A More Effective Way of Creating Value
Smart companies steward their most valuable assets. In every industry we have studied, firms that practice living asset stewardship (LAS) in a disciplined way have rolled up impressive market share against their traditionally-managed peers. They derive strategic advantages”synergies, quantum insights and inspired innovation”by caring about people and the overarching web of life in which we exist.
LAS leaders generate trust and loyalty. People want to affiliate with them. Consequently, they attract the best employees, the most faithful customers, the most committed partners and the most patient investors.
(P)eople truly want to be part of something greater than themselves. They want to
contribute toward building something important. And they value doing it with others.
” Peter Senge
A Reversal of Traditional Thinking
Traditional capitalism arose during the mechanical age of the industrial revolution over a century ago. It correctly saw that machines and technology, strategically deployed via financial capital, could quickly leverage the output of human labor and Nature.
But from this vision a distorted view arose that non-living capital assets ” buildings, equipment, money ” were more important than people and Nature. The corporate structure that emerged around this view in the late 19th century looked on the corporation as an orderly profit-making machine that was above the disorderly living world in which it existed, and whose scientific methods could improve living conditions by taming the chaos. To maintain order, the corporate machine was run by command and control with authority vested in a small cadre of people at the top who were presumed to have superior vision and knowledge. These leaders were guided by linear cause-and-effect thinking, embodied in generally accepted accounting principles (GAAP), which saw a company’s impacts on Nature and Society as “externalities.” Believing in the orderliness of such thinking, traditionalists believed they could extrapolate future results from past ones (sales, profits, etc.).
The critical weakness in the traditional management approach is its premise that a complex living world can be managed by mechanistic means. Employees cannot reach their creative potential if their freedom to think and self-organize is limited by command and control. Linear cause-and-effect thinking is too narrow to evaluate continually emerging relationships in our global markets and the ways these feed back on Nature.
As these conceptual weaknesses have become clearer in the minds of corporate thought leaders, a new mental model of business has emerged in the marketplace ” one that reverses traditional thinking by placing a higher value on people and Nature than on capital assets.
How LAS Companies Mimic Life
LAS companies instinctively mimic life in the ways they are organized and managed. By such means they gain deeper understanding of the larger living systems in which they operate (biosphere and society). The following six attributes are common to all life:
Central nerve system
For companies operating on this model, profit is less a goal in itself than the means to a higher end of service”one that calls forth the life affirming instincts and future hopes of employees. The operating leverage in this is obvious. Employees who work with their hearts as well as their minds are more productive than those who simply “do a job.”
Life Mimicking Companies as Creativity Hothouses
Respect for life is deeply wired into the human genome. Although originally linked to basic survival instincts, it has evolved over thousands of generation into our higher sense of aesthetics, core values and spiritual beliefs. It is the inspiration for great innovation as it has been for great art and music. Companies that mimic life have a knack for catalyzing inspiration and becoming creativity hothouses.
When employees work in ways that are congruent with their most cherished beliefs and values, they become energized and eager to learn. At such times they are more likely to access their higher (quantum) thinking capacities”the source of their best creative insights. Alternatively, when asked to work in ways that conflict with their life-affirming instincts, they become stressed and their creative thinking is compromised.
Quantum thinking … is rooted in and motivated by our deep sense of meaning and value. It is our spiritual thinking and our vision …. It is with quantum thinking that we create our categories, change our structures and transform our patterns of thought.
“Danah Zohar, physicist and management consultant
The Reinforcing Cycle of LAS, Innovation and Profit
Live-affirming values and vision inspire employees to learn and innovate behaviors that increase the odds of turning a profit.
Humanity needs a vision of an expanding and unending future.
“Edward O. Wilson
LAS as a Strategic System
Companies that mimic life see the connections between LAS and stakeholder loyalty. When employees are inspired they give better service to customers. When customers feel well served, they come back for more and generate referrals. Customer loyalty, in turn, begets investor loyalty as repeat business generates a growing stream of profit.
When loyalty cascades down through a business ecosystem it creates a web of durable relationships. The strength of these relationships which we refer to as “relational equity” is a reliable indicator of future financial equity.
Predictably, we found that investor loyalty was heavily dependent on employee and customer loyalty, and we understood that we were dealing not with tactical issues, but with a strategic system.
“Frederick F. Reichheld, Bain & Company