InnovationStartup general interest

Some thoughts on progressive (or better) business

By March 4, 2013 2 Comments

I’ve been doing a lot of physio since my knee injury which is an annoying time sink, but has the upside that I’ve been doing a lot more reading and thinking than normal. I’ve just finished Culture Shock by Will McInnes (read my review here) and Man’s Search for Meaning by Viktor Frankl (read my review here). One is a business book and the other mixes an autobiographical account of life in four World War II concentration camps with a theory of psychcotherapy, but they share the view that meaning and purpose are central to happiness and success in life. Together they have got me wondering if businesses that pursue meaning and put their purpose before profits, or at least on a par with profits, might be more successful going forward than those that are purely profit focused.

There are a bunch of reasons to think that the current business paradigm could be improved upon, not least high unemployment in the developed world, widespread job dissatisfaction, and growing wealth inequality, but the challenge is coming up with something better. The old cliche about democracy being the best imperfect system for government available could equally be applied to the current business doctrines of shareholder value, hierarchical management and mass marketing.

In Betterness: Economics for Humans Umair Haque makes an analogy between economics and psychology. Up until the turn of the last century psychology had been entirely concerned with curing mental illness, but the work of Havard professor William James turned the discipline on its head by adding the dimension of positive psychology. He shifted the question from ‘how do we fix people with problems?’ to ‘how do we help people realise their full potential?’. Perhaps economic and business theorists have spent the 250 years since the industrial revolution looking to solve problems of business like corruption, trade barriers, and efficiency and we are now at a ‘William James’ moment where the questions addressed can broaden beyond shareholder value to include sustainability and the welfare of other employees, customers and other constituencies. The idea is that business should become more authentic, durable, and fulfilling for employees, rather than the distrusted mess that it is today.

Such a shift sounds great in theory, but may be difficult to execute on in practice without losing profitability. McInnes’ argument in Culture Shock is that we are now getting an understanding of how businesses can make money AND be progressive, and that a heady cocktail of social media, real-time information, trends towards open-ness in society and the expectations of Gen-Y are now making change inevitable. Increasingly people want to work and buy things from progressive companies which have purposes and values that they believe in. And those are values and purposes must be genuine and lived out in practice. Zappos is perhaps the poster child example of a company that fits the bill – they have a famously inspiring culture and grew rapidly before being acquired by Amazon for c$1bn, but Will lists a bunch of other examples that fit the bill, including companies, including his own business Nixon-McInnes.

The interesting questions for me are:

  • whether Zappos, Nixon-McInnes and others are freak examples on the edges of a stable model for business, or whether they amount to a new trend?
  • if it is a new trend, can it fit into the venture capital model (or can the venture model adapt)?
  • how far does it all go?

The third question deserves a bit of elaboration, and is maybe actually precursor to the third. Progressive business in the most minimal sense isn’t really very different to traditional business. Having a mission, a good set of values, treating employees well and maybe indulging in a little employee participation in decision making has been best practice for a while, and simply adding some authenticity and sharing more information doesn’t seem to change that much. However, going the full gamut of fundamentally orienting the business around the needs of employees and customers (hopefully as well as shareholders) requires significant and important changes like employee democracy for important decisions.

I would like to believe that business can be ‘better’ in the way that Haque describes, and there is enough interesting stuff going on, both theoretically and at companies like Zappos to pique my interest. This is definitely an area I’m going to do more work on.