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The Case For Complexity: Leading With Shared Value In Mind

Forbes San Francisco Business Council
POST WRITTEN BY
Milo Shammas

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Nearly every business leader proclaims their commitment to responsible leadership. So why are so many shared challenges worsening? I believe business leaders must reorient around an expanded concept of leadership that integrates local context and systemic impact.

Every day, I meet hard-working managers, entrepreneurs and executives committed to responsible leadership. In 2018, that’s not an easy commitment to keep. Would-be leaders must contend with innovative competitors, impatient capital providers and vertiginous customer expectations. Those are table-stakes: You have to meet those challenges just to stay in the game. But the game is changing too. Businesses are buffeted, now as never before, by gusts of global uncertainty, explosions of information (and misinformation) and the twisting permutations of new technologies.

And every day, we learn of the growing urgency and increasing complexity of our shared challenges.

Among these are:

• Environmental challenges: According to one older Guardian article, more than 50,000 species go extinct annually, and The UN said climate change poses an existential threat to our own species in 2018.

Technological challenges: Moore’s Law was just the tip of the iceberg. It seems to me that the ratio of performance to price in information and biotechnology has grown recently. The resulting changes could pose big, hairy ethical questions, from how to deal with the “manipulation engine” of social media to whether to program extinction into harmful animal species, a topic recently covered in The Economist (paywall).

• Economic challenges: Economic inequality is stark. According to a House of Commons projection reported by The Guardian, by 2030, 1% of people could own 64% of the world's wealth.

The above list is wildly incomplete, but you get the idea.

I believe an effective response to these challenges must confront the limits of our present model of responsible leadership. Here’s a five-step, tongue-in-cheek version of the present model:

1. Within the law, do whatever works to amass material wealth.

2. While accumulating wealth, find ways to give back to your community. If you are strategically inclined, seek out win-win opportunities, which allow you to give back while indirectly contributing to your own (further) success.

3. Once you have amassed a great fortune, give away a significant portion now or after death.

4. Use your remaining time to shepherd the ongoing giveaway of your wealth or to otherwise better society.

5. Optionally, consider politics.

This model actually has a lot going for it: a long history, evangelists like Andrew Carnegie (see "The Gospel of Wealth" Essays and Other Writings) contemporary advocates like the Clintons and Gates, and the fact that succeeding at it puts you in legendary company.

Unfortunately, this model also seems to be struggling under conditions of increasing complexity.

My best source of knowledge for dealing with complexity is the natural world. With over 4 billion years of research development, it has a lot to teach us. As an author and advocate, I have long argued that human health depends on plant health, and that plant health depends on soil health. As a CEO and inventor, I’ve been working to enable and optimize those interdependencies my entire adult life.

Our body’s processing of food offers an instructive natural case of how complex systems can require carefully constrained solutions.

You need fuel to power your body. Specifically, you require a lot of glucose. Junk food can get you plenty of glucose, fast and cheap. The refined carbohydrates and processed sugars it contains break down easily. You needed fuel, and you got it.

Here’s the problem: The body is complex. It’s generally not looking for simple solutions. As with many of today’s shared challenges, this problem is multisided. State the problem of powering the body too simplistically and you could miss other local needs. The nutrients that were processed out of those refined carbohydrates actually matter a lot. Worse still, sudden glucose spikes could be harmful. In short, the junk food solution -- in both nutrition and business -- fails because it reduces a complex problem to a narrow, nuance-free metric.

Insight 1. Don’t oversimplify.

Effective approaches embrace multiple and dynamic variables. This suggests a variety of possible edits to the five steps above, such as this:

Within the law and the dynamic, ongoing sustenance requirements of the ecosystems in which you source, produce, and distribute, do whatever works to amass material wealth.

That change means we have to take metrics like water use, energy use, and carbon footprint seriously as we build our businesses. Organizations like the Rocky Mountain Institute offer tools for profitable waste reduction. Low hanging waste streams that can be made profitable vary by industry; you can examine your manufacturing waste, food waste, and e-waste for opportunities.

Insight 2. Local needs matter.

Applied to the earlier model, one application of this insight could be:

Within the law, do whatever works to propagate physical, emotional, intellectual, and material wealth among all the people you work with.

NGOs such as B Lab offer measurement tools to help businesses take stock of such impacts. One first item is to assure that any gender gap in pay or promotions is addressed at your company.

Insight 3. Mitigate systemic risk.

If the system you’re part of goes down, you go with it. That’s why I believe it’s imperative that we put serious effort behind understanding systemic risks to which our businesses may be contributing before any regulator comes along with a stress test. Here, the edit might read:

Within the existing law as well as the long-term interests of the communities with which you do business, do whatever works to amass material wealth.

This doesn’t just mean taking a hard look at risks like climate change and income disparity to which your business may contribute; it also means considering the types of shared value to which your business can profitably contribute. Shared value, a concept originally attributed to a 2011 Harvard Business Review article (paywall), involves creating both business and social value.

Whether or not you find these examples compelling, I ask you to entertain the possibility that the existing model of responsible business leadership may be outmoded. How would you update it in light of our shared challenges?

By looking to natural systems, I believe we can collaboratively develop a model of business leadership commensurate with the complex and interdependent challenges and opportunities of our era. I invite you to join me in doing so.

Forbes San Francisco Business Council is the foremost growth and networking organization for business owners in Greater San Francisco. Do I qualify?