Have you ever heard of the “Kondratiev wave”?
No, it’s not an obscure tribal greeting or a bodily expression of jubilation acted out by stadium-filling crowds.
Rather, the Kondratiev wave denotes the economic cycle first postulated in 1925 by Russian economist Nikolai Kondratiev. He’s the man responsible for the theory that Western capitalist economies have long term cycles (lasting 40-60 years) of boom (high sector growth) followed by depression (low sector growth). So far, five major economic cycles have been defined. These are the Industrial Revolution; the age of steam and rail; the age of steel and electricity; the age of oil, vehicles and mass production, and the age of information and communication.
It seems that the global financial crises of 2007-2009 marked the beginning of the sixth wave of innovation, which will encompass the next few decades and therefor directly affects you.
According to the author of “The Sixth Wave”, Dr James Bradfield Moody (also Executive Director of Development at the Commonwealth Scientific and Industrial Research Organisation) this new wave will be defined by ‘Resource Efficiency’. This wave, it seems, is different from all those before because of the unprecedented inter-connectedness of the various factors involved. We’ve seen massive changes in the market, in social institutions, in technology and in communication. But for the first time these are tied in directly (if you take a multi-decade view) with global and environmental factors such as water and food supply, and depleting energy resources (in particular peak in oil production and the rising scarcity of oil grades). Moody notes an increasing recognition of the economic value of the environment above and beyond its potential as merely a resource. Increases in cleantech and renewable energy echo this psychological shift. At the Creative Sydney conference Moody said:
“What is the value of a tree? Is it what you get when you sell the wood or the land? Or is it the value of the water it generates or the C02 it converts into Oxygen? We are starting to attach an economic value to all of these things… We are moving from an old mode of operation when we were harvesting resources that were plentiful and cheap to a time when we are managing resources that are scarce and valuable.”
It seems on a global scale we are beginning to separate economic growth from resource consumption – and it’s about time.
Moody has come up with four rules of thumb for achieving success in this new economy:
(Paraphrased perfectly by Olivia Solon from Wired Online)
Waste is an opportunity
“If you want to succeed you need to find waste and do something with it.” He described a Canadian brewery called Storm Brewing that found that it could use its drain waste to grow shitake mushrooms. The shitake mushrooms then change the drain waste to ensure that it can be fed to animals. As a result they are now a beer, shitake mushrooms and animal feed company. Likewise business models such as Streetcar and GoGet ensure than cars as capital assets are being used more efficiently. GoGet sees 10 families on average using a single car.
Sell the service, not the product
In the case of Streetcar or GoGet, people aren’t buying the car but they are buying mobility. In a product-driven world, consumers want their washing machines to last forever and manufacturers want it to last until the warranty is expired so they can sell you another one. If you rented the machine or paid per wash, both vendor and customer share the same desire for the product to last as long as possible. This sort of alignment can be achieved with business model innovation.
Bits are global, atoms are local
You need to work out what you need locally and what you don’t mind being global or virtually accessed. You need local production when you are consuming something — it costs so much to move things around so local production then becomes important. The likes of 3D printing can enable low cost, local production. Services, however, can be delivered globally.
If in doubt, look to nature
Nature as a designer has been doing a lot of the things you need to do in world of limited resources: it always has two-way chemical reactions, uses energy from the sun, consumes as locally as possible and reuses waste products. Thus the Center for Marine Biofueling and Bioinnovation at the University of New South Wales has created a boat surface that mimics shark skin and prevents the adhesion of barnacles and algae. Moody explains: “When you design with as little resource as possible it always ends up looking like insects or bones.”