As we stand at a crucial inflection point in human history, business leaders face a stark reality: the polycrisis we are in demands more than just incremental adjustments. It calls for a fundamental rethinking of how we operate, measure success, and sustain our world. The polycrisis, a term popularised to describe the interconnected crises spanning economic, environmental, social, and geopolitical domains, is pushing us to the brink. But within this challenge lies a profound opportunity for transformation. 

Understanding the Polycrisis

The term "polycrisis" captures the multifaceted nature of the challenges we face today. It is not merely a series of isolated issues but a complex web of interdependent crises. Climate change exacerbates social inequality, economic instability fuels political unrest, and environmental degradation undermines public health. And it’s time for us all to step up.  As John Elkington eloquently outlines in his book Tickling Sharks:

“However much we may have done in the past, none of us can retire responsibly from a dysfunctional system that threatens the future of all life, human and non-human. Now that we’re all in the same planetary boat, it’s time to step up – or jump overboard.”

The recent EY report “How can adopting regenerative principles unlock a sustainable future?” underscores this point: "Ultimately, we’re still trying to retrofit sustainability into a system that is unsustainable by design." This insight is crucial for business leaders to understand. The polycrisis is not an anomaly but a predictable outcome of our existing economic paradigms. Therefore, addressing it requires an economic reset, a shift from traditional metrics of success to more holistic and regenerative approaches.

The Inflection Point: Risk and Resilience

We are at a pivotal moment, an inflection point where the crises we face today could become the catalyst for an economic reset. The EY report highlights that "while there are worrying trends indicating we are at risk of locking ourselves into an unsustainable future in the long term, there are equally promising signals that we are at a pivotal moment for transformation."

This transformation hinges on our ability to balance risk and resilience. Businesses must move beyond risk mitigation to actively building resilience into their operations. This involves reimagining supply chains, investing in sustainable technologies, and fostering a culture of innovation. More importantly, it requires a willingness to transcend incrementalism. As the EY report states, "recognition is growing of the need to transcend incrementalism, and innovators exemplifying new economy principles are increasingly emerging to challenge traditional paradigms."

Measuring Success: From KPIs to IPIs

As the great Charlie Munger said in 1995 in his famous Psychology of Human Misjudgment speech at Harvard:

“Show me the incentives, and I’ll show you the outcome.”

The problem is that for decades, businesses have had an oversimplified model of incentives: monetary gifts you give someone to get them to do what you want. And that means that business leaders have become better and better and doing what used to work.

One of the most significant shifts that leaders can champion is redefining how we measure success. Traditional Key Performance Indicators (KPIs), focused on short-term financial returns, are inadequate for the complex challenges of the polycrisis. Instead, we need Impact Performance Indicators (IPIs), which prioritise long-term sustainability and social impact.

John Elkington's concept of the "Triple Bottom Line" – people, planet, and profit – is a useful framework here. IPIs could include metrics such as carbon footprint reduction, community well-being, and equitable growth. By adopting IPIs, businesses can align their operations with broader societal goals, ensuring that success is measured not just by financial gains but by the positive impact on the environment and society.

The Path Forward: Bold Action for a Sustainable Future

Tackling the polycrisis requires bold action and a willingness to embrace radical change. The EY report emphasizes that "positive signals abound, but bold action is needed to accelerate the transition." This bold action involves several key steps:

1. Adopting Regenerative Principles

Businesses must go beyond sustainability to regeneration, actively restoring and enhancing ecosystems rather than merely minimising harm.

2. Economic Reset

There is a need for an economic reset that prioritizes long-term resilience over short-term profits. This includes rethinking investment strategies, corporate governance, and stakeholder engagement.

3. Fostering Innovation

Encourage and support innovators who challenge traditional paradigms and offer new economy principles. These innovators are crucial in demonstrating the feasibility and benefits of sustainable business models. 

4. Collaborative Leadership

Leaders must collaborate across sectors and industries to address the interconnected nature of the polycrisis. This includes partnerships with governments, NGOs, and communities to co-create solutions that are scalable and inclusive.

As we navigate this polycrisis, the choices we make today will determine the future we build.

Business leaders have a unique role and responsibility to drive this transformation. By embracing bold action, redefining success, and fostering resilience, we can turn this inflection point into a tipping point for a more sustainable and equitable world.

The challenges are immense, but so are the opportunities. It is time for leaders to rise to the occasion and steer us towards a future where businesses thrive by regenerating the world they operate in.