The opening question is ‘Do Trees Communicate?’

To which my culture’s answer is, “Of course not. Don’t be ridiculous!”

But the answer of Suzanne Simard, professor at the University of British Columbia, who has studied these things, is that: Yes, they are communicating. They are exchanging information, and resources.

I particularly notice:

• (at about 19 seconds), “These plants are not individuals in the way that Darwin thought of them as individuals, competing for survival of the fittest. In fact they are interacting with each other trying to help each other survive.”
  .
• At 1m33s, “Metres away you can have a plant connected to another plant and they are shuffling carbon and nitrogen back and forth according to who needs it.” The trees are operating cooperatively, via mycorrhizal fungi — together the trees and the fungi form one system, in just the same way that my blood cells and my skin cells are different and work together to form one system.
  .
• “[The trees are networked together] even though they are of different species.” (2m16s)
  Notice that the idea of ‘species’ is something that we have added, just like the ‘yellow’ duck. But so far as nature is concerned, they are all parts of one system.
  .
• “All these parts are working together. It’s a lot like how our brains work.” (2m37)
  The forest, indeed the entire world biosphere (2m33s), is working like a brain.

And (at 3m18), “Diversity is what gives the forest … the resilience to withstand unexpected events.”

(‘Communication’ here is meant in the widest sense, including gestures, movements and other types of non-verbal communication.)

At first the trainer would reward a porpoise with a fish whenever it performed a particular trick. The porpoise learned what that meant, and this established a relationship between them.

Then the trainer made it more difficult: he wanted to reward the porpoise only when it performed a new trick. But how could he communicate this?

At first the porpoise did not understand the new rules. Indeed “the experience of being wrong was so disturbing to the porpoise that in order to preserve the relationship between the porpoise and trainer it was necessary (in the trainer’s judgment) to give many reinforcements [fish] to which the porpoise was not entitled*.” When, eventually, the porpoise understood what was being asked of it, it “put on an elaborate performance including eight conspicuous pieces of behaviour of which four were entirely new — never before observed in this species of animal**.”

As Bateson subsequently realised, all communication between mammals is about relationship. The giving of ‘undeserved’ fish was about preserving the relationship. The putting on of an elaborate performance was about preserving the relationship. And when Bateson himself reported these findings in a lecture hall packed with other people interested in communication, the real communication that was going on was not about whales or porpoises but about the relationship between him and the people in the room. The ‘speaker at the podium’ was communicating in ways that asked for attention from the audience, and trying to them to see things in a new way. The audience in turn was showing respect for the speaker at the podium. And all within the ‘rules’ laid out for how to behave in a scientific conference about whales.

So what?

Things are not things, they are processes. Processes are relationships. Relationships are communication. Communication is about relationship. The yellow duck is only yellow because we see it that way. It is our interaction with the world that shapes the way we see it.

So what? What does this have to do with strategy and sustainability?

Well, at a simple level, if all conversation between mammals is about relationship, then it means that when a manager asks (or tells) an employee to do something, what is really going on is that they are having a conversation about the relationship between them. The way the conversation happens (for example, asking or telling) communicates something about the relationship between them. And both parties will either agree or disagree with what is being unspoken about the relationship.

When twelve managers sit around a table discussing the monthly financial results, what they are really talking about is the relationship between them — who has done ‘well’, who needs to ‘improve’.

When those managers talk about strategy, they are talking about the relationships between them and the outside world, which their strategy is going to interact with.

When people start looking for ‘sustainable’ ways of living and doing business, they are really looking for new ways to be in relationship with each other and with the world.

The story with the porpoise (*) illustrates that this can be a very tricky, and a very rewarding experience. In the first case, severe pain and maladjustment can be induced by putting a mammal in the ‘wrong’ regarding its rules for making sense of an important relationship with another mammal. In the story above, it was the porpoise who experienced upset when the trainer decided to change the rules. In our every day lives it is often the person who seeks to find a new way, a more ‘sustainable’ way, of relating who experiences rejection for being in the ‘wrong’ about his or her relationship with others.

But the story of the porpoise also shows (**) that if this pain and maladjustment can be warded off, then the total experience may promote great creativity.

Tomorrow we look in a little more detail at what happens when we combine “all conversation between mammals is about relationship” with “the yellow duck is only yellow because we see it that way.”

As a friend said to me overnight, “Even my job is a process not a thing. Sometimes I get frustrated when I hit roadblocks that seem to be stopping me from doing my job. But then I remember that this is my job — to negotiate the roadblocks. The roadblocks aren’t a barrier to my job, they are my job. My job is a process, not a thing.”

Gregory Bateson talked about this a lot. He would say that we talk about a hand as having five fingers, but actually it is the four relationships between the different pairs of fingers that is more interesting.

(For example, it is the very fact that our thumb is ‘opposable’ that is thought to have directly led to the development of tools.)

We say, “This table is hard” or “This pillow is soft”, but that isn’t really so. What we really mean is that “When my hand encounters this table it encounters resistance” and “When I push the pillow it feels soft.” It is the relationship, the process, between the hand and the table that matters.

The adjectives in our world are processes too, as well as the nouns.

(And, again, it is our interaction with the yellow duck that makes it seem yellow.)

The television series Friends was about six main characters, but it was the interactions between those characters that made the show interesting. Having six characters gave fifteen different ways of having two characters on screen, twenty different ways of having three characters on screen (three girls, three boys, two girls and a boy….), and so on. Each combination enabled the writers to bring out a different aspects of their characters. And more importantly, each combination brought out different aspects of the relationships between them.

Because, as Bateson pointed out, “All conversation between mammals is about relationship.”

Finding ‘the answer’ in a single post is obviously ridiculous. And yet the pressure was there.

It must be something cultural — something I have picked up in my thinking along the way. Could that be part of ‘the problem’?

Our culture certainly does contain the idea of ‘the silver bullet’ that will defeat the werewolf. The crucifix or clove of garlic that will hold back the vampire. The talisman. The quick fix. The miracle cure. The magic wand. The elixir. The hero. These are all examples in our consciousness of expecting a single item, an object, a thing, to overcome and defeat a range of circumstance.

But the reality, surely, is that it is only the process of writing this blog that has any chance of uncovering what I am looking for. It is only the process of writing this blog that can hope to uncover insights that will help us to move forward.

Our language tricks us. It teaches us to think about a ‘yellow plastic duck’, even though reality is that the duck itself is not actually yellow.

The same language tricks us into thinking about processes as if they are objects.

We say “I am writing a blog” as if a blog were a thing. In a sense it is. But the thing that is useful about a blog is the process of engaging with it — both for the writer, and the reader.

We say that “Love is a many splendoured thing.” But love is a process, an interaction, a relationship — not a thing.

The world is littered with processes that our language talks about as if they were things: a river; a tree; an aeroplane.

In business we talk about a ‘product’ and that stops us dead. The product is a fixed object in our minds. But if we think of it as a ‘service’ then we can start to think about the process by which the customer uses the product. That instantly gives us the opportunity to improve.

If we focus on the process that the customer goes through when she uses the product (or her experience when she uses the service) then we can easily look for ways to make it easier to use, more user-friendly to operate. We can then add functionality that we didn’t realise was needed before (and remove functionality that doesn’t get used). We might realise that there are different groups of customers who use the ‘product’ in different ways, and that allows us to bring out different versions, each better-tailored to their particular customer group.

We can think about the process by which the customer goes about choosing the product, and add better packaging or choose different ‘channels to market’. If we think in terms of process then we will turn retail shopping into more of an ‘experience’, while online shopping will become more focused around customers who are looking for a buying process that is time-efficient. (And we might design an auction process on e-bay as something that provides both.)

And if we think about the process of what happens to the product when it breaks down, or after it is finished with, then we can shift our focus on the customer’s ‘whole life cost’. And we can think about whether a product that is finished with goes on to become pollution, or a raw material for a new product/process.

Thinking in terms of process empowers us. Thinking in terms of things fixes us in the way things are.

The same thinking can be applied to people. People are processes too. I am not the same person now as I was when I was six years old. Or sixteen. Or twenty-six. We change as we grow older. Organisations that facilitate that change can gain more support.

General Motors famously realised that its customers wanted different vehicles as they grew older. We take it for granted now that car companies provide a range of models, but General Motors’ was the first to provide a range of models that gave the different levels of comfort and functionality that people needed as their lives changed as they grew older. As a result of this innovation they overtook the incumbent Ford Motor Company.

Employees are ‘processes’ too. Companies that think about their employees’ needs for career development and work-life balance, for example, find themselves being voted ‘best company to work for’, which then helps the firm attract the best talent.

We can see the world around us as being filled with processes, or things.

Seeing a world filled with things allows us to dominate and control them at any one moment in time.

Seeing a world filled with processes allows us to innovate and change.

More on this tomorrow.

How on earth am I supposed to develop that into something that resembles a solution*? How can I encapsulate it in a single post? How to explain it in a way that will be comprehensible, when the very starting point is that the ‘truth’ will look ‘wrong’ to us.

What could it be in our (my) thinking that is mistaken? How could I find it? And how could I explain that to myself, let alone you, dear reader?

In a way it would be like trying to explain to a five year old that the yellow duck in the bath is not actually ‘yellow’. It is not made of ‘yellow’ plastic — it is made of plastic that looks yellow because it reflects yellow light.

Or perhaps it would be like explaining to a twenty-five year old that there is no such thing as ‘yellow’ light — that ‘yellow’ is only an interpretation passed to our brain by the ‘cone receptors’ in our eyes.

We think there are ‘three primary colours’ in the world, but in actual fact there is an infinite variety of colours. What there are three of is three ‘cone receptors’ in our eyes, each receptive to a different wavelength of light. We build television and computer screens with three ‘primary’ colours not to match reality but to match the way our eyes see. The pictures look real to us, but to animals with two (or even four) cone receptors in their eyes, the pictures on the screens would not look realistic. (There is more on this here.)

This is the challenge.

I am, we are, effectively trying to spot a wavelength of light that our bodies can not detect.

We are trying to detect something that could be all around us all the time but we would never know it was there – like electricity or magnetism — because we do not have a sense that detects it. And, as with magnetism or electricity, perhaps we can detect it by observing the effects it has.

In fact, this is where I started. It is because we are observing unwanted effects in the world that we are looking for something we have not perceived.

(*)Thinking back to the beginning of this post, perhaps I do not need to find a ‘solution’ at all. Perhaps that is part of the problem and the better thing to do would be to find a process, rather than a thing.

I shall talk about this tomorrow.

It concludes that:
a) the price of oil in real terms will most likely double over the next ten years,
and
b) there is a large degree of uncertainty in how things might actually turn out.

What the IMF working group did

Predictions about oil typically fall into two camps. First there is the ‘geological’ viewpoint, which says that there is a limited amount of oil in the ground and it will run out soon. You might call this the ‘doom and gloom’ scenario.

Then there is the ‘technological’ viewpoint, which says that higher prices will inevitably lead to innovations that solve the problem. This might equally be cast as the ‘naive optimism’ scenario.

The IMF, with its focus on international trade and sustainable economic growth, wanted to look objectively at the oil price, without pre-judging whether either of these views is correct.

The working group built an economic model that contains their best understanding of how increased demand for oil might drive production upwards, as well as their best understanding of how increased economic activity (and higher oil prices) would drive demand.

The working group’s conclusions

The result is a model that predicts historic price changes, “far better” than previous models do.

And the best forecast of the new model is that the impact of technology will only be a slight increase of world oil production (compared with the straight ‘geological’ scenario), and that there will be “a near doubling, permanently, of real oil prices over the coming decade.”

Key drivers

It seems that three key factors will determine how this turns out in practice. They are (paraphrasing):

1. How much recoverable oil actually turns out to be in the ground;
2. How much money people turn out actually to be willing to pay for a barrel of oil; and
3. The degree to which oil producers decide to raise production in response to higher prices.

None of these can be known until after the event, so there is a wide range of possibilities as to how things might turn out. (These are shown as dotted lines in the diagram above.)

Uncertain impacts on the economy

The working group also finds it difficult to predict what the consequences of tighter oil supply and higher oil prices would be for the world economy.

Firstly, “This is uncharted territory for the world economy, which has never experienced such prices for more than a few months.”

Second, “there must be a pain barrier, a level of oil prices above which the effects on GDP becomes nonlinear, convex.” (Presumably this is similar to the way that rising levels of water would have a ‘nonlinear, convex’ impact on a person’s ability to breathe, once the water level reaches their nostrils.) The key question is, does that ‘pain barrier’ come after the real oil price reaches $200/barrel, or before? Again, the world economy has not experienced this before, so it is difficult to know.

And third, “the assumption that technology is independent of the availability of fossil fuels may be inappropriate, so that a lack of availability of oil may have aspects of a negative technology shock.” In other words, a lack of (cheap) oil may impede our ability to develop new technologies, and/or use existing technologies.

The bottom line is that, in terms of impact on the economy, “The macroeconomic effects… could be much larger, more persistent, and … would extend well beyond the oil sector.”

What to do

The working paper says that for the IMF, further studies “will be a priority of our future research.”

But it is clear that what happens between now and 2022 cannot be predicted. It is not set in stone but will depend on the choices we make now and the actions we take. How well we prepare.

We do not know how much world oil production is going to rise. But we do know that it  has plateaued since 2005 (despite historically high prices), and that demand is going to continue to rise more quickly than production. Someone, somewhere, is going to face a shortfall.

We also know that the price is headed upwards, in real terms, permanently. And that the impact on the economy (that is to say, on individual businesses) has the potential to be ‘nonlinear’ — if we do nothing.

But business leaders do not wait for 100% certainty before they take action.

And it will be much easier to quantify the likely effect on individual businesses, than to try and forecast for the whole world economy.

This report provides enough information to know that every business should now be taking steps to do four things:

1. Identify where and how the price of oil/availability of oil impacts their current business model.
   (As a raw material; in the supply chain and distribution; in core operations; in the ability of customers and employees to participate in the business; …)
2. Quantify and prioritise those risks, and develop plans to mitigate or manage them appropriately
3. Identify business opportunities that are likely to arise in a future, oil-constrained world
4. Consider the development of step-change business models

(Businesses might also find it instructive to carry out the first two steps for their customers, their suppliers, and their competitors.)

The IMF’s working paper report is available from their website here, as well as here.

If we want to address these problems then as Einstein said, “We cannot solve a problem by using the same  level of thinking that created it.” We need to think differently.

Facing simultaneous problems in so many apparently-unconnected areas, the root cause must lie deeper. As Gregory Bateson put it, “The major problems in the world are the result of the difference between the way nature works and the way people think.”

I believe that at least part of the solution must lies in combining insights from strategy, psychology and sustainability:

• Strategy, because the solution has to work from a practical perspective
• Psychology, because it has to be implemented through people and has to benefit people.
  And,
• Sustainability, because any solution has to work in harmony with the natural world.

I have some experience of all three of these topics. I am going to blog on them thirty times over the next thirty days and see what contribution I can make.