HOW TO RUN A BUSINESS LIKE A FOREST – PART 2 of 3
Last week we sowed a seed:
How can a business create products, processes and services that function most efficiently, while optimizing environmental and social impact in the long term?
LEAN thinking shows how waste can be reduced by balancing flow and pull all along the value stream. Meadows, in her Thinking in Systems, suggests that Feedback loops are another way of visualizing the balance between flow and pull.
A feedback loop is a closed chain of causal connections from a stock, through decisions/rules/physical laws/actions that are dependent on the stock level, and back, via a flow, to change the stock.
Balancing feedback loops are target oriented sources of stability and resist change, e.g. integrated pest management that encourages natural predators, monitoring systems that report on environmental damage, pollution taxes, good nutrition. When we clear cut a forest, destroying species’ habitats, we remove the forest’s natural balancing feedback loop’s response mechanism. In contrast, if we let price reflect full cost of a product/service, then price variation maintains the balance between supply and demand, representing the idealistic feedback loop. The kicker is incorporating pollution, resource scarcity and social justice parameters into the cost equation.
In contrast to self-correcting balanced feedback loops, reinforcing feedback loops are self-enhancing. The more money earned, the more interest is accrued, resulting in more money. The more soil erodes, the less plant life it can support, the more rain runs off, the less compost is produced, the more the soil erodes. A source of growth but also collapse, a runaway reinforcing loop is eventually self-destructive, unless/until a balancing loop intervenes, e.g. eroded soil becomes rock which ultimately crumbles back into soil.
Principled Entrepreneurship, a fundamental tenet of Charles Koch’s market based management (MBM), encapsulates the long-term vision of creating value for customers while conserving resources. In contrast, value is consciously destroyed when resources are used less efficiently. Resources encompass raw materials, energy, labour, skills, intellectual property and time. Through MBM, Koch Industries has become one of the most profitable, yet responsible, group of companies.
Until Rachel Carson published her epic Silent Spring, in the 1960’s, the earth’s resources were largely treated as infinite, “free” resources. Deming, the father of Total Quality Management, encourages organizations to search for root cause as part of their continuous improvement quest. We now acknowledge that the root cause for many of our global issues is the misconception that raw materials are “free”.
To solve such challenges, we should emulate how a forest operates as a most productive system, harnessing waste as input, in a continuous cycle of efficiency.
Gundling et al, in their book Leading across New Borders, observe that companies are embodying more relationship-based ethics as it is realized that people and planet are just as important as pure profit for long term survival.
They define integrity in 3 ways:
- Ecological ethics: preserving species and ecosystems
- Product life cycle ethics: creating products in safe environments that minimize pollution and wastage while reusing materials
- Generational ethics: leave the world a better, more resilient, more resourceful, more beautiful place for our grandchildren and beyond.
They offer 4 ways to build more ethical perspectives into working life:
- Work for, in an organization that embodies this broader definition of integrity.
- In personal daily life, live sustainably (consider the choices when making purchases, how to travel, what to eat, where to go, who to influence)
- In your business, factor in and measure as much as possible ecological, product life cycles, broader impacts
- Influence every group that you interact with to adopt more sustainable practices, partners include:
- your supply chain,
- industry peers,
- government contacts,
- local communities.
My next Blog pulls these ideas together:
Link to my first Blog in this series: How to Run your Business like a Forest – Part 1 of 3
Thank you for reading my Blogs!
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Boulding, K. (1965) ‘Earth as a Space Ship’. Washington State University, Committee on Space Sciences. Kenneth E. Boulding Papers, Archives (Box # 38), University of Colorado at Boulder Libraries.
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Gundling, E., Caldwell, C., Cvitkovich, K. (2015). Leading across New Borders. New Jersey: John Wiley & Sons, Inc.
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