Is your business a climate change Kodak—or Apple?
Is your company going to be the last of its kind, just as Kodak was the last global conglomerate in chemical photography? Or is your company going to be like Apple, deliberately rolling out full iPod functionality on the iPhone, thereby cannibalising its own iPod business?
When solid foundations of an entire industry category are being turned to quicksand by a disruptive trend changing the entire context, businesses that fail to disrupt themselves faster than the trend will get eaten by it.
So what are the trends today? And what do they imply about your company needing to ‘eat itself’?
Most of the dominant, inexorable trends today are all linked to the impact the past century has had on the world. The IPCC report, and Gaya Herrington’s comparison of MIT’s predictions in 1972 in the book The Limits to Growth against measurements over the past 50 years, make clear that all industries are being disrupted in one way or another because of climate change. Food is already significantly disrupted through droughts, floods, fires, and more.
So, if you want to thrive, if you need your company to thrive in the next decade, where must you and your company disrupt yourself, or where must you ‘eat’ what has brought you success over the past decades?
You must disrupt yourselves in the following four strata (See P44 of my book Rebuild: the Economy, Leadership, and You for more details); and what you do must work within each stratum and be whole across all four
4. Inter-company/inter-stakeholder/inter-capitals
This includes articles of incorporation and bylaws, which are the structures and interactions that define what is possible. The key here is trust: the systems and interactions are there to create trust between people who do not know each other.
3. Inner-company
Your organisation design, how roles are related to each other in some kind of hierarchy, how tasks are executed, your strategy, your product lines - all of that is included in this strata. And this also extends to what you sell to your customers, what you buy from your suppliers, etc.
2. Inter - personal
This includes everything around people systems and their interactions, including your culture, your values (both your explicit value statements and the implicit values that people deem to be the true values of the company). Your interactions with customers, suppliers, etc. as human beings come under this category as well.
1. Inner-personal
Each person’s individual internal makeup, their nature, their psychology, and how they mediate between the different aspects of themselves, are all included in this strata.
Now consider this: these are the four strata available to you for innovation.
Up until now, almost all innovation has been in strata 3 - product innovation, process innovation, new organisational designs (agile, sociocracy or Holacracy), etc.
However, most disruptive innovation over the past two decades has been in strata 1 and 2 because of companies starting up around new cultures, bringing in peer-to-peer coaching, or striving for conscious capitalism, for example.
All 3 have been essential parts of the disruptive innovation needed for businesses to survive global trends and thrive — but they are not enough now.
Companies that want to flourish 10 years down the round must innovate in stratum 4, today. These will be firms that are currently startups but will overtake today’s incumbents, or they will be existing companies that ‘eat themselves’ in stratum 4.
The disruptive innovation we need now is to incorporate our companies inclusive of all of the capitals and all of the stakeholders the company touches. This means shifting from investor primacy, where money is the basis for governance rights and wealth share rights, to these rights being allocated to 6 capitals in an appropriate balance of power and wealth share for that company.The 6 capitals are natural, human, social and relational, intellectual, manufactured, and financial.
Paul Polman (former Unilever CEO) has seen these trends clearly for a few decades across his career. He said in a webinar recently, and writes in his book, Net Positive, that he sees successful companies of the future needing to take full account of all of the consequences of their actions, intended and unintended; they need to act long-term, in the broader interest beyond financial capital; and they need to optimise (not maximise) the benefits for all stakeholders.
This cannot be accomplished in a company (stratum 4) built as a standard limited, cooperative, or even most benefit corporations.
For a company to meet these three criteria, it must be freed from the control of money alone. Instead, it must be incorporated so that it is stewarded to address the needs of all, including future unborn generations, in a dynamic way as the consequences of the company’s actions become visible. It must include in its governance, representatives of all of the capitals the company takes in. And each of these capitals must be multiplied, i.e. regenerated. Not just money multiplied, as today’s business paradigm believes.
Any company that innovates in stratum 4 today and managers to achieve Level V in the diagram below will be in the best position to become a thriving and profitable (because of regeneration) company in 2030. It will benefit from higher performance from all the people involved (not just staff) than ever seen before, because psychological safety and alignment will be a given. The company will benefit from faster innovation and turnaround for its products or services because the right people will spend their time and effort doing the right work without wasted time and effort. And it will benefit from a high level of resilience against unpredictable changes in our ever more VUCA world, as described in this blog.
So, the questions now are:
- What needs to be true for you to lead your company through the next decade by driving it to ‘eat itself’ across all 4 strata?
- And who do you need to be to do that?
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Graham is the author of Rebuild: the Economy, Leadership, and You, a DIY guide to disruptive innovation across all 4 strata. He is also the founder of Evolutesix, an agency that helps build regenerative start-ups that are high-performing and whole across all four strata above, because they are multi-capital incorporated, have agile /Teal ways of working, and are deliberately developmental. They also provide consulting and coaching to individuals and companies wishing to journey towards this.
Photo by Soheb Zaidi on Unsplash