A New Paradigm of Business is Upon Us

by David Marshall

September 12, 2019

Like many of you, I grew up watching the Jetsons cartoon on TV and just assumed everything would be better in the future. I assumed that technological innovation would naturally increase human connection and creativity, and business would be oriented toward creating products that help people and society.

But it didn’t quite turn out that way.

At Harvard Business School, I learned that captains of industry are tasked with serving shareholders above all others because that’s what businesses were placed on the earth to do, to grow and thrive, creating needed products for customers. The precedent was set; however, the highest priority for business leaders was to keep the business alive under the auspices of returning increasingly larger amounts of profit to those who invested in our companies. If we didn’t, our shareholders would go elsewhere. We were all good people, but we were taught to reserve our best selves for our families, friends, and communities where we lived while committing to a certain kind of ruthlessness at work that prioritized one class of stakeholders over all others.

Something is very wrong with this global business model. It’s destroying the planet, creating larger and larger wealth divides, and failing to deliver on shared prosperity for all. We’re running out of time to seek new solutions to these issues. The clock ticks louder every year.

It’s Time For a New Paradigm of Business

We’re at a turning point in history. Now is the time we must replace the broken model we teach students in business school. Now is the time to create a new paradigm of business that, very much like BK founder Steve Piersanti’s new paradigm of leadership, is based in true stewardship of both people and planet.

But what does an organization that serves the best interest of all actually look like?

I believe companies will organize not around exclusion, fear, or scarcity but abundance, purpose, and restoration of both people and planet. I believe relationships between people will be balanced with results—not sacrificed for one or the other—and that both companies and employees will serve causes far greater than themselves.

Below, I define additional key operating principles of these organizations of the future—and the path we’re traveling to define this new paradigm of business.

How We Got Here: The Beginnings of the New Paradigm in Business

If all this sounds too good to be true, know this: The call for more socially and environmentally conscious business is not just an isolated moment in history but one that’s been building for decades.

Over the last thirty years, there’s been a rising tidal wave of progressive business leaders and organizations who are fighting to change the narrative in the service of bettering the lives of all people and the planet.

Yet, the question remains: what happened in the late 1980s and 1990s that changed everything?

Why did companies such as Ben & Jerry’s Ice Cream, Tom’s of Maine, and The Body Shop spring up out of nowhere to challenge the status quo about how businesses should be run? For one, focused reason: they were fed up with the status quo.

It had been over 20 years since the titans of Wall Street had convinced board members of major corporations that serving shareholders first was their legal duty and first priority. To counter this cancerous development, entrepreneurs emerged with the notion of serving the triple-bottom line (people, planet, and profit) instead of the single-bottom line of profit. Many small companies followed suit, but larger publicly traded companies remained bound to Wall Street’s demand for ever-increasing quarterly revenues and profits. In response to this growing community of leaders and employees committed to the triple-bottom line, The Social Venture Circle (once the Social Venture Network) was born and issued a bold call to action. Their mission is “to build businesses that drive the NEXT economy: one that is regenerative, equitable and prosperous for all.”

The only problem? All of this was still more or less on the fringe.

Most organizations were rooted in the old way. I worked for a large public software company in the 1990s that typified the old business model - the company mission was to become the biggest software company in the world. The founder’s mission was to be respected as the top dog of the industry. True to form, the culture was dog-eat-dog. People were pitted against each other in win/lose battles whereby the winner moved up the food chain while the loser was encouraged to seek employment elsewhere. Anyone trying to organize the workers for more humane treatment was blacklisted. The culture was dominated by fear and aggression. This is not just my story. Too many of us have similar tales to tell. We were searching for more love-based companies, but, in nascent days of the conscious business movement, they seemed to be few and far between.

Where We Are Now: The New Paradigm Goes Mainstream

Thirty years later, we’ve come a long way. The B Corp, Benefit Corporation, and Conscious Capitalism movements are in full swing. Even much larger companies are committing to a sustainable business model that places people and planet first. But most of the companies are still private, and founders of triple-bottom-line companies wonder if their new business models will outlive the founding generation.

Is there a way to grow and prosper as independent organizations, or must all founders eventually sell out? Are we left to choose one of the two prevalent exit strategies: 1) acquisition by a multinational corporation or 2) IPO with begrudging acceptance of the shareholder primacy model and the quarterly earnings call with Wall Street?

Ben & Jerry’s and Seventh Generation were acquired by Unilever. Tom’s of Maine was acquired by Colgate. Whole Foods was acquired by Amazon. Some of them went public first, but they were ultimately consumed by larger companies with more traditional business values. Is Patagonia next?

Recently, The Business Roundtable, representing CEOs of some of the largest corporations in the United States, announced in the summer of 2019 that they could no longer afford to only serve shareholders at the expense of other stakeholders. Their Purpose Statement committed to:

  • Delivering value to our customers
  • Investing in our employees
  • Dealing fairly and ethically with our suppliers
  • Supporting the communities in which we work 
  • Generating long-term value for shareholders

If the CEOs of the Business Roundtable are really committed to these shared-equity principles, it represents a dramatic move of triple-bottom-line values to the mainstream of business. But proponents of progressive business models, such as B Lab co-founder Jay Coen Gilbert, caution that such mainstream companies must follow up their words with actions before we can really say with conviction that a new dawn is upon us.

Still, there are other encouraging changes afoot. Workers’ rights are finding new forms for expression in our always-on economy. The old business model brought organized labor to its knees, but now disenfranchised workers are taking to social media to spread the word about employer injustice. Google and Facebook employees protest loudly against their companies’ cavalier approach to privacy, shutting down hate speech, and diversity and inclusion. Non-unionized Starbucks employees use public shaming of their employer to win humane working conditions.

In the private business space, many pioneering triple-bottom-line companies are quietly restructuring their ownership forms to fit the vision of a fairer economy truly. Will larger, public companies follow suit in order to deliver on these newly stated aspirations?

The New Business Paradigm: It’s Time for Action

What will the next 30 years bring?

I hope we’ll continue to develop the new paradigm of business to turn outward to all stakeholders and the earth, not further inward towards ourselves and privileged classes. I’ve seen it firsthand. At Berrett-Koehler Publishers, where I’ve worked for the last 12 years, we’ve worked hard to cultivate a culture of stewardship as we deliver on our mission to create a world that works for all. In my previous jobs, where the old paradigm reigned, we were motivated by fear and coercion. But here at Berrett-Koehler, it’s love. And love always wins.

With that in mind, I predict we’ll witness a groundswell of small, medium, and large companies moving to this new mindset in the next 30 years. What will these companies look like? How will they function? Below, I share some key operating principles.

13 Key Operating Principles of the Company of the Future

But what will it be like to work at one of these companies?

Picture in your mind and heart this 2050 company, where you and coming generations jump out of bed in the morning excited to start the day. When you arrive at your place of work, your senses respond:

  • It LOOKS like all walks of life are represented. Natural sunlight is streaming through the windows. You notice the workers’ council representative talking at the board meeting.
  • You FEEL safe to express your true self without judgment, punishment, or exclusion.
  • Your communication and collaboration with colleagues and interaction with partners TASTES sweet, not bitter.
  • You HEAR the sound of all voices speaking up and being heard. Laughter is in the air.
  • The office SMELLS like a garden in bloom. Abundant office plants remind us of our strong bond to the earth. Employees no longer fear retribution for speaking up.
  • Your company’s culture feels warm to the TOUCH and is teeming with life, not dead in the center. People engage in constructive conflict to solve business problems, mindful of being hard on the issues, but soft on the people.

Together, We Can Shape the Economy of the Future

There’s still a lot of work to do for the next 30 years.

Perhaps the company of the future will resemble my vision I shared above. But it’s up to all of us to define this new paradigm as we work to make it a reality. I know I may not live to see 2050, but I hope my 30-something children do. This is the picture of the future that gives me courage and fortitude to keep on the march.

So I challenge you to keep at it. Hold your company executives accountable to embrace the New Business Paradigm, become more earth friendly, eschew hierarchical decision making, and share information freely—seek out and convene with kindred spirits who are on the same journey as you. We’re all in this together.

Join a movement and model the way!


For a glimpse of what bringing our best selves to work can look like in 2050, please join us at The People-First Economy Online Summit, September 17-26, 2019, where over 30 thought leaders will share their ideas and practices on how we can co-create the company of the future.

 

Topics: Diversity & Inclusion, Workplace Culture, Change Management, Organizational Development, equity, Leadership and Management

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