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Opinion

”An enterprise ought to be able to thrive forever, if it chooses to. For if you do not plan for it, expect it to fail eventually.”

Four years ago I wrote a blog post called ’The 300 Year Business Plan’ where I elaborated on the concept of long term thinking in the world of business. Now, at the very intersection between 2020 and 2021, it’s more relevant than ever to re-iterate this line-of-thought.

We leave a strange year behind us, however I see this as a great opportunity for reflection and introspection, re-evaluating not only yourself and the way you live, but also how you act in business or in your professional life. I think we can all agree that 2020 provided us with a pause, a break from over-consumption, unnecessary traveling and requestioning the whole value chain.

I

Most business today thrive on short term perspectives when it comes to revenue, profit and product-cycles, constantly pushing customers or consumers to buy as much as possible, faster and more often. Many of us are also trapped in a system, where quarterly planning (and profits) are fundamental to run a business. Now, of course I’m not arguing against running a business for great return-on-investments, but how sustainable is it really to do it as fast as possible and at what cost to our society and natural resources?

Years after writing the blog post I still like to play with the idea that no business is worth while unless it can survive for at least three hundred years. When I used to believe that chasing unicorns and building long term business didn’t go hand-in-hand, I now think there’s beauty in trying to do both. I mean the point of conscious capitalism is to make the best out of the system we live in; you can still aim for maximum shareholder value, and in the same time provide the highest level of sustainability. What is then the next step?

Carol Sanford is an expert on business design and have helped many companies in adopting regenerative principles. Regenerative business are not only sustainable but also have a net-positive contribution and have full transparency on the interconnectedness between the business and the world in which they operate.  According to Sanford a regenerative system is autonomous in its structures and processes, keeping all individuals focused on their contribution to the whole – every single action should benefit the whole system for the better. One of the most effective ways of doing that is through designing products and services so that when they are made and used by stakeholders, good things happen in the world.

Or as Gideon Rosenblatt, expert on the relationship between technology and humans, puts it:

— One of the first steps to building regenerative business is rejecting the idea that your business is just a piece of property designed to maximize returns for your external shareholders. A regenerative business views profits as critical, but not as something to be extracted to boost dividends and share price. Profits are a vital source of fuel to sustain your mission and the full network of stakeholders who fuel it.

Rosenblatt defines business in four categories: A) The Shareholder-Centric View of Business, B) Mission-Centric Organisations, C) People-Centric Organisations and D) Regenerative Business.

II

There is complexity in managing a company, especially in the long term. In a Harvard Business Review article, authors Kim C. Horn and Joseph Pine II elaborate:

— Leaders today need a better approach. We need first to understand enterprises, along with the humanity and activities that make them up. And this understanding must be developed in light of (i) economic value creation — the primary function of a business enterprise — and (ii) accepting the challenge that an enterprise ought to be able to thrive forever, if it chooses to. (For if your enterprise does not plan on thriving forever, expect it to fail eventually.)

According to Horn and Pine, there are seven laws of regenerative enterprises, that supports longevity as well. These ”laws”  are part of solid framework and guidance for business leaders, providing they can answer the fundamental questions

1. The Law of Potential: Who creates value for the enterprise?

Only the enterprise that unleashes potential, through meeting its workers’ innate needs, induces human engagement to its fullest.

2. The Law of Meaning: Why do people come together to create value within the enterprise?

Only the enterprise that infuses meaning, through a shared purpose, effects alignment among fully engaged workers.

3. The Law of Creativity: Where does enteprise create value?

Only the enterprise that liberates creativity, through applying intuition and exercising free will, regularly discovers opportunities for surprising wealth-producing innovations.

4. The Law of Learning: How does the enterprise create value?

Only the enterprise that invigorates learning — through exploring, exploiting, and orchestrating — generates the knowledge necessary to persistently create new value among infinite possibilities.

5. The Law of Humanity: What value does enteprise create?

Only the enterprise that enriches humanity, through the knowledge embedded in its business activities, creates offerings of unquestionable economic value.

6. The Law of Vitality: When does enterprise create value?

Only the enterprise that attains vitality, through its incessant destructive recreation, produces the wealth necessary to survive.

7. The Law of Coherence: In What Ways do these aspects collectively create value?

Only the enterprise that sustains coherence in all its aspects, through ongoing orchestration, regenerates itself to thrive indefinitely.

III

Hopefully you are now even more convinced that running a sustainable, even regenerative, business is the way of the future. Now comes the hard part; how would you proceed in writing your own 300 year business plan? And why 300? Well, it’s not the exact number that is the key here, it’s going beyond quarterly or short-term business planning. This is by no means going against running an iterative, flexible business, on the contrary the way to survive in the long-term is by continuous re-invention and adaptation.

So to put it short: What kind of vision do you have for your company? What role in society does it play? What contributions to the evolution of our people’s and the planet’s wellbeing can it have? How are the innovation cycles renewing themselves over time, without impacting nature’s ecosystem? How can you protect the company from market threats, competition and regulations? And so forth.

It’s not an easy task, but intellectually one of the most stimulating activities you will set out to do as a business leader and manager. Good luck!

Categories
Opinion

”To be really innovative you must encourage the pursuit of imperfection”

Here are some reflections on impermanence and imperfection in business. Because, the way I see it, not being perfect, will be one of the key assets humans can bring to work-life.

A machine, or computer, operate according to very specific given tasks and commands, leaving no room for error or imperfection, unless the system is broken. When humans operate, there are a lot of different factors influencing the outcome; be it emotional state, physical wellbeing, mental capacity, social influences, expected financial results or to put it simply — just having a bad day.

We all know how unsettling it is to not being able to solve a task just because things did not feel right. However — more often than not — true radical creativity comes from the unplanned interconnection of various events, emotions, insights, discussions, reflections, and try-outs. That is the beauty of the human brain — it is just completely random and unpredictable sometimes, just like anything else that is part of nature.

Both machines and humans wear down and break after a while. Machines can, in theory, last forever if we have the right replacement parts, and humans last somewhere around 80+ years. In some ways, the notion of death actually pushes us to be even more creative since we have a final stop one day whether we want it or not. (And as someone said about living forever — it would be very dull at the end.)

As business leaders increasingly are pressured by shareholder expectations and competition, they look for finding ways of optimizing operations. In many ways, businesses are still run as they were in the 19th century at the height of the industrial revolution, with some business leaders viewing the workforce as some kind of human machine.

So what is perfection? The notion of perfection has existed for millennia and more, but it wasn’t until Newton and the aforementioned industrial revolution its modern incarnation was born. There is a clear difference between a product coming out of the factory and something constructed in our heads. In the digital domain, we can see that innovations and services are developed somewhere in-between on this scale. Digital solutions are usually relatively free-floating, ever-changing entities.

The agile approach that has been so popular in the last couple of years, developing something in endless iterations, testing, learning, and striving for stripping away the bugs as much as possible, works well in the software industry or in developing services. This way-of-working is very much aligned to never accepting the status quo, constantly pushing for new solutions, and learn along the way. Lean and other management systems from the East has contributed to spreading this way of viewing the world.

I’m a big fan of the Japanese philosophy on impermanence — Wabi-Sabi. It’s a world view centered on the acceptance of transcience and imperfection. The concepts derived from the Buddhist teaching of the three marks of existence; impermanence, suffering, and emptiness, or absence of self-nature. Wabi-Sabi is about asymmetry, roughness, simplicity, austerity, modesty, intimacy, and just the love of the natural and organic.

”The process and learning along the way is more important than the end product.”

So as managers, business leaders, innovators, and creative workers — what can we learn from this? Primarily that in order to be really innovative you must encourage the pursuit of imperfection. The process and learning along the way is more important than the end product. Especially in the age of data-driven business, where all corporations gradually turn into as-a-service software-based companies, we also need to remember how to accept what we cannot control (counter-intuitive in the age of industrialized perfection-seeking).

And coming back to the initial line of thought, what is truly an important asset to us humans? Well, being human! The only way to beat the machines is by becoming more human. Excel in creative thinking, asymmetrical problem solving, aiming for non-perfect solutions, trying and testing just for the sake of the learning process, admitting that failure is ok — just get up and do it again.

The employers of the future will have endless automation opportunities, especially for the mundane tasks that machines can do faster, better and smarter. But they will also need an empathatic and humane workforce that understands that nothing lasts, nothing is finished, nothing is perfect. Truly understanding this notion, paradoxically drives humanity towards perfection, constantly searching for improvements and problem solving. Although, as someone smart said — fall in love with the problem, not the solution. But that is another topic for another day.