Towards Business Design Principles for Strongly Sustainable Organizations

By Antony Upward

Welcome

This is [a report of[ my third post to the blog of the Strongly Sustainable Business Model Group (SSBMG), an applied research group within OCAD U’s Strategic Innovation Lab (sLab) in Toronto, Ontario, Canada. [The original post (made March 6, 2013) is available here].

[At the time of writing I was ] busy writing up my thesis [, now published as]: “Towards an Ontology and Canvas for Strongly Sustainable Business Models: A Systemic Design Science Exploration”. This blog post discusses one aspect:

–      If the Strongly Sustainable Business Model Ontology (SSBMO) and the canvas it “powers” (the SSBMC) asks the right questions of business model designers who are trying to create strongly sustainable business model designs…
–      What, based on the same natural and social science literature of strong sustainability used to identify the questions asked by the SSBMO, are good answers to those questions?

Introducing Design Principles

Clearly there can be many answers to the questions posed by the SSBMC; after all there are a very large number of possible business designs – even given the goal of strong sustainability: simultaneously generating environmental, social and monetary profit.

So perhaps a simple “list” of answers is not possible or practical. Instead, perhaps it would be better to provide advice to business model designers. They can then apply this advice as they answer the questions using the full knowledge of their business model.

Generally advice used to design are called design principles. Generically a design principle is:

A statement of what is desired of, or a requirement for, some aspect of an the thing being designed.

In this case the thing being designed in a business model and the basis for the requirements is derived from the literature of strong sustainability.

So, Strongly Sustainable Business Design Principles are:

A set of advice that when followed by a business model designer, as they answer the questions posed by the SSBMC, ensures their business model will meet the “Gold Standard” for strongly sustainable organizations (or least significantly increases the likelihood!).

Introducing the proto-Business Design Principles for Strongly Sustainable Organizations

As I reviewed the natural and social science literature concerning strong sustainability during my research two things became clear:

  1. We have an unprecedented amount of knowledge from which to derive business design principles for strongly sustainable organizations
  2. But that knowledge is not complete: what exists appears necessary but currently it is very unlikely to be sufficient.

So, recognizing the limitations of our knowledge, what I am putting forward should be considered a starting point – proto-Business Model Design Principles – with much further work required.

A Story to Structure the Principles

Also as I reviewed the literature a story became clear that linked together the advice from each of the disciplines about that disciplines perspective on strong sustainability. Together I find that this advice makes a compelling argument for the conditions required for strongly sustainable organizations to exist and thrive.

This story spanned the systems or ecologically oriented natural and social sciences: physics, chemistry, biology, ecology, (positive) psychology, (environmental) sociology, ecological economics, and their organizational counterparts (micro-) economics (finance), organization design (micro-sociology), and management (including marketing, operations and management information systems).

In my thesis I labelled this story “Towards a Theory for the Conditions Required for Strongly Sustainable Organizations”. And like any good story it has an introduction, a middle (consisting of 5 parts), and an ending: seven “chapters” in all.

However, the story is ‘only’ an argument: while each element has considerable empirical support from its respective disciplinary source, there is limited evidence to support the inter- or trans- disciplinary end-to-end story I’m about to tell. Work, such as that being undertaken by the Strongly Sustainable Business Model Group, will I hope over time help to refine and test this theory.

As I started to consider the business design principles I realized they too appeared to fit within this same narrative. So, as a first attempt, I’m choosing to group the principles using the seven chapters.

Introducing the Principles

What follows interleaves the seven chapters of the story about the conditions required for strongly sustainable organizations to thrive with each of the relevant proto-business design principles. For now, as this is an introduction, I’ve included summaries of each of the proto-business design principles identified to date.

Are they a good starting point for advice that can be easily understood and applied by business model designers?

Perhaps, but it is clear much more work is required. The work to transform proto-principles into pragmatic advice is a significant part of the Strongly Sustainable Business Model Toolkit project.

In the mean time let me know if you have questions, comments or if you’d like more details!

In the Beginning –
Defining the Strongly Sustainable Organization

A “strongly sustainable” organization is one in which all of its behaviours and all the behaviours of all other relevant social, economic and biophysical actors, lead to the possibility that human and other life will flourish on the planet forever[i]

The overall proto-Business Design Principles for Strong Sustainability are:

  1. Be clear what is to be sustained or made resilient: for whom, for how long, and at what initial and on-going cost[ii].
  2. Stay within overall limits of available energy: simplify needs, find more sources of supply, or using existing more efficiently and effectively[iii].
  3. Design as an ecologist, i.e. design for: productive systems and contexts with minimal required on-going interventions. Do this by leveraging existing flows from nature, remembering that increases in complexity will, over time, reduce returns[iv].
  4. Bias continual improvement towards a specific goal or aspirational target using backcasting, all the while delivering returns[v].

Chapter 1: Sharing Understanding of the Planetary Conditions for Strong Sustainability

The first part of the argument for the conditions required for strongly sustainable organization is about ensuring the people involved in the organization have a common understanding of our planet.

First: In order to understand the conditions required for strongly sustainable organizations to be possible, groups and individual humans need to have a shared understanding of what strong sustainability means.

The related proto-Business Design Principle is to ensure any business model design meets the planetary conditions for strong sustainability[vi]

Chapter 2: Personal World-View Compatible with the Scientific Knowledge of Strong Sustainability

Second: To act upon our understanding of the planetary conditions for strong sustainability requires certain individual and collective world-views (i.e. belief systems that cause people to act in accordance those beliefs)

The related proto-Business Design Principle suggests that any person wishing to attempt to create a strongly sustainable organization, should, to the best of their ability, attempt to design it in accordance with the “the Natural Laws of Sustainability”, or a similar set of ideas.

Natural Law of Sustainability[vii] Commitment
  1. Law of Interdependence
See the ecological, social and economic system of which you are a part
  1. Law of Cause and Effect
Be accountable for all of the consequences of your actions on those systems
  1. Law of Moral Justice
When responding to those consequences abide by society’s most deeply help universal principles of morality and justice
  1. Law of Trusteeship
Respond to those consequences as well by acknowledging your trustee obligations and taking responsibility for the continuation of all life on the planet
  1. Law of Free Will
Break free from the false beliefs that control your life and your organization and choose your own destiny

Chapter 3: Macro-Socio-Economic Goals Compatible with Strong Sustainability

Third: To put these world-views into place will require a new macro-socio-economic goal for society; or at least people willing to act to achieve this goal even if ‘official’ policy isn’t aligned with it.

We don’t yet have a consensus on, nor aligned action to, such a goal. However, after 67 years of work by the United Nations on various conventions, charters and conferences it is perhaps not too far a stretch to state the following aspiration:

The goal of humanity is to create the conditions so that human and other life will flourish on this planet and beyond forevera[viii]

The related proto-Business Design Principle suggests that any person wishing to attempt to create a strongly sustainable organization, should, to the best of their ability constrain their business model designs based on the following three policies, irrespective of whether these are formally in place or not in the relevant jurisdictions[ix]:

  • Policy #1: Limit the absolute flow of all bio-physical materials through the business model (i.e. across the whole supply chain – cradle-to-cradle)
  • Policy #2: Do everything possible to maximize distributional equity of the flows of environmental, social and monetary benefits (and costs) amongst all the stakeholders of all the firm’s in a business model.
  • Policy #3: Within the limits imposed by Polices #1 and #2, use the market and market pricing mechanisms to achieve organizational environmental, social and monetary efficiency and effectiveness.

Chapter 4: Organizational Goals Compatible with Strong Sustainability

Fourth: To achieve the new macro-socio-economic goal will require a reconceptualization of organizational success and its measurement from solely the maximization of monetary profit to the integrated achievement of tri-profit[x].

The related proto-Business Design Principle suggests that the stakeholders of an organization’s wishing to attempt to enable strongly sustainable outcomes should explicitly define their acceptable level of success (mission, vision, values, etc.) so that it is compatible with the following statements[xi]:

Our organization is one in which:

  • All of its behaviours and all the behaviours of all other relevant social, economic and biophysical actors, lead to the possibility that human and other life will flourish on the planet forevera.

We achieve this by maximizing:

  • The quantity of the needs of human and other life that are met via satisfiers that align with the recipient’s world-views (i.e. maximizing value creation)

and minimizing:

  • The withdrawal of satisfiers, the application of inappropriate (pseudo) satisfiers, or the application of satisfiers that do not align with the recipient’s world-view (i.e. minimizing value destruction)

…so that the total net result satisfices greatest amount of environmental, social and monetary benefit for as much human and other life as possible.

Further, an organization’s stakeholders should explicitly choose design goals and assumptions for their organization’s business model so that they are compatible with the following statements[xii]:

Our system of production reliably creates the possibility for:

  • Abundance, not limits
  • Everyone and everything forever, not just me now
  • Flourishing by being, not languishing by having
  • Positively contributing, not doing less damage
  • Enduring, not failing
  • Happiness, not fear
  • Confidence, not uncertainty and distrust

…and in doing so…

  • Creates a net increases in well-being, natural and human capitals, e.g.

–    Our buildings: ‘produce’ more than they ‘consume’ while increasing the purity of air, soil and water

–    Using our products and services increase well-being and contribute to eco-system service flourishing and the quality and quantity of bio-physical stocks

–    At end-of-life, our products are 100% bio-degradable (for biological nutrients) or are 100% reused at the same or higher level of utility (for technical nutrients)

Chapter 5: Business Model Designs Compatible with Strong Sustainability

Fifth: To design and operationalize organizations which can reliably achieve tri-profitability requires the use of compatible theories, practices and patterns of business model design, operations and measurement.

There is an increasing body of work in the management and organizational literature about specific details of business model designs which increase the likelihood that strongly sustainable outcomes will emerge. Examples surfaced to date include. advice about:

–      Understanding and designing organizations to best meet their stakeholders’ needs (see the works of Manfred Max-Neef, Stuart Hart, and the Positive Psychologists

–      Agency, power and governance (see the governance design principles of Nobel Prize winner Elinor Ostrom)

–      How, where and with what does an organization create and deliver its value propositions (i.e. its business processes, see the work of Mark Pagell, Amory Lovins, Paul Anastas, Ernst Ulrich von Weizsäcker and Eric Trist).

The End: Taking Action Today

Lots of people are already implicitly and explicitly following these principles, to the best of their abilities. Examples of groups of organizations include:

–      Signatories to the Declaration of Leadership for Sustainable Business.

–      The 700 certified or chartered Benefit Corporations world-wide (B Lab).

–      Companies working with The Natural Step to adhere to the Framework for Strategic Sustainable Development.

–      Members of the Business Alliance for Local Living Economies (BALLE), putting into practice their Localist Values

–      Organizations using the Local Exchange Trading Systems

–      Organizations who are a part of the Institute for Local Self-Reliance Initiative for Independent Business.

Of course measurement of performance and standards for acceptable levels of performance are also important. How well are these organizations doing on their journey towards creating strongly sustainable outcomes?

To date I have found just two notable measurement systems and standards that appear to be well aligned with the science of strong sustainability:

–      B Impact Reporting Systems (BIRS) – part of the Benefit Corporation approach (which include GIIRS and IRIS). BIRS requires that you get a score of 80 out of 200 from a survey of between 400-600 items (depending on industry, company size etc.) in order to qualify as a certified Benefit Corporation.

–      PROmoting Business Excellence (PROBE) – a bench marking approach largely based on the Framework for Strategic Sustainable Development.

Also worth noting is the forth coming Gold Standard for Sustainable Business being actively worked on by Dr. Bob Willard [Subsequently this work has become known as the Future Fit Business Benchmark – F2B2] and (hopefully) embedded in:

–      the future standard being developed by the Global Initiative for Sustainability Ratings (GISR) and

–      future versions of BIRS[xiii].

This blog post is © Antony Upward / Edward James Consulting Ltd. 2012 and is licensed under an Attribution –Non-Commercial –Share-a-Like Creative Commons Attribution 2.5 Canada License. Contact for permission to use commercially.

Further Reading

The following are a selection of sources referenced above:

[i] Adapted from p.6 Ehrenfeld, J. (2008). Sustainability by design: a subversive strategy for transforming our consumer culture. New Haven, Connecticut, U.S.A.: Yale University Press.

[ii] Adapted from p.26 Allen, T. F. H. (2003). In Hoekstra T. W., Tainter J. A. (Eds.), Supply-side sustainability. New York: Columbia University Press.

[iii] Adapted from p391 “Advice to managers as applied ecologists” Allen, T. F. H. (2003). In Hoekstra T. W., Tainter J. A. (Eds.), Supply-side sustainability. New York: Columbia University Press.

[iv] Adapted from p.14 Allen, T. F. H. (2003). In Hoekstra T. W., Tainter J. A. (Eds.), Supply-side sustainability. New York: Columbia University Press.

[v] Adapted from Holmberg, J., & Robèrt, K. (2000). Backcasting from non-overlapping sustainability principles — a framework for strategic planning. International Journal of Sustainable Development & World Ecology, 7(4), 291. doi:10.1080/13504500009470049.

[vi] Two good summaries of these conditions are the Sustainability Principles within the Framework for Strategic Sustainable Development and The Planetary Sub-System Boundaries:

–      Eriksson, K. E., & Robèrt, K. (1991). From the Big Bang to sustainable societies. Acta Oncologica, 30(6), 5-14. An overview of the Framework for Strategic Sustainable Development including the Sustainability Principles can be found here.

–      Rockström, J. (2009). A safe operating space for humanity. Nature, 461(7263), 472. Johan Rockström’s TED talk can be seen here.

[vii] Doppelt, B. (2012). From me to we: the five transformational commitments required to rescue the planet, your organization, and your life. Sheffield, United Kingdom: Greenleaf. A summary of the book, including an introduction to the five laws can be found here.

[viii] Adapted from p.6 Ehrenfeld, J. (2008). Sustainability by design: a subversive strategy for transforming our consumer culture. New Haven, Connecticut, U.S.A.: Yale University Press.

[ix] Adapted from: Lawn, P. A. (2001). Scale, prices, and biophysical assessments. Ecological Economics, 38(3), 369-382. doi:10.1016/S0921-8009(01)00172-0.

[x] Tri-Profit, a neologism I have coined, to describe the ultimate goal of a strongly sustainable organization, is the conceptual sum of the environmental, social and monetary “profits” generated by an organization: i.e. Tri-Profit is a metric calculated as the ‘sum’ of the net harm or benefit arising as a result an organizations activities in each of the environmental, social and economic contexts in a given time period. Tri-Profit as a unitless score, i.e. it is NOT measured in monetary terms. A full introduction to Tri-Profit will be the subject of a future blog post.

[xi] Many of these ideas inspired by Manfred Max-Neef’s work on “Fundamental Human Needs” and their culturally specific “Satisfiers”. A full introduction to these ideas, including my working definitions of value, value creation and value destruction will be the subject of a future blog post.

[xii] Adapated from p.18, ch.2 pp.45-67 & pp.89-91 of McDonough, W., & Braungart, M. (2002). Cradle to cradle: remaking the way we make things . New York City, New York, U.S.A.: North Point Press with additional items from Ehrehfelda

[xiii] This is hopefully one result of some work I’m doing right now with The Natural Step Canada and B Lab (the 2nd project listed in the project section of my LinkedIn profile for details).

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