Shareholder Model >>> Stakeholder Model

I wrote this piece for the World Economic Forum regarding my thoughts of what the most important component of the Fourth Industrial Revolution is. 

Let’s start with the bottom line: we are all humans. 

 

Humans are hard wired to seek connection and meaning in our lives. Unfortunately, too many of us spend the majority of our days working for companies, trading our time for paychecks and leading lives mostly devoid of the connection and meaning we fundamentally seek. Free market capitalism and the culture of business leadership have served as the architects of modern society, but we often forget that actual people make up the machine-like corporations that have such a drastic influence over our socioeconomic system. It has become apparent that this system exacerbates inequality. Countless people have been stripped of their dignity, their fundamental needs, and their happiness while the billionaire class is prospering exponentially. The unrest we are seeing across the globe comes as a result of people feeling trapped and powerless, as opposed to empowered and in control of their own destinies.

There is a better way. It involves helping private sector organizations realize their potential for inspiring and empowering the masses - their employees - to realize their own potential. The one thing I would propose to create a more equitable economy is to shift from the shareholder model to the stakeholder model.

After spending several years traveling the world evaluating investment opportunities and mutually-beneficial partnerships, I began to notice an unlikely pattern that seemed to dictate our success. This pattern was so subtle that it took me a while to pinpoint it. It wasn’t profit potential. It wasn’t scalability. It wasn’t even really sustainability. It was how business felt. It was in how the people in the boardroom related to each other, how the ideal vision was delivered, received, and collaboratively conceptualized, and what the energy was amongst the teams charged with the execution of our plans. After a few months of explaining this phenomenon to my contacts I discovered that there was a fringe mindset emerging called conscious business, which summed up what I had experienced. Conscious business is a new lens through which to view the world that places highest value on authenticity, servant leadership, and the triple bottom line.

Individual purpose and organizational purpose are not mutually exclusive. One needs the other in order to truly come alive. Our deepest calling is to grow into our own authentic selfhood and expand our possibilities, and as we do this we will find the joy that every person seeks. What if the jobs we all worked in provided us those opportunities day after day? What if our jobs were the pathway to our own self actualization? The shareholder model reigned supreme for much of the 20th century, but it is flawed because it requires leaders make decisions that favor profit over people and planet. Frederic Laloux has spoken about the emergence of the stakeholder model, which insists that companies must answer not only to shareholders, but also to customers, employees, suppliers, the local community, the environment, and others. The expanded perspective needed to make decisions for the highest good of the entire stakeholder matrix is the key. The stakeholder model continually reminds us of our shared human experience.

Capitalism is one of the most powerful vehicles of opportunity creation that is available to us, so let’s empower our capitalistic organizations to show up fully. Holistic employee engagement results in heightened creativity, insights, focus, and passion. If all companies made moves toward the stakeholder model, a massive swath of the global population will be directly, quickly, and positively affected. The employees will feel a deep level of personal fulfillment. The consumers and other stakeholders will positively benefit from the momentum fueled by passion. The companies themselves, and their profit margins, will rise with the tide. It is a win-win-win.

The business leaders of our world have a unique opportunity to accelerate positive transformation by enacting systemic change in the DNA of their organizations. This involves a process of rethinking the why behind every move and motivation in order to evolve as people and as a business entity in lockstep. What would it feel like to have the workplace serve as an invitation for leaders and employees to become the ideal version of themselves every day? The societal turbulence that we see so much of would naturally fade away as more people truly feel seen, heard, and respected. If people can make empowered choices, they can transcend circumstances.

We need organizations to redefine business as usual and position the stakeholder matrix at the center of their strategy. We need private sector leadership to encourage expansiveness of self and of possibilities as much as they encourage meeting project deadlines. When we guide ourselves back to a daily standard of feeling great while doing our jobs, that’s where our clarity is, that’s where our joy is, that’s where our flexibility is, that’s where our balance is, and that’s where our world-changing ideas come from.  

This is a step beyond meaningful work. This is about coming home to our humanity. As Professor Klaus Schwab said last summer at the World Economic Forum, “We must preserve the human dimension!” When we boil it down, we all want love, we all want freedom, and we all want connection. In order to alter the fabric of our economy, we must motivate the for-profit entities to operate with transparency and heart; we must show them how to be the driving force behind the elevation of global consciousness.