Read Full Transcript

Welcome

Katherine Radeka (00:03):
Welcome to Accelerate Net Zero, the podcast dedicated to the acceleration of the technologies we need to address climate change. My name is Katherine Radeka, and I've been accelerating innovation for a long time in a number of different industries. And nowhere is that acceleration more important today than in the renewable energy, materials, food production, transportation, and other programs to limit carbon emissions so that we can stabilize our climate. So if you are working on these programs as a technologist, as a manager, as an investor, a public policymaker, an activist, or just a concerned citizen, then you have come to the right place to learn how we can eliminate obstacles and put more momentum into these programs so that they can begin delivering impact on carbon emissions sooner. And we can reach Net Zero faster.

Reflection

In this episode, I want to introduce a concept that I'm going to be talking about a lot, because it's proven to be very powerful for accelerating innovation, even though it's counter-intuitive. And that is the concept of the Last Responsible Moment. As you may imagine, we are past the Last Responsible Moment to address climate change.

We passed that moment sometime in the 1990s, probably if not earlier. And we certainly had passed it by the year 2010. Today in 2020, we are experiencing the effects of global warming and our hope is not to prevent it altogether. Our hope is to mitigate the damage and then establish a limit., so that global warming does not exceed an amount that is unsustainable for human society or for the Earth's ecosystems, to limit the damage. Because of that, we have a lot of people trying to do a lot of things.

There's tremendous pull. You see that in clean tech investor communities, you see that in all the actions that countries around the world are taking to hit the targets they've set for themselves as part of the Paris agreement. We all have heard that we have to cut our emissions in half as a planet by the year 2030, and that we have to achieve carbon neutrality by the year 2050. Companies like Amazon and Apple and Ikea have set even more aggressive goals for themselves. So with all of that, there's a tremendous amount of energy and pull to create solutions, to electrify transportation, to replace coal-fired power plants with renewable energy. And it goes on and on.

And with all of that, there's danger. And the danger is that all of this pull also creates a lot of urgency. And the thing that we think we have to do when we feel like there's a lot of urgency, is that we have to make decisions and run.

So I know that investors in this space are investing in a lot of different solutions in the hopes that some things turn out to be sustainable and scalable and make a big enough difference at a low enough cost that they can be widely accepted. And I know that governments are doing the same: they're funding a lot of different things, a lot of different initiatives in order to figure out which ones will actually make a difference. And pursuing multiple alternatives like this is definitely a good idea. I would not want to discourage that, but if I'm one of the people working inside one of those programs, and I want my program to be the one that is scalable, to be the one that does become fully adopted, then I might want to think about how I handle the decisions that I'm making in the fog of all this uncertainty.

Because here's what I know, and it is counter intuitive. And that is that there are decisions that innovation teams take in very early development, that they are highly likely to regret later because they don't have a lot of information. They may not have very good knowledge to use to make their decision. They may be guessing, and they may be working in a very dynamic environment where the conditions are changing so fast. It's hard to know what the right decision will be by the time the product is ready to reach the market or by the time the solution is ready to be implemented. And for that reason, these decisions that they make early on can make them feel like they're making a lot of progress. But the reality is they're sending time bombs for themselves that are likely to go off when they're trying to demonstrate that they can scale or when they're trying to achieve consumer acceptance so that they can drive costs down.

And these are the kinds of questions that the teams that I work with learn how to handle a little differently. The Last Responsible Moment is the last point in time, when you can make a decision without impacting anything that happens downstream of that decision. So if you're ordering parts, for example, to make a full system prototype so that you can demonstrate that the technology works, your Last Responsible Moment for ordering those parts is determined by how long it's going to take you to get them up to that point. You don't really need to know what your components will be. There may be a Last Responsible Moment for figuring out where you're going to do a market test: when you need to figure out and actually start shipping the units, or do the prep work, right? Do whatever you have to do on the ground.

But prior to that, you don't really need to know. You certainly don't need to know a year out where you're going to do a market test, if you're not even going to start working on the market test for nine more months. In the meantime, you know, a better market may have, it may emerge as the obvious place to do the market test. So I coach the teams that I work with to identify a particular kind of decision that benefits greatly from being made at the Last Responsible Moment. And those are decisions with a lot of fog of uncertainty around them — decisions where if the team was forced to guess they'd probably be wrong just because they don't have the knowledge they need, or maybe the knowledge they need doesn't exist yet. Especially decisions in that fog of uncertainty that have a high cost of change, that will be very difficult to change later when they start moving into the execution phase, when they start having to prove that it not just can make one of them, but that they can actually scale it so that it can achieve broader adoption.

Those high impact, high unknowns decisions are the ones that really benefit from being made at the Last Responsible Moment. Now I admit this is challenging. It's challenging because it feels good to close loops. And some of us, especially those of us who are very smart, have a really hard time, sometimes leaving things open and it feels like procrastinating. It feels like not making progress, but the reality is if you make a decision and you are guessing, then you are taking on a lot of risks, that decision is wrong. And while there are times when it's appropriate to take on that risk, why would you take it on if you didn't have to? And the appropriate time to take on the risk for high-impact high-unknown decision is when you are at the Last Responsible Moment and you cannot delay making it any longer.

To place this in the context of climate change: We have a lot of things that people are trying to bring to market, that people are trying to scale, that people are trying to implement and adopt as rapidly as possible to accelerate the transition to renewable energy and green transportation and on and on. Within those initiatives, though, there are specific programs that have specific objectives and specific timescales. And within those programs, the concept of theLast Responsible Moment can help ensure that those programs actually deliver what they intend to deliver on the time that they expect to deliver it.

Because here's what I know after many years of observing innovation teams that are trying to operate in this fog of uncertainty. If I have a major decision, a decision with high cost of change, and I am forced to guess too early, I am almost certainly going to be wrong. And when I do get to the end and I uncover that I'm wrong by then it may be too late, or it may be very expensive, or it may cost me months of time to fix.

So by calling it out and saying, okay, yeah, this is one of those high impact, high unknown decisions. We're going to make that decision at the Last Responsible Moment. What I have done is I have given myself a much better visibility into what's actually happening with my program, because I know that this is an open question. I know that the information that I need to make that decision with confidence does not exist yet, or I don't have it yet. I have given myself time to learn and I have given myself time for a dynamic situation to evolve so that when I do make that decision, I'll be able to make it with greater confidence and less risk.

So what does this mean for me as say the CEO of a startup that is trying to introduce a new kind of battery technology to the market? I probably have a lot of high-impact high-unknown decisions, maybe around things like, where am I going to manufacture it or who will be my primary marketing partners? And what we want to do is we want to say, okay, when do I need to know this decision? When do I REALLY need to make this decision and keep it open?

Now, if I'm an investor or I'm a public policymaker, I sometimes do things to encourage teams, to make decisions earlier than they really need to without realizing it. And so I'm going to want to be more mindful of that. Then when a person comes to me from one of the programs I'm investing in and says, well, we don't know that yet because we don't think we need to know that until this time. This is the Last Responsible Moment and we want to preserve flexibility by deferring that decision until we really need to make it.

That should be the sign that you are dealing with a team that is very smart and very wise about how they are developing their innovation, because they are recognizing that this is an area that they either don't know, or an area that is evolving very rapidly. And that therefore they're going to be better off allowing more time for that decision instead of rushing through it, just because they're trying to meet some artificial deadline that you may have set for them.

So no matter where you are in the ecosystem of people working to address climate change, think about high impact, high unknown decisions you're facing, and then ask yourself, what do I really need to make that decision?

For myself personally, we are in the process of figuring out how we are going to add solar energy to our roof, but we also know it won't be until next summer before we do it. So that means that we just need to figure out how much lead time we need to have. And in the meantime, we're going to spend time learning, talking to people that have solar systems, figuring out what the best options might be for our area, learning what we'll need to know as homeowners about the systems. So that when we are at the last responsible moment to make that choice, we will be able to make a much more informed choice that represents not just the fact that we are a lot more knowledgeable, but also the fact that even in that short period of time, the solar energy market will have evolved to some degree.

This is how the concept of the Last Responsible Moment can help Accelerate Net Zero by encouraging teams that are working on these critical technologies and business models and other innovations to make their high impact high unknown decisions when they really need to make them so that they can make them with the best available knowledge.

My experience shows that when teams do this, they are able to get their ideas to market faster because they are not having to rework earlier decisions that are difficult to change. Every innovation program faces tremendous pressure to deliver results quickly, to demonstrate the value of their idea.

A

nd if anything, the technologies we need to address climate change face these pressures worse than the typical innovation team because of the urgency, which is why it's even more important for those of us in a position to help these teams as leaders and managers, as investors, as policymakers, that we ensure that we do everything we can to encourage these teams, to make their high impact high unknown decisions at the Last Responsible Moment so that they are more likely to be successful. And we are more likely to get what we need. These programs are set up to Accelerate Net Zero.

Sponsorship

Thank you for listening to Accelerate Net Zero. For resources, transcripts, and additional information about this project. Please visit our website, https://acceleratenetzero.com. The Accelerate Net Zero project is sponsored by the Rapid Learning Cycles Institute. We help innovators change the world — faster. To learn more about the rapid learning cycles framework, and how it can help you accelerate innovation, visit https://rapidlearningcycles.com.

The Last Responsible Moment is a powerful practice for improving decision-making in the fog of uncertainty.

We are clearly past the Last Responsible Moment to address climate change. We needed these solutions yesterday. For everyone working in any number of areas that will contribute to lowering greenhouse gas emissions, the urgency and pressure to deliver quickly is enormous.

But this introduces increased risk of rushing into our most important decisions without the knowledge needed to make good decisions. The concept of the Last Responsible Moment can help teams make decisions at the right time, giving themselves more time to learn, and allowing time for a dynamic situation to evolve. They’ll make decisions closer in time to when those decisions need to be executed, which makes them much more likely to make the right decision.

This is one secret to accelerating innovation: reducing risk by giving yourself just a little — but not infinitely — more time.

In this reflection, I’ll share my thoughts on how to apply the Last Responsible Moment when the world needed your solutions yesterday.