Purpose Inspired: by Wayne Visser

The explosive growth of this global casino of financial markets is largely as a result of introducing two new games: futures and derivatives trading, beginning in the 1970. Not so long ago, the grave warning of economist John Maynard Keynes echoed loud and clear above the chaotic din of frantic stock market traders: “When the capital development of a country becomes a by-product of the activities of a casino, the job is likely be ill-done”. Modern critic, David Korten who is author of When Corporations Rule the World, calls this phenomenon “de-linking money from value”. He argues that capital is being diverted away from long-term productive investment in the ‘real economy’ in favour of short-term speculative investment in the ‘virtual economy’. It comes as no surprise that those who are grabbing the lion’s share of the benefits from speculative trading are the same ones that have been roaring for greater deregulation of capital flows over the decades. We look at the worrying side effects of speculative trading and deregulated financial markets.

This podcast introduces the economists’ useful notion of ‘externalities’ or spill-over effects. In the unsustainable economy, companies impose costs on society and nature without paying for these damages – these are negative externalities. For example, we look at what happens if we decrease the stock of biodiversity, either by a wetland being drained for development, tropical forests being cleared for agriculture, or a valley being flooded for a hydro-electric power scheme. On the other hand, lone sustainable companies may make contributions to the community or the ecology, without being financially rewarded for these benefits – these are positive externalities. The sustainability trend is forcing companies to internalise their social and environmental externalities, i.e. account for them in their own books. Climate change provides excellent examples of the application of economic instruments to promote sustainable commercial activity.

The world we live in is exceedingly complex. We use indicators to simplify things. Indicators work in the same way as a map. They are meant to be a guide, a representation of reality, which help us to understand the lie of the land. The scale of the map and what it is trying to measure will determine how accurately and completely it approximates reality. Except that sometimes we get lazy. In the midst of our information overload, we are tempted to oversimplify. This is the main problem with economic indicators today. GDP is the classic example of a blinkered unsustainable approach to indicators. This podcast looks in more detail at the concept of indicators, the limitations of Gross Domestic Product (GDP) as a measure of progress as well as some of the more sustainable alternatives, like the Index for Sustainable Economic Welfare (ISEW) and the Genuine Progress Indicator (GPI).

Products and services will need to shapeshift radically in a sustainable world. It will no longer be acceptable or successful to follow the old approach of producing widgets and flogging them to a market brainwashed by advertising, whilst ignoring the damage they cause along the way. The new generation of sustainable products and services will focus on adding value over their entire life cycle. In so doing, they will incorporate design characteristics inspired by the genius of Nature. In fact, many products will become obsolete as they are replaced by ‘leased benefits’ instead. There are various manifestations of this new philosophy, including life cycle assessment (LCA), eco-efficiency, supply chain integrity and take-back schemes. While these are mainly aimed at the environmental elements of life cycle accountability, supply chain integrity auditing begins to address social impacts as well. But the biggest shapeshift has less to do with new methods or models, and more to do with inspiration. That is the potential for products and services to be inspired by the genius of Nature. 

Communication for sustainable companies is a dialogue: an ongoing, two way, interactive process which involves listening as much as talking, and includes non-verbal as well as verbal exchange. These companies are far less opportunistic when it comes to communicating with stakeholders. The reason they enter into dialogue with their employees, or communities, or environmental NGOs, is the fact that these entities are interconnected in some way, be they interested in, concerned about, or affected by the company’s operations. The ingredients of effective communication are good, basic common sense. Be open. Share information. Not just the good stuff, also the bad and the in-between. And not just the boring facts; also the hopes and dreams, the passions and emotions. Talk about the serious things (the so-called hard facts) when they need talking about. But don’t forget to share the lighter moments as well. Very important – don’t tell lies (or even bend the truth). But once there is a track record of honesty, trust what the other says. 

Companies have cultivated relationships only from pure self-interest – mostly with shareholders, financial analysts, customers and suppliers. And usually, these interactions have been a pure power play – wining and dining the influential few, while ignoring the rest or pressuring them into conformance. The idea of genuine dialogue with communities, NGOs and government for the sake of enduring symbiotic relationships, rather than as a short-term bargaining tactic, is still somewhat unpalatable for most companies. With their quarterly eye on the skittish profits, spending time and energy on building long term friendships without any immediate reward seems, well, a costly indulgence. But to survive in the sustainability era, companies have to move beyond their aggressive, competitive tendencies. They need to learn to be not only sociable, but genuinely concerned about the perspectives and wellbeing of all of their stakeholders. 

Over the past decade, for example, numerous corporate governance codes have emerged, which require companies to give a more transparent account of how their business is being run and the impacts on the various stakeholder groups. One of the most recent and progressive documents is South Africa’s revised King Report which even makes explicit recommendations on sustainability reporting and social and ethical accountability. Shapeshifting goes beyond putting ticks into boxes, however. At the end of the day, it is once again about values and behaviour. In order to implement governance at a practical level, shapeshifting needs to occur in at least three areas: company incentive systems, decision-making processes and communication methods. In exploring these issues, it is instructive once again to contrast Western and Southern cultural dynamics. 

Having a leader’s inspiring vision is one thing, but it is like whistling in the wind unless people in the workplace are able to express their own inherent magic – their creativity and imagination, their values and passions. As Anita Roddick says: “People become motivated when you guide them to the source of their own power.” Sustainable companies do something that is almost unimaginable. They accept humans as humans. They don’t try to turn us into machines. In fact, they encourage us to express all aspects of our humanness. This is not is about becoming completely scattered and ineffective. It is about being flexible, discovering the most appropriate times to work and play and socialise, or to do a combination of these. Being human at work is also about being able to be ourselves – our whole selves. One thing that would help with the existential crisis in business would be a switch from the present focus on ‘jobs’ to the old idea of ‘vocations’. 

Shapeshifting seldom happens in countries or companies without visionary leadership. Like the revolutionary philosophers and scientists of centuries past, somebody has to be able to step outside of the parochial present and see the bigger picture of the future. And like those historical reformists, today’s innovative leaders walk a tightrope between being recognised and celebrated as a visionaries and being regarded as crackpots to be locked up or heathens to be burned at the stake. The great thing about creating a sustainable future is that it is an inspiring ideal: something that, like the elephant, is bigger than ourselves - a little frightening, somehow magical, an exciting challenge at the very least. And in today’s barren desert of materialism and secularism, people are crying out for something inspirational, even sacred, to quench their thirst for meaning. Sustainability is that oasis shimmering on the horizon. 

In this podcast, we start going beyond the ‘why’ to the ‘how’ of sustainable business. We explore seven critical dimensions in which shapeshifting needs to occur in order to create sustainable companies. These are: values, vision, work, governance, relationships, communication and services. We begin with values. Values are exactly what they say they are – a reflection of the things we value. They are not motherhood and apple pie statements in annual reports, or candyfloss principles framed on the boardroom wall. In other words, companies’ values are betrayed by their actions, not their words or their spin doctor’s marketing material. We illustrate the prioritisation of values with two examples: America’s popular ice-cream chain, Ben & Jerry’s, and Brazil’s largest marine and food-processing machinery manufacturer, Semco. Of course, corporate values seldom exist in isolation from broader cultural values. For example, the culture of the West/North is highly focused on individual performance and rewards hierarchical authority and rational decision-making, while the East/South’s emphasis is more about social harmony and cohesion, participative decision-making, creative expression and motivation.