February 12, 2016

Which of Today's Business Practices Will Seem Barbaric in the Future?

My family and I recently visited the Jefferson Memorial in Washington, DC. Surrounding the giant statue of the man himself are four quotes in foot-high letters. They all, remarkably, still resonate today, but one in particular struck me hard:

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[As] the human mind becomes more developed, more enlightened, as new discoveries are made, new truths discovered and manners and opinions change...institutions must advance also to keep pace with the times. We might as well require a man to wear still the coat which fitted him when a boy as a civilized society to remain ever under the regimen of their barbarous ancestors.

What a profound level of self-reflection. Jefferson knew what the world considered acceptable in his time -- such as advocating individual liberties while owning slaves -- could become intolerable in the future. So he suggested that rules and institutions remain flexible to allow for changes of hearts and minds.

Jefferson was speaking mainly about keeping governments in particular up-to-date. But we should apply this thinking to all institutions, including business. In previous eras, businesses relied on many horrific practices. Slavery and indentured servitude propped up the pre-industrial age. And child labor, 7-day workweeks, and unchecked monopolies were the norm into the 20th century.

Sadly, many of these practices continue in some form today, including even what'seffectively slavery in a range of industries and countries. But mainstream business finds the practice abhorrent and the prevalence is greatly reduced.

But what about ways of doing business that are perfectly common now? What will our descendants consider unseemly, unacceptable, or just plain stupid? I reached out to the Twittersphere to ask for opinions on this question and combined their thoughts with my own list. Here are 10 business practices that we are already challenging, and a few that we need to question:

1. Paying women less than men for the same job.

2. Overall levels of inequity, including absurd ratios of executive pay to average salary.

3. Emitting gases that change the climate without paying for them. Climate change is intergenerational oppression. More simply, a few tweeters pointed out that using energy from fossil fuels would be quaint someday.

4. Not putting a value or price on all that the natural world provides (free clean air and water, a stable climate, materials, flood prevention, and more). As consultant Sanjay Kapoor put it, we can't continue to "boost economic capital while depleting natural capital."

5. Linear business models that take in materials, produce products mainly for quick consumption, use them, and then throw them out. As we build circular models, we will see our current model as incredibly wasteful and expensive.

6. Letting short-term investors and stock price gyrations dictate our actions. Investor Dan Saccardi tweeted that it will be anachronistic that sustainability considerations (or "ESG") are an "afterthought/niche rather than baked into every investor's calculus."

7. Running businesses as groups of financial assets, not as groups of people making and doing things for other people (i.e., a common lack of humanism in business).

8. Seeing the role of business as purely financial rather than serving some need and purpose in the world. Millennials in particular want to work for companies that share values and have purpose.

9. Focusing solely on competitive advantage versus more collaborative practices that enlarge the pie for all. Kimberly-Clark sustainability exec Peggy Ward suggested that "not working collaboratively will be unacceptable."

10. Keeping hidden almost anything about your product, ingredients, supply chain, compensation, investors/backers, employees, and so on. Transparency will be expected.

All that said, we should still acknowledge what some of our dated practices accomplished, even as we look to move beyond them...

• Fossil fuels were not immoral -- we needed them to build a modern society. But we now know what they're doing to our health and the planet. And, most importantly, we have alternatives.

• Linear models get things done -- Henry Ford and Frederick Taylor helped the world produce orders of magnitude more than ever before. But now it's time for new levels of innovation to close loops and treat physical capital as precious.

• Investor-led capitalism was a reasonable experiment, but it may be time to take what works -- such as efficiently matching human and financial capital with needs and investments -- and improve upon it, infusing more humanity into the process.

Change is not easy. Moving to less barbaric modes of operation will require (at least) three things: flexible structures of governance (Jefferson's main point), a change of mindset (easily the hardest part), and innovation and technologies that enable the shift.

Picturing and bringing about a better future is not an academic exercise that only applies to some imagined great grandchildren. Given the longer lifespans and the radically increased rate of change, arguably we'll be around to experience the ramifications of our own choices. We're our own ancestors.

As we look forward into this new year and consider where we want to be in 52 weeks -- and 520 or 5200 weeks -- how can we avoid being barbarous ancestors? Or to flip the script, how can we be kind to our descendants and ourselves?

(This post first appeared on Huffington Post.)

(Andrew's new book, The Big Pivot, was named a Best Business Book of the Year by Strategy+Business Magazine! Get your copy here. See also Andrew's TED talk on The Big Pivot.

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