Ecosystems of the Future

No one organisation, leader or solution will make the changes we need, only cooperative interaction.

Annette Liias and Iana Samotolkova interview Iiro Jussila 
Supervisory Board Member of Citizen Network Osk, Partner in Skillmotor Finland Ltd
 and Professor at LUT University.

Citizen Network Cooperative will provide training, coaching and consultancy on ecosystem working, portfolios and their management in the future. This is one of the ways in which the cooperative will support the positive development of the social and health sector.

We asked Professor Iiro Jussila, who is familiar with ecosystems and portfolios from many different perspectives, for an interview on the subject. Jussila works on the topic at Skillmotor Finland Oy, coaching limited liability companies, cooperatives, associations and foundations on strategy, management, and business issues. Through his Capital Six investment company, Jussila also has an insight into the world of finance and investment, where portfolios have long been discussed and where ecosystem thinking is making strong inroads. 

This interview is connected to the HyvinvointiAgora - WellbeingAgora events, where Iiro will be speaking on this topic.

In his work at LUT University, Professor Jussila specialises in systemic change. He wanted to start the interview by drawing attention to the big picture of economic and social change, which he has been actively discussing in different arenas for a couple of decades.  He asserts: “We are moving away from thinking in terms of individual organisations, with an emphasis on separation and competition, to thinking in terms of networks, integration and cooperation between different actors.” This change was foreseeable a long time ago, but it is now becoming increasingly evident. As Jussila sums up:

“To create a better future, we need cooperation and the use of different resources - all good things come from cooperation.”

Portfolio - it's all about good management

A change of mindset is also underway in the investment industry. According to traditional portfolio thinking, different pools of financial capital contain different types of separate investments. The potential synergies between them have typically not been considered or exploited. In general, a poor understanding of the actual situation and prospects of the investments has necessitated diversification to manage risk.

Now the importance of cooperation is also beginning to be understood in the world of finance and investment. Ecosystem-based investing not only takes into account the interactions and interdependencies between companies and other organisations, but also actively shapes companies to work as a network to achieve economic, social, environmental and climate goals. An understanding of the whole ecosystem and the potential returns of its components, as well as the opportunity to influence, also reduces the need for diversification to reduce risk. 

Iiro Jussila wonders to what extent it is even worth talking about a portfolio if synergies are to be emphasised. "The origin of the word 'portfolio' brings to mind a portfolio of documents that have been classified separately from each other". But he says that identifying and classifying different types of investments is useful. You just must understand that portfolio management must consider how the components are used effectively together. At the same time, Jussila also points out that the word portfolio is also used in other contexts than investment, such as innovation and human resource management.

“The R&D portfolio refers to the collection of research and development projects that are currently underway in a company. In a company that manages its R&D portfolio well, based on a good strategy, the various projects work together and move towards common goals and objectives. Portfolio management ensures both short-term commercial success and the development of a longer-term competitive advantage.”

The portfolio of competences, familiar from the HR management side, refers at the organizational level to the “knowledge, skills, attitudes and values of the whole work community.” The imprint of work is based on the interaction of these, not on a single element of the portfolio. Jussila finds an analogy with investment.

“It is not the course or degree certificate of an individual that matters, but how competence, learning and human growth are managed at the community level, supported by a strategy, that is essential for future success.” 

The same is true for the company as part of a broader picture. “An individual company, whatever its size, can fail quite quickly if it is not part of the right and well-managed ecosystem” says Jusilla.

Portfolio and ecosystem management - an important part of management

Professor Jussila has worked extensively with non-profits and wants to direct his message specifically to them and, at the same time, to the Citizen Network Cooperative. After all, the members of the network linked to the cooperative are mostly non-profits. It is no coincidence that Jussila's portfolio examples are not only on finance but also on innovation and human resource management, as Jussila says:

“Non-profits now need skills in all three of these areas.”

Firstly, the core missions of non-profit actors are intrinsically linked to social innovation. New structures and models of action are created to solve and innovate in order to prevent, for example, physical, psychological or social well-being problems that arise in the midst of major social upheavals and that cannot be solved by public action or the market. 

“Social innovations often take shape in interconnected research and development (R&D) projects, so the skill of managing an R&D portfolio and ecosystem is one of the basic elements of non-profit management.”

Secondly, the activities of an organisation can involve a wide range of human resources that are more or less under the formal control of the organisation. For example, the payroll of an association and its subsidiary may include a workforce subject to the employer's right of direction. Some on a more permanent basis, others as temporary project workers. In addition, partners from different organisations may be involved and, depending on the form of the partnership agreement, the link with the organisation may be more or less loose. In addition, non-profit activities often involve both natural and legal persons as members, who are not involved as employees or contractors, but contribute their skills to the common good in their free time and on a voluntary basis - without any obligations, working hours, formal duties, or remuneration. “The effectiveness of non-profits in preventing and eliminating certain social ills and promoting well-being is essentially based on their ability to bring together and combine different human resources and also to develop them as a whole, taking into account the changing environment in which they operate.” Therefore, the skill of managing a portfolio of human capital and an ecosystem is, according to Jussila, an essential part of non-profit management.

Thirdly, funding for the activities of organisations can come from many sources. As mentioned above, an organisation may have a subsidiary, which can in principle use all the general financial instruments of a limited company, from revenue funding to public development grants and from equity investments to bank loans. The association - whether or not it is the parent - can finance its own activities from the proceeds of its activities, from fund-raising, investment and financing activities and from general grants. These include a very wide range of possibilities which can be exploited within the limits of the rules and the conditions attached to the various types of financing. “The skill of managing an organisation's financial portfolio and funding ecosystem is therefore an important part of running a non-profit,” says Iiro Jussila.

Organisations and cooperatives as examples - or laggards?

According to Jussila, it is interesting that the ecosystem thinking that is spreading in finance is closely related to the traditional thinking and practices of the social economy. Ecosystems are built through dialogue between individuals, entrepreneurs, businesses, research institutions and public administrations. Non-profits and cooperatives have traditionally been the structures for generating and managing this multi-stakeholder dialogue and, to a certain extent, for organising the governance of the ecosystem that is formed. The idea is that, within and supported by the structure that is being created, the various resource holders pool their resources and engage in a broadly participatory (democratic) dialogue and expertise-appreciative negotiation that creates shared value.

Through a variety of hybrid structures involving private and public limited companies, non-profits and cooperatives have long since moved beyond their traditional roles and have innovatively sought new ways to operate and finance their activities in the face of social problems and market failures in a changing environment. At the same time, they have moved away from the world of charity and impact-oriented activities towards more traditional models that expect a return on invested capital. At the same time, the sustainability debate has moved limited liability companies towards values and objectives familiar to non-profits and cooperatives.

More recently, for example, the Roadmap for Sustainable Development in Finnish Finance, prepared by the consulting firm Gaia and its partners, highlights that the world of finance is currently shifting - and actively seeking to steer - towards climate, environmental and community change (impact) approaches - as outlined in the UN's Agenda 2030. These models fall somewhere between traditional profit-maximising activities and charity. Funding is traditional finance seeking a return on capital combined with different impact objectives - with varying expectations of return and impact. Funding can be targeted at the community in general or at a specific activity, such as a development programme, project, or financial product.

Democracy, leadership and ownership are needed

Jussila points out that non-profits and cooperatives are, for example, only in principle suitable tools for a green transition or for correcting democracy. It is by no means clear that they would emerge as winners in practice. However, organisations and cooperatives can play a role in tomorrow's economy by actively adopting the full range of human and financial resource mobilisation tools that are specific to them. They should capitalise on their strengths, as impact is now also of interest to venture capitalists. According to Jussila, it is worth asking what role organisations and cooperatives can play if investor-owned companies are dealing with social problems, market failures and environmental problems.

In the same breath, Jussila urges us to forget the idea that one model can solve all problems. In general, the traditional division of thinking into silos, such as public organisations, cooperatives, joint stock companies and organisations, must be overcome. “We need bridges between different models, to utilize our own specificities and to understand that diversity makes us stronger. In this way, people have more freedom and channels to influence and make choices. In this way, the ecosystems we build will also become stronger,” says Jussila.

In a world of ecosystems, the first task for every community and community leader is to identify the structure of their ecosystem and understand how its different parts can work together. At the same time, traditional boundaries like the organizational titles need to be crossed. You have to see beyond party lines and titles of people and always be able to bring to the table those whose contributions are relevant to the problem you are solving. The focus is then on delivering prosperity and everyone concerned must be heard. Not just those with a formal (e.g., official or educational) role in the solution.

Leadership is an attitude that is reflected in every daily choice. Leadership at the individual level is key to building ecosystems, as every action can be the first step towards greater impact.

Ecosystems don't emerge out of thin air - they are built through collaboration and the participation of individuals. They are like networks in which each individual is an important node. Leadership also means the ability to see the big picture, to understand the role of different parts and to make choices that support a common purpose. At the same time, it requires openness and a willingness to learn from others, as each of us can bring our own specific skills and insights to the table.

The ecosystems of the future will be built on leadership and collaboration between individuals. 

The Citizen Network Cooperative shows the way through ecosystem work and portfolio thinking, providing training, coaching and consulting. In this way, it supports the development of the social and health sector, while emphasising the importance of collaboration and multidisciplinarity.

You too can take the lead by choosing the right services, guiding your behaviour and your thinking. At the Wellbeing Agora we discuss how we can work together to promote wellbeing at both the individual and ecosystem levels.

But democracy does not mean that ownership and leadership do not matter. On the contrary, ecosystem functioning requires leadership, which can be demonstrated by those who assume responsibility and ownership. The right to own can only be achieved in the future by being able to create shared value and balance economic, social, environmental and climate objectives. This applies to all those who take on leadership or who, as owners, seek to steer ecosystems in a particular direction. 

Once the traditional boundary fences are broken down, the core ideas of different organization models are fair game and skilled ecosystem builders systematically exploit them without prejudice to create a winning ecosystem and solve the chosen problem in a sustainable way. As Jussila says:

“This is an opportunity for every player in the social economy, especially if you are open to cross-border cooperation.” 


The publisher is Citizen Network Research. Ecosystems of the Future © HyvinvointiAgora 2023.

Article | 28.10.23

community, mental health, nature & economics, Sustainability, Finland, Article

Iiro Jussila

Finland

Interim

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