New economical principles for organization

A lot is going on in the world and it seems that we are facing many cries at the same time. There is a food crisis, an energy crisis, an ecological crisis, a financial crisis, a social crisis, …

In this post I will focus on the financial state in the world and the necessary change I see. Because I am not a macro economist I will approach this from the perspective of organization. With organization I understand two things; they process of how we organize our self and the structure that emerges from that (a company, a government, …).

Though many people still want to believe that the current crises we are facing  are temporarily and that we can solve the current issues with solutions that have proven their value in the past, reality shows us something else.

Even today we are still trying to solve the issues within the current boundaries of our thinking. The incentives and interventions that are done find its origin in a worldview that might not be accurate anymore. The steps that have been taken to overcome the current ‘financial crisis’ are from the same level of thinking that causes this crisis. And as we find out now, this is not enough.

In this video link David Harvey gives a great and simple explanation of what has happened in the financial sector, what the reactions were and why this doesn’t work. This video inspired me to this blog. Though I am not a Marxist I do agree that we have crossed the boundaries of a healthy free economy.  And judge for yourself; Is it healthy, is it free?

Does the capitalist system as it is organized now provide freedom, health and wealth for all? We can discuss if this is what needs to be achieved, but I’d rather focus looking forward and finding alternatives that make the current solutions obsolete. And what if it was possible to create an economy that does differentiate AND provides health and wealth for all at the same time.

Our economical system has to be radically changed. The change that I consider as necessary is a change towards a sustainable economy. Financial sustainability is just one aspect of my definition of a sustainable economy. The other aspects of my definition of a sustainable economy is that it contributes health and wealth in social and environmental perspectives as well.

To me this is not about people, planet, profit; it is about adding value to our life conditions in economical, ecological and social terms. And with the term profit a lot of misunderstanding can arise. It invites to go into win/lose thinking.

When you look to value adding from the financial perspective one can argue that life standards have increased for most people on the planet. However at what price?

We have postponed to pay the bill.  We have been very successful in developing the modern western industry, but the growth has been unbalanced. The negative side effects have been pushed forward into time or we have created solutions that did solve the immediate threat but did not solve the real issue behind it. Thought leaders on organizational change and leadership like Peter Senge and Otto Scharmer have addressed this quite accurate in their work.

Our current economy is based on growth. As I mentioned it has brought us many good things, but it also has a shadow. Facing the shadow is inevitable, because the price of not doing that simply just is too high. Growing too fast creates unhealthy situations. Maybe we have grown too fast. We call the instability in economical, social and ecological crises. And, in my belief, we are not actually dealing with the causes. We are avoiding the shadow.

I will share my view on the necessary change within the sustainability model of people, planet and profit. This model can be easily read as a linear model where the three elements are separate issues that can be isolated. Choices need to be made between people, planet and profit, and quite often the choices made from this viewpoint are ‘either-or’ choices. And there people and planet most often are considered less important than profit. That’s logical in an economy based on (infinite) growth. But nature tells us differently.

The solutions that our governments and companies are applying are still within the same mindsets. The basic assumptions on which our economy is built and the way we organize our self in companies and in society are not questioned. Linear, rational models are dominant where I believe a different approach is needed from a different mindset, a more holistic mindset. We need different approaches and solutions from a mindset that makes the current ones obsolete. This sounds much easier than it actually is, because we have been so successful …  

Meanwhile people are unsatisfied and (apparently) for different reasons protesting against their current life conditions. And earth is protesting too. Recent long term studies show that the biodiversity needed to keep our ecosystem balanced is much higher than we assumed. “Although species may appear functionally redundant when one function is considered under one set of environmental conditions, many species are needed to maintain multiple functions at multiple times and places in a changing world” (Nature, Aug 11).

In average 84% of the species (plants) in an ecosystem are critical and irreplaceable to keep that ecosystem healthy as a whole. And in many ecosystems we are close or even beyond this critical boundary where more than 16% of its plants has extinct.

When you look at the people, planet, profit model from a holistic view it creates different possibilities for application. From a holistic viewpoint all aspects (people, planet and profit) are equally important and should all be taken into account and seen as a whole. Instead of linear, separate and exclusive, people, planet and profit are mutually interconnected. All are both a separate issue as an aspect of the other two. It is like you finger that is separate and part of your hand at the same time. This mindset creates alternatives for either-or choices. 

New economical principles for organization implies not only changes in the financial system, it implies a radical change in thinking and acting. Applying alternatives within the current dominant thinking just is not enough. Once the bath is full, you need to close the water, otherwise it pours over. And it is at that point that we are.

The necessary change I see is from eternal growth and optimizing profit towards sustainable growth and optimizing value(s). Value adding becomes key, not profit only. Economical value is one aspect, as are social value and ecological value. Here I´d like to introduce the term Value adding organization. We need to organize our self questioning the value that is added for the whole and the part. This creates possibilities to accept less profit in order to realize better life conditions and more wealth. Even stronger, from a holistic point of view it is not logical to act differently.

The last few years leadership is a term that is being used frequently. We have seen new theories and models arise like Theory U, Spiral Dynamics, and other. But when applied from the old mindset they become ´tricks´ and do not really work. A win-win situation will never emerge from win-lose thinking.

In my years of experience working with the U-process I see many companies going down the U into an awareness process, but when it comes to action fall back into old patterns. The challenge is to go from awareness to action, going up the U the other side. Peter Senge and Otto Scharmer call this learning from the future. In my interpretation of dr. Don Beck´s work, this a breakthrough from first tier thinking to second tier thinking.

To organize our self with value as key principle instead of profit/loss is not easy. It brings up the differences between people and nations and it asks us to go inside to connect with our inner core values. It also asks from us to go beyond the duality of either-or and to recalibrate our reality concerning profit and loss.

In terms of the People, Planet, Profit model; a value adding organization (team, company, country) -in my definition – creates checks and balances that are beyond the either-or choices. It integrates indicators for people and planet in its profit objectives as it does integrate profit indicators in the people and planet objectives and so on.

So, instead of creating an economy that is about profit and growth I believe it is much more healthy to develop an economy that is about value and value adding. I also believe that this could be much more profitable in the long term, especially when the People Planet Profit model is implemented in a holistic way as drawn above.

A key question is “How?“.

The new prototypes for economy and organization do not emerge from theory. Neither do they just pop up from our current habits and line of working. It takes action and learning from the action as a reflective practitioner. Learning and acting are so interconnected and should not be isolated from each other. Reflecting is part of the action, the action is not complete without it. Though in the high pace that we are working and living and with all the external stimuli to move on to the next thing this is often ignored. And in time of economical crisis it seems very difficult to experiment, allow failure and learn. But still, it is the best thing we could do.

I also strongly believe that we not need to throw out all the achievements, learning  and models that we have now. On the contrary, to include these brings the leap forward closer. But our relationship with these models can change. This will broaden our perspective for action and with that the choices that we can make and with that the possibility of being successful.

It takes pioneers, small steps, perseverance, documentation and sharing. And probably more.

In several projects that I am involved in we are experimenting with new ways of organizing. Either in the way we have meetings and apply performance management in companies or in the way we approach issues that people encounter in towns or rural areas. A key role that I play in these is to interconnect beyond the different viewpoints. This is hard work, but it opens a perspective for different viewpoints. By integrating these with an inclusive approach a new reality emerges and people find safety to walk new paths.

The long term success of many new initiatives still have to prove themselves and I am sure they will all fail using the current criteria we have. It is a great joy to see what happens if we put these criteria aside, even if it is only for s brief moment. It opens the doorway to new ways of working and living. And that is what I hear the world screaming for.

About Alain B. Volz

Alain Volz M.Sc. (1969) - Social Economy Entrepreneur, founder and director of ATMA - has studied Business Administration and Organizational Psychology. He started his career with Royal Dutch Ahold and has worked with IPMMC and TC&O. For 10 years Alain has been working with Twynstra Gudde Consultants and Managers as senior consultant Human Talent & Change Management. He was responsible for Competency Based Human Talent Management. He is co-founder of the Center for Human Emergence in the Netherlands (CHE), a former member of the CHE alignment circle and founding director of CHE School of Synnervation (currently Synnervate). In 2011 he held the position of partner with the RnR Group in Maarn. Alain is Strategy & Alignment Officer at Dipaliya Women's Association in Tamale, Ghana. In the Netherlands he is board member of the committee for the position of women and minorities in the Dutch Democratic Party (D66 Thema Afdeling V/M Sociale Innovatie). As such he represented D66 in the PVO; a cross party National committee consisting of represents from 6 different political parties (CDA, CU, D66, Groen Links, PvdA, VVD). The office of ATMA is located at the ImpactHub Amsterdam & the ImpactHub Accra.
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