„Business“ for us is fundamentally determined by a more or less one dimensional understanding of one of its main components: The dominant business model. From a systemic perspective that’s a concept which lacks other significant ingredients. In order to develop a solid basis for future business, there’s need to include two more components into the math.
As we can realize every single day in the news: our world, our planet is no longer in good shape. According to Oxfam, eight individuals hold as much wealth as the poorer half of the world’s population. According to Harvard Business Review, inequality increases not only on an individual but on a corporate level, the middle-class vanishes. The effects of the climate change (regardless of its root-cause) show obvious and dramatic consequences. The Earth Overshoot Day (aka Ecological Debt Day) this year was as early as Aug 2, after e.g. Aug 22, 2012, Oct 26, 2007, Nov 21, 1995, and Dec 19, 1987. Not mentioning many other developments that undermine the foundations of our global society.
Most of these developments are the outcomes of a business world with a singular focus on shareholders, leaving the multidimensional perspectives of other stakeholders behind. After the steep increase in understanding our impact on the climate, now we need to start leveraging our influence on „business climate“.
New business models require new management designs
In the past organizations could thrive by focussing on the optimal (mostly analog) business model and related profits, with Bureaucracy and/or Meritocracy being the underlying management models. The increasing importance to include environmental perspectives requires managers to broaden their view. With these new perspectives one-dimensional solutions are a thing of the past, and multidimensional solution spaces, as they are standard in advanced mathematics, need to be reflected in decision taking and foremost in the operating system of organizations. The rise of (more) digital business models, with its high demand in speed, dynamic capabilities, and agility, in many organizations caused the end of Meritocracy as the optimal solution for the design of cooperation and made Adhocracy, as prominently promoted by Julian Birkinshaw, seem to be the best fit.
Combining social, economic, environmental virtue
Apart from the close relationship between business models and the management design, there is another important ingredient that needs to be taken into account: strong sustainability.
Strong sustainability is the systemic approach, describing the interconnectedness of economic- and the social-environment AND the ecological impact of organizations, which all are considered to have equal influence on the wealth of an organization. It outlines the existing circular relation between its elements and provides an, still often lacking, holistic viewpoint.
A new perception of the business ethics
The broad consensus that the way we performed business in the last 50 to 80 years destroyed too much of our ecologic and social environment, now leads to an increasing pressure on management. Stakeholders, especially customers in the western world, get more conscious of the ecological and social footprint a company and their products create. In addition financial analysts today reward economic growth potential over existing profit, which paved the way for „ “ companies like Apple, Alphabet, Amazon, and Facebook to enter the worlds market capitalization top ten list.
The new goal: sustainable virtue
The systemic synthesis of a management design that fully reflects the (new) business model needs to leverage multidimensional solution spaces, plus a sense of strong sustainability as the footing for future developments, leads to a new overarching goal of modern management: sustainable virtue.
For modern business, the virtue it gains in all three areas of strong sustainability is the new indicator of success. It combines profit orientation with the perception and preferences of the stakeholders and the related social, economic and environmental aspects.
Leveraging the people to increase sustainable virtue
In order to increase the sustainable virtue of an organization, there’s another, ingredient, that finally, apart from all discussions on Artificial Intelligence and digitization needs to be leveraged: people!
In a world where global connectedness and systemic interdependencies are significantly more obvious than ever before, the needs of the people, that are in whatever kind of relationship with an organization, has an explicit influence on the companies growth and profit. In return, the individual development, learning and inclusive prosperity of our societies are more and more dependent on the focus companies put on their sustainable virtue.
People-centric management design
Implementing a sense for sustainable virtue, often followed by a more people-centric management design, which explicitly creates space for individual developments and that’s open for multidimensional solutions, is the new necessary condition to establish long-term success. It allows to include more participation, trust, and self-organization into the core DNA of organizations and thus allows for substantial economic and social growth and environmental improvements.
If we want to achieve meaningful growth, we have to start to think and act in this more contextual and social dimension. We have to open up ourselves and our businesses for strong sustainability and align our business models and management design accordingly. This is the starting point for our journey from EGO to ECO and from ME to WE.
The result gives globalization a new and different meaning and relevance. It requires not only a redesign of rules and processes but an un-/re-framing of the mindsets of many executives and managers on a global scale.
From a systemic perspective, that’s what is required to save our planet and our species.