2013 has arrived, and with it a fresh feeling of hope, optimism and energy. It’s time to blaze new trails and spark the fire of a new generation of enterprises. In China it may the Year of the Snake, but here it’s the Year to Shake-It-Up.
While there were many exciting developments and new paradigms that emerged in 2012, the business-as-usual mentality continues to define how business is done for the majority. Reckless decision-making and a cavalier attitude about what matters most belie the claims that business is a force for good in society. It’s time to start down a new path and reinvent the world of business.
It’s time to ReImagine, ReDesign and ReConnect.
We need to reImagine new possibilities about what businesses are capable of and what they can achieve.
It is rare that we see business leaders who are imaginative and inspiring. Instead we see swaths of C-Level execs who possess superior competitive and analytical capabilities, yet don’t have an imaginative or inspiring bone in their body.
Imagine that a little over 10 years ago Elon Musk was building PayPal now he is overseeing the development of an electric car company (Tesla Motors), a residential solar provider (SolarCity) and the first company to successfully launch a private rocket into space (SpaceX).
We don’t need another crop of enterprises built to incentivize excessive consumption and industrial growth. We need entrepreneurs to imagine a set of new possibilities and build solutions to real problems that advance the interests of humanity, not a select group of shareholders.
We need to reDesign the way businesses are built and how incentive schemes are structured.
The old business-school mentality still defines how the great majority of businesses are created. Find a big-money opportunity, raise capital, grow as fast as possible and tie executive and employee compensation directly to the company’s profitability.
Recently the B Corporation (B Corp) was created as a legal entity in the US as a new structure for businesses. To become a certified B Corp a company must generate a certain amount of public benefits (a perfect score is 200, the minimum is 80), and in return they receive tax, investment and procurement incentives. Companies earn points within five categories (environment, community, employees, consumer and governance) and are audited to ensure compliance. One of the most innovative elements of the B Corp is that stakeholder consideration is included in the articles of incorporation, thereby requiring certified companies to be accountable to stakeholders by law.
A new era of businesses are being born out of a need for impact in society. Like everything else in life, businesses can be designed to achieve a certain outcome. The old-school business was designed to be purely profitable, the new school business needs to redesigned to deliver impact and profitability.
We need to reConnect a business’s profitability to the value chain without generating large-scale social and environmental externalities.
The lines between profitability and value creation have been blurred beyond recognition. Billions and billions of dollars are rewarded annually to companies who simply push paper or create advertising opportunities, and the great majority of companies who are immensely profitable create the biggest socio-environmental problems.
Brazilian luxury fashion label Osklen, founded in 1989 by designer Oskar Metsahaht, proved that high-quality design and social-environmental responsibility go hand in hand. The company produces clothes that are both stylish and sustainable, made possible through the use E-Fabrics, which were developed to meet strict environmental standards. The Founder recently agreed to sell a 30% stake to textile manufacturer Alpargatas S.A. for approximately $35 million USD, valuing the company at $110 million USD.
Connecting to the value chain without generating massive social and environmental externalities is not only possible, it’s profitable. Companies that reConnect their core activities to the interests of society will build a loyal following without having to bury controversial corporate activities in the footnotes of their financials or pay high-priced attorneys – trust is a valuable commodity.
The opportunities are infinite for those who dare to march to a different drumbeat and start rethinking the way business is done. Strides are being made in every direction, but it takes a mob to make a movement. With a new year comes a blank slate and a fresh set of possibilities, it’s time to make it happen.