Article
Evolutesix
18 w
Are you investing in bonsai trees or in a forest?
Why don't we have time? Why do we have a degenerative, not a regenerative economy? And why is the climate, biosphere, everything still degenerating despite the best efforts of brilliant people for more than fifty years?
Imagine a company as a tree. You can place it in a pot where its survival depends entirely on its own ability to absorb only the nutrients in the pot.
Or you can plant it in a forest. Its roots will spread and become part of an ecosystem of other trees, mycelia, and animals, where nutrients are transported between all the plants of the forest.
Doesn't our investment and business world look a bit like many fragile bonsai trees, each in their own pot?
And maybe the breakthrough investors have been looking for, to get the outcomes we need in the time we have left, lies in those insights.
Read on for the first interview of a series of five Carsten Terp of Impact Insider had with me in the first half of 2024.
The way our business world looks today is like millions of trees, each in their own pot. We bet too much on independent individual business, when in fact we should be nurturing and caring for the forests – especially if we want companies that create impact.
Because impact is best and most effectively created in forests – collaborative ecosystems.
Graham Boyd, author of the book “The Ergodic Investor and Entrepreneur”, believes so.
He argues for a confrontation with the mainstream economy that defines our social thinking. And he believes we must rethink the way we build and invest in companies if we really want to create a balanced world.
Fifteen years ago, Graham Boyd left a management job at Procter & Gamble and embarked on a mission to create a more regenerative economy. The drive was a question that kept buzzing in his head.
Why are we making so little progress?
“I am in a company whose purpose is to improve the lives of the world’s consumers. And I am surrounded by passionate colleagues who understand the importance of polycrises and climate change. Why is it that we are making so little progress in staying within the planetary boundaries?” says Graham Boyd, adding:
“It doesn’t help that we take a step forward if we simultaneously slide ten steps backwards down a slippery slope.”
Graham Boyd’s own answer to the question that drove him like a mare is that our economic thinking is flawed.
“We have to build an economy that creates conditions for life. Why is it so difficult for us? After all, nature has done it successfully for 3.7 billion years” he says.
We need to do something different than what we usually do, explains Graham Boyd, and exemplifies it with a bluebottle fly that tries to get out into the open, but again and again bangs its head against the window glass.
“The fly does not understand that it will not get anywhere, no matter how much force it puts into its efforts. It needs to understand that the way out requires it to grab the handle, turn it and pull to open the window. Not push harder,” says Graham Boyd:
“For 15 years I’ve been thinking about what kind of windows we humans keep banging our heads into and never get through.”
Graham Boyd professes an economic direction that goes by the name of ergodicity economics. He has a Ph.D. in particle physics, and that is also where the term comes from, and his experience in ergodic thinking began 35 years ago.
Ergodic economics makes clear certain limits in applicability of mainstream economics, which defines our social thinking and so governs the way we create and invest in companies.
This week, Graham Boyd explains what ergodicity economics is all about, and why he believes it provides some of the answers he – and many of us – seeks. Later we will move around the economic forest and explore its secrets. For the full interview watch the video below or here.
graham1_subsburned-mp4
https://videopress.com/v/kmKfI00h
The solid lines in this comparison show the difference between bonsai and forest investing. Over a 10 year investment the dashed lines show a portfolio of (bonsai) companies; and the solid lines, the same companies, but invested in as an entire ergodic ecosystem (forest).
How you can get healthy reurns on your investments and hit your impact objectives without compromise by shift from portfolio to ergodic ecosystem investing strategies.
Imagine how much more impact we can have, how much less time we need, if all climate, impact, etc. investments are done using ergodic, not portfolio, investing?
If you are an investor and want to know more, contact us at Evolutesix or take a look at our investor offerings. And read all about it in my recent book The Ergodic Investor and Entrepreneur.
You can write to Carsten at carsten@impactinsider.dk
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11 w
Embracing a forest mentality in investing could unlock new pathways for sustainability and impact
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18 w
Fascinating simile, I am looking forward to learning more about the details of how an ergodic economy works!
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18 w
This is really interesting is it similar to the doughnut economy theory?
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18 w
@lucinda_ramsay I would say it's complementary... We focus more on the "How" i.e Our legal company incorporation (the FairShares Commons) builds companies that are designed to create and operate as ergodic ecosystems of regeneration of all capitals (natural, financial, intellectual, human and social). This is what I got from chatgpt and it sums it up quite well : Common Ground: Sustainability and Fairness: All three models value ecological sustainability and fairness in resource distribution. Inclusive Participation: Each framework advocates for broader participation in decision-making and resource distribution, though they differ in scope and scale. Systemic View: All these models recognize the interconnectedness of various actors—whether it be people, ecosystems, or companies. Key Differences: Scale: Doughnut Economics is a macroeconomic model that operates at the level of nations and global economies. In contrast, FairShares and Ergodic Ecosystems focus more on organizations or interconnected networks of companies and communities. Ownership: The FairShares model emphasizes shared ownership and governance within companies, while Doughnut Economics doesn’t specify ownership structures. Ergodic ecosystems extend this into fractional pooling and long-term stability at an interconnected ecosystem level. Time Horizon: Ergodic ecosystems have a strong focus on long-term stability, while Doughnut Economics and FairShares have a broader focus on sustainability and equity. In conclusion, Doughnut Economic Theory provides a framework for sustainable economies, while FairShares Commons Company Design and Ergodic Ecosystems offer practical business models and ecosystem designs that can operate within or complement the Doughnut's principles. Both FairShares and Ergodic models prioritize equity, shared governance, and profit distribution but operate at a more local or organizational level, often focusing on interconnected systems of institutions that are capable of actually building the new economy.