There is a rising response from the business community to external pressure on its role in creating the multi-faceted global challenges we face. That response is beginning to acknowledge what many of us have known since 2008 — that the neoliberal economic model has had it’s day and that we need a new view of what business is and can be, and what economics can and should be — in the 21st century.
We’ve seen the US’s Business Roundtable step up to redefine the role of corporations. We’ve see the editor of the Financial Times publish a full page ad this week that suggests that neo-liberalism now need a serious reset.
“….in the decade since the global financial crisis, the model has come under strain, particularly the focus on maximising profits and shareholder value. These principles of good business are necessary but not sufficient.
The long-term health of free enterprise capitalism will depend on delivering profit with purpose. Companies will come to understand that this combination serves their self-interest as well as their customers and employees. Without change, the prescription risks being far more painful. Lionel Barber, Editor, FT.
Enough wise leaders have told us by now that we cannot solve our global challenges with the same approach we have taken that got us into difficulties in the first place. A global economy based on constant (and often exponential) growth is incompatible with a planet under threat of social breakdown due to the potential impacts of climate change.
We have a good idea of strategies that might mitigate our current existential threat. Leave fossil fuels in the ground. Shift to a clean, green energy economy. Move to a circular economy in which we recycle and reduce extraction of vital materials from our earth. Regenerate our soils to ensure we have more than the predicted 40–50 years of productive soil left. Eradicate the harmful impact of plastic pollution in our waterways and oceans. Reduce consumption.
All of the above ideas have an impact on how we do business but it is the last one — reduce consumption — with which the existing model of business struggles the most; especially consumer brands. Although many global brands are implementing circular economy strategies, or aligning behind the UN Sustainable Development Goals, these strategies do not change the fundamental principle of constant growth. Most companies, especially manufacturing brands, exist based on the principle of more. Make more, sell more, grow more profit. And then make more, sell more and grow some more.
If we are to actively encourage less consumption, then it logically follows (at least in my mind) that we must produce less and sell less. What kind of business model is one where we abandon the cherished notion of growth?
I have long believed that there is no good reason for any business to exist and no licence to operate, unless it is prepared to play a part in creating a regenerative future in which creating the conditions conducive to life sits at the centre of strategy. But what does that look like? What things do we need to consider?
You can choose from different pathways. I’ll use the inspiration I took from Joanna Macy:
Pathway 1: Protect & Preserve
Protect & Preserve are holding actions which — appropriately — hold back the tide of degenerative and extractive economic destruction and social harm. This is traditional the domain of charities, social enterprise, philanthropic models, corporate social responsibility, companies who choose to sponsor social & environmental challenges in their locality or domain of infuence.
These are all important, but they’re not transformational. Anand Giridharadas took apart philanthropic effort in Winner Takes All. I wouldn’t go as far as he does because I think it’s important that we have ‘bridges’ towards the future we can’t yet imagine, and holding actions are those. They mean we might have a few more species preserved, a little less rainforest lost, more people who have been the victims of encroaching climate change and war, cared for and protected. So they are still important.
At the very least organiations can step up their collaborative relationships with organisations that are dedicated to some form of protect and preserve. They can put aside greater percentages of their profits to such philanthropic efforts — whilst they begin to look at the legal, financial and governance models that would allow them to radically transform into new forms of business.
Pathway 2: Creating Systems Change
Changing the big complex systems that surround everyday life — energy, transport, education, the financial/investment markets, water, waste, politics, economics, gender equality, colonialist business models, the food system, ownership, land management, ocean health, the business system itself — is an enormous task. All the systems that surround us are dependent on and driven by, neoliberal economics.
How can companies play a part in changing the very system in which they operate? There are many options. Too many to list here in one post but here are three big categories I define in my forthcoming book Renewal.
Models for Renewal: Legal Frameworks, Ownership, Bioregional Economies, Regenerative Finance, Emergent Education
New legal frameworks which change the nature of ownership are already emerging and are necessary. From benefit companies in the form of B Corporations, to cooperatives and collectives, leaders are recognising that a new legal form of organisation which puts responsiblity to people and planet into the articles of association by law — is a necessary part of transforming accountability.
The most common organisational form — the limited liability company, limited by shares — is a foundational pillar which drives the idea of constant economic growth. We buy and trade shares for one reason only — to generate income. The share trading system cannot work without constant growth because no-one is going to buy shares in a company that’s not demonstrating constant growth. That is a huge system to unpick, but I believe it will be necessary for a regenerative economy to be born.
John Fullerton from The Capital Institute has put forward a vision of a new fiscal model in his papers Finance for A Regenerative World.
One of the best books I ever read on the subject of ownership is Owning Our Future by Marjorie Kelly. Read it, it could transform how you think about your business.
One of the most pressing and urgent areas to re-imagine education is business education. Most lauded business educational institutions – from Harvard to INSEAD — haven’t yet gone beyond the economic model of neoliberalism.
Management and leadership training may still incorporate the mechanistic, behavioural and human potential models but none have yet opted for a regenerative paradigm. Regenerative business expert Carol Sanford and deliberately developmental leaders like Robert Kegan are some of the few voices to embrace and practice this emergent way of doing business. Carol’s recent series on Medium on Language, Leadership and the Four Wisdoms are really worth reading.
New economic thinking to de-globalise economies through glocalised strategies where resilience is the responsibility of bioregional networks. Inspired by legendary systems thinker Donella Meadows, bioregional learning centres are emerging all over the world. I am forming one in the south of england. We already have one in the west country, and there are many emerging around the world who are affiliated to Regenerative Communities Network, founded by The Capital Institute.
Visionary thinkers are experimenting with this kind of business approach in tourism for example. The recent Travel to Tomorrow conference held by Visit Flanders and curated by Anna Pollock is looking at the future of tourism from a completely inverted perspective of place-making.
Only last month I attended a bioregional learning journey hosted by The Bioregional Learning Centre in Devon in which multiple organisations, businesses and people came together to talk about future water resilience for the first time. In conversation between resource managers, farmers, urban citizens, food producers, wildlife conservationists, scientists, coastal flood defenders, local authorities — we could see a clear bioregional strategy emerging to make this small area climate resilient in the future.
Regenerative agricultural practices are the global response to our deeply degraded soils which threaten the future of our food system. This threat is every bit as existential as climate change and intimately linked to it. This is perhaps the area in which regenerative strategies are emerging most strongly. Companies like Danone, now a B Corporation, are committing to transforming its supply chain to ensure only businesses with regenerative practices are included in the future.
Companies like IKEA have taken the important step to recognise that they are not only in the business of interior design but also in the business of forestry. If they don’t act to preserve the forests for the future, they won’t have a business.
In a webinar for my Regenerative series on Connectle, The Savory Institute and Wrangler Jeans spoke about the global effort to reconnect business to regenerative land-based practices that reduce impact on soil and waterways.
Pathway 3 — The Shift in Consciousness
We are recognising that we can’t do the vital tasks of changing systems without changing the level of consciousness with which we approach that change. This is a vastly complex subject for a blogpost and I cannot pile into it all the stories and research of the last 5 years. I regret you will have to wait for the book on this.
So it will have to suffice to say that I have remarked that leaders who are pushing forwards a regenerative approach to business — whether that is from a social perspective of being deliberately developmental like Atlassian, Next Jump or Ampelmann who I worked with this year, or an environmental perspective such as Interface, Patagonia or Fab City — are far more likely to be led by leaders who would map to a ‘higher’ level of consciousness than leaders only just stepping their organisations onto the first rung of sustainability.
There is a direct correlation between the ability of an organisation to take on board the responsibility to change its business model to be regenerative rather than degenerative to the advanced conscious development of its leadership teams or its ability to release developed consciousness through its approach to ground-up organisational design.
Future fit organisational designs that are being used by such leaders include those which unleash autonomy and creativity, and replicate natural living systems. They include transformation models such as Natural Step, Future Fit Benchmarks and biomimicry’s Life’s Principles, but also take advtange of change processes like Theory U and self-managed designs such as sociocracy.
What do brands need to do to participate in a regenerative future?
There are some simple steps and there are some complex steps any brand could take. The first and most difficult is to ask itself the question that leads this article. What is our licence to operate on a finite planet under existential threat? Everything stems from that one question.
Once that licence came from shareholders and investors. Today it comes only from future generations as yet unborn as Jeffrey Hollender recognised at Seventh Generation. Are you contributing to a future in which future generations — and all other life — can enjoy the same planetary conditions or better, than you have had? Or are you detracting from that possibility?
If you’re a brand that produces products or services for women, what can you do to take responsibility for elevating the level of consciousness of women? What can you do that is beyond quotas and targets to activate a society that incorporates feminine psychology in its design (see my previous articles for a deeper explanation)?
If you are in the business of food, what can you do to ensure you reduce your impact on soil, water, land, forests, air quality? How can you ‘glocalise’ your once global system? Can you step back if you’re a global commodity business — like cocoa or soy — and redesign your business model to be less about colonial extraction from the global south to the global north and more about regenerative local partnership? Hard I know. But could you?
If you are in the business of manufacturing fashion, what can you to do ‘glocalise’ production once more so that you are regenerating your locality and strengthening your ability to place-make? Can you revitalise cloth production in your region? Can you bring distribution to the most central spot on your footprint so that you minimise the impact of transport?
If you are a drinks brand, can you do something other than providing great-tasting refreshment? Can you incorporate phsyical or mental health into your reason to exist, over and above a sponsorship or CSR programme? Can you exist to change the face of fruit production or collaborate with laboratories to eliminate all the multiple additives that go into making canned drinks taste great but deplete the planet?
If you are in motoring or transport, can you design new models beyond Uber which are about shared value rather than ownership — as Clever Shuttle does in Germany?
If you are producing home cleaning products, could you get together with your competitors and agree that we don’t actually need yet another variety of washing powder or liquids, cleaning fluids or even cloths! Could you abandon the very idea of competition for pre-competitive collaboration on product development too — in the way many global brands are doing to address global issues like plastic?
If you’re in the business of white goods can you abandon in-built obsolescence in favour of new business streams for repair and renewal?
It might sound like a utopian unachieveable set of questions. But the generations that came out on the streets of multiple capitals all over the world these past two Fridays are asking those questions of business.
Where once a good corporate social responsibility programme, a reasonable sponsorship or affiliation, or a half decent sustainability strategy was enough to be deemed acceptable to its audiences, now most brands face an increasingly demanding public in Millennials and Generation Z who want more from business than business is prepared, or able, to give. Who demand from their employers more than green-washing or purpose-washing. A generation who, on the wave of people power inspired by Greta Thunberg and Extinction Rebellion, live in both fear and anger for the future they perceive to be evaporating in front of their eyes.
The struggle to attract and retain the best and most unique talent in the future, may rest on an organisation’s capacity to accept that it must reinvent itself to act for future generations rather than shareholders and stakeholders.
Our ability to deliver a regenerative economy which can cope with the limits to growth we need to impose upon the entire planet, may depend on each inividual company’s willingness to embrace fundamental transformation.
That fundamental transformation will mean shifting from a business whose legitimacy was given by the shareholders, investors and financiers prepared to support and encourage exponential growth and consumers prepared to buy into every attempt to create a scarcity need in their personal psychology, to being a business whose only legitimacy is delivered by its willingness to play a role in addressing the global challenges we face. From being a business that provided jobs and therefore relative security for some, to being a business that provides security of future for life on earth.
This article was also produced on the Activate The Future blog on Medium where I gather leading thinkers in regenerative economics and transformation.