4. Towards Corporate Humanities: how to leverage purpose to make your organization more human
In the past few weeks we talked about what purpose is, how it’s affected the economy, and why it’s so important from a psychological perspective. We ended the last post by beginning to understand the differences between Humans and Econs [Humans being real people in the real world, and Econs being our theoretical version that economics is based upon] and the unfortunate truth that most companies are, unlike us, Econs.
Which brings us to thinking about companies as Humans. What would it mean for companies to act more like humans, to be irrational, to value fairness and equality, be driven by a purpose beyond profit, to adapt and change its beliefs as it grows?
Studies (and there are many) demonstrate there is actually an economic consequence for companies that don’t behave fairly. Firms actually loose customers and revenue when a more ‘fair’ competitor exists, which adds more evidence to our theory that companies that are purpose driven outperform their peers.
But what about employees? and investors? and suppliers? Would they favor more human organizations? The truth is, humans are social beings, we stick together, and favor each other over other species, including Econs. So as long as your employees, customers, investors and suppliers are also humans, the theory suggests they’d also be more inclined to work with, buy from, invest in, a like species.
Some might even argue that this is the holy grail of brand building. Acting more humanlike would allow organizations to finally be able to be more authentic, because they’d be able to admit when they’re wrong, talk about their weaknesses, and laugh at their own failures. That’s what people do. And that’s what brands could do too.
This is all evidence that companies that act more like humans are better off in the long term.
With the exception of a few large corporations that just get it, the companies that are able to act most humanely, are small businesses. They feel more human because the people working in them feel more connected, because they can access all employees and managers at all levels, due to their size (and often close, personal and family ties). Big corporations can get away with doing evil, inhumane, things because people feel disconnected between the actions they’re doing and the actions the company is doing. They’re so big you loose touch with reality.
It’s much easier to distance yourself from the potential negative or harmful impacts of a large corporation because you don’t feel connected to it. It’s not your home, your company, where you belong. It’s just some place you work. When you feel a connection to your work, a meaningful connection, you care more. The company cares more. It’s empathetic, more human.
Technology is actually doing the same thing to people that size does to large organizations. It distances us from each other, makes it easier to do things we couldn’t do, wouldn’t do if we were standing in front of someone. This is why cyber bullying has gotten so out of hand. It is very difficult to look someone in the eye, tell them they’re fat (or ugly, or stupid, etc.), and laugh in their face. But it is relatively easy to laugh at a funny video of someone overweight online. It’s not even that hard (for some people) to post a mean comment under that video directed at a real person. Technology creates distance between humans and the more distance between us, the less we remember our shared humanity.
But technology also connects us. Technology also allows people with shared interests who would never find each other in the real world, to meet and share ideas in the digital world. Technology allows for information to flow so quickly and so pervasively that companies can no longer get away with murder. If you do something wrong, really wrong, someone will find out about it and the second they do, it’ll go viral and everyone will know.
So we take the good with the bad.
We learn, we adapt, we grow. We evolve.
We know that technology creates distance between us, so we consciously think about our actions and learn to act more like humans even when we’re interacting with technology. We remind ourselves that it’s not a ‘company’ deforesting the rainforest, it’s people, making decisions, within a company to deforest the rainforest. We consciously close the distance between the things we don’t want to think about and the reality of our actions.
And when I say ‘we’ in that last example, I mean we as managers of companies. We as consumers. We as investors. If you are reading this, you most likely fit all of those boxes. We are part of the problem, but luckily we are also the solution.
The solution is to put the humanity back in business. PEOPLE RUN COMPANIES. Companies don’t do bad things. People do. Companies just make it easier to disguise unethical decisions and avoid the truth.
I also believe that if we continue to treat companies like persons (as we currently do), then we have to give companies souls. By that I mean we need to inspire management to discover the existing values that drive the organization towards its purpose, to create a family, an integrated group of people focused on solving the same thing, pursuing the same value for whoever they’re creating it for: their tribe, themselves, or others in society.
By giving a company a personality, with both strengths and weaknesses, great leaders can help cultivate a culture to help pursue its purpose.
The most evolved companies, those able to sustain and endure in a complex world will be those that are most human-like. We are the most evolved species, we have the potential to create something even greater, but first we must give the organizations that dominate our world (companies) the tools to act more like us, to ensure they remain a complementary asset to society, not something that destroys society.
In order to understand where we’re going, I often find it’s sometimes helpful to take a look back and see where we’ve come from…
A framework // TOWARDS CORPORATE HUMANITIES
In my previous life as a Corporate Social Responsibility consultant I reviewed numerous charts, graphs, and frameworks for defining how it is that corporations are becoming more ethical. My favorite was from PwC who focused on the maturity of sustainability in corporations. I’ve adapted that and created my own to fit my clients’ needs. I call it Towards Corporate Humanities:
The evolution of corporations moving away from pure Econs and towards greater humanity began sometime in the 1960s and 70s with the birth of ESG Risks (Environment, Social, Governance). It was the step towards progress and the focus was on compliance. The hippie movement catalyzed activists to campaign for change and companies were still very much on the defensive. The goal of analyzing ESG risks was to understand what negative impacts the company was making (i.e. polluting rivers, working with child labor, or outright disobeying laws) and how likely they were to get in trouble for it.
Next up came corporate responsibility (also known as corporate citizenship, corporate social responsibility, or corporate sustainability). The first effort towards doing good that had little to no strategic alignment between the operations of the company and the good they were doing. This eventually became a sort of ‘should do’ standard for all companies and you’d be hard pressed today to find a major corporation that doesn’t at the very least have a philanthropic foundation, a volunteer program and a sustainability team.
One of the most frustrating things companies do at this stage is separate the environmental sustainability team from the social impact / community team. The sustainability team is typically housed in operations with the supply chain or procurement teams and the social impact team typically lives somewhere under communications or public affairs. One team is narrowly focused on improving the operations of the company around a single impact issue, and the other team is focused on marketing all the good the company is doing with little concern for actual impact. This causes a separation between what is said and what is done, which is not good.
What would make more sense is to have a single, distributed ‘humanities’ team. Representatives of this team could be found working with your suppliers, customers, employees, investors, all stakeholders. All people involved in the ecosystem of the company. That’s true leadership. Imagine an internal team dedicated to teaching ethical decision making and helping to reinforce the company values throughout the organization, affecting all departments and all stakeholders.
I wasn’t the only management consultant that had issues with how corporations were managing their responsible initiatives. Michael Porter is a Harvard LEGEND and best known for his framework and theories on corporate strategy, in particular Porter’s Five Forces. But he wasn’t convinced his efforts were being put to their best use, so he teamed up with colleague Mark Kramer and together they founded FSG, the undisputed leader in social change consulting (the purpose driven McKinsey, if you will).
A few years later, after publishing revolutionary articles on Catalytic Philanthropy and Collective Impact, they introduced the term Shared Value in a 2011 Harvard Business Review article. This changed everything.
Their theory wasn’t revolutionary, but it was the first major step, in a very long time, on the evolution of ethical corporate behavior. The idea being that companies should align their operational strategy with their ability and desire to create positive impact. The first example they gave was Nestle’s investment in creating more fair trading opportunities for the farmers that grow their cocoa in Africa. By ensuring their farmers had more stable living conditions (living wages, education for their children, access to learning and development to be better farmers), they could stabilize their supply chain and reduce costs associated with constantly finding new farmers to work with and training them to meet Nestle’s strict requirements. They were simultaneously improving the lives of low income farmers, strengthening their supply chain, and reducing costs. That is shared value.
Creating shared value is a great concept and one I encourage all of my clients to follow. But the problem is that finding opportunities to create shared value can be very limiting. The reality is that trade offs do exist, and more often than not a company is going to choose profit over impact. The overlap of shared value opportunities is small.
To be a true leader, I’d recommend managers add a corporate humanities lens to their existing shared value initiatives. Go beyond the low hanging fruit (but pick those first, it’s always best to start with some wins on the board!), think long term, innovate, bring in your people, as many representatives from as many groups as possible, and start finding ways to make your organization more human. You can start with the following recommendations:
- Close the distance between people. Create internal engagement channels that allow your front line employees to provide feedback to those creating products and services on the backend. Middle management shouldn’t stifle the flow of ideas, it should facilitate and lubricate a smoother pace. I’d recommend checking out what NOBL Collective is doing in the world of organizational behavior and team management.
- Lead with purpose, be guided by your values. If you’re current purpose and values look exactly like all your competitors, then you might as well just throw them away. These are things that are traditionally developed with a top down approach which is all wrong. Think of purpose and values as the inherent personality of the company, a relic from the founders’ legacy. Rediscover what is already there, listen to the people in your organization, distill their existing ideas, and leverage what’s real, what’s authentic to craft a better map and compass that you all can agree on.
- Be authentic. This one is easier said than done, but it makes a huge difference. Admitting your faults and weaknesses goes against traditional sales 101, but let’s face it, it’s 2015 not 1880. It’s probably time to break the rules. Build a brand, a company, a culture where its ok to be honest, ok to admit defeat, ok to ask for help, ok to be human. Laugh at your mistakes, then learn from them and move on. You can not fake authenticity, and if you really want to engage your people, you need to meet them at eye level. Throw the curtain back a bit and start being real, the dividends will be a sweet reward.
It’s important to note that my framework isn’t toped by a nice pinnacle, because I’m certain my thoughts aren’t the end all. As I’ve argued, we will continue to grow, to learn, to evolve our thinking. New knowledge, new technology, new ways of thinking will help us come up with better ideas on how to thrive. But as far as I’m concerned, Corporate Humanities is on the top of the list, for now.
As a society we have opened our arms to corporations and through our government we have even given them the legal power of ‘personhood.’ But can corporations really live up to that ideal? Are they humane enough to be human?
The truth is, that the science shows that people do care. We do genuinely want our species to not only survive, but to thrive, to flourish.
And we are in a perpetual journey of learning, growing and consuming information. As we evolve and develop we gain more leisure time to think, to learn, to understand. And we should embrace that, celebrate our progress!
So in the end, companies will need to prove they can be human to survive.