered on the need to train the leaders and managers, the engineers and designers, the accountants and planning and strategic departments. The above call for a transformation, a paradigm shift, cannot be realized with the tools of the old paradigm. It can happen only with new managerial tools. This by itself is an ambitious and enormous mission to meet. The only way to do that is by first training the leading consulting firms and the large accounting firms, with the help of the elder business mentors who know how to make a transformation happen quickly. Then to join forces in preparing the leaders and executives.
We know how to do that.
At YK Center, we have the right international teams of senior business mentors and experts. We have developed tools for what we call “Trans-Form-Nation”. This is a method to prepare governments and large organizations to deal with these challenges effectively and with urgency.
Teaching and training the decision makers to handle these challenges requires a well-coordinated global educational effort. Due to the very frequent changes around us, the planning stage has to be very flexible. Therefore, the common approach that allows only continuous and smooth passage from the present to the future has to be replaced by a reversed direction: from the future to the present. In other words, it is important to redefine the (multi-dimensional) vision and values, and then agree on the desired future. Then there is a need to identify the obstacles and to find ways to deal with them. This educational approach ends up quickly with major breakthroughs (either things that were defined at first as impossibilities, or things that were not thought about earlier).
Most people have a natural tendency to fear and resist change. That fear is augmented by a weird term like “paradigm shift” that involves thousands of changes. Despite the fears, this may be complex, but not complicated! It simply requires a new way of looking at things!
Those of you that watched the movie Avatar probably remember the situation where the hero, living in sort of a black and white two dimensional space, is transformed into an amazing colorful three dimensional world. The audience experienced the transformation by merely wearing special glasses.
Assuming that the end result will be achieved and humankind will manage to prevent the catastrophe in time, there are additional educational challenges:
One, is to reach the fourth SDG – i.e., the education quality goal. And the other is developing the very young generation. In order to meet the 4th SDG, we are developing Edu-Coaching programs with collaboration of many educational institutions: elementary, secondary and vocational schools as well as universities. In the past teachers had the knowledge and also the experience that was useful for the future. Now the students have access to all the knowledge in the world and the experience is quite irrelevant for the new economy (The young generation is the first that is able to live simultaneously in reality as well as in virtual reality!).
The second, is to reach the higher level of speech that comes from the frontal part of the brain, rather than from the ancient brains. This brings much better joint operation, driven by logics and better control, where the primitive instinctive reactions are suppressed most of the time. There is a very simple technique to teach all people (from age 4 -5 and above) how to activate this ability. It brings everyone to a higher level of private and public discourse, and has a potential to improve people’s health. We call for declaring 2018 as a year of Human Interaction (HI). During this year there will be a massive effort to disseminate this technology all over the world.
The education of the very young generations (kindergarten kids) is also important. At that age children can absorb easily the ability of using the higher level of language, and at the same time they can be guided to use their inventive powers and be attracted to study sciences. So that later on they will love to study the more advanced sciences, and will be good at it. What you learn at very young age imprints your behavior and attitudes for the rest of your life (the Jews used to teach very young kids to read and write a few languages at very young ages, and rooted the basic religious ideas in their minds).
This paradigm shift requires immense investments, trillions of dollars per annum in impact investments. We have a possible solution to where the money could come from. This is less relevant for the current presentation, but just for satisfying the curiosity we shall devote a few words to our suggestion. The only potential sources for long term financing is retirement programs. They can be either from (1) the public sector (governmental budgets and especially social security programs), and (2) the pension plans, retirement and saving programs, and long term life insurance products of the private sector. The financial institutions of the private sector currently manage for their customers an immense portfolio of approximately 80 trillion dollars. That money was the basic target and motivation for the PRI and PSI initiatives during recent years. Unfortunately, in a world of very low (near zero, actually) interest rates, there is little incentive to save money and little appetite to finance impact investments.
Everybody must understand the key role of interest rates in creating attractive retirement plans. High yields are a necessary condition for attracting higher savings and for enabling higher investments. There are possibilities to generate investments with high yields. We can suggest practical ways, that were tested on large scale, to do that, but it is outside of the scope of this presentation. This will enable to create an accelerating self-propelling cycle: higher returns on a retirement plan’s portfolio will enable the offering of attractive retirement schemes. This, in turn, will motivate larger long term savings, and thereby will enable the financial institutions to finance more impact investments. As long as these investments will continue to yield high returns, this self-propelling cycle will continue.
Now, when almost all countries have adopted the new metrics—the SDGs—and have committed to reach these goals by 2030, it is the time to mobilize these educational and financial programs. A country can do what an individual can’t—lift itself off the ground by pulling its own bootstraps! These mechanisms can be established and activated within a short period, and can be used to simultaneously treat at least three major and pressing global challenges: mitigation of major social and environmental threats through the appropriate impact investments, creating jobs and reducing the job insecurity of Millennials, and re-establishing retirement security for Millennials and future generations. In short, hitting several ambitious and extremely urgent targets with a single arrow!
Can we do this “Trans-Form-Nation”? Yes We Can!
- Prof. Yehuda Kahane is active in both the academic and business areas. He is a professor (emeritus) of Coller School of Business and the Porter School of Environmental Studies and the former head of the Institute for Business and the Environment, Tel-Aviv University. He founded and served as dean of the first academic school of insurance in Israel (now a part of Netanya Academic College). At Tel Aviv University he directed the Erhard Insurance Center, the actuarial studies program, and coordinated the Executives Development Programs. He is a life and non-life actuary (Fellow of the Israel Actuarial Assoc. and other international actuarial associations).