#146 Startups That Will Last P1

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Building a Regenerative Business that Lasts

We had a request from an enthusiastic listener who has read the Carol Sanford books and has been listening to all of our podcast episodes. His name is Peter Nelson, CEO  of Threshold. A startup that helps Artists of all kinds– musicians, authors, podcasters, or anyone else with a fanbase– find their fans anywhere around the world and set up events in their fans’ home or business base.

Not surprisingly, his question is “What are the most important steps I can take now, in the infancy of my company, that will help me build a regenerative business that lasts? As an entrepreneur, I only have so much time and money so I want to make sure I’m using the time and money available wisely.”

  • As co-founder of a startup as well, Zac started thinking about the first day of committing to work on his business. He asked himself the very same question. Fortunately with the work we do at Business Second Opinion, it wasn’t about finding an answer but a more whole and complete approach to thinking critically about that question.

July 2019 HBR article by Hermant Taneja and Ken Chennault

  • There is an article I read that has a decent direction.  HBR July 2019 by Hermant Taneja and Ken Chennault. But it was missing some things like a deeper understanding of what actually drove the decisions of these companies.
    • The entire article also felt superficial and a bit cobbled together – giving the reader broad stroke ideas without coherence. The other issue is that they also only used one successful start up idea and instead resorted to huge companies as examples.
    • The article gets stuck as outdated or incomplete. In parts of their advice it is a paradigm that is better than the worst. That is the extract value approach that we all agree we want to avoid, which is about a business getting what we can from its efforts regardless of the effects on Earth- communities and even the consumer.
      • For the most part they did avoid the extract value paradigm. Which is good so we can all cheer. Most people might give this an example of regenerative. What did you see that sounded good and might fool people.
      • To us, was the section entitled articulating a value framework for societal impact, not just financial return.
        • This seems to be a blending of the extract value and do good paradigms here. They use the example of Intermountain Healthcare transforming their business model from fee for service to value based.
          • Seems harmless enough. But it’s clear that the authors are in an extract value mindset when they say that Intermountain Healthcare quote “cannibalize” $700 million worth of profits to transform their business. They also noted that quote “It will take time to measure IHC’s success with this model”.
          • What’s missing here is an ability to understand that you don’t have to undermine profits to do this, and good earnings and margins. Particularly when you start from a place of abstract ideas like, “society”, you stop focusing on how to evolve how you make money to begin with. Which is how the paradigm of do good gives us nice intentions but without the rigor of making those results concrete.

What is missing to be regenerative?

          • Regeneration is about fundamentally about building the capabilities of your companies’ beneficiaries for ongoing evolution.
          • Whether they be customers, suppliers, or employees all nested within the same systems. When looking through a regenerative lens, the focus of the article would have been more helpful to me if it were about the effects of the business model on a companies’ beneficiaries, rather than the sustaining the business and its abstract mission.

What are the core points of the advice?

          • First, they suggest having the business internalize principles and values for society. Which sounded good in theory, but left us wondering how as a business owner one might start.
          • Second, be adaptable to change so that the company can make it for the long haul as the world changes around you.
          • Third, create scalable leadership driving the values deeply into operations and orientation, ensuring that there are younger leaders who are steeped in the values of the company.

What is missing for startups who question these core points?

          • Well the first thing is that they use society as a placeholder for concrete thinking. Society also feels pretty generic – implying everyone. But who decides what’s good for society? Where are the benchmarks? Given the polarization of our society each side has different views on this idea. That generic idea of society leaves the impression like you have to appeal to everyone.
          • Another area that stands out is what happens when you don’t know how to examine the paradigms you are thinking through. You end up mixing and matching and not seeing the confusion and disturbing experiences you create. You stay blind to one’s own worldview and tend to leave out critical aspects of what regeneration brings to the working aspects of nature and humans in a living system. It comes from thinking fragmented often and trying to fill in the gaps from only what they can see.
  • It seems to be an augmentation of a do good paradigm missing a few areas, such as society first principles. But the dead giveaway is that they have not considered a regenerative possibility which leaves so much on the table such as working from a specific whole to avoid abstractions like society.  And they have some hidden old world paradigms from the ordained leader Era of Kings and the extract value paradigm.  For example, delegation and hierarchical leadership are strong over time- which conflicts with some paradigms.
    • There are three challenges here:
      • First, who defines economic and social benefits? These are often ideals of one group or class imposed on another.
        • For example, one company might think that social and environmental contribution comes from setting up a foundation and giving money to causes they like. Another company might say that it has to live this kind of change through the business model.
        • But we have said before that it’s really about an entire community you effect. You can’t pay attention to just the walls of the business. It includes the community within which that business is nested.
      • Second is the benefits are abstract ideas- create value for others. How do we know when we have done that?
        • We really don’t know. Who are these others? What is value? These are all questions based that are valuable to explore but written as a bumper sticker, they drop out the invitation to thinking critically. They are an answer rather than a question.
      • And third, rarely are they integrated into the strategy of the business but are add-ons or separated in another department strategy, like corporate responsibility. This fragments and allows externalities immediately. Now they may be better to some degree than the extractive folks. But what are the implications of non-systemic?
        • If you start from a fragment, your results will be fragmented. Like in philanthropy. Philanthropy is seen as a balance for extracting the maximum amount of value and then giving those at the top the ability to feel good after the fact – rather than just designing a business holistically to begin with.

What would a regenerative paradigm suggest we do here instead?

        • The offered advice has two flaws. They are abstract and they are assumed to be generic. Regeneration is always concrete and specific.
          • For example, we work with getting to the specific through creating what we all Global Imperatives. This is hard to get the mind to do because we want the ideals for what humans want to do.

What does it take to switch to a regenerative mind?

        • Get into “human societies and natural planetary systems shoes”. Which sounds strange. The question is different than a do good question. Instead, ask yourself, “what makes certain systems work effectively.” E.g. Democracy- Seventh Generation asks this and answered, “democracy only works with a well-educated electorate.” Then they worked to be specific on that critical thinking skills and mastery of the thinking to be purposeful and not reactive.
        • And for the planetary imperatives, they ask, what is required by Earth to make her contribution effective. They answered, “be able to regenerate her functioning in the fact of disequilibrium.”
          • This discussion sounded like never getting know systemic exchanges out of balance. They asked where this was likely to happen that they effected and realized they affected forests in their supply system.
          • But instead of setting up a buying practice, they set up an education and engagement with their ingredient suppliers and created a co-creation Lab for R&D on several ingredients. It helped farmers switch practices but also to evolve their crops over time.
          • This also worked on adaptability in a more complete way rather than less harm. They measured the whole of forests and crops for their contribution to homeostasis of the local ecosystem. They sought to understand the working of the system when healthy, not deficiencies and gaps to solve.
        • There is one more thing that regeneration gives us that we miss in the HBR approach. Enduring businesses start with and stay with their own essence in the creative and growth processes. It is coupled with the Global Imperatives and one more question, to be enduring.
          • The focus in their article ends up with the do good idea  we just spoke to, but leaves out the ability to differentiate yourself which is key. Not by market survey but by deeply understanding who you are from the launch. Revealing, not deciding on, Essence is the most important factor in the ability to be enduring. When coupled with concrete specific Global imperatives and a regenerative market positioning process, you have a better stable triad than what they offer.
          • This also speaks to the adaptability suggestion they make, which makes me very nervous as advice. Since most understanding of change to which we need to adapt to comes from tracking emerging trends.
          • That seems to put our eye on the wrong ball. The changes, without a framework, can easily become distractions and turn into a guessing game about how to respond. If we always start from our essence, we know what to pay attention to and we can uniquely respond.

So for today, we have challenged the first two pieces of advice, society first and be adaptable. Which are definitely better than not having them, but don’t go to the heart of the most enduring advice. Think of it this way – in a regenerative paradigm we try to move from abstract generic ideas like mission statements to better society. To concrete specific global imperatives and our specific role in them where we have the most impact. And from Adaptability to change to starting with our essence where we understand the working of  a system and how we uniquely can contribute to it.

There are a few more good offerings on second opinions this piece triggers, but let’s make that Part 2 of Peter’s question. Next time let’s look at the other questions that elevate the idea of enduring to non-displaceability and also take on the idea of scalability of leadership that are built with a system of leadership. That was particularly seductive with the word system in it, but we will help clear that up and give some regenerative grounding to it.

If you are a business, we invite you to join us our Regenerative Business Development community where we apply regeneration to your business and give the details on the second opinion we offer., We use Living systems principles as they apply to producing  regenerative strategy, leadership and work design for human development. Nominations are now open for The Regenerative Business Prize where get free Regenerative education and reflections from our panel of reviewers on your business’s integrity with the 7 First principles? Look for the Prize tab on The Regenerative Business Summit website. Submissions open in NOW until the end of March. The timetable is on the summit. Webpage Download the Rubric from the Prize page and learn about how to avoid Greenwashing with your good deeds and offerings.

There are many other ways to join us from books with Book Clubs with Carol, to engaging in one of nine Regenerative Life Communities? Check out on Carolsanford.com/offerings. ,The Regenerative Women Entrepreneurs Community has openings. Check it out on SEED-Communities.com.

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