The Emerging Science Of Market Catalytics

Formulating the secret sauces of tomorrow’s economies

Einstein didn’t much like quantum mechanics—and he was particularly disturbed by the notion of quantum entanglement, where separated particles remain connected over extraordinary distances. He famously described the phenomenon as “spooky action at a distance.” And every so often I am reminded of all this when thinking about the emerging discipline, maybe even science, of what Daniel Aronson calls “market catalytics.”

Ever since I worked with companies (including ICI) developing chemical catalysts from the late 1970s and with companies (including Novo Nordisk) working with biological catalysts, aka enzymes, from the late 1980s, I have been fascinated by catalysis. The central principle is that a reaction is accelerated by a catalyst, which itself remains unaffected.

It has been estimated that something like 85% of all manufactured products depend on some form of catalysis in their supply chain. The question that has been on my mind this year, as reported in the Rewilding Markets series of posts, is how we might apply similar approaches to the evolution of the markets that such products serve.

Leaders catalyze

Having known Aronson for many years, most recently as founder of Valutus, I have long been interested in his thinking. When it comes to businesses and markets, his definition of a catalyst is someone who influences change in places over which they don’t have control. A chief sustainability officer (CSO), for example, could help engineers create more sustainable products, even though the product development function reports to someone else.

Because of the cross-cutting nature of environmental and social issues, this is a particularly important skill for sustainability advocates. As Aronson puts it, “Sustainability leaders need to be catalysts—influencing others to increase their impact.”

Although he has been talking about catalytics for years, Aronson believes it’s particularly important now. This is because there a growing gulf between what sustainability advocates can control and the impact they seek.

“The to-do list for sustainability keeps getting longer,” he notes, “but there aren’t similar increases in resources or budget.” At the same time, governments and policy actions are slowing down or even going in reverse, leaving that “much more for others to do.”

Market catalyst: Daniel Aronson

The catalytic toolkit

For people wanting to operate in catalytic mode, Aronson identifies four different models, as follows:

1. Intentional, which he sees as the most used change mode. Here, you’re trying to get someone to decide to change something. “When a company tries to get employees to choose healthier food at lunch,” he explains, for example, “putting up posters encouraging them to choose healthier options,” it is being intentional.

2. Inertial, which involves changing the default choice, “such as when the cafeteria changes the size of the most popular cookie from 6 ounces to 5 ounces. Most people will continue to eat the same number of cookies (although they could buy more, they usually won’t). However, because the cookies are smaller, they will be eating less unhealthy food.”

3. Incidental, which is “when people consciously make the change you’re after, but for a different reason. An example is creating a grab-and-go section of the company cafeteria that has only low priced, healthy food. People who want to get their food more quickly or spend less on their lunch would then use the grab-and-go section, saving them time and money. They would also end up eating healthier food, but that wouldn’t be the reason they did it.”

4. Invisible, where “people don’t even realize that something has changed. Take a cafeteria that reworks a recipe so that it tastes the same but uses less fat, sugar, and salt. Employees order the same dish, and it tastes the same, but what they receive is healthier.”

Apple goes Invisible

Often the fourth of these is the most powerful, particularly at times when sustainability issues are contested. Ask Aronson to give an example of the ‘Invisible’ approach, and he points to Apple’s efforts to cut the energy consumption of the tens of millions of iPhones operating at any point in time.

As he notes: “There are about 150 million iPhones in use in the US. While they don’t use much electricity individually, total power used starts to add up.” So, “starting with iOS 16.1, Apple has tried lowering the carbon footprint of that electricity use. The iPhone’s ‘clean energy’ charging feature determines if the conditions are right and, if they are, it prioritizes charging when the electricity being produced is less carbon intensive.”

The clean energy feature only activates when the grid has a higher than usual carbon footprint, but where forecast is that the grid’s carbon intensity will decline before the owner unplugs his or her phone. The feature also “only kicks in when it looks like there’s plenty of time for the phone to charge to 100% on cleaner energy before it’s unplugged – such as when it’s plugged in overnight.”

To nudge the process along, Apple also now includes a grid emissions forecast in the Home app on many of its watches. At a glance, Aronson notes, “you can see how clean your energy supply is right now and when it’s likely to change (getting cleaner or dirtier). In fact, for many people it’s one of the default elements of their Apple watch face. (This is an example of the Inertial catalytic technique.)”

“At a time when a lot of government and corporate support for sustainability is in question (or in decline),” he says, “making it easier for individuals to take action is especially valuable.”

Six questions

To help me get a grip on Aronson’s thinking, I asked him six rapid-fire questions:

1. What does market catalysis mean in a soundbite?

A market catalyst changes the trajectory or direction of a market. For example, financing and incentives helped the US residential solar market grow 1200% in ten years. Then two very different examples from problematic sectors. The first cigarette company to admit causing cancer created a sea change in regulation and the market. And, second, BP’s then CEO stating in 1997 that fossil fuels caused climate change “sent shock waves through the industry and the American Petroleum Institute that represented it.”

2. What existing management disciplines/techniques does all this most closely relate to?

There's a connection to disciplines around change and leadership, though catalytics isn't the same as either. For example, leaders cause change even where they don't have control—such as, in the case of the Sustainable Apparel Coalition, across their industry.

3. What functions in relevant organizations are pushing this approach?

Catalytics is function-agnostic. Sustainability professionals use it when creating pre-competitive agreements within their industry and engineers use it when creating uniform standards as in the case of WiFi.

4. Things to watch out for, in terms of second order risks, etc.?

The catalytic toolkit is powerful—it can be used against you as well as by you. For example, when consumers were encouraged to pressure companies to act in line with their values, that led to pressure from both sides of many issues. But that doesn’t mean leaders shouldn’t use catalytic techniques—they’re essential if we’re going to make the changes we need in the time we have. It just means that, as with any tool, leaders need to be ready for how others might use it.

5. If you were running a session with a board or C-suite team, what key messages would you want to leave them with?

You have much more power than you think. You can create change even where you don't have control—and that's what your company and the world need you to do.

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What readers say:

“Thank you, John, for being our godfather, soothsayer, advocate, provocateur, and—ultimately—inspiration.”

HANNAH JONES, CEO, The Earthshot Prize