askintegralexperts.com Interview: The Evolution of Business

Below I am sharing the written answers from my interview with askintegralexperts.com. Not all of the questions made it into the interview or the final edit, so I have decided to share them here. When you have a moment, check out the interview on askintegralexperts.com. Because of the length of these answers, I have decided to post each separately.

2. I read in one of you essays about an idea called the “hierarchical line of business development.” Can you talk a little about what you mean by this?

It’s a confusing term – I need to find another way to talk about this, as most assume it’s about business growth in the traditional sense: finding new clients/customers and creating more revenue. Of course, I am all for new clients, customers and more revenue. And, in this circumstance, I am talking about something much bigger and ultimately, in the long term and high level perspective, something much more important.

I am talking about the way businesses grow through systematic perspectives and expressions of operations. One way we look at development is through outcomes or value measurements. One way we look at human development is through the lens of value measurement: what is an individual expressing in the world? We can do the same with business too.

Traditionally, businesses had a singular focus: profit for the owner (the bottom line). And, traditionally, businesses had just one owner (or a small group of partners), and this owner typically ran the business. As the business system has developed over time (due to human evolution), the measurement of value from and through business has also grown. One significant shift happened in the 1800s to the framing of the bottom line: the bottom line profit share grew as stock markets (buying share in companies) become more common. Instead of just one or a small amount of people sharing in a company’s success, a larger number of people could.

This economic shift created a shift in the way business was viewed. In the late 1800s, the Supreme Court decided that corporations were actual entities with the same rights of individuals (an early awareness that corporations is something unto itself affecting and being affected by the world around it – more on this later). In 1932 Adolf A. Berle and Gardiner C. Means published their treaty The Modern Corporation instigating the idea that business should not be run by owners but by professional managers creating a shift from owner operators to professional managers. These shifts paved the way for business evolution that we have seen through the 1900s and early 2000s.

In 1976, Michael C. Jensen and William H. Meckling published “Theory of the Firm: Managerial Behavior, Agency Costs, and Owner Structure” in the Journal of Financial Economics which built a case that a business’ sole purpose was maximizing shareholder value. Many then (and now) saw this as a mistake, and in certain terms it was. Companies that have focused on and made decisions to maximize shareholder have underperformed companies that have focused on other things, for example, maximizing customer experience. This shift, however, created an important definition, which spurred both push back and evolution.

We saw inklings of the next major stage of business evolution during the cultural revolution of the 1960s but did not really see the full expression of the next major stage development until the late 1990s. This next stage was primarily expressed through triple bottom and LOHAS oriented businesses. With this, businesses began to open and expand the way value was measured. The impact of business created in the world was clear and the impact of a single bottom line profit driven company was clear – other things are affect and other things are at stake that affect both revenue and the world. This awareness also considered great spans of time (something we see in personal development too); a good single bottom line decision is not always a good triple bottom line decision and is not always a good revenue decision for long-term sustainability.

I believe the next stage in business evolution will be integral businesses that measure value through a penta bottom line lens: Profit, People, Planet, Principles and Progress. I won’t go into detail about this post, but you can read about it here.

Kristoffer Nelson | Krama Consulting & Development, Inc. | kramaconsulting.com

askintegralexperts.com Interview: What is an Integral Business?

Below I am sharing the written answers from my interview with askintegralexperts.com. Not all of the questions made it into the interview or the final edit, so I have decided to share them here. When you have a moment, check out the interview on askintegralexperts.com. Because of the length of these answers, I have decided to post each separately.

1. I know one of your passions is Integral business. Can you talk a little bit about what Integral business is, what it looks like, and how it functions?

Integral Business is what I am most passionate about right now. I feel business more than anything else currently has the capacity to generate more impact in world and galvanize human change. Almost every single person on this planet is engaged in business (commerce) and everyone is affected by it. It’s no longer a matter of chaos theory: Literally, deforestation in Brazil affects the weather in Texas.

And, in more concrete terms, most people will spend most of their lives working. In a recent Conference Board poll 53% of Americans are dissatisfied with their Jobs, 47% don’t like their immediate supervisor, 48% don’t like their work environment. That’s a lot of unhappiness. And yet that doesn’t cover all that business affects: government, policy, stakeholders, the environment, research, science… the list is huge.

Currently, I think, business is more powerful than any other system on the planet. Business crosses geographic and political boundaries, and business greatly influences and innovates cyber-space. Simply, business is everywhere, and wonderfully it’s changeable.

I have pursued for essentially the entirety of my life how to instigate positive change for others and myself. I began to get really interested in business about five years ago. It was an awakening with universal impact. It was of L.A. Story billboard portions screaming: If you want to create change, look here. And the here is business.

After a lot of consideration, and all ready being a student and member of the integral community, I naturally began looking at what an integral business might look like. And, one thing that I constantly come back to is that the most exciting thing about this work is that no one knows what an integral business really looks like.

I’m not sure a successful integral business exists yet, outside of perhaps a few sole-proprietorships, intellectual property firms, and training and consulting firms – essentially those few consultancy, coaching, training and development firms, and a few very small revenue minimally staffed regional business. We don’t yet have a business that is not in the business of change operating with an integral perspective as an integral organization. We’re a long ways from this.

That said, I am currently building a few businesses with others that are interested in the same. And excitingly, I think we are well on the way to creating this. One of our operations is on track to gross over $1,000,000 in revenue this year. This is a huge and exciting step.

Right now, the majority of work on integral business is academic (Leo Burke, John Forman, Brett Thomas, and Michael Putz’s 2005 paper titled Integral Business), literary (Fred Kofman’s book Conscious Business), and theoretical .

As I said, I am not sure a large-scale, successful integral business exists yet, and I am really passionate about creating them - at least none that I have found. Of course there are inklings and aspects here and there – the work Pacific Integral is doing in leadership, personal development, and organization development and the work Holacracy One is doing in organization design, for example, and I know there are some great people out there exploring progressive business models, like Kevin Clark at Content Evolution. And I don’t feel we have the whole package. Not yet, anyway.

And this is why: In order for anything to be integral, it has to be completely novel – it has to include all that has come before and also be something completely new integrating each component that makes something, well, something (in this case, a business) and this is no easy feat.

Most of what I see coming out of the integral world these days in regards to business is mostly related to leadership development. For example, Kofman says, on the second page of his book, Conscious Business, “My effort is to unlock the black box of leadership” – Conscious Business is really about leadership. Kofman’s Conscious Business is really about conscious people consciously leading. This is great. And it does not fully address business as a whole.

I sense that an integral business will create value in five areas (instead of just profit), and that’s profit, people, planet, progress and principles, and will consider equally, in all it does, the development and motivation of individuals, the actions and outcomes of individuals, the culture of the organization, the effectiveness of the organization’s systems, and the organization’s unique purpose backward and forewords through space and time. When you bring these things together, something novel begins to emerge. An integral business begins to emerge.

The business that I mentioned earlier is an outsource sales and distribution company. We are applying the above principles and awarenesses, and already some amazing things have happened – the organization has a culture like none I have ever experienced in a business context, we are already cash positive after just six months of operating, and, as I mentioned, we’re on track to gross a million dollars in revenue this year. That’s cool!

Though complex, integral business is fairly simple to think and theorize about – the maps aren’t hard – compared to its application, which is very challenging. Consider how hard it is to create a conventional and profitable business. Now take the many essential things that make an integral business and require really developed people to implement while keeping ensuring the organization profitable. This is why I’m so passionate about assisting businesses and people in growth, and creating integral businesses myself – it’s what has to happen.

Follow up: What is the impact that Integral business is having now and what will the impact be once enough businesses awaken to such a thing?

Right now, I think the fully developed impact of integral business has yet to be realized – right now it’s still a vision and a dream for the most part, shared by many people. However, we have been seeing the impact that some of the components have produced. For example, the impact triple bottom line thinking and practice (a value development) has had on both the marketplace and the environment, and the impact social media (a systems development) has had on a company’s orientation to consumers. And, though post-conventional, these shifts in business are not yet integral; they’re birthed from Green Meme consciousness.

I believe that in the future, integral business will be responsible for birthing integral government (Steve McIntosh’s passion), it will integrate spirituality in people’s everyday lives in meaningful and practical ways (what if doing your job was your spiritual practice?), it will care for and protect the environment and the world’s people, and it will become the main force of human development.

Could you imagine going to work to generate your income, engage in your spiritual practice in an explicit way, develop as an individual, care for the environment and for others, while creating and experiencing the life you want to live? That’s an integral business!

Beyond The Triple Bottom Line (Integral Business II)

There is a lot of talk in the business world, especially the post-modern new business world of value and vision, about the Triple Bottom Line: profit, people, and planet. I like this approach. I think it's a great start towards building businesses that are sustainable in the long-term and impacting, meaningful in the short term. However, an integral business needs to go beyond this.

I know some of us are just getting our feet wet to the idea and practice of the Triple Bottom Line. For some of us, it's not even yet on the radar. An integral business of profit and impact needs a Penta Bottom Line. I was going to add just one more to the mix (quadruple bottom line), but we, as a business community, need to take a huge leap. Now.

The Penta Bottom Line: Profit, People, Planet, Principles, and Progress.

Most when talking about the Triple Bottom Line put profit last, as in: planet, people, profit. I think this is wonderfully visionary, and yet it fails to acknowledge that a business exists, in my perspective, to primarily create capital. Certainly, not at the harm of the other points on the bottom line, but it's primary reason for being a business, is again, making money. Otherwise, it would be a non-profit or something different.

I assume most of you understand profit, people, and planet, so I will explain principles and progress.

Principles: Rules are out. Principles are in. Principles act as guides and measures in vision, strategy, process, operations, and out-reach. Principles are interactive, directive voices in the process of decision making. Rules are rigid, limit creativity, and exist to create measured and tested results. Principles, on the other hand, acknowledge that our world is complex, changing, and unstable. No longer will rigid rules work to guide organizations that need dynamic and responsive action in a rapidly changing market and business landscape - we need interactive principles. What are the known and unknown principles that guide the decisions in your organization? Do you like them? Are they effectively guiding the outcomes you desire? Do you need a guiding principles tune-up?

Progress: I forced myself to stick with P's, but by progress I really mean development. Integral businesses consider the development of their people, culture, organizations, and the systems they interact with as important as profit. A direct investment in the development of each employee in your organization is a direct investment in your organization. Development programs are generally geared towards management (which is great and certainly needed) and those that are really screwing up, but what would your organization look like if it valued the development of each person, group, and the world around you? How can you create systems where each person is given the chance to build capacities and self?

By operating with a Penta Bottom Line, your organization opens up the sphere and valuation of success to areas that directly relate to your organization's success in the short-term and long-term.

As always, more on this soon.