Reimagining Business: New Possibilities for a New Era

Do you remember rotary phones? At one time, rotary phones were in every home. Now they’re relics of the past, displaced by better, newer, faster technology.

If you were starting a business today, would you set up a rotary phone for your business? Of course not. The very idea is ludicrous. However, you wouldn’t do it because the rotary phone doesn’t work; technically, you would still be able to make and receive telephone calls. The reason you wouldn’t do it is because the rotary phone is not suited to the business needs of the present. To keep up with the pace of business today, you need a phone that you can take with you, that allows you to read email, search online, and send and receive text messages.

Many of our business practices and beliefs are just like the rotary phone. They were developed during a different era, in which they were widely used and met the needs of those times. However, they are not suited to the needs of the present, much less the future. Consider a few long-held beliefs that are now being challenged:

  • Resources are unlimited. At the beginning and during most of the Industrial Revolution, resources appeared to be unlimited. Drilling for oil was on the rise, forests were being cut down, and rivers and lakes were being polluted. However, we now know that those resources are actually limited. Just one look at the famous picture of the blue marble shows that our planet is finite, as it hangs in the vast darkness of space. Therefore its resources are generally finite as well, with the exception of certain renewables such as wind and sunlight. Simply put, there is only so much water, lumber, and minerals available on the planet. As economist Kenneth Boulding once said, “Only madmen and economists believe in perpetual exponential growth.” To expect unlimited resources on a finite planet is simply unrealistic.
  • Hierarchical management is best. What we accept today as the way that management must be set up is actually a system that developed in response to the manufacturing environment of the Industrial Revolution, when many low-skill factory jobs needed to be coordinated by a foreman. Unfortunately, this model of one person (or a few) at the top making the decisions and having everyone else fall into line is completely unsuited to the knowledge economy in which we now find ourselves. Today, all employees in a company have access to information, not just the senior management. By holding onto the old belief that only management has the knowledge to make decisions, businesses are actually  missing out on the wisdom of their own employees – and putting themselves at a disadvantage, when their more savvy competitors are tapping their own internal resources.
  • Financial profit should be the defining feature of business. As Milton Friedman famously said, “there is one and only one social responsibility of business: to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” In other words, a business should exist only to make a profit. However, what happens when the rules of the game change? A generation ago, perhaps, we could plead ignorance to the destruction of the environment and exploitation of workers in pursuit of corporate profits. Now, in the wake of the Wall Street meltdown and the BP oil spill, the damaging evidence of the natural and social costs of pursuit of profits at all costs is all too clear. While financial profit must necessarily remain an important component for business, it cannot remain the only reason for business to exist. Indeed, businesses that embrace social and environmental responsibility are showing that it is possible to make money while doing good. B Corps provide an excellent example of this.

These are just a few examples, but they illustrate the point that some of our most central business ideas were developed under vastly different circumstances than the ones in which we now find ourselves.

It is time for us to reimagine business for the 21st century.

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