Posts

Tony’s Chocolonely was founded 13 years ago by journalist Teun van de Keuken. Teun was shocked to discover that much of the chocolate sold in supermarkets was made by people working in slave like conditions. When he tried to discuss the situation with chocolate makers, many declined to discuss the issue.

Teun van de Keuken, journalist and founder of Tony’s Chocolonely

Malpractices in the cacao industry drove me to set up Tony’s. Many plantations in Western Africa practice slavery and child labour even today. That’s what we want to help to prevent.
Teun van de Keuken, journalist and founder of Tony’s Chocolonely

 

Being a journalist, Teun had investigated the number of children working on cocoa farms and how many were working under illegal and dangerous conditions. This was what motivated him to create Tony’s. 

From the outset, it was clear that a mission to eradicate modern slavery from all chocolate production went way beyond measuring Tony’s direct impact.

 

Alone we make slave-free chocolate, together we make all chocolate 100% slave-free. One of the main things we’ve learnt along the way is how difficult it is to change an industry. After 11 years we’re not there yet. We’re actively seeking partners who apply our model.
Teun van de Keuken, journalist and founder of Tony’s Chocolonely

Tony’s strategy roadmap to achieve the goal of 100% slave-free chocolate consists of three pillars: 

Extract from Tony’s Chocolonely annual report 2018/2019

It is these three pillars that form the measurable impact of Tony’s Chocolonely. The company also follows the GRI (Global Reporting Initiative) guidelines for sustainable reporting as well as the usual financial accounting metrics. he metrics relating to their roadmap are their clear indicators of impact and success. In their 2018/19 annual report, this meant 13 key metrics linked to the three pillars.

The newest of these metrics is linked to the third pillar and is all about the start of Tony’s Open Chain, an open source platform where chocolate companies can access the necessary knowledge and tools to improve their supply chain. 

On its own, a certification label does not enable farmers to live above the poverty line and provide a decent income for their families. The way we see it, chocolate makers are responsible for their chocolate supply chain – not the certification inspector.
Teun van de Keuken, journalist and founder of Tony’s Chocolonely

 

Tony’s Chocolonely

Critically, Tony’s recognises that it cannot do it all by itself and its business goal can only be achieved in collaboration with others. This it acknowledges in the way it reports its impact, highlighting the contribution of others.

In 2018/2019 Tony’s Chololonely expanded to 143 employees with a revenue of roughly 70 million euros. Over 53 million of this revenue came from the home market of the Netherlands, and the business is now looking into international expansion. Take a look at the latest annual report here to find out more about the size and complexity of the problem, about what is going well for the business and what still needs to be improved. 

 

  • This is an extract from the forthcoming ‘The Business of Wellbeing – Alternatives to Business as Usual’ Guide, launching in January 2020. For more extracts, please click here
  • To stay informed of the release of each extract, please sign up to our newsletter here.

If we want to contribute to value creation, health, safety, ecosystem survival and human wellbeing, it is important to include them as metrics in our balance sheet.

Martin Rich, FutureFit

The more you outsource externalities, the better you do financially in today’s system. If companies outsource all harm you never have to account / pay for it.” 
Martin Rich, Co-Founder and Executive Director at Future Fit

We need to consider our own operations and also the full supply chain and product life cycle. Only this way can we measure performance indicators in a similar way to financial performance. However, can we ever compare the value of a tree to the value of a mother in monetary terms?

James Vaccaro, Special Advisor to Triodos Bank

People want to measure everything but it is not always healthy. You can hit the target but miss the point.” 
James Vaccaro, Special Advisor at Triodos Bank

 

Rather than blindly tracking our performance towards a framework like the Sustainable Development Goals, we need a clear idea of the future scenario we want to create as part of our business purpose, a plan on the business’ contribution to this scenario and clear performance indicators on how to get there. 

We need a clear understanding of a desired future scenario that is easy to communicate. This provides us with a shared starting point so we can effectively work together on the desirable change. Frameworks like the Natural Step can help us develop such scenarios. 

Natural Step Framework

 

We then need a bold set of processes, tools and practices that help us facilitate action and a clear set of performance indicators that we can measure success on.

There is always the temptation to take off the shelf (ready-made) indicator sets, both for ease as well as comparison with other organisations. However, we would suggest first asking yourself the question: Do these indicators accurately reflect the change that your business wants to achieve?

Much time and energy is wasted collecting lots of data for tick box activities as opposed to measuring whether the change (those activities were designed to achieve) has actually happened. 

It is not the amount of training provided but what people do with that training that matters. Measuring impact should not be different from measuring key performance indicators (KPIs). A forward-looking set of KPIs should instead be the impact you want to achieve. 

In recent years, alternative return on investment methodologies have emerged to assist businesses in bringing their social and environmental impact into the balance sheet. These can be useful, but only if their limitations (valuing nature, dubious discount rates) are recognised and the data is fed back in a format that enables people to take action. Measuring for measurement’s sake is just not worth it.

Often t the story of how the impact is achieved (rather than the return on investment calculations of the impact) is the most useful information an organisation takes away from such an exercise. 

We can only operate at environmental and social loss for so long, otherwise we will go bankrupt.” 
Martin Rich, Co-Founder and Executive Director at Future Fit

Ultimately business needs to find ways to design wellbeing into their economic system and incentivise those actions that have the potential to substantially contribute to positive impact.

 

Unusual Rigging (Unusual) began their circular journey around five years ago. Embedding of the principles of the circular economy in the business has been the guide for this journey.

Historically, Unusual has employed a rental system for its products which has been efficient at managing material loops. As the company strives to transition towards a fully circular business model, its new goal is to become effective at closing material loops. 

In short, the company is striving to:

  1. Prolong the life of their products
  2. Design their products for disassembly and resource recovery
  3. Offer products as a service

A key innovation that is helping them to achieve these goals is their asset tracking software system. This system, first introduced in 2014 for their own products (and in 2016 for those of their clients), provides Unusual with the ability to conduct predictive maintenance and gives each product a material passport. 

By no longer viewing their products as having a limited lifespan means Unusual are able to design and offer them as a service. It resulted in more than 50 tonnes of steel being reused during the course of a year, saving thousands of tonnes of CO2 emissions. 

“We would define [the circular economy] as an economy ‘where objects never die’ – we are dealing predominantly with ‘technical nutrients’ – finite stock that through digital innovations can continuously be tracked, assessed, utilised and returned with an almost zero marginal loss in values.”
Tom Harper, Director and Head of Circular Economy, Unusual Rigging

 

In terms of closing their own energy needs loop, the company has committed to renewables to power their principle site through the installation of  solar panels. 

An important additional step Unusual are taking is to share the story of their journey of working collaboratively with their community of suppliers and customers to bring the circular economy to their industry. Through collaboration and sharing they are demystifying innovations in the circular economy and showing that it is not just achievable but optimal for medium size businesses to also embark on that journey.

Established in 1983, Unusual Rigging is the UK’s most experienced provider of rigging and stage engineering solutions, working across Europe, principally in the entertainment, special event, exhibition and presentation industries.

  • This is an extract from the forthcoming ‘The Business of Wellbeing – Alternatives to Business as Usual’ Guide, launching in January 2020. For more extracts, please click here
  • To stay informed of the release of each extract, please sign up to our newsletter here.

Currently, about 2.01 billion metric tons of waste are produced annually worldwide and only a fraction of that is recycled or composted. The World Bank estimates overall waste generation will increase by 70% by 2050. In a world full of waste, what products and services does the world truly need? 

Dave Weatherhead, Managing Director of Kinesys

“Business should ultimately aim to give people jobs that improve their lives and to produce products and services that improve the world.” 
Dave Weatherhead, Managing Director of Kinesys

New York University Center for Sustainable Business (CSB) has identified a growing consumer demand of sustainability-marketed products, however these currently only account for under 17% of the current market. But does sustainability as we understand it enhance the world? 

William McDonough, author

“I ask myself occasionally if the word sustainability is the right word to use. If sustainability is just maintenance, perhaps we can go beyond it. Is being less bad being good?” 
William McDonough, co-author of Cradle-to-Cradle

 

Designing products and services that last

Reduce, reuse, recycle. We are all now familiar with this slogan. However, it is still only recycling that has really taken off. 

The problem is, that if we design products that go to waste after a certain lifespan, even if we recycle, the raw material loses value. There is energy lost along the product lifespan, throughout research and development, production, transport, maintenance and the recycling process. Many industries design their products to break after a certain period of time so they can be replaced by a new (possibly improved) version – so called “planned obsolescence” .

“I see design as a signal of human intention. We need to stop designing things for end-of-life, designing for next use is just a different way of thinking.” 
William McDonough, co-author of Cradle-to-Cradle

 

Image: Ellen MacArthur Foundation infographic

The image above presents three principles of a circular approach for product design. Waste and pollution are largely a product of how we design and so can be designed out. Keeping products in use is all about reusing, repairing and remanufacturing. Regenerating natural systems is making sure that every end of use /spare resource is food for another sector.

Creating space for learning and innovation

Traditional innovation processes tend to leave out the bigger ecosystem picture and to focus on satisfying consumer demands. There is a need to map raw material flows, energy use and stakeholders in order to develop a balanced approach that creates value for all that are involved. 

“The current linear economy is following a cradle-to-grave model, we are looking at eliminating the concept of waste using biological and technical nutrients.” 
William McDonough, co-author of Cradle-to-Cradle

No matter if you apply human-centred design, design thinking, biomimicry or circular design processes, a circular design approach includes ecosystem awareness in every step of the product and service innovation process.

Offering services rather than products

One way to radically reducing material use is to move from offering to sell a product to selling a service. Offering products as a service is a model which returns the ownership and responsibility of the product back into the hands of the producer. Selling a product as a service makes energy efficiency and sustainability profitable. It makes cutting costs through designing for disassembly and resource recovery attractive. Modular design becomes the default for designers, making extending the life of the product attractive. 

A good example of this approach is Philips’ selling of light as a service rather than lighting units as a product. With a 5-year service agreement to supply lighting in Schipol airport, designing lighting units to be easily repairable makes financial sense for Philips and reduces the price to the client. 

For Riversimple, a company featured in another case study in the guide, they include not only all elements of car ownership in their service offer – the vehicle, repair, insurance but also the (hydrogen) fuel. This allows them to exercise their greater buying power to keep down (hydrogen) fuel costs.

Moving towards a circular economy

As we move towards a circular economy, we start seeing more opportunities in stakeholder collaboration. Suddenly organizations like Circle Economy find that a neighbourhood community can benefit from the heat created during the manufacturing process of a nearby factory, sharing platforms can facilitate the exchange and reuse of goods and we can benefit from open design processes that involve citizens to solve local challenges, like with OpenIdeo

A circular economy system is one where collaboration prevails and where there is no need for patents and idea ownership. An example here are Tesla and Riversimple. The real value is created through expertise, mutual benefit and collaboration. Learn more about the circular economy here. All the concepts mentioned in this article talk to the wellbeing economy – the wellbeing of the planet.

Maroma was founded in the late 1970s by Paul Pinthon and Laura Reddy and is now a multi-million dollar business with over 80 staff. The Indian business sells home fragrance and body care products: incense, candles, aromatic essence, reed diffusers, room fresheners, votive, candles, gift sets, potpourri, fragranced mats, perfume spirals and perfumed sachets.

The Auroville community owns all shares in Marona. While the CEOs of Maroma are founders and follow the charter of Auroville, along with the other business owned by the community, Maroma’s employees have the autonomy to run and manage the business.

Maroma’s profits constitute its contribution to the Auroville Foundation. These funds serve to finance and create infrastructure assets in the sector of road building, water and sanitation, power (including from alternate sources such as solar, wind and biomass), as well as telecommunication, and housing for Auroville residents.

Erinch Sahan, World Fair Trade Organisation

“Maroma is a quintessential example of an enterprise fully embedded in its community. It has a governance and business model that locks-in its social mission. After 40 years of serving its community, Maroma demonstrates the resilience of the Fair Trade Enterprise model. It shows that business can be designed to put people and planet ahead of growing its own profits.”
Erinch Sahan, CEO, World Fair Trade Organisation

 

 

Maroma aims to achieve a balanced relationship with its suppliers through selecting suppliers that are able to offer products that match product specifications but allowing suppliers to set their own prices. If suppliers get into economic difficulties, Maroma looks to support them to move through those difficult times.

Maroma is verified by the World Fair Trade Organization as a social enterprise that fully practices Fair Trade. This means they structured as a mission-led enterprise as well as implementing the 10 Fair Trade Principles in all their operations and supply chains.

Find out more about Maroma in this World Fair Trade Organisation podcast.

  • This is an extract from the forthcoming ‘The Business of Wellbeing – Alternatives to Business as Usual’ Guide, launching in January 2020. For more extracts, please click here
  • To stay informed of the release of each extract, please sign up to our newsletter here.

 

James Vaccaro, Triodos Bank

If people feel they cannot be seen by anyone else it brings out the worst in them. If they feel part of a community, this brings out the best in them.”
James Vaccaro, Special Advisor at Triodos Bank

In business, the value of stakeholder engagement is often not fully appreciated. The results of such engagement usually only become visible in the mid to long term. When we consider social and environmental impact as part of business, we need the long-term support of our stakeholders. 

Recognizing the role we play in the wider system and in our industry can make what we do much more powerful. There are three levels in which we see community play an essential role in supporting business in the wellbeing economy: 

Genuine and balanced supplier relationships 

Suppliers form one of the three most pivotal relationships we have at work alongside customers and colleagues. Yet how often do we think of them as part of our community? How balanced is the relationship we have with them? 

It might be the case that our suppliers are larger and more powerful than us or vice versa. Regardless of which way around it is, genuine and balanced relationships can be forged if businesses go beyond compliance to a deeper relationship of shared values. 

Often it is easier just to tick a box, but we have seen that the most forward thinking businesses go deeper to cultivate relationships based on shared values…and why wouldn’t they? 

Building relationships with suppliers around a shared purpose and with similar value sets can increase reliability and simplify collaboration.

As the economic systems begin to transform, will we only be able to succeed by treating suppliers as a vital part of our community.

Ultimately the boundaries around organizations will become less fluid. What we will see will resemble an organizational ecosystem rather than large organizations.”
Daniel Christian Wahl, author

 

 

Finding your place in the community

Often as a business, we choose to locate our offices and sites based on accessibility, tax rates and employee wages. But how much do we consider our relationship to the communities we are a part of?

Business can be a catalyst for exchanging knowledge and collaborating at the local and regional level, generating value in their location and beyond. Through working with other local stakeholders early on, a business will find how  it can contribute to supporting a vibrant local area. 

Rehema Isa, Womanomics

We need collaborative creation processes to define and design together what wellbeing means in each organization and local context. We need access to spaces that allow us to be part of the change scenario and explore how we can contribute to the ecosystem.”
Rehema Isa, Womanomics

 

 

Depending on local conditions a businesses contribution could look different, for example: ensuring that employees get safely to their workplace and back home during a night shift or supporting local governments with education around waste management and recycling. 

Recognizing your role in the wider system

Being a pioneer is not easy, but if we want to achieve change in our sector, we need the ability to recognize the potential that comes with forging a new path. 

No matter if you work in the chocolate industry, banking, hospitality or reforestation, hearing how challenges were experienced and solved by other leaders can give us inspiration. Understanding where luck and human connection made a difference, gives us courage to take up the challenge of rethinking business as usual.

We at Triodos are an important drop in the ocean, but we remain a drop in the ocean. Only if we recognize our place within the wider systemic spectrum can we really have an impact.
James Vaccaro, Special Advisor at Triodos Bank

 

Many organizations that provide support to businesses have recognized the importance of communities of practice. Organizations like the Impact Hub have based their business model on the value they provide through an active community of support.  

That’s why communities of practice provide great support to leaders and changemakers:

We see ourselves as a provider of credit and capital. However we also provide value in being at the centre of a community and therefore play an important social function.
James Vaccaro, Special Advisor at Triodos Bank

 

 

Lancor is a cooperative with 89 employees and 76 years of history. The company started off as a family business and is now specialised in the production of elevation machinery and wind generators, with a large additional portfolio of innovation and development projects. 

In 2005, the business was in a moment of crisis when Koldo Saratxaga from NER Group met with them and offered a transition towards a model of self-organization. In a leap of faith the employees decided with near unanimity to embrace the NER group model. In 2013 the cooperative Lancor 2000 S.COOP was founded. 

This was a radical change for the organization. The team had experienced many tensions and mistrust in the past: managers had committed to a workload that workers in the workshop didn’t feel was realistic. The change was challenging for former leaders who had held their positions for many years. Also for the workers, who struggled as they suddenly had to coordinate work themselves in their teams. 

“Most of us who coordinate have started in the workshop, like me. We got the opportunity from our coworkers to be coordinators.”
recalls Javier Dosuna, General Coordinator at Lancor

Javier Dosuna, Lancor

Today, Lancor has worked for over 10 years with a ratio of 99.5% in-time delivery, something that few manufacturing companies ever achieve. When the cooperative started the transformation, the business was depending on 4 clients, a situation that created a great risk for the business. Today the team has managed to widen the client and product portfolio. 

“We have won the trust of people through absolute and total transparency. Every month we meet and all information is shared with relation to finance, client situation etc. and we make decisions around investments where everyone can contribute and is represented.”
comments Javier Dosuna

 

From a situation of 450k Euros of loss in 2005 the company became profitable in 2006 and generated a €1M profit in 2018 (with a turnover of around €20M) with almost the same number of employees. 

The NER Group model is flexible but never the same, so we have adapted it to our needs. We are what we want to be and work as a combined entity that makes decisions about its development.”
adds Javier Dosuna, General Coordinator at Lancor

 

NER Group is an association in which diverse organizations, united by a shared organizational model, approach and culture that fosters self-organization, share experiences, synergies and knowledge. The group represents nearly 2,700 employees with an annual turnover of approximately €400 million. 

  • This is an extract from the forthcoming ‘The Business of Wellbeing – Alternatives to Business as Usual’ Guide, launching in January 2020. For more extracts, please click here
  • To stay informed of the release of each extract, please sign up to our newsletter here.

Nobody is born a perfect leader or entrepreneur. To be good at either means being able to take a risk. A leader might at first fear such actions, as they might think it appears as ‘weak leadership’, or not ‘leading from the front’. These fears are understandable, but as a business matures we naturally need to create space for participatory leadership…you can’t do everything yourself!

Lili David, Sociocracy 3.0

“Decentralize as much as possible, and retain as much influence as necessary.”
Lili David, Co-Developer at Sociocracy 3.0

 

Skilled leadership comes through an awareness of yourself as well as your changing external conditions. Understanding how the two combine is critical to knowing how your leadership can best serve the business. 

We have identified two key features of leadership and participation in a business that can flourish in a wellbeing economy: Trust and Control

 

Trust as a balancing act 

According to recent 4 year research study on team effectiveness carried out by Google, psychological safety was identified as the single most important dynamic of an effective team compared to a less effective one. Their research also revealed that sales teams with high ratings for psychological safety actually brought in more revenue.

A climate of openness with the possibility of admitting errors and speaking about them openly, is one of the key factors that also Harvard Business School Professor Amy Edmondson confirms to be crucial for psychological safety. 

Miki Kashtan, author

When we don’t experience trust, as when we don’t experience safety, we shut down, protect, and hide our vulnerability. We also, in both cases, tend to place responsibility for our experience on the outside.
Miki Kashtan, author and international CNVC trainer (from her blog post) 

 

As a leader you can support a sense of safety by framing challenges as open learning questions that require everybody’s input. 

 

Marcos Leite, OLX Brazil

“We need people who challenge the status quo, and openness in the management team to be challenged.
Marcos Leite, EVP & Chief Commercial Officer at OLX Brazil

 

Showing your own fallibility by openly requesting support and modelling curiosity by asking many questions can also help to stimulate a learning environment that creates space for innovation, exploration of new ideas and the possibility to make mistakes.  

 

Feeling good in and out of control 

We like to feel in control and often delegating responsibility is a big challenge for leaders. Sometimes, because of a lack of knowledge and maturity in the team. Sometimes because the leader struggles to let go of control. 

How can we provide the minimum amount of structure to allow the maximum amount of autonomy in our team; the best value to our customers; whilst making the leader feel good being ‘out of control’?

Erinch Sahan, WFTO

To move towards wellbeing economy you need to give up power, are the decision makers ready to do it?
Erinch Sahan, Chief Executive at World Fair Trade Organization

 

‘Giving up’…or as we would rather put it…’sharing’ power can be one of the best things a leader can do for the organisation. The Google study has identified dependability, clarity and structure as additional key elements for effective teams. 

 

Distribute the power to influence, to enable people to decide and act for themselves within defined constraints. Being clear about responsibilities and constraints when you delegate, as well as offering support if necessary, are key to the success of effective collaboration.Lili David, Co-Developer at Sociocracy 3.0

 

The benefits of effective delegation of responsibilities can be many: Firstly, delegating decision making creates a broader accountability base within the business. Secondly, decisions can be more effective as they no longer just rely on one person’s gut. Decisions can be made by those closer to the effects of those decisions.

Activating collective intelligence across the system

Ultimately, sharing control can liberate a leader as the business grows to provide guidance and strengthen the capabilities of their team. It can afford them to play the role of coach and mentor in areas they once dominated themselves.

We want to spend the time we have available where we can create most value, and often leaders create value by serving as motivational leaders, inviting in clarity and structure where it is needed and creating a culture of learning and innovation. 

James Vaccaro, Triodos Bank

We need to support founders with the elements they struggle with most so they can focus on what they are good at and where they can create impact.
James Vaccaro, Special Advisor at Triodos Bank

 

 

 

 

At the end of 2017, Auchrannie resort on the island of Arran in Scotland became the first Scottish resort to transition to a model of employee ownership. A trust now owns 100% of the company’s shares on behalf of its 160 employees.

The co-founder, and Managing Director since 2010, Linda Johnston said of the employees in relation to the transfer:

“They realise that what each of them does will affect the future success of the business and that this is directly linked to their own success, so they have already become more engaged in making the business better and understand the power and influence each and every one of them now has on their own future.”

 

New targets for the business

New efficiency targets for the business, agreed by the ‘new owners’, created the conditions to become a Real Living Wage Accredited Employer in April of 2018.

While the efficiency targets helped boost profitability, paving the way for the introduction of the Real Living Wage, there was also a recognition that the introduction of the wage would in and of itself support further financial benefits. These included lower staff recruitment costs (due to higher retention), greater productivity and increased occupancy from an improved reputation.

Linda Johnston, MD of Auchrannie resort

“Employee ownership will give the whole Auchrannie team a stake in the continued growth of the business. All of us will work together to build a more efficient, sustainable and profitable business.”
explains Linda Johnston

 

Since the acquisition of a 16-room guest house in 1988 by Linda and her late husband Iain, the resort has become home to two 4-star hotels, 30 5-star self-catering lodges, 14 luxury ‘Retreats’, two leisure clubs, 3 restaurants, children’s playbarn, a destination spa and outdoor adventure company.

 

Ownership transfer as an exit strategy

The ownership transfer was born of a desire for an exit strategy by the Johnston family (sole owners of the resort) that would allow the business to continue to flourish as well as upholding the ethos of the company, maintaining and motivating the team plus continuing the community’s access to the facilities of the resort.

“We are confident that the collective efforts of our fantastic team will continue to strengthen Auchrannie’s customer care and community focus as well as improving the sustainability of the business going forward.”
adds Linda Johnston, MD and former owner of the resort

Crucially, the transfer arrangements were designed for it to be affordable to the business to be able to reinvest in the future as well as financially reward the employees after the transfer. The previous shareholders will be paid out of the profits of the business over the next 25 years.

  • This is an extract from the forthcoming ‘The Business of Wellbeing – Alternatives to Business as Usual’ Guide, launching in January 2020. For more extracts, please click here
  • To stay informed of the release of each extract, please sign up to our newsletter here.

 

Riversimple is a car manufacturer that has taken value creation to a completely different level. The business was founded to address the enormous environmental damage created by personal transport, with the purpose ‘To pursue, systematically, the elimination of the environmental impact of personal transport’. The founders recognised that they serve not only investors but a total of 6 different stakeholders: The Environment, Customers, Communities, Staff, Investors and Commercial Partners. 

“We believe that it’s possible to design a business model that aligns the interests of the business with those of people and the planet but the mindset of the business has to be aligned in order to conceive of and implement such a model, so this is a further reason for redesigning the governance.”
Comments Hugo Spowers, Chief Engineer and Founder of Riversimple

 

As Buckminster Fuller said, “you never change things by fighting the existing reality; you change things by making a better model that makes the existing model obsolete” and so the intention is to make more money from doing the right thing than business as usual makes from doing the wrong thing.

Hugo Spowers, Chief Engineer and Founder of Riversimple

“If a business is designed to maximise financial return, delivering environmental and social return as well is inevitably a cost on the bottom line and competes with the financial return. However, if a business is designed to deliver environmental and social return as well as financial, it enhances rather than competes with financial return.”

 

The company did decide not only to include these actors in the governance model, but also to make them the key decision makers in the ownership structure. The aspiration was a business model with the capacity to ‘see’ in all directions and then ‘deliver’, even in the face of complex challenges.

“The original intention was to serve the ‘basket of interests’ so often referred to by economists. However, the interests of investors are not always well correlated with the interests of society and the planet, so we decided to embed the Purpose structurally in the governance of the company, rather than relying on altruism.”
comments Hugo Spowers, Chief Engineer and Founder of Riversimple

 

With that in mind, 6 ‘custodians’ with separate legal entities were put in place, each being a separate and independent entity, representing a set of members that represent each stakeholder.

image: Riversimple value creation model, riversimple.com

 

“Shareholder value has primacy in UK law, so we felt that the simplest way to deliver that without a conflict of interests was to make the Environment and other key stakeholder groups shareholders.”
adds Hugo Spowers

 

A Stewards Board ultimately ensures that the board is abiding by its fiduciary responsibility, “To balance and protect the benefit streams” of each of these stakeholders. 

Hugo Spowers, image source: riversimple.com

“The Board’s duty is to pursue the Purpose while balancing and protecting the benefit streams of all six stakeholder groups, rather than maximising the value of one.  It is essentially a partnership model and you cannot have a partnership in which one partner has control, because then it’s not a partnership.”
explains Hugo Spowers

 

While governance is distributed, money flows in a similar way to any normal business: 

“Dividends still go to the equity holders but that does not mean that control all goes to the equity holders. Equity and control are decoupled and addressed separately – ownership of all the equity does not mean control of all the business.”

 

This ownership model has especially proven its value in difficult moments, where the solution to balance all interests was not obvious.

“Having stakeholders actively interested and involved in the business means that we have the benefit of their wisdom and perspective and they hold us to our Purpose, which is fundamentally dedicated to the wellbeing of society and the planet.” comments Hugo Spowers

Riversimple has developed a unique business model that aims to completely rethink the automobile sector, from open-source design to a circular economy approach to car use, with the goal to minimize environmental impact deeply rooted in the organizational backbone. 

  • This is an extract from the forthcoming ‘The Business of Wellbeing – Alternatives to Business as Usual’ Guide, launching in January 2020. For more extracts, please click here
  • To stay informed of the release of each extract, please sign up to our newsletter here.

No founder will ever forget the day their business legally came to life. The birth of this new entity comes with a great sense of responsibility. Many business owners feel a great deal of emotional attachment to their creation as it unfolds, develops and grows. 

Ownership and governance play a crucial role in business as we attempt to transition towards a wellbeing economy. Holding on to what is most important can require reimagining what it means to own something. Here are 3 important elements to consider: 

  1. Decision making
  2. Growing pains
  3. The Social and the Environmental

How can ownership support effective decision making?

Recent research has shown that more than two thirds of employees are not fully engaged in their work, affecting motivation, commitment and ultimately also productivity.

James Priest, Co-developer of Sociocracy 3.0, LearnS3

“Collaborative endeavours will be more effective if people affected by decisions are involved in making them, or at least that they are able to influence decisions that affect them, on the basis of sound reasons for doing so.”
 James Priest, Co-developer of Sociocracy 3.0, LearnS3

 

According to a recent McKinsey survey, we spend about 37% of our work time on decision making.

Decision making, made in the absence of an understanding of the full picture, can affect the level of agility to respond to a changing environment (changing market demands, risk factors, regulations etc.). 

In commonly used ownership structures, influence and business information are mostly centralised to a few decision-makers. As a result, employees, customers, and affected communities and the planet are often left out of decision-making processes.

“Management hierarchies centralize decision making. While this is effective in some contexts, collaborative endeavours are more likely to succeed if you shift responsibility for significant elements of decision making close to where value is created.”
 James Priest, Co-developer of Sociocracy 3.0, LearnS3

 

Ultimately, ownership should not be a roadblock to productivity. It should enable it by delegating governance to those affected.

How can ownership affect our trajectory?

Many companies started out life in response to a social need – sometimes influenced by their founders’ religious beliefs. The UK confectionery Cadbury’s was begun by a Quaker. The Spanish cooperative Mondragon by a Catholic priest. The UK retailer Marks and Spencer by an impoverished Jewish boy from Belarussia. These organizations, like many others, have struggled through organisational growth and change of ownership to stay true to, and serve, their initial purpose. 

An ownership and governance structure that supports affected key stakeholders to have a voice in decision-making can help organisations to stay true to their mission. 

Katherine Trebeck, author of The Economics of Arrival

“Investor demands on business can take away from a business’s original mission. Without ownership and governance models designed to protect the interests of all stakeholders, there is a risk that actions focussing on the short-term will prevail.”
says Dr. Katherine Trebeck, author of ‘The Economics of Arrival’

 

As companies grow, they often start to be viewed as commodities, controllable by the highest bidder. Business-as-usual governance models are designed to maximise shareholder influence and often ignore stakeholder interests.

 

Martin Rich, FutureFit

“Listed companies are owned by nobody because they’re ostensibly owned by everybody, the result is a lack of responsibility.”
Martin Rich, FutureFit

 

This means economic interests and short-term profit gains can often overrule organisational values and principles, social and environmental concerns and even the long-term success of the business.

Even Patagonia, often held up as the poster child of sustainability, is wrestling with these questions as they head north of the $1bn mark in annual sales. They are beginning to question whether their scale is a hindrance to being truly regenerative.

Hunter Lovins, President of Natural Capitalism Solutions

“Scale is a real problem for change.”
Hunter Lovins, President, Natural Capital Solutions

 

As a business grows and occupies a new role in the market, there is a need to evolve to a model of stewardship. This means influence is delegated to a range of stakeholders to ensure informed decisions can be made by those affected.

 

Who’s responsible for the social and the environmental?

Traditionally, consideration of social and the environmental impacts was an afterthought for businesses, once the business of the economic i.e. financial had been taken care of. That has begun to change with statements from various business groupings that profit maximisation will no longer be the sole focus for their business.

Patrick Andrews, Co-Founder of Human Organising Co.

As a general rule, ownership brings responsibility. So it’s something of an anomaly that the owners of companies have no legal responsibility for their actions. If you own a share in a company that breaks the law, pollutes the environment or even kills someone, you can’t be touched. Is this not strange? 
Comments Patrick Andrews, Co-Founder of Human Organising Co.

 

However, saying it and actually doing it are two very different things. One way to help ensure we move from words to action is by bringing other voices into the governance model. Check out our first case study – Riversimple for such an example. Another is employee ownership, a model discussed in our second case study, that of Auchrannie Resort.

Together with a number of local and international stakeholders and investors, Futuro Forestal developed the ‘generation forest‘, a combination of the dynamics of a natural forest and reforestation.

This combined approach allows the organisation not only to tackle climate change by absorbing carbon dioxide and ensuring biodiversity, recover soils and water sources, it also helps to make a viable business case that reduces poverty locally by making sustainable forestry possible and economically viable. 

Andreas Eke, Futuro Forestal

“The natural forest in itself doesn’t have a viable business case, and political and financial entities lack the ability to create a system where environmental services are paid for.” Andreas Eke, Director of Futuro Forestal

Even though the company is largely driven by foreign impact investments, the business model ensures long-term profitability. Futuro Forestal attempts to be a game changer for the forestry sector:

“Generation forest is a concept, not a product. We need others to use it, so we can be on time with climate change. Our work is a small drop into the ocean and we have to be successful with what we are doing, so others copy what we do.” explains Andreas Eke.

With alarming climate change data, Futuro Forestal is in the process of expanding its approach through land ownership in addition to forest management and environmental services provision, creating an asset in which to invest.

What does success mean at Futuro Forestal?

 

“The biggest success moment for me was when the Jaguars came back to an area where we had reforested; an area that had been a cattle field 5 years ago. That was a moment of plain fulfilment, we celebrated this moment with champagne.” remembers Andreas Eke.

Futuro Forestal started off as a small family retail forestry company that has, over the last 25 years, transitioned to one of Latin America’s largest and premier providers of tropical hardwood, with reforestation of over 9000 hectares, the creation of 4,500 hectares of private reserves and FSC and bcorp certification. Find out more about generation forest and how to support the initiative here.

Images in this article: Copyright FF, 2 and credits to 3 Emir Lebedev.

To stay informed of the release of each extract, please sign up to our newsletter here.

This is an extract from the forthcoming ‘The Business of Wellbeing – Alternatives to Business as Usual’ Guide, launching in January 2020. For more extracts, please click here

A clear future vision is key to redefining the way we do business today. If we want to become part of the solution, it is essential to create time and space to reflect on what kind of future we would like to contribute to; how can we make the wellbeing of people and the planet an integral part of our business goals? 

Marcos Leite, OLX Brazil

“We need to think beyond shareholder value and aim for improving people’s lives.”
Marcos Leite, COO, OLX Brasil

 

A business that will succeed is one that is able to make decisions that favour people and the planet where there might be a trade off with the goal of profit maximisation.

Why does common business logic no longer serve us?

The assumptions upon which the current economic system were built, simply no longer hold true: Jean-Baptiste Say articulated in 1803 that ‘natural resources cannot be exhausted’, therefore they are ‘out of the scope of economic sciences’.

Thomas Pikkety in his book ‘Capital’ showed to be false the assumption that free market capitalism will ensure the returns from capital and labour stay in balance. The returns from capital will always exceed those from labour under the current system, inevitably leading to ever growing inequality in economic life. 

Daniel Christian Wahl

“The economic and monetary system is still driving the process: Our current system has an inbuilt growth imperative and structure drives behaviour. In all of our good intentions to redesign things, we are not going deep enough. We need to be more radical if we want to make a difference.”
says Daniel Wahl, author of ‘Designing Regenerative Cultures’*.

 

To compound all of this, current company law (in many jurisdictions) is not explicit in its support for businesses to incorporate environmental and social impacts into their approach to business.

 

So, what can we do?

Most decision-makers gradually move into improving employee wellbeing ,supplier relationships and addressing community concerns to secure their market position and talent. While this has certain value, often the real deal lies in finding the hidden opportunity: 

How can we be the first to rethink our industry model, delivering products and services that add to human and ecological wellbeing? 

Given the increasing importance of environmental and societal challenges, redirecting the value creation of our businesses’ product or service offerings to serve society and the planet ensures business survival. In most cases this also means involving colleagues, and stakeholders in the process and adapting the vision of a wellbeing economy to each local context: 

Rehema Isa, Womanomics

Until we picture wellbeing in different cultural contexts we will not know what it actually means.”
Rehema Isa, Founder of Womanomics, South Africa

 

 

Ultimately, it also comes down to the question of how we want to leave this place behind for future generations and what a fulfilled life would truly look like for us as individuals, those we care about and for those we do business with.

*Find out more about Designing Regenerative Cultures by Daniel Christian Wahl here.

Business plays a vital role in the transition to a wellbeing economy. It is a vehicle for creativity and innovation with the potential to be one of the most effective advocates for change.

Working together with government and civil society, businesses have a major role to play in creating the means of meeting human and planetary needs. 

In our current system, finance and the economy tend to serve themselves rather than serving society and the planet. A wellbeing economy is an alternative approach, in which we intend to reverse these effects: Finance serves and incentivises the economy, the economy serves society and ultimately the planet as part of its intrinsic purpose:

Martin Rich

Martin Rich, Future Fit

“Today society and planet are serving business while business needs to be the servant of society.”
Martin Rich, Co-Founder and Executive Director at Future Fit

 

Given the complexity of the ecosystem we are part of, there is no one path that can help a business transition to a new economic system, and no one model for a business that flourishes in the economy of the future.

We will need multi-stakeholder collaborations to address today’s most pressing issues. We will need businesses playing a vital role in driving innovation and finding solutions that ultimately allow society and the planet to flourish.

Here are a few elements that such businesses are likely to have in common:

  • Connection – a corporate culture that aligns the organizational purpose with collective values 
  • Dignity – a business model that creates the means for employees, customers, suppliers and other stakeholders to live dignified lives
  • Fairness – a business model that distributes wealth in a way that supports equity  and equal opportunities
  • Nature – use of natural resources that flow back into ecosystems in ways that support regeneration rather than cause harm 
  • Participation – balanced and values-based relationships with all stakeholders 
Baby steps or taking the big leap?

Most businesses take small incremental steps to improving their impact on society and the planet, without compromising profit. 

In times where we are surpassing our planetary boundaries, many argue that it is simply not enough to be sustainable. We need to build regenerative systems that allow us to make up for the damage caused and add value back into the ecosystem in which we live. Kate Raworth has developed a corporate to-do list, in which she lists different levels, in which businesses respond to the environmental crisis. She maps stages from ‘doing nothing’ to ‘being regenerative’. 

But to get to where we need to, requires building a bridge and a bridge is built from both sides.

Kevin Bayuk

Kevin Bayuk, Lift Economy

“There is a paradigm shift between a new (transformative) economy and the old economy.” says Kevin Bayuk from Lift Economy
“Some people think if it is not going to change the world it is terrible, but we need incremental change too in order to build momentum for new economic models to emerge.”

 

No matter whether you decide to attempt a radical shift or to take an incremental approach: an essential first step towards alternative ways of doing business, is to build individual and organizational awareness of how our current business operations impact, and potentially damage, society and the planet.

Collective awareness is a first step to collective learning, and we will not be able to do this transition on our own. Once the value of taking an alternative path is recognised across the organisation, ideas and opportunities will emerge and more people will be willing to explore alternative ways of doing business.

This is an extract from the forthcoming ‘The Business of Wellbeing – Alternatives to Business as Usual’ Guide, launching in January 2020. For more information and further extracts, please click here.