How to Build aCompany That Acts Beyond Profit — Part 1

Photo by Marc-Olivier Jodoin on Unsplash

For more than six months, we have been exploring how companies are becoming software-driven organizations. We found that building a tech company is not only a technological, economical, and organizational undertaking, it’s an undertaking that will need to see people working themselves into new mindsets. These are, of course, mindsets that allow people, teams and organizations to get a better grip on the intricacies of software, but we found out that these come with the side effect of making companies more reflecting, more introspective, and more aware of its surroundings.

Diversity is the new corporate capital

While this sounds like good news for the people working in such more software-driven companies — and is certainly validated empirically by the much better working conditions in software — there seem to be few things to prevent companies from doing evil things, for example:

• Google: once the “do no evil” liberator of knowledge on the Internet, now a soulless billboard.
• Facebook: once the networker of people, now the dominant producer of echo chambers and division of societies
• Amazon: the marketplace of the world, but never stopped to be the schoolyard bully that pushes suppliers and workers around
• Airbnb: once a connector of people across geographies, now a main contributor to ever more unaffordable housing
• Uber: once a great source of transportation and employment, now a company that squeezes drivers pay to win over ever more customers and satisfy investor demands

Would it have been such a large disadvantage for these companies to consider the social consequences of their actions? How much would their profits or market capitalization have plummeted? How happy can Larry Page and Sergey Brin be now that they are rulers of the world’s largest advertising business empire? Is this what they wished for as students? Is it what they want to be remembered for?

I joined up with Dr Nari Kahle and my regular co-host Frank Thun to discuss ways how companies could act beyond profit. Nari has spent a lot of time thinking about this question and made “Act beyond profit” the mantra of her beautiful website (https://narikahle.com). She has just published a book “Mobility in Motion — how social innovations revolutionize our mobile future” and her business title at CARIAD, the automotive software subsidiary in the Volkswagen Group, is Head of Strategic Programs. We found five practical ways that could help to prevent the ethical Armageddon’s that has been experienced by Google, Facebook and Amazon.

Step 1: Detect Flat Holism

Companies should look at problems holistically. Sorry for the platitude.

However, Holism — or wholeness — is a Janus-faced thing. It can mean different things to different people. For most people, it means looking at a problem from different perspectives as part of an analysis. I call this level 1 holism, Holism for beginners.

Holism Level 1: Clever iterative analysis.

“Let’s look at this holistically” is a perfectly comprehensible claim. No one would dispute it. But it’s also too shallow: You go into analysis mode and, in a first step, collect factors from a wide variety of perspectives. Then, in a second step, one weights the factors. Critical factors become design parameters of the solution; uncritical ones are ignored. Problem, diagnosis, therapy — the three steps of a head-driven analysis.

In the end, you keep iterating through problem, diagnosis, and therapy — an Iterative Holistic Analytics, so to speak.

The problem with shallow holism is that it is a purely rational examination of a problem. Feelings, quality, or even tipping points don’t find influence in analysis models via proxy factors. The problem is that our Western civilized minds rely too much on quantification to objectify our impressions. We can’t help but quantify our environment.

As any philosopher can attest, reduction to numbers — quantification — is one of the great cardinal errors of our time. Through this error, we do not see the world fully, but through the lens of numbers. This brings us back to large internet companies. Plain analysis not only tells you what to do but also tells you what to ignore. For example:

• Google: Economically, it’s a winning move to more or less ignore suppliers, who do not pay for being displayed prominently on Google
• Facebook: Economically, it’s a winning move to ignore truth and focus on content that produces clicks instead
• Amazon: Economically, it’s a winning move to ignore the long-term prospects of suppliers and just go and produce easily imitable goods on one’s own (Amazon Basics)

Analytically, ignorance makes sense. You can’t take care of everything. You need focus. But how can you prevent that aspects which are less suitable for analytical analysis and quantification are not simply overlooked in the process?

Step 2: Use Your Heart to Become More Sensing

If analytics produces ignorance for those things that are hard to measure or foresee, the only way to become more sensing is to allow intuition, care and circumspection into the formula for organizational decision making.

Some companies are trying to do just that: implement practices that incorporate holistic analyzing (head) and empathic feeling (heart) into their problem-solving and decision-making routines. Think of more public good-oriented companies like Patagonia, Vaude, Buurtzorg, but also arch-capitalist ones like Bridgewater (one of the most successful hedge funds in the world), Netflix, or Haier (the world leader in home appliances).

The New Work movement is also full of routines that add a new, sentient layer to analyses. For example, by reflecting together in groups that should be so psychologically safe that what should be said is said. In this way, the quality that has been operated out of the system via analytical foreshortening and quantification is sought to be designed back into the process. Thus, one more step is added to the analysis: Synthesis.

Holism Level 2: Synthesis plus analysis — to bring in head and heart.

Synthesis is the “union of different, often opposing, mental elements, of thesis and antithesis into a new higher whole.” Higher means bringing together reason and intuition, rationality and emotion, practicality and meaningfulness.

But we don’t believe that a few practices here and there thrown into large organizational machines will accomplish much. If the environment is not designed with this in mind, individual measures will always come to nothing.

So, what has to happen so that bringing your heart to work is not so damn difficult? Nari, Frank and I have come up with three more approaches on this, which we will explore in more depth in the second part of this article next week.

This way to the second part:

How to build a company that acts beyond profit — Part 2

How To Build A Tech Company

An industry in transition: I would like to discuss with you, but also with international experts, what kind of organisation and processes are needed to create modern, innovative products that combine high-quality hardware with agile, smart software solutions. I would like to find out how we can jointly transfer German engineering skills into the digital or even autonomous age — which is why, in the coming months, I will be asking myself more than ever before: “How to build a tech company? Follow our Medium blog for this.