Why Purpose-Driven Standards and Metrics Hinder Achieving Regenerative Systemic Effects
I was recently speaking with a colleague who is a consultant for purpose- or impact-driven organizations. We were exploring how she could help her clients embrace more regenerative practices and increase their organization’s positive effects on social and ecological systems. My colleague mentioned her clients were spending a lot of resources on meeting purpose-driven industry standards and metrics and evolving their management practices and operations accordingly. She suggested she might leverage that work and use it as a starting point to engage them in regenerative thinking.
My answer was “Don’t do it!” Why? Because using a fragmented set of metrics as a starting point will never drive the development of a whole, integrated, and coherent regenerative strategy aimed at generating systemic effects. Once you have dissected a frog you cannot put the pieces back together and get a living frog! Life is what gets left out when metrics are defined generically. In other words, a reductionist mindset is incompatible with an approach grounded in a living systems worldview.
The good news is that there is a different approach that my colleague can use to help her clients shift toward more regenerative practices. This approach, grounded in living systems thinking, requires embracing a whole system- and effect-driven perspective. The benefits for organizations, their stakeholders, and the social and ecological systems within which they operate can be so significant as to enable each player to exceed the metrics and standards they were seeking to meet in the first place. Moreover, this approach tends to make purpose-driven work far more meaningful and uplifting for those who do it.
Starting From Effects to Realize New Potential
Working from a whole living system perspective requires considering an organization as a living whole nested within other living wholes. Figure 1 depicts the nested systems view of an organization operating within its stakeholder ecosystem, whose actors contribute to the well-being of a larger social-ecological system or place. The stakeholder ecosystem includes five groups of actors (as indicated by the Pentad icon in Figure 1): the customers or beneficiaries; the co-creators such as the employees, suppliers, and business partners; the individuals or entities that steward or advocate for Earth; members of the local community; and financial investors. In the nested system, each living whole has a unique potential and capacity to play a value-adding role (VAR) and contribute to the realization of the potential of the system within which it is nested.
The starting point for an organization to create more regenerative effects on social and ecological systems is to first explore the ability of these systems to realize their potential. This is indicated by the right-to-left arrow in Figure 1, which represents a way of thinking that starts from effects as a way to realize new potential. We call this “end-state thinking,” which means identifying the state that a living system needs to evolve toward if it is to pursue more meaningful ends[i].
There are three measures to assess the state of the health and well-being of a living system: its vitality, viability, and capacity to evolve. Vitality reflects the system’s ability to thrive — its aliveness and quality of energy, and how energizing it is for entities that interact with it. Viability measures a system’s capacity to transact with other systems and endure over time. Evolution relates to the capacity of a system to engage in an ongoing development process by which it achieves higher orders of expression over time. These three measures of the state of a living system are never generic but always specific to the inherent potential of the system.
For instance, a degraded estuary that has been bulldozed and built over will not be a vital environment for marine species to reproduce; its poor conditions will threaten the viability of the marine life it was supposed to nurture and threaten the livelihood of the local community; the whole social and ecological ecosystem will slowly die because it is unable to adapt and evolve. For an organization whose operation affects the estuary, end-state thinking would mean uncovering the unique potential of the estuary to evolve to a healthier state from which it could pursue new ends, that is, replenish the marine life of the sea to which the estuary is connected, thereby regenerating both natural and human communities.
Having uncovered the gap between a social-ecological system’s future state and its current state, an organization can develop a set of regenerative goals, which can be realized through its stakeholders’ value-adding processes. In this context, goals are not meant to be functional but developmental; they express the new capacity and capabilities (or new ableness) that the system needs to develop to pursue new ends. These goals are what the stakeholders need to achieve if they want to play a value-adding role (VAR). To do so will require each stakeholder to develop their own ableness so that they can generate systemic effects for the social and ecological systems they serve.
This understanding can be used by an organization as the basis for the development of a regenerative strategy that respects the integrity and unique potential of each stakeholder. To build stakeholders’ ableness, an organization may develop a stakeholder strategy that may include ways to, for instance, a) raise the level of distinctiveness of its product or service offering so that the new value may not only delight its customers or beneficiaries but also enable their value-adding process to be more effective; b) create a working culture of personal and professional development that will increase its workforce’s and business partners’ creative capacity; c) enhance the uniqueness of social and ecological systems while generating fewer negative effects and aligning its activities to its community’s distinctive story and unique essence; d) engage its financial investor in on-going developmental dialogue to educate them on the benefit of regenerative thinking. In our estuary example, the organization might engage its customers, business partners, environment activists, and members of the community in understanding the importance of regenerating the health of the estuary, developing a culture of stewardship, and finding ways by which each can uniquely contribute to its restoration through their activities.
Only at this final phase of the process does it make sense for an organization to develop a set of metrics and performance indicators to assess the effectiveness of its stakeholder strategy. Metrics and KPIs may be developed to evaluate the outputs (i.e., the quality of what is being produced by the organization and its efficiency in producing it), the outcomes (i.e., the value delivered to the stakeholders in terms of new ableness); and the systemic effects (i.e., how well the organization is able, through its stakeholder ecosystems, to build the vitality, viability, and evolutionary capacity of the social and ecological systems it interacts with). From here, the organization may execute its strategy, thereby driving system actualization for all nested systems: the stakeholders and the social and ecological systems within which they operate. This is indicated by the left-to-right arrow in Figure 1.
What’s Holding Us Back
The focus on defining functional industry-driven goals as opposed to engaging in place-sourced ‘end-state thinking’ is a reason why, despite all their good intentions to evolve business practices toward addressing climate change and other societal challenges, purpose-driven industry standards and metrics cannot be used as a starting point toward engaging organizations in a regenerative approach. Because they are being developed independently of an understanding of the uniqueness of the specific social, ecological, and economic systems within which an organization’s activities take place, these standards and metrics are generic, abstract, disconnected, and only offer a fragmented view of reality. They are poor indicators of the systemic effects generated by an organization on its environment and stakeholder ecosystem.
There is an underlying cause to the ineffective way we still try to address our society’s challenges: as Einstein warned us, we are trying to solve our problems with the same thinking that we used to create them. Most of our social and ecological problems arose as a consequence of our materialistic and reductionistic worldview. Though we are generally unconscious of the fact, we see the world as a set of (static or “dead”) material objects or variables that are subject to the Newtonian principle of cause and effect, and that can be manipulated and acted upon toward predetermined goals or targets. When our living world seems too complex, we reduce it to a set of fragments that we deal with independently of one another. We then assign metrics, targets, or KPIs to these fragments and use them to guide our activities.
When applied to the living world, the materialistic and reductionist mindset has unfortunate consequences. It narrows our expectations to reduction of impacts while keeping us stuck on problem-solving activities that may temporarily alleviate symptoms but will not help living systems realize their potential. This mindset impedes our ability to foresee how our activities create unintended consequences, further aggravating our challenges. Furthermore, the materialist worldview has influenced our language. For instance, the concept of impact on society is misleading. The word means impinging or striking one body against another (Britannica Dictionary) — an idea that is very much aligned with a Newtonian view of the world. Using the word impact makes us believe that we can directly act on and even ‘fix’ social and ecological systems as if they were machines. In contrast, the word effect relates to a change in condition or state of affairs as the result of something being done; effects are always specific to the unique essence and potential of the nested wholes and are inherently systemic. Since living beings have the inherent capacity to self-regenerate, an indirect developmental approach that focuses on building their capacity and capabilities to heal is most effective.[ii]
New Opportunities for My Colleague and Her Clients
It’s unlikely that purpose-driven standards and metrics will disappear anytime soon, and I assume purpose-driven organizations will continue working on meeting these standards for quite a while. It’s part of the rules of the game! But this should not deter organizations that feel motivated to increase their regenerative effects on society by moving beyond the status quo. In fact, working from a whole systems approach may enable these organizations to not only meet but far exceed purpose-driven industry standards. When an organization’s operation is guided by a developmental stakeholder strategy, all strategic decisions are made in a way that is fully aligned with its stakeholders’ value-adding processes and unique interests. As Ben Haggard and I noted in an earlier article, an organization contributes to the health and evolution of a whole ecosystem when it nurtures its stakeholder ecosystem, creating mutually beneficial relationships with all of its members, and delivering value to them that enables them to more successfully create value themselves. In the process, the organization increases its relevance and viability in its marketplace.
When considered from a reductionist mindset, the approach I just presented may sound daunting. A regenerative approach does indeed require a shift in thinking, but when this shift takes place, new possibilities open up that were previously unavailable. I co-founded The Regenerative Economy Communities (TREC) with Sidney Cano from DUIT, Mexico, and Ben Haggard from Regenesis, NM, to help organizations go through this paradigm shift. We believe any organization can be a powerful instrument for regenerating social-ecological systems and local economies. TREC supports organizations in the development of a stakeholder governance strategy that is inherently regenerative for all living systems. Working this way is not only possible but also urgent!
We are currently enrolling a new TREC Cohort. To learn more about The Regenerative Economy Communities (TREC), please visit our website and contact us: contact@regen-economy.com
Notes
[i] The notion of “end-state” comes from The Regenerative Practitioner Series, the foundational course offered by The Institute for Regenerative Practice.
[ii] To learn more about the limits of a direct approach and the necessity to shift to an indirect approach when working with living systems, see Carol Sanford’s 2022 book “Indirect Work, A Regenerative Change Theory For Businesses, Communities, Institutions and Humans.”
