By Professor Owen Skae, Director: Rhodes Business School

There are two young fish swimming along when they meet an older fish swimming the other way. The older fish nods and asks, “Good morning. How’s the water?” The young fish swim on for a while until one turns to the other and asks, “What the hell is water?”

The novelist David Foster Wallace used this parable to illustrate a simple but profound truth: the most important and pervasive realities are often the hardest to see because they form the background conditions of our lives.

For modern civilisation, energy and the cooperation required to harness it have long been that invisible “water”. Since the Industrial Revolution, societies have operated within a rare period of expanding energy abundance that has enabled extraordinary economic growth, technological progress, and improvements in human well-being. Yet many of the crises that define our age suggest that the conditions sustaining that progress are shifting.

From geopolitical instability in the Middle East and the systemic risks associated with climate change, to the disruptive acceleration of artificial intelligence and the rapid spread of misinformation through social media, our world increasingly feels as though it is under strain.

These challenges are often treated as separate problems, but they may be symptoms of a deeper issue: the difficulty of sustaining large-scale cooperation in an increasingly complex and resource-constrained world.

At its core, the challenge is institutional. As the biologist Edward O. Wilson famously observed, “We have created a Star Wars civilization with Stone Age emotions, medieval institutions, and godlike technology.”

Our technological capabilities have advanced dramatically, but many of the institutions that govern our societies remain rooted in structures designed for a different era.

Research in cultural evolution offers insight into why this mismatch matters. The economist and evolutionary theorist Michael Muthukrishna argues that human prosperity is built on our unique ability to cooperate at scale through shared norms, institutions, and culture. However, institutional reforms that fail to consider these dynamics can unintentionally undermine cooperation. In societies where corruption is widespread, for example, transparency initiatives can sometimes backfire by revealing that norm violations are common, thereby reinforcing the perception that “everyone else is doing it.”

Such dynamics illustrate a broader pattern: poorly designed interventions can worsen the very problems they seek to solve.

Ecologists offer a vivid analogy. In 1935, cane toads were introduced into Australia to control agricultural pests. Instead, the invasive species spread rapidly and destabilised local ecosystems. Many policy responses risk creating similar unintended consequences when they treat complex systems with simplistic solutions.

If governance systems are to remain effective in an era of heightened complexity, they must evolve to sustain cooperation across wider networks of stakeholders.

One useful framework comes from the legal scholars Margaret Blair and Lynn Stout, who developed Team Production Theory in the field of corporate governance. Their work challenges the idea that a corporation is merely a “nexus of contracts” serving shareholders. Instead, they argue that firms are best understood as collaborative enterprises in which employees, managers, investors, and other contributors make firm-specific investments that collectively create value.

Within this framework, the board of directors functions as a mediating hierarchy. Its responsibility is not to privilege one stakeholder group over another, but to balance competing claims in ways that sustain the long-term viability of the organisation as a whole.

Extending this logic beyond the firm offers a useful lens for thinking about governance more broadly.

In an increasingly interconnected world, governments must increasingly operate as mediating hierarchies for society itself by balancing the interests of present citizens, future generations, and the ecological systems upon which all economic activity ultimately depends.

Seen this way, good governance is fundamentally about sustaining cooperation at scale. As Muthukrishna notes, corruption is not simply the absence of cooperation; it is cooperation that operates at too small a scale, within families, factions, or patronage networks without any sense of consequence for society as a whole.

Addressing this challenge requires more than institutional reform; it requires a shift in mindset. The leadership thinker Simon Sinek draws on the philosopher James P. Carse to distinguish between finite and infinite games. Finite games have fixed rules, clear competitors, and definitive winners. Infinite games, by contrast, have evolving rules and no final victory. Their purpose is simply to keep the game in play.

Many of today’s defining challenges, climate change, technological disruption, and geopolitical stability, are infinite games. They cannot be “won” in any final sense. They can only be managed through sustained cooperation, adaptation, and institutional learning.

Problems arise when leaders approach these challenges with a finite mindset. When institutions focus narrowly on short-term victories such as quarterly earnings, electoral cycles, or geopolitical advantage, they risk undermining the trust, cooperation, and innovation required to sustain long-term progress.

This insight has important implications for leadership education.

At Rhodes Business School, we emphasise the need for leaders who can think systemically about value creation in complex environments. Our 4E framework, Economy, Equity, Ethics, and Ecology recognises that economic systems cannot be separated from the social and environmental contexts in which they operate.

Energy systems illustrate this interdependence clearly. Energy researcher Charles Hall has shown that economic growth is closely linked to the availability of surplus energy. Expanding the technological frontier through advances in energy generation and efficiency remains essential to sustaining prosperity. But technological solutions alone are insufficient. Without institutions capable of coordinating large-scale cooperation, even abundant resources can be mismanaged or squandered.

Ethics and equity, therefore, remain central to governance. In periods of perceived scarcity, societies tend to retreat into smaller circles of trust, families, tribes, or political factions. Effective institutions must counteract this tendency by fostering inclusive systems that expand opportunities rather than concentrating them within narrow elites.

The King V Code of Corporate Governance recognises this reality through its emphasis on integrated thinking, which is the idea that organisations must understand the deep interdependencies between financial performance, social legitimacy, and environmental sustainability.

Ultimately, the challenge facing modern governance is not simply technical but civilisational.

Humanity possesses a periodic table of the elements, but, as Muthukrishna argues, we still lack a comparable framework for understanding how cultures, institutions, and incentives combine to sustain cooperation at scale.

The stakes are significant. Societies can respond to rising complexity by retreating into polarisation and short-term competition, allowing crises to compound and institutions to fragment. Or they can invest in governance systems capable of mediating competing interests while sustaining long-term collaboration.

The water around us is changing. The question is whether we recognise in time that it is water and that it is changing. Rather than waiting until the water freezes or disappears entirely, we must learn to see the systems that sustain our collective future and design institutions capable of keeping the game in play for generations to come.