By: Mary Beth McEuen
Mostbusiness conversations sound a lot like this. The goal of every single thing a business does is to create an ROI that makes a deposit into the single bucket that matters — profits and financial capital. In business, there is only one bucket and that is the nonliving bucket called financial capital.
Now, here is the problem with this single-bucket mindset. It doesn’t work. Atleast, it doesn’t workfor living, breathing social systems that have living assets called people, brands, relationships, cultures, reputations, knowledge, and an emotional climate.
In the industrial age, value was defined in tangible (nonliving) assets. We are no longer in the industrial age. In the creative age, value is defined by intangible (living) assets.
Intangible “living assets”include things like:
- Social Capital – the quality of relationships
- Intellectual Capital — the knowledge that flows through webs of relationships
- Emotional Capital — the emotional states that spread like contagions
- Creative Capital — the human potential that is unleashed
In living, breathing organizations, all of these buckets are important and they operate interdependently with the one-bucket we understand the best — financial capital. In the book, Profit for Life, author Joseph H. Bragdon challenges business leaders to see the difference between owning and employing. “Owning is possessing, a one-way street that entitles the owner to take and give little or nothing in return. Employing is relational, a two-way street involving continual give and take, mutual learning, and adaptation. Companies can own nonliving (capital) assets because they are passive, controllable, and amenable to possession. But they must employ living assets because people are self-driven and resist mechanistic control. This makes all the difference in how these assets are managed. Nonliving assets are easy to manipulate and control because their behavior is highly predictable; they are guided by rational, mechanistic laws such as those of Newtonian physics. We can understand livings reasonably well using linear cause-and-effect thinking. Rational laws guide the logic of computers, the properties of steel, and the compounding of interest — but they neither direct or explain people and nature. If we think of and respond to living assets mechanistically, we overlook their essential qualities and diminish their real value. Because they are continually in flux — networking, learning, adapting, and changing in response to the ebb and flow of life around them and within them — we can understand living assets only by taking a holistic, or nonlinear, systems approach.”
How do we build business practice designs and measurements that fully take into consideration the “multi-bucket” world we live in? This “multi-bucket” world is not linear and mechanistic. Rather, it is dynamic and inter-related. It is not as simple as a formula, rather it requires a shared purpose and values that guide how people work and relate to one another. There is no owner’s manual. What is needed is a set of ideals that inspire people and social interactions that generate a positive impact.
Is it just me, are are others struggling with the prevalent “single-bucket” thinking that seems to have taken root like an inextricable truth in business. I’d love to hear what you think.