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A New Kind of Corporation. A New Way of Measuring Value.

by Tree Langdon 2 months ago in economy

People, Planet, Profits.

A New Kind of Corporation. A New Way of Measuring Value.
Photo by Paweł Czerwiński on Unsplash

“This is the moment when we must come together to save this planet. Let us resolve that we will not leave our children a world where the oceans rise and famine spreads and terrible storms devastate our lands.” Barack Obama

Recently, my friend, Paul Myers, asked me to give my perspective on a post-pandemic sustainability strategy for multinationals.

“I invite all writers to identify and critically analyze trends, opportunities, risks, and challenges that corporate leaders at Multi-national corporations (MNC’s) face today; to develop, implement and maintain a post-pandemic sustainability strategy.” — Paul Myers

I’ve been following the fascinating conversations he's been having and I'm inspired by the variety of ideas coming to the surface.

We need a paradigm shift in how we measure value.

Our measure of value tends to consider Profits, then People, then the Planet. That’s changing.

It’s obvious that’s not an ideal measurement of value in the current environment.

The pandemic revealed weaknesses in many established systems we’ve become to rely on, both corporate and socially.

It tested the concept of globalization, interrupting distribution chains while revealing how quickly panic buying can result in shortages around the world.

There were some clear winners. Online shopping services saw a sharp increase in demand, as did delivery companies.

Social infrastructure problems were revealed in a powerful way as deaths in senior’s homes mounted, the poor and homeless were disproportionately impacted and those with underlying health conditions were more at risk.

Foodbank services were interrupted and homeless shelters were overwhelmed. At the same time, they were trying to establish some sort of social distancing for the protection of their staff and clients.

These social groups tended to be in sectors that were already at a disadvantage. The effects of the pandemic only served to magnify existing problems within the system.

Some governments played a role in supporting the disadvantaged during the first six months of the outbreak although it was an inconsistent response globally.

Some corporations did their part by donating excess food supplies to food banks while they struggled to pivot into new markets.

Things are beginning to change.

It’s time to look at the bigger picture, a longer-term solution that will remain in place well after the pandemic has eased and life returns to a semblance of normalcy

The pandemic was sudden, unexpected, and changed our way of life.

The pandemic is considered to be a black swan event. That’s a once in a lifetime event that is unique in how rare and unpredictable it is. Besides being beyond normal expectations it’s also considered to have serious consequences.

In many ways, the pandemic and environmental extremes are the same.

The environmental events that are occurring on the planet may be considered black swan events as well. The environment is fragile, we are seeing more extreme weather events around the globe.

Flooding across Europe, in Ethiopia, Iran, India, and the United States has been the worst in recorded history. Forest fires on the Pacific coast of the United States and in Siberia are larger than we have ever experienced. In Australia last year they called it the Black Summer.

We can no longer brush these off as once in a lifetime events. They’re happening and they are getting more severe.

Environmental events are different from a black swan event because they aren’t as rare as they used to be. They are somewhat expected. We set new weather records all the time. Heat records, size of hurricanes, the number of wildfires, and the number and severity of floods are all increasing.

These are the result of environmental changes from global warming.

It’s easier to ignore an environmental event if it isn’t happening to you. The smoke from forest fires affects surrounding countries but when the fires are extinguished, life goes on. We have short memories.

We’ve also been in denial for a long time.

The pandemic has prepared us for the coming environmental collapse

It has shifted our thinking. We realize things aren’t as safe as we thought they were. We aren’t in control. We’ve had a warning and many of us are paying attention.

The pandemic was global, affected every country, and required us all to make changes to how we behave in our day to day lives. Unlike a localized environmental event, it happened to everyone, all around the world.

Businesses and employees alike had to find ways to pivot as the pandemic changed the face of how we exist in the world.

Going forward, we need to be able to continue to adapt to changes quickly and provide solutions to a changing environment.

Our response to the Pandemic was a training run.

Some of our existing institutions are well-positioned to flex with circumstances as they come. Many bricks and mortar stores will not.

As we realize this is only the beginning of more change to come, we must prepare by creating ways to work together on solutions.

How will we respond to the next event?

Brainstorming has always been a way to generate new ideas and this skill is needed more than ever. Businesses that provide space and opportunity to be creative are more likely to encourage new ideas and the expansiveness required.

Experimentation with all areas of the business is essential. From design, through production to marketing and fulfillment, companies need to be flexible enough to allow employees to test new ideas and testing is key to responding to the market.

It’s also key to responding to the environmental changes to come.

Responsiveness is important. Coming up with the ideas required to meet the new environment (Covid or otherwise) is the first part of responsiveness. Making the decision to go with them is the second part.

Innovate, create, respond, decide.

Successful designs are created with the customer in mind and one eye on the competition’s response. Keeping tabs on distribution lines, and the impact of events on all of your network is key to creating a response that works for everyone. Communication with a team that includes key relationships allows room for change.

There is no point in creating a product that can no longer be shipped due to restrictions or a product that only partly meets the needs of the customer as the situation evolves.

Embracing the flexibility of technological solutions to problems is part of the solution. Be willing to host virtual meetings, use artificial intelligence, and use new tools to display information or host data. Being open to these tools allows for a broader experimentation set which allows more testing While you’re at it, keep your data secure. It’s more vulnerable out in the cloud or on virtual calls. Witness the problems Zoom experienced as they scaled up their ability to respond.

Formalize communications. Clarity and excellence are needed because we don’t have the advantage of face to face meetings, the handshakes, the nods, and other body language indicators to ensure understanding. Written words have to clearly state intentions and agreements. Clarify the arrangements.

Creating structures in organizations that are flexible and open to change is key to allowing the business to respond using these techniques.

There’s one thing wrong with this approach.

It ignores the new rules of Planet, People, and Profit, in that order.

You can’t get out of a hole by continuing to dig.

We are so focused on the customer, we’ve forgotten to adjust our priorities.

What if we considered the Planet as the main customer, then People, with Profits coming up last.

If we go through the above Response framework with this new formula in mind, there will be a new result, but there’s always a problem.

Money.

In the end, the value of a business is measured using Money.

Something beyond the responsiveness of existing corporations is going to be needed to get us out of this. The corporation is able to change, but only to a certain extent. Then it hits our expectations.

We can talk about being flexible and nimble, pivoting all we want but we’re still chasing the same thing — Profits.

To truly make this change, we require an overhaul of our values. We need to put the Planet first, then People and last Profits.

Profit needs to be redefined.

Traditional systems look at financial results as a value measure.

Corporations make money by creating experiences that others are interested in purchasing.

When we determine the value of a job, the salary or hourly rate is always a factor. You can love what you do but society requires you to earn enough money to take care of yourself.

We assign a monetary value to a corporation based on their ability to earn profits and to return a portion of those profits to owners through dividends or other payments.

This method is fraught with problems.

There’s Always a Grey Area

As I began my journey of studying to become an accountant, I was surprised to discover that numbers don’t represent a black and white picture.

Financial reporting is subject to rules that are subject to interpretation. Companies can argue whether an outlay is considered a long term or short term cost. That difference has a profound effect on the bottom line.

How Do We Measure Value

Experiences.

We can create them without the need to use money. Time in nature, time spent with friends and family, or time nurturing ourselves doesn’t require the intervention of a product or a corporation.

Time.

Having time to spend any way we choose is important to us. It allows us to relax and contemplate life. We are able to discover ourselves and think deeply.

Happiness.

We use it as a measure of value but we often set happiness aside in exchange for making more money. Happiness levels vary around the world. Finland has figured out a way to be the happiest country in the world.

“Finnish society has been built in such a way that people are supported but still feel like they have control over their lives”. Anu Partanen, author of The Nordic Theory of Everything,

A Paradigm Shift

What if we focused on establishing social supports similar to Finland while making every decision with the environment in mind.

What if businesses were valued for their contribution to supporting the environment and adding to the happiness levels of a country?

What if the new definition of Profit included these two key factors in changing how we operate in the world.

As we struggle to determine what we value and what is important to us on this planet at this time, I hope we can find a way to redefine Profit.

Imagine this as a new definition of Profit:

Profit is measured by how the corporation contributed to supporting the environment and how it added to the happiness levels of the planet.

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Previously featured on Medium at :https://treelangdon.medium.com/

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economy
Tree Langdon
Tree Langdon
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Tree Langdon

For most of my life, I worked in business as an accountant, in marketing, and then as a controller for a large educational institution. I decided to change my path which gave me more time for writing and travel.

For more, read my bio here.

See all posts by Tree Langdon