Monday, 27 August 2018

Systemic Thinking: The Primary Skill That Humanity Will Need as We Prepare for a Future That Will Not Be What It Used to Be

It’s hard to believe that this is my 300th blog post. It amazes me how fast the years seem to fly by when you’re doing something you enjoy doing; when that something feels important and meaningful!  Awakening our collective adult human consciousness and preparing for the changes that are coming, and the disruptive challenges those changes will create for all of us feels very important to me if our goal is the successful creation of a more just and sustainable world.
In this article, we will take a look at systemic thinking and the dangerous unconscious childhood illusion that each of us is a unique being independent and separate from the rest of reality.
We’re not.
But that unconscious childhood belief and the behaviors and actions that this unconscious childhood belief allows us to manifest in the world is clearly threatening the collapse of our planet’s life support system, the foundations of human civilization, and the very survival of humanity.
What we “do” matters. How we “think” matters.

Human Civilization Is At a “Fork” in the Road

Humanity is at a crossroads. We can continue “business as usual” and continue human civilization toward the precipice of collapse, or we can begin to prepare for the life-altering changes I will list below…the changes that are coming.
  • Without preparation, those changes will threaten human civilization and life as we know it.
  • Without preparation, the critically needed resilience that preparation creates will not happen.
  • Without preparation, the changes that are coming will threaten human civilization and life as we know it.
  • Without preparation, the resilience that will be needed for our survival will be seriously compromised.
  • Without preparation and resilience, the level of courage and sacrifice that will be required for humanity to survive will be seriously compromised.
Unfortunately, our collective childhood illusion of separateness is keeping humanity from preparing for those changes. We fail to “see” the reality that we are intimately interconnected and interdependent on the life support system Nature has provided for us. We “know” it’s true. We simply choose not to dwell on it. We take it for granted… as if it is some form of entitlement that is somehow due to us simply because we exist.  
But denial is a very dangerous human trait… and the illusion of separateness is not helping us deal with the life altering-changes that are coming because they feel too big for any one person to solve. We assume that it’s better to just ignore reality because the changes that are coming feel too complex, too overwhelming, and too depressing to even think about. When denial takes over our consciousness, we find it all but impossible to believe that our small individual actions do matter… that they can spread like ripples through the whole web of life and reality.
Fortunately, there is a growing global community of people who believe they can make a difference.

The Growing Global Community That Embraces Realistic Hope

Fortunately, there are a growing number of people around the world who do believe in realistic hope. They believe we can adapt and survive the changes that are coming. They believe the survival of human civilization is worth fighting for. Their beliefs and actions reflect a deep sense of realistic hope for our planet. Regardless of how disruptive those change will be for human civilization, these folks believe that by working together, we can begin to prepare and build resilience into our lives… a resilience that will help them create a viable and sustainable future.
So, who are they?
They are folks that live in your community. They live in your neighborhood. Your town. They live in your city. They are all around you. They are the people who know that resilience and survival will require an openness to radical new ideas and new ways of thinking. They are the people who march, carry signs and demonstrate for the things they believe in. They are the folks who know we can’t solve the problems that are coming alone. They are the people who know the problems that we’ve created for ourselves, will never be solved if we continue to use the same thinking that initially created those problems.
(A quote attributed to Albert Einstein)
They are not blind to the realities that are coming. They are preparing for resilience and survival in a future they know will not be what it used to be. They know the future that is rapidly heading our way will change life as we know it. They know that preparation for the changes that are coming is absolutely essential for us if we are to successfully create the tough resilience that will be needed.
I am convinced these folks represent the future of humanity.   They not only have the ability to embrace a sense of realistic hope in the diversity and spirituality of wholeness reflected in nature, they also have the ability to think systemically… the two primary skills that human civilization will need if we are to survive the life-altering changes that are coming… sooner than most of us believe.
As this global community of everyday heroic folks continues to grow, I believe they will be fondly remembered by history as the heroic people who had the courage to unflinchingly face the threats that were coming; the possibility thinkers that had the visions that humanity needed to create a new and viable future; the folks that had the realistic hope and the faith that their actions would somehow matter.
The ability to embrace realistic hope is certainly one of the more important traits of those folks I refer to as “the future of humanity”. But I am concerned that realistic hope alone will not be enough to ensure our survival. Without the ability to combine realistic hope and action with wholeness and systemic “thinking”, effective preparation for resilience and the survival of humanity will be all but impossible.
So, let’s jump in and take a closer look at why I believe wholeness and systemic thinking are so vital for the future survival of our planet’s diverse ecological life support system, human civilization, and our human species in the coming decades.

The Importance of “Wholeness” And “Systemic Thinking”

I am convinced the importance and primacy of systemic thinking for the very survival of our species, and human civilization, cannot be overstated. So why is systemic thinking so important for our survival? Stated simply, systemic thinking is essentially “wholeness  thinking”; a big picture way of seeing the world that understands and embraces the radical interdependence and interconnectedness of all of reality. Systemic thinking embraces a deep spiritual focus on the wholeness and oneness of reality; a whole system way of thinking.
Complex systemic thinking replaces our current tendency to simply confine our focus on individual, isolated pieces and parts of reality. For example, we use this simplistic pieces and parts focus when we attempt to understand the depth and complexity of nature itself. Systemic thinking accepts the reality that all complex systems, including nature, are an interconnected set of individual parts that interact together to create a complex whole that is greater than the sum of the individual parts… and the complex whole is itself always a part of a larger complex whole. Scientists refer to this as holonic thinking.
Some examples of a complex system include the human body, nature, economic systems, political systems, environmental systems, human cultures, human civilization, global warming (including the storm intensification, droughts, flooding, forest fires, and other global warming impacts).
  • Systemic thinking is the recognition that whatever affects one thing in a complex system ultimately affects everything else within the system.
  • Systemic thinking is the ability to see the bigger picture, multiple perspectives, how things interact… the whole complex web of reality and all living things.
  • Systemic thinking recognizes that problems that arise within complex systems are never solved by simple solutions.
  • Systemic thinking rejects the notion that simple solutions can fix complex systemic problems.
Systemic thinkers “know” for example our world is far too complex, too interconnected, and too interdependent for anyone to fully understand its intricate diversity. When someone attempts to offer simple solutions to complex systemic problems, they are guilty of narcissistic hubris, or are simply reflecting the ignorance that is always created by inflexible ideological, black and white, either/or, thinking; a thought process that refuses to embrace the truths that always exist on both sides of every subject or issue.
Ideological thinkers insist that they have “the truth”, but they base that truth on a limited vision of reality. They fail to see the truths that are present when reality is embraced as a complex whole, not simply a focus on the separate, unconnected pieces and parts of reality.
Far too many of our politicians and policymakers, for example, appear unable to embrace the reality that they are dealing with complex, interconnected, interdependent systems. They appear unable to understand that the problems and changes that are coming, or have already arrived, represent breakdowns in extremely complex social, economic, political, environmental, and biological systems. They are unable to comprehend the reality that viable solutions to these problems will require complex systemic thinking and the ability to think in very long-time frames… in other words, far longer than their next political election.
To summarize the concepts discussed above, the changes, challenges, and problems threatening the future of human culture are all embedded in complex, interconnected systems… and they will never be solved by simple, short-term solutions! In fact, some of the “possible” solutions that will need to be implemented in order to deal with issues such as global warming… will require centuries… or longer. Nature can fix some of the problems and reverse the damage we have caused, but she moves in time frames far longer than individual lifetimes.

Our Collective Human Consciousness Is Addicted to Thinking in Pieces and Parts…. Not Middlepath Wholes

Unfortunately, our secular human culture celebrates separation, fragmentation, differentiation, specialization, individualism and independent autonomy; all of which require a narrow focus on individual, unconnected pieces and parts; not the “whole”. This is especially true for those who insist on using dualistic, black and white thinking that sees the world in simplistic either/or terms rather than a more complex both/and thinking.
As I’ve written about in past Stonyhill-Nugget articles, when we choose to ignore the truths on both sides of any complex issue (and all issues are complex) we are choosing to walk a path that leads toward intentional ignorance…….and dangerous conflict. The conflict and gridlock we see in Washington today have been created by politicians that simply fail to accept the reality that there are always truths on both sides of every issue. They choose to ignore the reality that to be viable, the path forward always has to be a compromise that acknowledges and incorporates the truths embedded on both sides of every issue.
Systemic thinking, or what I sometimes refer to as “middlepath thinking” attempts to connects previously unconnected things, or issues, in order to discover new pathways into the future. Middlepath, systemic thinking always attempts to integrate multiple perspectives, and intentionally searches for the truths embedded on both sides of all complex, conflicted issues.
For example, our global economic system is driven by individual “what’s in it for me” greed, profit, accumulation, wealth, success, power, and production. It’s an economic system in which those who profit from it (the multinational corporations and the 1%), choose to intentionally ignore its impact on the whole. Pollution, wealth inequality, over-consumption, environmental destruction, resource depletion, and waste remain outside their thinking or concern. They spend a lot of money to ensure that you and I remain focused on unlimited economic expansion, not the impact of that “unlimited economic expansion”.
On the other hand, capitalism has created the modern industrial world.
So, the issue is, how do we create a middlepath economic system that continues to help humanity move into the future, without replicating the problems and limitations of modern capitalism. That is one of the most important and complex issues that humanity will need to successfully address as we move into a future that will not be what it was. “Business as usual” capitalism as we know it, will not be part of our human future if human civilization and humanity are to survive.

Systemic Thinking “Will” Change Life as We Know It

There is currently very little real concern for the “whole” in human civilization. We give it lip service; we wring our hands over global warming, crippling growth in debt, extreme wealth inequality, and poverty. We agree that something needs to be done… by somebody… but our concern for the future comes to an end when we recognize that a real, compassionate, empathic focus on the “whole” implied in true systemic thinking would require major life-altering changes in the way we currently live our lives.
We are not yet willing to embrace the changes in lifestyle that walking our talk would require if we actually embraced and applied systemic thinking to the challenges that face us.
As I said above, our human civilization and human culture are standing at a fork in the road. We can continue “business as usual” and move into a future that is rapidly headed towards social collapse through…
  • overpopulation (est. 11-12 billion people),
  • an increasingly fragile and unsustainable global economic system based on greed and unlimited economic expansion on a finite and resourcelimited planet,
  • a growing level of global hunger and poverty,
  • global warming and global climate change, which will require that we power down and radically simplify human civilization from its current dependence on petroleum and carbon energy, which will require learning to consume significantly less “stuff” than we do today,
  • growing climate and storm intensification,
  • increasing droughts, and famines,
  • flooding,
  • forest fires,
  • an increasing number of climate immigrants,
  • massive debt restructuring,
  • a growing and dangerous global wealth inequality between the 1% and the commons (a primary historic cause of past “empire” collapse),
  • growing air and water pollution and their related health impacts,
  • ocean warming and acidification, and
  • the inevitable destabilization and collapse of human civilization as we know it by ice melt and the rising ocean water levels and the massive climate migration and global relocation it will create.
In other words, given the above realities, it’s clear that business as usual is not an option.
Regardless of the economic system humanity designs to replace capitalism, this newly proposed alternative to “business as usual”; an economic system created in the crucible of wholeness and systemic thinking would open our hearts to a deeper compassion and empathy for the “whole”.  “whole” that would include all the other people and life forms that we are interconnected, and interdependent with on this tiny planet we call our home.

We Are Not Separate from The Rest of Reality

In fact, our survival as a species is intimately dependent on and interconnected with all of our planets various life support systems, and all of the other living species that we share the planet with, and indirectly, the entire Universe. Without the reality of countless supernovas that have erupted in the Universe over the last 13.7 billion years, our planet would not exist. Life on our planet would not exist. You and I would not exist.
Our planet’s life support system includes the air we breathe, the water we drink, the organic soil that grows our food, and the biodiversity of our planet down to the smallest cells…….and if any of life support systems are compromised in any significant way, the ability for you and I to survive would also be compromised. We are an integral part of, not separate from, the complex life support system that Nature has created for us.
Stated simply, what happens to our planet will ultimately determine the survival of our human species. Global warming, pollution of our air and water, over-fishing, the acidity of our oceans, all matter. Nothing is independent from the rest of the reality that surrounds us. And that includes you and me.

Summary

Systemic thinking is simply the ability to embrace the interconnectedness and the interdependence of all of reality… but it will require that we change how we behave, how we live our lives, what we value, and who and what we include inside our compassion and empathy.
Separateness with the rest of reality, and the fragmentation of reality into isolated pieces and parts is deeply embedded in our bone marrow; a thinking that began in childhood. As children, our primitive ego conditioning was primarily focused on creating a “self”. We believed our “self” was a “self” separate from the rest of reality. As a result, the illusion of separateness is an unconscious childhood belief that very few of us are consciously aware of. We simply grew up believing it to be true. Until we have the courage to become intentionally self-aware of how we think, the illusion of separateness will remain buried in our unconscious.
Unfortunately, the illusion of separateness is one of the most dangerous illusions unconsciously accepted by almost all of our collective adult human consciousness. Reality is clear. We are not separate from the rest of reality. We are an integral part of the complex life support “system” we call nature. It’s time we awoke to that important reality and do the work of intentionally evolving our collective human ability to embrace “systems thinking” … because the illusion of separateness unconsciously embedded in human thinking is rapidly compromising nature’s ability to support life on our planet.
Our collective human unconscious illusion of separateness is a primary source of conflict and violence in the world. The whole concept of “other” is an extremely dangerous illusion embedded in our unconscious childhood conditioning. The reality is there is no such thing as “other”. Other is a meaningless concept. There is only “we/us” interconnected and interdependent on all the rest of reality.
So when we choose to intentionally embrace systemic thinking, and embrace the wholeness of reality, it “will” require a radical, and deeply personal willingness to intentionally change how we act, and how we behave, in our day to day lives. This is not a philosophic endeavor. I am convinced the future survival of human civilization and humanity itself will depend on how successful we are in changing the adult human consciousness from our current what’s in it for “me” thinking, to a more enlightened focus on the impact our life choices and behaviors will have on the “whole”. And the whole I’m referring to is the whole complex interconnected, interdependent world of “we and us”.
We are an invasive species on this planet. And biological history is clear. Nature deals with invasive species through a process called extinction. I see nothing that would support the concept that we are somehow a “special” species that will manage to escape that fate.

Conclusion

You and I are not separate from the rest of reality.  Nothing exists in isolation. Nothing! Parts always dwell inside larger wholes, and the larger wholes are themselves parts of even larger parts or wholes. Nothing and no-one is separate from this simple reality… everything is an integral part of a larger whole or holon. Everything and every form of life on our planet is intimately dependent, and interconnected, with the larger wholes they are part of. This is why small changes in a complex system can result in massive unintended consequences!!!
When we talk about living a sustainable life, it means we acknowledge that we are intricately interconnected, and interdependent on all of nature and the life support systems of our planet. Sustainability will not happen without systemic thinking. wholeness thinking that acknowledges that nothing, including ourselves, exists in isolation from the larger wholes that we are part of.
Let me say it as clearly as possible. Creating sustainability on our planet will be achieved only when systemic thinking the ability to see the interconnected and interdependent wholeness of reality has successfully entered the collective human consciousness.
To think in complex, systemic, interconnected, holonic perspectives and talk about living sustainable lives, we are acknowledging that
  • nothing is simple.
  • there is always truth on both sides of every issue!!!
  • we have to avoid simplistic, black and white thinking.
  • we have to look for the interconnections!!!
  • we have to be an independent, critical thinker!!
  • we are called to do our own thinking, not simply accept the opinions of others as “truth”.
  • we need to keep asking questions and digging deeper. To think systemically. To embrace other points of view. To dig deeper in order to understand for yourself how things work, and how they are interconnected, and intertwined.
The result of this systemic approach to reality is called wisdom. And a sustainable world will not be possible until this kind of wisdom has entered the collective consciousness of humanity. 
Taming the primitive ego of its childhood illusion of separateness will happen only through the spiritual practice of intentional self-awareness. Systemic thinking is a powerful spiritual practice into the wholeness of nature, and the simple reality that all things are interconnected and interdependent.
Otherness is a dangerous unconscious illusion born in the childhood conditioning of humanity. It births hatred, violence, conflict, and is nurtured in the silence of separateness. It is the destroyer of community, cooperation, empathy, compassion, and love. It thrives in the darkness of isolation and tribalism.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

A Personal Note to My Readers

Thanks for hanging in there and reading to the bottom of this long article. I am hopeful that you are beginning to see why I believe middlepath, systemic thinking is so critical to the future survival of human civilization and our human species.
Only through systemic thinking and preparation for the changes that are coming will we create the resilience and wisdom that will be needed to survive those changes and the life-altering challenges they will create. Challenges that will impact our lives and change human civilization as we know it.
Can humanity change enough to embrace systemic thinking? Many will laugh and say it’s not possible, that it’s ridiculous to think that our world could change that much. Perhaps they are right.
But what I do know is that the changes that threaten human civilization are coming. If you doubt that statement, take another look at the list above. We can’t stop the threats embedded in that list in time to avoid the massive challenges they will create for us.
If we are to survive, we will need to embrace systemic thinking and the compassionate, cooperative, interdependent, sense of community that whole focus, systemic thinking will create.
Only whole systems and middlepath thinking will increase our ability to cooperate with the needs and points of view of others.
The challenges that are coming will be more intense than you or I as individuals will be capable of dealing with alone. Survival will require the skills needed to be a compassionate, functioning part of a community that is interconnected and interdependent. We need to become part of the community I described above as “the future of humanity”. The more of us that are willing to join that community, the better our chances of creating a viable, sustainable human future. 

Going it alone will not be an option.

In the next Stonyhill-Nugget of this “what if” series of articles, we will look at the changes that are coming in more depth and explore more of the personal skills that we will need to cope with those changes.
We will continue to explore the simple reality that the life you are living has not always been the life that others lived. For example, we are living in an energy-rich world that has been created by a non-renewable “pulse” of petroleum. But that petroleum is rapidly running out, becoming rapidly unsustainable, and polluting our world.
In this universe, things will change. The world we take for granted today will not exist tomorrow. Human civilization is a complex, ever-changing system. Therefore, don’t pour concrete on the way you see the world! It won’t be around that long!  
Learn to embrace change… it’s coming whether we are open to it or not!!!! Learn to prepare for a future that is different than the one we are currently living, and think more systemically about the long-term consequences of our current actions.
Remember… the changes and challenges that are coming…are not the end of the world!! They simply represent the end of life as we know it. If we can embrace those changes and prepare for the impact they will have on human civilization, the possibility for humanity to create a resilient, high quality of life in that new future, is significant.

Thursday, 16 August 2018

How to Build Companies That are a Force for Good in Society

Photo by Volkan Olmez on Unsplash
by Juho Makkonen, Medium:  https://medium.com/bettersharing/how-to-build-companies-that-are-a-force-for-good-in-society-33163843033e

Most technology startups say they’re “making the world a better” place as anyone who watches the TV show Silicon Valley knows. Reality is, of course, murkier.
In some cases, it can pretty objectively be argued that a company is really making something the world needs; if they’re innovating on renewable energy or a cure for a terminal illness, for instance.
In most situations, assessing whether the company has a net positive impact on society is nonetheless difficult. Some devout defenders of entrepreneurship might argue that any company that creates jobs is already making the world better by default, even if the impact of the company’s products is neutral. This view can, however, be challenged, especially if the employees of the company consist mostly of “scarce resources” like programmers or designers, who are high in demand. Opportunity cost needs to be taken into account.
The Upright Project, a company that measures the net impact of companies, argues that if a company mainly employs people from this group of “scarce resources”, its impact is, by default, negative: if this particular company wouldn’t exist, these people would immediately find jobs elsewhere in companies that might produce something more valuable. In other words: if a company is taking these scarce resources off the job market, it better do something useful with them.
Companies that reach profitability are, of course, providing value to certain stakeholders: their customers, employees and shareholders — and to society in the form of taxes. However, if this value is created by burning fossil fuels or convincing people to smoke cigarettes or buy more things they don’t need, it can be argued that the net value is negative.
I’ve been a tech entrepreneur for almost 7 years. What drives me to startups and for-profit entrepreneurship is the scalability of my impact. If I was a doctor or a teacher, my work would certainly have a high positive impact, but it would only benefit a small group of people. If I build a company that manages to develop a cure for a common disease or create educational technology that helps millions of kids in developing countries learn to read, the impact of my work touches a vastly larger group of people even though the amount of hours I put in is the same. That’s powerful.
During all these years, I’ve struggled when trying to figure out how to make sure that our business — or any business — is truly serving society, not taking more than it’s giving. I’ve come to the conclusion that the answer lies in how the company is structured, and what kinds of incentives it offers its management.

Why being “mission-driven” is not enough

Many modern technology companies are created by teams of young, idealistic founders who truly want to make the world a better place. Their business ideas are often born from a genuine desire to fix a certain societal problem. In an ideal scenario, they can align their purpose and their profits: every dollar they make also advances their cause. Think of a company that produces solar panels or makes an app to buy food that would otherwise go to waste. On the surface, this sounds like a perfect equation: as the company’s business scales, so does its positive impact.
Unfortunately, this genuine willingness to be mission-driven is not enough. The world is complicated. What sounds like a business model that generates a purely positive impact can have surprising negative side effects. As the company grows bigger, it might need to venture into business areas that are no longer aligned with its original mission in order to sustain growth.
If a company is structured in a traditional way, it still needs to ultimately listen to the demands of its stockholders. If the stockholders are primarily interested in maximizing their profits — and this is often the case for any company that is public or has sold more than 50% of its equity to venture capitalists — the company’s management is incentivized to put its social mission on the backburner and focus on profits and growth instead.
Let’s take a few examples to illustrate this problem. My work is in the field of the sharing economy and peer-to-peer marketplaces, so I’m choosing my examples from this industry. I’m picking three companies that seem to have genuinely mission-driven founders who have always heavily emphasized the social impact side of their business: Airbnb, Lyft, and Etsy.
Airbnb
Airbnb is a pioneer of the so-called sharing economy. Their claim has been that we have lots of underutilized space that should be put to better use. If people use the extra space in their homes to turn them into hotels, we will need less new hotels, and the space for hotels can be used for something else.
It sounds great on paper. Unfortunately, reality isn’t quite so straightforward. The hotel industry is seeing more profits than ever. My theory is that instead of decreasing the demand for hotels, Airbnb has simply expanded tourism — because of more affordable places to stay, more people choose to travel. This also means a lot more flights, and with them a lot more emissions. And Airbnb doesn’t even want to disrupt hotels anymore; it just announced that it is now offering its platform to hotels as well, helping them find more guests.
But doesn’t it still mean that Airbnb increases the utilization of existing spaces? Not necessarily. According to some studies, 40% of Airbnb’s revenues come from professional landlords. They have turned the apartments they own, formerly available for permanent rental, into vacation rental homes. This means there are fewer apartments available for people living in a city, all the while vacation rental apartments are empty half of the time during the off-season. Because of this, rental prices have gone up in some cities, pushing less well-off people into the suburbs.
This is, of course, not what the founders originally intended; it’s simply a side effect of their business model — something economists call an “externality”. But there’s no denying that it’s an important factor when considering whether Airbnb’s impact on society is net positive.
Lyft
For a long time, the Lyft founders have been working towards a noble goal: reducing congestion and car ownership. On the surface, it sounds that Lyft’s business model is doing just that. Who wants to own a car in a city when I can summon a personal driver in a matter of minutes, for a relatively affordable cost? Lyft’s main competitor, Uber, has the same effect, but it’s been Lyft that has made its claim to fame by focusing on this positive aspect of its business model.
However, like Airbnb, Lyft is also causing externalities it probably didn’t expect. Several recent studies show that Uber and Lyft actually increase congestion in cities. Because of their affordability and convenience, they often convert people from biking, walking and public transport. Meanwhile, between rides, Uber and Lyft drivers spend on average 50% of their time alone in their cars, adding to the problem of congestion.
Etsy
Etsy was born as a statement against the world of mass-produced goods, best represented by Amazon. Etsy wanted to get more people to buy hand-crafted goods while providing an income to micro-entrepreneur crafters.
Etsy went further than Airbnb and Lyft to emphasize its position as a company that puts its mission before its profits. It acquired a B Corp certificate, which obliged it to submit annual proof that it meets rigorous standards of social and environmental performance, accountability, and transparency. In a speech to his employees, Etsy CEO Chad Dickerson read the Milton Friedman quote about profit maximization as a sole responsibility of a business, and said: “You’re all free to hiss”. Then he hissed himself, showing his distaste for Friedman’s thinking.
Similarly to Airbnb and Lyft, Etsy decided to raise lots of venture capital to accelerate its growth. Eventually, this meant that Etsy needed to offer investors a way to liquidate their investments, which meant going public in 2015.
In 2017, a hedge fund called Black-and-White Capital saw an opportunity to make profit. It started buying Etsy stock, after which it launched an activist campaign, accusing the company of careless spending and demanding that Dickerson be ousted as a CEO. The company’s board proceeded to fire Dickerson, along with 8% of the company’s staff.
Friedman 1 — Dickerson 0.
Etsy used to have a “Values-Aligned Business” team, which oversaw the company’s social and environmental efforts. The new CEO Josh Silverman dismantled this team. Etsy also gave up its B Corp certificate. Even before going public, it had started allowing the sales of manufactured goods on its platform.
These moves have been applauded by Etsy stockholders: it has tripled its share price within the past year. But Etsy is no longer the same company it used to be.

The ultimate solution: remove the incentive to maximize profits

An attentive reader might have noticed a pattern in the three stories above. All three companies had a clear way to tackle the negative externalities caused by their business models. Airbnb could ban professional landlords and only allow people to rent out the places they themselves live in and their second homes. Lyft could make its services less attractive during peak hours by volunteering to pay a congestion tax that would increase its prices. Etsy could reinstate the B Corp certificate, ban manufactured goods, and monitor the origin of goods sold through its platform more carefully.
In reality, these companies are not in a position to do so because of their company structure. They can’t escape Friedman. The main incentive for their management is to grow the business and maximize shareholder profit. All the proposed solutions are in conflict with this goal as they could have a significant negative impact on revenue and growth for these companies. And that’s why we most likely won’t see them happen.
Their structure. Their incentives. Perhaps therein lies the answer to the original challenge: how to build companies that are a force for good in society.
One can’t argue with Friedman since he is simply stating the facts: this is how companies are structured, and this is what their duty is. But what if we change the structure and duty?
In her excellent 2017 book Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist, economist Kate Raworth explains that we need to build an economy that lifts people out of poverty and brings them well-being while respecting the natural ceiling for growth caused by the limited resources of our planet. She believes that in order to achieve this, we need to make fundamental changes to our society and to our organizations. She writes:
“The most profound act of corporate responsibility for any company today is to rewrite its corporate bylaws or articles of association in order to redefine itself with a living purpose rooted in regenerative and distributive design and then to live and work by it.”
The key insight here is that we don’t need to create companies that maximize profits at all costs. In their articles of association, we can write that their profits are only a means to pursue their social mission, not an end goal in themselves. In some cases, this means that the company might make decisions that deliberately decrease its profits or slow its growth if its management feels that it is the right to do, all things considered.
Such company structures can be created without changing our current legislation, and some pioneering tech startups are already adopting these structures. Kickstarter, the world’s largest crowdfunding platform, paved the way in 2015 by reincorporating as a public benefit corporation, and stating it will never sell or go public. By remaining independent from the control of outside stockholders, it can be sure that its management is forever incentivised to put its mission first.

Putting our money where our mouth is

Our company, Sharetribe, helps entrepreneurs and organizations create their own peer-to-peer marketplace platforms. With our technology, you can essentially create something like Airbnb, Lyft, or Etsy. Like these three companies, we also have a social mission. In our case, it is to democratize the sharing economy by making platform technology accessible to anyone. We truly admire these three companies and the tremendous technological and cultural innovations they’ve made. However, we’re also worried about the negative consequences of their pursuit of even higher growth. Our thinking is that if we make their innovations available to local platforms operated by small businesses, social enterprises, co-operatives, non-profits or even cities, we can reap the benefits of the sharing economy without causing many of the downsides.
When our founders travelled the world telling people about this mission, many asked whether there was a risk that we would become another profit-maximizing platform giant ourselves. What if we started generating unintended negative externalities as well, and our shareholders wouldn’t allow us to do anything about them? At the time, we didn’t have a good answer. After all, we’ve had a traditional startup structure, and we’ve recognized that if we raised any more money with that structure, the final decision would no longer be in our hands. Even if we decided not to raise money, there was no way for us to make a binding commitment to our stakeholders that we wouldn’t do so in the future.
This made us worried and frustrated.
Finally, we decided to do something about it. A few weeks ago, the Finnish Trade Registry approved our new articles of association that officially transition our company into a structure called steward-ownership. We are the first company in Finland and one of the first tech startups in the world to do so. Steward-ownership is a company structure designed to ensure that our company’s profits are purely a means to pursue its mission, and forever removes any personal financial incentive of profit maximization from the company’s management. Unlike B Corp certificates, the steward-ownership structure is protected with a foundation structure and can never be dismantled once introduced.
From now on, it’s in the best interest of our management to put our social mission first, even if that means slowing down our growth. Everyone working in the company is incentivized, first and foremost, to make decisions that benefit not just the owners of the company, but all other stakeholders, the environment, and society at large. After this change, we can finally — confidently — say that our company will always be a force for good in society.
How does our steward-ownership model work in practice? That is the topic of another post.