Is Climate Tech eating the world? Observing the anthology of software’s success to drive a "climate proof future".
In 2011, Marc Andreesen shared the prescient statement “software is eating the world”. Now, Climate Tech is reshaping how we live with hardware & sustainability. Are we going through the same process?
Darryl Dickens, category design strategist argues that climate tech has the ability to drastically change how we live, as much as what we observed with software in the past decades and maybe beyond.
It was a prescient statement in 2011 that “software is eating the world” by Marc Andreesen.
The appetite for software has continued unabated since then and has become the overwhelming focus of business spend and growth. It is intrinsic to any and all initiatives in enterprises, startups, governments, or militaries.
If you break down how and why software ate the world, there are some inevitable conclusions, and also guide us on the next big “feast” that will occur across our economies.
On Software Tech 👾
Intrinsic and participatory
Software is not a nice enhancement to have: it is at the guts of any business and its processes. Similarly, on the consumer side, it is part of our daily lives. Consider your most critical connectivity/comms/social device – your smartphone – now considered “90 percent software and 10 percent hardware”.
Software is so intrinsic to the business and our daily lives that IT as a function has largely become a custodian. The IT leadership in most companies maintains the network and core infrastructure, but gone are the days of IT dictating what specific applications and software Marketing, Sales, Product Engineering, or Strategy and Planning use.
Business units and functions decide on what supporting software they need to execute and compete. The software thus became not only intrinsic to the business but “participatory” across the entire organization. Everybody uses common infrastructure and apps and then utilizes specific software at their functional level. Software, quite simply, is everywhere and at the heart of any company and its activities.
And Climate Tech — defined as net zero cities; clear air/carbon capture; low carbon mobility; recycling/circular resources; clean energy, and efficiency — will follow an adoption even rivalling that of software!
Valuation and measurement
The ubiquity of software has been significantly driven by the explicit value that it drives for the business and its measurement. We no longer think of monolithic, standalone apps such as ERP and years-long estimates of bottom-line impact. It is now a continuous alignment between the company business unit’s end goals and the software-based initiative.
What business impact and outcomes will the software drive? What is the cost of delay if we don’t invest?
Thus “valuation” of what software delivers is a clear and recognized process across organizations. It guides us on how and where to invest and what to expect regarding impact. And because it is now integral to companies and their ability to execute, it is a key competitive driver and differentiator.
Process and Integration
The ability to implement, consume, and maintain software became more and more efficient over time. It evolved from “programs” and monolithic systems to the building of apps that live on the edge and interact with distributed systems. Software development and implementation moved through phases such as “Agile” and “scrum” and eventually concepts such as “DevOps”.
These modular, faster methods meant clearer processes for how to build and deliver software. And any software necessarily interacts and integrates into existing processes and applications. It is interoperable and delivered across an incredibly rich ecosystem, interacting with components such as IoT and big data. This maturation around the process and delivery of software has made it the greatest source of startups, wealth creation, and new categories that we have seen in the history of business.
And these are key learnings that we can apply to how and why Climate Tech will evolve and be adopted across the business and our daily lives.
On Climate Tech 🌏
“Great leaders know that under the turmoil of chaos and change, there is a beauty of patterns and designs.”
Let’s start with intrinsic and participatory, the first major factor in “software eating the world”.
From a Climate Tech perspective, the adoption and impact will be felt across:
Candidates and new recruits will increasingly push the recruiter/employer on the company’s sustainability agenda and results. This is accelerating as pressure as demographic groups such as GenZ are very focused and vocal on this.
Employee Engagement is a key issue (e.g. quiet quitting, great resignation) and has a bottom-line financial impact. Ample research and findings validate that Engagement is improved with a sense that the company is actively “doing good” and has a common purpose.
Business unit and management
Business units and line management are pressured to deliver continual efficiencies and improved performance. Technologies such as Process Mining not only uncover inefficient processes but also have implications for carbon reduction or green and more efficient mobility.
These “wins” at the business unit level can be rolled up into the broader corporate sustainability progress, with a positive impact, therefore, on business unit performance and recognition.
ESG has now become a common component of overall corporate planning, execution, and communications. And while it is a useful early-stage framework for sustainable growth targets (carbon footprint metrics, diversity, and inclusion), it is still evolving and lacks standardization.
New models and metrics will evolve with the top leadership acutely concerned and involved in understanding how to execute with a cleaner/greener footprint, as well as communicate internally/externally around its efforts.
Whether current or potential, investors are keenly sensitive to the sustainability and Climate Tech positioning of the company. This focus and expectation will only continue to grow and pressure the adoption of Climate Tech across companies.
Climate Tech will be inexorably driven across the company and, like software, become intrinsic to operations.
Valuation and measurement
The massive, continual software adoption was driven by an ever-clearer ability to define its value. With valuation and metrics, clear decisions around trade-offs, bottom-line impact, and investment can be made. Execution and implementation lead to results, which are communicated, and the cycle goes on.
Is Climate Tech here yet? No. But think about how software evolved, clear processes, metrics, and Categories emerged, and the massive economics that was driven.
To look at potential drivers around new ways of modeling and valuation, consider two leading areas of thought: Dasgupta and Doughnuts.
Partha Dasgupta’s ground-breaking work focuses on the real valuation of what we consume. For example, what is the true cost of the power we consume? Or the full impact and cost of a consumer good we use? There is huge momentum around this new microeconomic thinking and models.
It will be the industry’s true Innovators and Category Designers who take on and solve this problem in terms of modeling, process, and technology enablers. Climate Tech will be valued in the context of the resources used and impacted.
In parallel, the concept of the traditional circular-flow diagram of an economy and GDP is being challenged. Historical mapping of resource and transaction flow does not capture the energy or the materials on which the economy depends, nor the society in which those activities develop.
A new macroeconomic approach gaining traction is the “doughnut economy”, where thinking and a visual framework for sustainable development are presented – shaped like a doughnut– combining the concept of planetary resources and thus a boundary in which we must operate and live.
In either of the above new ways of thinking, we have the ecosystem around us and the need to rethink the valuation of resources and the full impact we are making. Innovators and creators in Climate Tech who define these new models will unleash tremendous new wealth, technologies, and Category Leadership.
Process and Integration
The delivery models and enterprise-wide integration associated with the software must also mature and manifest for Climate Tech. These initiatives must be interoperable with other company systems and seamlessly feed into the company’s data, tracking, and reporting.
Innovations and technologies such as Process Mining which uncover inefficiencies (and the opportunity to lower carbon footprint) are examples of how Climate Tech can be adopted and accelerated. But this is only the tip of the iceberg.
Because of the magnitude of the problem (and financial upside), innovators and creators will make Climate Tech easier and easier to adopt and measure. There will be new Categories that emerge around this problem-solving.
And history shows that the ones who design the Categories are usually the ones who end up leading them!
“Our economies are embedded within nature, not external to it.”
Internal efficiencies have driven the software and have become integral to the “guts” of a company.
Climate Tech is driven from the opposite direction – the outside in. We only need to look around or read the news to understand how big this will be. So let’s learn from history and create legendary new companies and Categories in the Climate Tech space!
If you are a climate tech founder seeking funding, apply here to the climate tech coalition, gathering 27 climate VCs and CVCs, and get a chance to receive a free membership if qualified.