How does systemic change happen? That’s a big question but fortunately, here’s a very simple and powerful explanation. It’s the Two Loops model from the Berkana Institute:
I think it’s excellent because it at least gives a clear model to start from and think about. It’s also easy to see interesting examples of this happening in lots of categories. So, she talks about energy and education and then there’s also finance with the Finance Innovation Lab.
However, there’s a very big gap between the existing loop and the new one. In thinking about it, I don’t think that’s quite right. This is because I don’t think if we go from the current loop to a more sustainable one then its going to take the outright collapse of the existing system to give birth to the new one. The way its drawn is that there is no link and carryover. I don’t think this is right because, given the nature of business, there are people in business (in the existing loop) that are evolving and already trying out more sustainable ways of doing business that can easily work in the new loop.
So, if the existing system collapses and with it, the idea of the publicly-listed business then it’s likely that co-operatives can be a new way to do business in the new loop. (Loads of assumptions in here, obv.) But, John Lewis, the Co-operative are already doing this successfully in the existing loop. Does this mean that they will not survive the collapse? Or should they be re-framed as examples of how businesses can successfully work in the new loop? To be seen a ‘loop-crossers’ or similar? Similarly, charity shops, freecycle and ebay can be seen as businesses that work very well in the current loop and would be likely to be ‘loop-crossers’ as well.
So, business has always been about creative destruction and it just so happens that some current businesses have evolved in such a way that they’ll do well if we transition to a different loop sometime in the future. So, if Berkana are right (and it makes a lot of sense to me), then I think that it’s okay to not be as pessimistic as the gap between the two loops suggest.
If you want to get pessimistic you also have to accept that the new loop could be anything, not just a more sustainable one. Say fascism for example. Like what happened in Germany when their existing loop collapsed in the 1920/30s. Just saying.