Aiming for sustainability
My last post dealt with the subject of “systems thinking”, claiming that its fashionableness in the tech industry doesn’t jive with the amount of collateral damage being racked up by prominent companies.
I wanted to follow up with a post that doesn’t spend 600 words tearing down other people’s work. To that end, I’d like to pose the question of what a company would look like if it were to truly espouse systems thinking.
To characterize a possible outline of such a company, I think that it comes down to developing a sustainable business model before being coerced by market forces to make the business work by any means necessary.
The word “sustainability” ceased to convey meaning years ago. It’s become more of a Boy Scout merit badge than an objective against which key results can be measured.
But to take a step back and define our terms, for a process to be sustainable, it must be capable of continuous operation without the aid of external forces. In the realm of business, the process to be sustained is growth, presumably of revenue. A firm can’t simply remain in operation to be considered successful—it must keep pace with (or beat) the greater economy.
This fact of business life provides the primary point of pressure on management—growth must be sustained, if not accelerated, or else it’s your head.
A company must overcome this pressure in order to have the luxury of even considering its adverse impacts on society. A management team kept up at night by fear of investor insurrection is not one that’s apt to fret about automation’s impact on the working class.
A company that fails to overcome this pressure is akin to a truck rolling downhill with its brakes cut. As more people pin their hopes and dreams to the company, management starts to lose political capital and control of their own destiny. As things get dicier, it starts looking preferable to steer the truck towards the crowded intersection in order to stay on the road instead of maintaining course at the brick wall ahead of you.
A business earns the luxury of considering social impact by enacting a successful business model. A sustainable bottom line is the price of entry.
That sounds all well and great, but one does not simply “enact a successful business model”. This is a very difficult thing that most management teams fail to do.
Two contrived examples of how this may occur:
- As a consequence of identifying a problem that your team is uniquely capable of solving, you achieve bottom line growth before investors lose patience.
- You raise money from folks that trust you deeply, and this trust allows you to invest early capital in experimentation in pursuit of a sustainable business model.
Both of these scenarios involve quite a bit of luck. But this luck is earned, either by the team’s execution on a suitable problem or by building and leveraging trusted relationships.
To me, the crux of this process is wrapped up in the motivations of a founding team. A team motivated by the fashionableness of starting a company as a get-rich-quick scheme is not one that’s likely to be mindful of negative externalities.
I contend that you’re better off executing on a problem that you find truly meaningful and likely to have a positive impact on society. These characteristics do not supersede the requirement of making money, but can be thought of as filters on the paths down which a company may traverse.
Starting a company is hard work. Minimizing a company’s exploitative fallout on society requires patience, some amount of privilege, and fundamental alignment among the founding team.
Thanks to Oren Schetrit for reading and providing feedback on drafts of this essay.