Integrated Thinking

The IIRC’s Integrated Thinking & Strategy Group has published a new model for integrated thinking and strategy.

The group is made up of over 50 organizations globally that came together to share thinking about developing strategy across multiple capitals, learn from world leaders and co-create a common view of integrated thinking that is globally relevant to help build resilient, future-fit businesses.

About integrated thinking

Integrated thinking is a multi-capital management approach that enables organizations to deliver their purpose to the benefit of their key stakeholders overtime. It is about creating and preserving value and enabling better decision-making based on interconnected, multi-capital information.

Model for integrated thinking

How should the management of modern business operate? Are there good practices we can learn from? Is there a goal managers should be aiming for when managing multiple resources beyond financial capital, including human, natural, intellectual, manufactured, and social and relationship capitals?

Some organizations have started to tie together new management practices based on a broader understanding of the resources they use and manage. To use the language defined in the International Integrated Reporting Framework, they are seeking to consider the creation of multi-capital value over the short, medium and long term. This multi-capital management approach is known as integrated thinking.

Rather than using a narrow focus on financial tools, today’s best performers are basing their business decisions on interconnected information across multiple capitals, including natural, social and relationship, human, manufactured and intellectual. Financial capital, it turns out, is just one capital of many.

About the report

The report, ‘Integrated Thinking & Strategy: State of Play Report’ has been developed by the participants of the integrated thinking and strategy group over two years. It introduces the concept of the ‘spring model’ for integrated thinking (page 12 of the report) that has been developed by the participants of the group as they embed integrated thinking within their own organizations, as well as sharing their individual case studies and approaches.

Integrated thinking is a concept that is still relatively new and constantly developing. As we continue to advance this work throughout 2020, we welcome your feedback on this report.

From string to spring

The IIRC and its partners have developed a new model to understand the power of integrated thinking: the spring model.

The model combines the 1970s economic theory of the string model, and the multi-capital approach to value creation: the IIRC’s six capitals framework, and its impacts, as captured in the <IR> Framework using the graphic below.

The first half of the graphic is a visual representation of the operating impact of a corporation. If we were to represent the Friedman model in these terms, we may imagine a single string – the string of financial capital – which acts as the resource a company uses, as well as the measure of its success. In a model with multiple inputs and multiple impacts, this value creation model serves us well.

In a world of integrated thinking, we don’t just want the individual strings – the capitals and their impacts – to be considered in isolation, we need them to be evaluated together. If we were to tie the strings together and show their changing impact over time, we could visualize the result as a spring (please see below).

Hear from the group’s Co-Chair, Tjeerd Krumpelman:

 

About the Integrated Thinking & Strategy Group

This group offers world-renowned and innovative organizations the opportunity to share thinking about developing strategy across multiple capitals, learn from world leaders and co-create a common view of integrated thinking that is globally relevant to help build resilient, future-fit businesses.

A diverse group of organizations have come together to lead the special interest group, including:

  • Association of International Certified Professional Accountants
  • Natural Capital Coalition
  • Said Business School, University of Oxford
  • The Prince’s Accounting for Sustainability
  • The World Bank

The Group is co-chaired by ABN Amro’s Tjeerd Krumpelman and the World Bank’s Zinga Venner.