For years we have said that Economy with realistic goals and outcome performance review would bring about jobs and we were right in forecasting the structure of schedules.
Building a sustainable economy: the three critical steps
To move beyond growth, business must seek new financial models, ownership structures and ways to measure impact.
Economic growth is the whale politicians, economists, and business leaders have been chasing for decades. But it is an increasingly perilous and empty pursuit. Photograph: Tony Beck/Barcroft MediaEconomic growth. It is the white whale that politicians, economists, and business leaders have been chasing across the sea of economic policy for decades. For many years the harpoon was firmly lodged in the whale's back, and we ploughed through the seas. More recently, we are becalmed, and the great monster has become elusive.In our new book, Enough Is Enough: Building a Sustainable Economy in a World of Finite Resources, we argue that it is time to abandon what has become an increasingly perilous and empty pursuit. The hunt for ever higher production and consumption is drawing down limited supplies of natural resources, using up the capacity of ecosystems to absorb wastes, and – despite all of this – failing to improve people's lives in wealthy nations.But unlike Captain Ahab, we are not doomed to a life of insane purpose. We can build an economy that meets people's needs without undermining the life-support systems of the planet. Big changes are needed to achieve such an economy. Some are fairly obvious, like limits on resource use and waste emissions to ensure environmental sustainability. Others are less apparent (but equally important), such as limits on income inequality to improve societal health. There is a growing consensus that these changes are needed, but less consensus about how business would function in an economy where the goal is enough, not more.The shift to an economy of enough requires business to change in three critical ways. The first is a shift toward new business models that generate shared value, an idea championed by Harvard economist, Michael Porter. Shared value goes beyond the conventional notion of "corporate social responsibility" in which a company might donate some of its profits to charity or adopt a fair-trade policy but still pursue activities that are fundamentally damaging to society or the environment. Instead of taking responsible actions only as an afterthought, businesses would be driven by a sense of purpose to enhance the communities and conserve the ecological systems where they operate.The second critical change is towards ownership structures that are less prone to growth than shareholder-owned corporations. Two good examples are co-operatives and public interest companies. A co-operative works to achieve a goal that benefits its members, and it also distributes decision-making responsibilities and earnings to them. As purpose-driven organisations under democratic control, instead of profit-driven organisations under autocratic control, co-operatives are better positioned to achieve objectives beyond the balance sheet. Success stories like John Lewis in the UK and Mondragon in Spain are demonstrating how co-operatives can outperform conventional corporate structures and achieve desired results for society.Another significant ownership structure, the public interest company, is also gaining traction around the world. In the past, people who wanted to work toward a social or environmental purpose had to choose between establishing a for-profit business (which limited their ability to achieve the purpose) or a non-profit organisation (which limited their ability to realise financial gains). But new legal forms now exist that combine features of both. In the US, 15 states have passed laws that allow businesses to charter as Benefit Corporations, or "B Corps". B Corps integrate pursuit of the common good into their DNA. A similar situation is unfolding in the UK with the development of "community interest companies". Close to 8,000 of these have opened for business since the scheme started in 2004.The third critical change involves new indicators of progress. Although indicators of financial value such as the FTSE and Dow Jones Industrial Average have been climbing to impressive heights, indicators of social and environmental health have been falling off the cliff. When scientists recently reported that the concentration of carbon dioxide in the atmosphere had reached 400 parts per million – higher than it's been in over three million years – most corporations collectively shrugged their shoulders and continued with business as usual.Given the potential of rising global temperatures to cause widespread harm to civilisation and ecosystems, indifference in the business world is unacceptable. New indicators to guide business decisions could go a long way toward eradicating such indifference. The key idea is to measure the efficiency with which financial inputs are transformed into social and environmental outputs. Accepted standards for measuring such outputs would provide better guidance to investors, and in the process, increase the amount of investment in businesses that create social and environmental value.Rob Dietz and Dan O'Neill are the co-authors of Enough Is Enough: Building a Sustainable Economy in a World of Finite Resources.