Managing the big transitions

VOICEOVER
This is Up Close, the research talk show from the University of Melbourne, Australia.

ELISABETH LOPEZ
Hello, I'm Elisabeth Lopez.  Thanks for joining us.  Human beings are notorious for their resistance to change. It's a trait that café owners reference when they urge customers to leave a tip.  If you don't like change, leave it here.  If only the answers to the world's most pressing problems were that simple.  Instead, the path to change is littered with failed projects, ruined finances, poisonous politics and paralysis.  Our guest on Up Close is a pioneer in the field of transition management, which synthesises a number of disciplines to tackle complex change.  Jan Rotmans says we are living in the eye of a hurricane.  Every era has change, but we are living in a time of turbulence seen only once every 100 or 200 years.  Jan has examined complex change in areas like healthcare, regional development, waste management and even the roofing industry.

The two questions at the heart of his approach are deceptively simple - where do we need to go and how do we get there, but they require a radical shakeup of existing structures and processes.  Jan Rotmans is Professor of Transition Management at Erasmus University in the Netherlands and he's the founder of DRIFT, the Dutch Research Institute for Transitions, and he's here as a guest of the Melbourne Sustainable Society Institute and the EU Centre [on Shared Complex Challenges].  Welcome Jan.

JAN ROTMANS
My pleasure.

ELISABETH LOPEZ
What is transition management and why is the world starting to take notice of it?

JAN ROTMANS
Well more and more people realise in the world that we are in a stage of transition that means basically that the structure of our society and economy is fundamentally changing.  How we are organised, our basic institutions, is very much rooted in the 19th century.  It's based on a certain hierarchy - vertical - structures and that is all eroding.  People all over the world are building new structure, new institutions.  It's much more from bottom up and not top down and what you see is that also in our economy there's a new fundament arising, a much more digital economy, also decentralised and the two of them come together and that is rare.  If you look at the history, the last great transition was actually during the second half of the 19th century.

ELISABETH LOPEZ
With industrialisation…

JAN ROTMANS
Yes…

ELISABETH LOPEZ
…railways.

JAN ROTMANS
Yes at that time we built up a completely new infrastructure, physical, economic but also social infrastructure.  That was what we called the Great Transition and I think there are many similarities between that period and the current period.  We are building up a completely new digital infrastructure, but also a societal one and…

ELISABETH LOPEZ
So there's a social contract that's changing, a post-war social contract?

JAN ROTMANS
Yes.  So what we can learn from the 19th century, there was a long period of turmoil.  There was a lack of overview and insight.  Many people were afraid for the system change that they were facing.  There was a group of people that profited from that period and there was a large group that suffered from it.  So it led to let's say a greater social inequality and that's…

ELISABETH LOPEZ
So capital versus labour…

JAN ROTMANS
Yeah, yeah.

ELISABETH LOPEZ
Those sorts of big groups pitted against each other.

JAN ROTMANS
Yeah and Marx of course was warning for that.  What you see is now also a threat of greater social inequality.  Now we have Piketty, warning for that.

ELISABETH LOPEZ
The French writer, Thomas Piketty, the author of Capital?

JAN ROTMANS
Yeah but the big difference is that one of the greatest problems we are facing, global climate change, is rooted in that 19th century when we started to burn our fossil fuels.  That's one of the greatest challenges that we are facing now and secondly, if you look at the space and the impact, it goes thousands of times faster than in the 19th century.  There was also a power shift in the 19th century.  In Europe the nobility was replaced by the bourgeoisie, the well-informed and educated citizens.  That's what I expect right now also, a shift in power.  There are hundreds of thousands of citizens that are organising themselves all over the world and that bottom of society is challenging now politics because in the 19th century we also saw a failing political system.  We were building up a new one and what we see all over the world now is a failing political system again.

ELISABETH LOPEZ
I was going to ask, how much of a European story is this?

JAN ROTMANS
Well in the 19th century, Europe used to be the engine, the motor of worldwide innovation. That's not anymore the case.  What we see now is that the older continents are in the lead.  If you look at what's going on and is emerging, then we need to look at Asia, Africa, South America.  There these transitions go much faster than in Europe.  That's also a striking difference, and transition management tries to deal with how can you influence these big shifts in society.  What is the answer?  How can you steer that?

ELISABETH LOPEZ
So the connotations of that term to me, at any rate seem to imply you're moving from a position A to a fixed position B, but the truth is probably a lot more chaotic than that.

JAN ROTMANS
We used to think in that linear way in the 19th century, from A to B, but we have advanced since then.  So we know it's indeed much more chaotic.  There's no blueprint like Karl Marx intended.  There are no total solutions.  If you look at system change, it's so complicated that the only thing you can do is what we call searching, learning and experimenting.  So there's a variety of potential solution options.  Look at the energy system for instance.  It's still not clear what is the basis for the new energy system.  Of course we have the renewables, but it will be either hydrogen based or it will be electricity based.  There's still a number of options open.

So what we are promoting is in the first phase of a transition, you need to do a lot of experiments and find out what are the most promising ones and that is a process of divergence.  Then you learn a lot about it and then the process of converting starts.  Then you are going to select the most promising options.

ELISABETH LOPEZ
That's an interesting case to bring up because it's been said by some of the people who think similarly to you that the whole philosophical underpinning that drives the way energy is provided is based on neoclassicism so it's all about markets, supply and demand, but if you're taking a transition management point of view, you're bringing in societal aspirations and considerations about equality and energy security.

JAN ROTMANS
Absolutely.  We are talking about specific markets, niche markets.  What we have learned and what we know now is that these niches need a lot of support, guidance.  I'm a fan of [Mariana] Mazzucato, the Italian professor who definitely showed that even Silicon Valley was not the result of the free market only.  There was a long term support by the governments at the different levels and you also see that in other parts of the world.  So if you want to stimulate renewable energy, you need to facilitate that as a government for a longer period until there is a serious market.  Because the whole idea of a free market is nonsense in the sense - if you look at the worldwide energy system and you look at the subsidy schemes, we know that fossil fuels are subsidised enormously, twice as much as renewable energies.

We think about these things in terms of a regime, kind of an incumbent structure and the whole fossil fuel regime is deeply [entrenched] into our institutions, structures, even education system.  In essence, that's what you need to transform and therefore it is a shift in power.  You need to break the power of the fossil fuel energy system.

ELISABETH LOPEZ
That's easier said than done.  You've consulted to the OECD, the World Bank and national governments on energy policy.

JAN ROTMANS
Yeah.

ELISABETH LOPEZ
What sort of discussions or conversations do you have with people in government about this?  There's obviously likely to be a lot of resistance to the idea of breaking the control that fossil fuel producers have over policy.

JAN ROTMANS
Yeah but on the one hand they realise that we are facing systemic change, so there's no question about that.  If you look at our bigger systems, the financial system, the energy system, also the healthcare system, they are part of a systemic change.  These big institutions acknowledge that more and more and then two questions arise.  What does that mean for us?  What does it mean for the OECD or for specific countries or for the European Union or whatever?  Secondly, how can we facilitate that systemic change?  How can we influence it into a direction that is more sustainable?  Then I always say, I don't have a recipe.  There is no blueprint, there is no fixed solution, but you need to invest a lot in what I call radical innovation.  In general we have two distinct ways of innovation - doing things more efficiently…

ELISABETH LOPEZ
So incremental innovation.

JAN ROTMANS
Yeah incremental innovation and doing things radically different, radical innovation.

ELISABETH LOPEZ
But that's obviously not very easy to plan.  It just often comes when you need the right climate to support it.

JAN ROTMANS
Well I'll give you an example.  I'm advisor of one of the biggest ports in the world still, the Port of Rotterdam that is still heavily dependent on fossil fuels - coal, oil and gas.  We've [built it up] in Rotterdam over the past 150 years.  They know that in particular after the Paris Agreement, that comes to an end.  So the question is not; do we need to go on with that?  The question is how do we transform that fully fossil based port into a more sustainable one?  Then it gets interesting, because there is a new economy arising that is about disruptive innovation.  So can you use, let's say, 3D printers in order to stimulate a more sustainable ship transport?  So the maritime sector can be linked to 3D printers but these are entirely different worlds.  So the world of the entrepreneurs is not operating in the world of the port and the harbour.

The same holds for the app developers.  If you ship transport from Shanghai to Rotterdam there are about 20 different parties dealing with that.  Within a couple of years, that will be only two or three left and it will by fully directed by apps.  They don't know yet those app developers so what we do is we bring together these entrepreneurs, social economic entrepreneurs with a traditional businessman in the Port of Rotterdam, linking the old and the new economy and they have now developed a strategy in which they are systematically going to invest more into the new economy, doing a lot of experiments and they have developed a vision for the next 25 years.  They want to become fossil fuels free.

It's a complicated process, but if you don't start building it up right now, you might be too late and then you're out of business.

ELISABETH LOPEZ
I'm Elisabeth Lopez and you're listening to Up Close. Our guest is Professor Jan Rotmans at Erasmus University in the Netherlands and he's talking about transition management to solve complex societal and environmental problems.  So tell me about the process of facilitating this sort of thing.  Scenario mapping came about in the 1970s in Shell but it's more than that, isn't it?

JAN ROTMANS
It's more than that.  It's about strategic thinking and then scenario mapping helps, but it all starts with strategic thinking, but then you must do the following.  The link, it's between strategic thinking and strategic acting.  That means that you need to attract people who can link the old structures, institutions, economy, to the new ones.  So you need different type of transformative agents.  You need frontrunners, who are experimenting with new solutions, you need connectors connecting the old structures with the new ones and you need what we call topplers.  Topplers are game changers and are able to develop new systems.

ELISABETH LOPEZ
It's a very evocative name.  It sounds like someone who is prepared to let a whole lot of old things just fall…

JAN ROTMANS
Yeah absolutely.

ELISABETH LOPEZ
…to make way for the new.

JAN ROTMANS
Yeah and they are rare but they are around in the different systems.

ELISABETH LOPEZ
Who are these people?  So they bridge different disciplines or do they just happen to have a knack for being able to reach outside their own training and experience?

JAN ROTMANS
It depends, but they are around.  If I look in Europe, in each and every sector I see combinations of those frontrunners, connectors and topplers and the combination can be quite effective.  I see them in the energy and climate sector, in the education sector, in the healthcare sector, but these people need what we call degrees of freedom.  They need to operate in a space that allows them to pursue those radical innovations and it's still not easy because you need to deal with a lot of resistance, mental resistance but also institutional, financial resistance, but what you see is that these people are breaking through the incumbent systems.  That is going on right now and that's the most fascinating period I can imagine.

ELISABETH LOPEZ
So the people who occupy these roles, I suppose, are fairly powerful given the right circumstances.  Does it necessarily take a crisis to bring these people to the fore?

JAN ROTMANS
Yeah that's actually what I'm trying to do in many countries, to give these people the right space that they need, in particular the mental and institutional space.  So I'm trying to encourage the formation of these different transformative agents and to let them do the revolutionary work.  It's a matter of recognising them but also identifying them, because most people claim that they are or think they are but they don't have the right competencies to do that.  Because you need to withstand a lot of criticism, a lot of resistance and if you are not able to withstand that, then you will have a difficult period, but there are thousands of these people all over the world, but they are mostly hidden in the incumbent structures and institutions.

We need to take these people out of those institutions and structures and to give them a free space for radical innovation.  So I'm pleading for radical innovation spaces to let these people further develop those radical solutions.

ELISABETH LOPEZ
So structures have to change first?

JAN ROTMANS
It's a combination of structure and culture and that's difficult because in many cases they are intertwined.  What I learned over the past 25 years is the biggest barrier is the culture, the mental barrier, that people cannot imagine that it can be done in an entirely different way.

ELISABETH LOPEZ
Is it not the province also of smaller organisations?  Isn't it the case that large organisations, whether you're talking about government or corporations, just have an in-built tendency to inertia because they are so big?

JAN ROTMANS
Yeah lately I had a meeting with a multi-national company in Europe and they wanted to start such a transformative change process internally.  I'm advising them and I asked for 15 frontrunners, connectors and topplers, so 15 transformative actors.

ELISABETH LOPEZ
Did they just stare at you in bewilderment when you used those words?

JAN ROTMANS
Well they knew me so they were a little bit used to that.  The CEO was well aware of the, let's say the urgency, but I asked him, do you have those people on board and he said no.  No, we don't have 15 of those free thinkers and actors.  I said, why not?

ELISABETH LOPEZ
We got them out in the last wave of redundancies, right?

JAN ROTMANS
Exactly.  He told me we got rid of them because these people are quite cumbersome to handle and I say well in this phase of the transition, you badly need those people.  So many of the big companies are bureaucratic, are not flexible, not agile enough to go through the next phase of the transition and that's really problematic.  If you were a big company, you had many advantages in the past.  Now it becomes more and more a disadvantage, so they are really suffering and one of my statements is that three out of five of these companies will not survive.  If you look at the energy companies now in Europe, most of them are in trouble.  If you look at their position in the financial markets, their value on the stock exchange decreased by 70, 80, 90 per cent over the last eight years.  That's pretty dramatic.

That doesn't hold only for energy companies but also for insurance companies, financial companies.  You see it all over the place.  So that is what I call the deterioration, the breaking down of the old structures and may sound odd, but we need to celebrate that because you need a lot of breaking down in the old systems and meanwhile we need to build up the new ones.

ELISABETH LOPEZ
So it sounds like there's an element of chaos theory in what you're advocating, that it's a process of decay that's necessary for new ideas to be able to emerge and feed off the ruins.

JAN ROTMANS
Absolutely, yeah.  Everything that I think and do is rooted in complex system theory and chaos theory is a part of that and complex systems theory deals with emergence of new phenomena, co-creation and co-production, but also self-organisation.  I analysed many big companies including NGOs and what you see is the way they are structured and [built their] roots in the 19th century - very much top down, hierarchical, quite a number of layers in between - what you see is that the new structures are much more horizontal and decentralised.  So there's a tendency in the new organisations to organise in self-organising cells with as much autonomy at the lowest possible place.

In a country like the Netherlands there are more and more companies experimenting with self-steering teams - small groups of 10, 15 people without a boss and they are quite autonomous in determining their own budget, even salary sometimes, and they have no bosses but they have coaches.  So if they have questions, they are being guided by coaches.  That is also spreading all over the world.  That's the new mode of organisation, which is according to the complex system theory, much more valuable and much more flexible than the old fixed and rigid structures.

ELISABETH LOPEZ
How equipped are most organisations to institute a culture like that, given that we've had a command and control system of management since 19th century or longer?

JAN ROTMANS
It's difficult.  The reason why they are structured is that they are based on fear and distrust.  If you want to build up those new organisations, you cannot do that based on fear and distrust, so you need a certain kind of trust to give away autonomy to people who you trust that they can organise themselves.  Self-organisation is also not the recipe.  It's an interesting new phenomenon and not every employee can handle that and not every boss can handle that, but it's one experiment in the many options that are [unclear].

ELISABETH LOPEZ
I'm Elisabeth Lopez and you're listening to Up Close.  Our guest is Professor Jan Rotmans of Erasmus University in the Netherlands and he's talking about transition management to solve complex societal and environmental problems.  Jan, one of your case studies involves a mining region in the Netherlands.  Can you tell us what that taught you about transition management?

JAN ROTMANS
Yeah, that dates back to the '60s when we closed down the coal mines and there was a lot of resistance then.  It was a very emotional period because the Netherlands was economically built on coal and oil and now gas.  So they closed down the coal mines and they started a transition onto a new economy but after some decades that stagnated.  We [were the] group of transition experts helped them in order to develop new societal and economic structures.  We helped them to realise the urgency of building up this new economy and to look at their genes.  What is the DNA of such a region?  We collected about 20 frontrunners and tried to develop a long term vision and try to start with small experiments onto realising that vision.  That was done more or less successfully.  That was the first big transition management project that I did in the Netherlands that started already 20 years ago.  They are doing well.  At that time we warned for phenomena like the greying of people in the area.

ELISABETH LOPEZ
Oh ageing populations.

JAN ROTMANS
Ageing populations and that was not on their agenda at all.  They didn't believe it, but it's something you can quite easily predict and that is now the number one item on their agenda.  So they moved away from coal, they invested more in renewables, they invested more in different kinds of tourism, they invested more in attracting younger people and trying to build an economy also based on the greying people.  So they invested more in the quality of the whole region and make the region more attractive to a larger number of people and it's still not easy.  It's quite difficult, but that transition process, you need to realise that lasts 20, 30 years.

ELISABETH LOPEZ
One of the other things that came about was that the towns or the cities in this region stopped seeing themselves as individual cities and realised that they had common aspirations and problems as a region.

JAN ROTMANS
Yeah there were about eight municipalities.  They were not used to working together.  We showed them the advantages of working together and functioning as a region as a whole, so they started thinking and acting at the regional level and also we advised them to work together over the boundaries with the Belgian and the German people.  So what you see is that the new economy is operating at the regional level.  There's a huge competition among regions all over the world.  Even a city is not large enough anymore to withstand that competition, so you need to organise as a municipality yourself at the regional level.

On the other hand, if you look at the societal structures, they are functioning at the local level.  So you need to operate at different levels, the neighbourhood level and the local level, the regional level and I think the future is the well organised regions.  If I look at Europe but I also see it outside Europe, then the future of Europe is not any longer the future of the states…

ELISABETH LOPEZ
Nation states.

JAN ROTMANS
The nation states, but the future of the regions.

ELISABETH LOPEZ
What's the role of politicians in this apart from holding the purse strings?  Given the poisonousness of a lot of politics, the partisanship and the backbiting, are they best cast out of the whole process?

JAN ROTMANS
Yeah the reason why I started with transition governance or management was that I did not expect that the answer would come from politics.  So the whole idea of transition governance is that you mobilise society and the different kind of actors and put a lot of pressure on the political system.  So the whole idea is that if you develop that new kind of power arising from society, that the political system is forced to take a different route and that is actually what is happening in many countries, building up that pressure and there are some politicians that show some wisdom and look beyond their ultra-short term agenda, but they are exceptional.

ELISABETH LOPEZ
What happens when things go wrong in the process as they inevitably do in any change process, especially an enormous one of the scale you're talking about?  What sort of tools do you have to break through impasses and vested interests?

JAN ROTMANS
What I've seen over the last 25 years, we've made a lot of mistakes.  It's impossible to do these complex transition processes without making errors and it's actually about searching, learning and experimenting.  If you are doing 10 different experiments, you may hope that at least four or five of them will fail because you learn the most from your failures.  What we do is constantly monitoring what is going on, evaluating that and learning from it.  So we have developed our own governance tools, systematically analysing the states where transition is in, analysing the different roles of the actors but also monitoring, evaluating, learning.  That is the analytical part which is extremely important in transition governance and then trying to convey that to a larger audience.

So the whole idea is not to start from a broad support but a small and deep support, start that only with transformative actors and then try to broaden the support and broaden it, then you create circles of circles of circles.  That is the evolutionary part of it.

ELISABETH LOPEZ
So people see an experiment that works and think okay, I might hop onto the bandwagon here because it looks like it's going to go somewhere.

JAN ROTMANS
Yeah.  For instance, in the city of Rotterdam we are doing experiments with adjusting ourselves to climate change.  We do experiments with floating houses because we will be faced with a sea level rise of let's say about a metre in the next century and it's much smarter in order to move with the rising tide than let's say to raise the dykes constantly, but if you ask people, would you be willing to live in a floating house, nine of 10 people would say no because it's dangerous.  They associate it with all kinds of risk, but perhaps within a generation, it will become mainstream.  So we start those experiments with those people who are willing to live in these quite radical situations in a floating house and then it turns out that there are many advantages.

So we start with a small group of frontrunners and then if it is successful, we try to do it with a broader group of people.  So again here the mental shift is the most problematic one because people in the Netherlands and in many other countries associate water with a risk.  You need to protect yourself and we try to shift that mindset that water is not only an enemy but also an ally, that you can live together with the water, that you can work on the water, that you can recreate on the water.  We are trying to promote this idea worldwide.

ELISABETH LOPEZ
Jan, to what extent are we reliant on the commercial sector to come up with the sort of breakthrough innovations that are going to be needed to get around some pretty dire sustainability problems?

JAN ROTMANS
Well actually an intriguing combination between two forms of disruptive innovations.  First of all I see worldwide the emergence of disruptive citizens, citizens organising themselves in communities.  Like we call it the commons working in the public domain, city developers for instance in the forms of citizens, but you see that in the energy field, you see that in the healthcare fields, in education, all over. So that's in interesting phenomenon, disruptive citizens. They form a new power.

Secondly, disruptive innovations and they have a lot to do with let's say the digitalisation of our economy. Think about 3D printers, think about robots, think about digital platforms like Uber and Airbnb and now it comes. The combination of disruptive citizens and disruptive technologies can mean an enormous boost, impetus, for the new economy and new society. So the total disruptive power that I see emerging from the combination of disruptive citizens that are using effectively disruptive technologies can be unprecedented.

To give you an example, there are now 500 energy cooperatives in the Netherlands producing their own sustainable energy. There used to be 10 or 20, 10 years ago. That's a kind of an explosion and you see that in many other domains as well and that's not typically Dutch, that's not typically European. You see that all over the place.

ELISABETH LOPEZ
Jan Rotmans, thanks very much for coming in.

JAN ROTMANS
My pleasure.

ELISABETH LOPEZ
Jan Rotmans is Professor of Transition Management at Erasmus University in the Netherlands and the author of the forthcoming book The Change of Eras. You can find relevant links to his work, research and publications on the Up Close website together with a full transcript of this and all our other podcasts. Up Close is a production of the University of Melbourne, Australia, created by Eric van Bemmel and Kelvin Param. This episode was recorded on 24 February 2016. Audio engineering by Gavin Nebauer. I'm Elisabeth Lopez, thanks for listening. I hope you can join us again soon. Bye for now.