As the public sector worldwide continues to struggle to solve economic, environmental and social challenges, the private sector is now being called upon to fill the gap. Yet this falls outside of the role that business has traditionally played. Instead, the private sector is just one of many stakeholders that must come together to solve society’s “wicked problems.”
Key to solving such problems is to engage all stakeholders, so they can contribute their unique capabilities and scale. To understand the role of the private sector in solving wicked problems, let’s first define wicked problems, who solves them and illustrate how the private sector is contributing to these solutions.
A wicked problem is one that is difficult or impossible to solve because it involves multiple elements that are often changing, or incomplete and contradictory. It cannot be readily fixed or solved, because there is usually no single solution. “Wicked” denotes its resistance to resolution. It is also essential to note that “wickedness” is not just an issue of degree of difficulty but instead is the result of numerous causes. One wicked problem tends to become entangled with others.
Wicked problems can be defined as:
- Difficult to clearly define
- Socially complex
- Characterized by chronic policy failure
- Having many interdependencies. Often multi-causal
- Unstable, with no clear solution, and socially complex
- Having no clear solution
- Involving changing behavior by the stakeholders involved
Wicked problems hardly ever sit conveniently within the responsibility of any one organization. And attempts to solve them often lead to unforeseen consequences.
Who solves wicked problems?
The question of who solves wicked problems is illustrated in Figure 1 (adapted from XGENESIS).
Different kinds of organizations have different relative strengths. For example, entrepreneurs have speed and focus but not size and scale, while the public sector has size and scale but less speed and focus. All other stakeholders sit between these two extremes. Business, depending on the sector and company strategy and culture, can be a bridge between the entrepreneurial and public sector. Multinationals can have size and scale (think: Microsoft) but also speed and focus (such as AB InBev and its 100 + Accelerator program).
The role of the private sector
The private sector thus has a critical role to play in solving wicked problems because it is capable of engaging with both entrepreneurs and the public sector. Many companies also have the benefits of global reach, critical skills in marketing and communications and in many cases success in nurturing and scaling innovations. The private sector has also demonstrated the ability to partner with NGOs, occasionally, in solving environmental and social problems. A nimble large company can sometimes also work across industry sectors.
However, not all private sector companies or sectors appreciate their unique role and opportunity to contribute here. Corporate sustainability programs help give an understanding of a company’s actual commitment to engage in solving environmental and social problems. The private sector over the past couple of decades has begun to focus on sustainability initiatives (sometimes referred to as corporate social responsibility, corporate responsibility, or environmental, social and governance (ESG). But the investment in, and effectiveness of, such sustainability programs varies. Sometimes it is strategic and aligns closely with business strategy. Other times it is more of a “check the box” effort intended primarily for external reporting and image efforts.
As a concept, sustainability started slowly back in the 1970s, based on the idea of a “social contract” – that businesses have an obligation to serve the needs of society. Certain businesses have been attempting to operate based upon such a social contract mindset ever since Andrew Carnegie published “The Gospel of Wealth” in 1889. In recent years, a surge of sustainability reporting has often been more rhetoric than action. Companies have generally not been truly transparent with stakeholders about their efforts. Moreover, even 131 years after “The Gospel of Wealth” was published, many companies still don’t publicly report on their social and environmental impacts.
The early days of sustainability reporting were dominated by glossy reports about corporate beliefs and actions. But that is no longer enough. The question now is whether companies are really engaged in working to solve “wicked” environmental and social sustainability challenges.
A need (and demand) for transparent reporting and business accountability
Today customers, consumers, investors, supply chain partners and indeed anyone with a social media account want proof, and verification. Now there is a growing consensus that the private sector needs to be actively engaged in solving environmental and social issues.
Some companies are actively engaged as a key stakeholder in solving wicked sustainability problems that go well beyond traditional approaches. They are leveraging their unique capabilities and scale to drive new initiatives to solve wicked water and climate problems.
For example, AB InBev is a leader in sustainability issues such as agriculture, packaging, climate change and water. However, the company goes well beyond such leadership. It launched the 100 + Accelerator program to identify, invest in and scale solutions. The unique platform has accelerated the scaling of the company’s impact. It engages with entrepreneurs and provides funding, mentoring and the opportunity to pilot their technology ideas.
Another example is Microsoft with its $1 billion climate fund, AI for Earth program and investment in the Emerald Water Venture Fund. It has the advantage of closely aligning its core technology offerings (i.e., Artificial Intelligence capabilities) with such initiatives. However, it is also leveraging its scale and balance sheet to actively invest in climate and water solutions. While there are clear benefits to Microsoft’s brand and image, the real value is in delivering solutions at greater speed that what might otherwise be possible. Too many other companies just set targets to reduce their energy and water use and carbon emissions. Good, but not wickedly good.
We need to separate the signal from the noise – not all corporate sustainability programs have measurable societal impact. But many of the problems the world faces are grave, and society demands business step up. Companies are going to have to be essential stakeholders if we are ever going to solve our most wicked problems.