The vital missing stakeholder in your business plan

When you’re creating a new venture or planning a project within an existing business, thinking about stakeholders – groups of people who are affected by the project – is a useful way to work through the impact of what you’re going to do.

A typical list of stakeholders is: employees, customers, investors and suppliers. Sometimes ‘community’ is thrown in by more socially conscious businesses too. Companies are encouraged to listen to and ‘engage’ all of their stakeholders to reach good outcomes for everyone.

The crucial missing stakeholder from this list is future generations. These people have no voice today because they’re not born yet and so cannot be ‘engaged’ in any way, but they are completely beholden to our decisions, actions and the legacy we leave them. This is particularly true of the environmental impact of business today, the outcomes of which affect future generations far more than they affect any other stakeholders today.

Assessing the environmental impact of a project is nothing new, but there is something powerful about putting a human face on it. For me it becomes more powerful to talk about outcomes for future generations than something abstract like ‘carbon footprint.’ This is especially true because every single one of the other stakeholders will one day come out of the future generations group, so if a business is to survive long-term then looking after their interests is essential.

Take waste for example. Our planet is a closed system. Except for the odd spacecraft, nothing leaves the planet. There is no such thing as throwing waste ‘away’ because there is no ‘away.’ When we burn waste and add carcinogenic heavy metals into the atmosphere or bury polluting waste in landfill sites we’re simply leaving it for future generations to deal with. This is as unacceptable as dumping it in the front gardens of people living today but of course we’d never do that because it would affect us right now, and people today have a voice and would rightly complain. Future generations are powerless today and can only be treated fairly if we consider the impact on them today.

Next time you’re working on a stakeholder analysis, try adding future generations to the mix. The base level is reducing harm to them down to zero, but a whole world of possibility opens up when you consider how you could actually enhance positive outcomes for future generations just like you try to create positive outcomes right now for the other stakeholder groups like employees and customers.

There’s a wonderful vision of the future in the iconic design book Cradle to Cradle. The authors envisage a future where homes and other buildings are more organic and actually purify and enhance the environment around them. They use the analogy of buildings being like trees and cities like forests, with air and water coming out cleaner than when it came in. Further, in the future we could design products that can be endlessly ‘upcycled’ into equal or better products (rather then recycled which generally means ‘downcycled’ into lesser products until the materials can be reused no more.)

Sounds far-fetched? Big companies like Ford, Herman Miller, Nike and Walmart are taking the Cradle-to-Cradle philosophy seriously and whilst they have a long way to go, they are on the path towards realising this future. And it all stems from thinking and caring about the voiceless stakeholder group of future generations.

Guinea pig on a plate, pre-inca ruins and a hike from hell

My laptop has died which is really messing with my blogging rhythm so sorry for the slow posting recently. Hoping to have it fixed when I get to Lima in a couple of weeks, but in the meantime I thought I’d mix things up a bit with a story of a few days of Peruvian adventuring.

I’m in northern Perú at the moment in a town called Chachapoyas. It’s in a region full of important archaeological sites set in the Andes mountains. There are lots of tour groups taking people to see them but I decided to see how far I’d get on my own.

On Saturday morning I took a collectivo (the local public transport – a minibus that leaves once it’s full) to a small town in the mountains called Cruzpata. The journey was along typical Andean mountain dirt roads, winding their way up hill with steep drop-offs. At one point we had to pass a large parked truck on the road and we were getting dangerously close to the edge. I normally only get worried when the local people look scared so when a Peruvian lady started screaming at the driver all of the passengers decided to get off so the driver would only be risking his own life. It turned out that he got past the obstacle without any bother and we continued on our way. We arrived at Luya, a little town on the way where we needed to catch a new collectivo. The road was being dug up so together with some friendly Spanish students whose machine-gun speed Spanish was almost impossible for me to understand we hiked for a kilometer and persuaded a local taxi driver to squeeze seven of us into the car (not quite a record, I recall getting 9 in a car once in Bolivia) and take us to our first destination, Karajia, a site of 6 ancient sarcophagi together with human skulls and other bones in a cliff face.

The sarcophagi at Karajia are set in an imposing sheer cliff face with a great view of the surrounding mountains. You can see the human skulls set into the cliff around them, and the ancient paint work is still clearly visible. There are also collections of other human bones dotted around which have been found at the site.

After hiking back to the nearby village we ate our lunch at a house. Lunch was Cuy – the local speciality of roasted Guinea pig. People have been eating Cuy here for thousands of years, long before the little critters were kept as pets. You can sometimes see them running around a kitchen before being caught and killed. The taste isn’t bad actually, especially the crispy skin but as you’d imagine, there isn’t a whole lot of meat on them. The tiny little ribcage and claw still attached is also quite cute.

My new friends were heading back to Chachapoyas so I said goodbye to them and then stayed the night in a filthy but friendly little hospedaje in a small town called Cohechan. I was woken at 6:30AM by one of the delights of South America – municipal radio. It’s hard for a foreigner to understand why in an area where many people walk around with personal transistor radios that they need their local radio blasted out of speakers throughout the town and ricocheting off the surrounding mountains. Music with loud trumpets and accordions and really aggressive sounding monologues from the ‘DJ’ isn’t my ideal Sunday morning tonic, but the local people actually love it. In South America, people don’t have the concept of noise pollution like we do in Europe, as the car alarms which cycle through all possible variations of car alarm sirens if someone so much as sneezes within 20 feet, and people playing music out loud on their phones on buses confirms.

I had been told that I could catch a collectivo in the morning to my next destination, a beautiful valley called Belen. Some farmers in a passing 4×4 said they could take me part of the way so I jumped in the back. They were off to harvest potatoes which they said grew well at that altitude.

At the next village we stopped to pick up a couple of other people at this point they told me that actually where they were going to drop me off there would be no other transport to Belen and they asked me what I’d be prepared to pay someone to give me a ride on a motorcycle. This was one of those awkward moments when you’re in the middle of nowhere, with a group of locals laughing at your cluelessness and you’re wondering whether it’s a gringo rip-off or there really is no other option. The best thing to do in these situations is to smile and laugh along with them and trust your instincts. I’d only been in Perú a few days so had no idea what the going rate was so I offered a typical collectivo fare of 5 Sols (about $1.50) which was met with more laughter and the word ‘gringo’ (which just means ‘foreigner’ and isn’t usually meant as an insult.) I laughed along and said I’d just go as far as they could take me and then work it out from there.

When we got to the spot where the farmers were going to be working they pointed up the road and said “3 hours walk that way.” I don’t mind a hike so was about to set off when another local on a dirt bike pulled up and said he was going that way. Result! So I jumped on the back and we rode for an hour to get there. I was relieved that he didn’t drive like a maniac as it was muddy and sometimes loose ground with more steep cliffs. As we got close to the end of the valley he asked where I wanted to be dropped off. I was planning on having some breakfast there and then asking around for directions and making a plan, so I said “At the village” – at which point he laughed and said “there´s one house here.” Oh dear.

So I got dropped off at the only house for miles around and just as I was wondering what to do, a Peruvian came out of the house and asked me where I was heading. All I knew at that stage is that I wanted to see the valley and somehow get to a town called Congon. He said he could take me so I gladly accepted, at which point 3 friendly gringo hikers, two Americans and a Spaniard, came out of the house – they’d already hired this guy to be their guide and were going the same way as me, so I joined their group. Another result.

It turned out that our guide Carlo was awesome. He spoke excellent English although I tried to practice my Spanish as much as possible. He had fantastic knowledge of the area as well as a sarcastic, joking sense of humour so I knew we´d get along. He´d already nicknamed the two tall Americans “Chato” which is what you might call a small kitten, and “Chatito” which you might call an even smaller kitten. Great stuff.

We hiked along the lush green valley floor. It has a long winding river running through it which legend has it was created by a giant snake. There are wild horses and cattle grazing and you can sometimes see trout darting through the water.

Eventually we hiked up out of the valley onto a pre-inca trail and up into the humid cloud forest. It wasn’t long before we were at 3000M, the highest point for the day. On the way to the next town, we visited some pre-Inca ruins called Pirquilla. These were discovered relatively recently (in the 1990´s) but have yet to be properly explored by archaeologists. The trails around the site do not see many visitors so Carlo had to use a machete to hack through the jungle giving the experience a real Indiana Jones feel which I loved. The ruins are mostly stone brick platforms on which houses (long since gone) were built. Everything is covered in dense jungle and nobody even knows how big the site is.

We made our way down-hill to Congon and stayed in a hospedaje there, a wooden building with coffee beans drying out on the veranda, lively dogs fighting and loud roosters. There we had a hearty carbohydrate-fest of a dinner and tried to sleep as best we could through the animal noise.

The next day would cover some pretty hardcore terrain. A gruelling 36KM trail, about a vertical mile uphill (around the height of the grand canyon.) It was raining most of the time and there was very heavy mud on the ground. Carlo said that most people do this section on donkeys and the Americans had hired some. The Spaniard was up for walking and I thought “it´s only a hike, who needs a donkey?” Big mistake!

The first hour and a half while my legs were relatively fresh weren’t too bad, then the trail just seemed to get steeper and steeper with every step through the gloopy mud becoming tougher than the last. There was still another hour and a half of this until lunch, and even then we’d only be half way, with another 4 hours to cover in the afternoon. I made it to the lunch spot feeling almost delirious but there was no time to rest because we immediately set off on a side trail to check out some more ruins, similar to Pirquilla.

Lunch was dried meat, boiled potatoes and rice. My stomach was in knots from the climb so I didn’t eat much. We were still in good spirits though when we set off for the afternoon hike, just as the rain reached a new level of intensity. I somehow managed to hike uphill for another two and a half hours, cheating for about 15 minutes on the back of a donkey which was returning from dropping the Americans at the top. The end finally felt like it was within reach. We now had just one more hour of gentle uphill and flat terrain along the top of the mountains then an hour downhill to the town where we´d spend the next night. We were treated to some spectacular views of the cloud forest. A mixture of bright white and dark lush green rolling hills.

As we hiked along the top Carlo spotted wild blackberries growing and the five of us foraged like wild animals for a while, hungry and dehydrated. In my condition at the time I had never tasted anything quite so delicious as those berries and I then couldn´t stop myself fantasizing about eating a large fruit salad.

Finally, the trail began its descent, steep and muddy with streams of water running down them. After an hour of slipping and sliding we made it to the next town. I´d long since run out of water and was so dehydrated I drank about 2 pints of coca-cola from the local tienda to get some fluid and sugar back into me which I’d later regret as I lay exhausted but completely wired from the caffeine and unable to sleep until the early hours of the next morning.

On the final day my plan was to hike without a guide to the huge ruins of the pre-inca fortress, Kuelap. This site is known as the Machu Picchu of the north and is older, larger and far less excavated than its cousin in the south. Machu Picchu is an enormous privatised enterprise, with a huge brand and it´s over-run with tourists. 600 people per day on the Inca Trail and up to 2,500 daily on the site itself whereas Kuelap is still quite peaceful. My plan was to try to get there early before the tour groups, but after the hike the previous day I took the lazy option and stuck with my new friends who were taking transport to the site.

Our small group was joined by a whole minibus full of people from Chachapoyas and when we got to Kuelap I found myself surrounded by a really friendly, but large and noisy group of tourists chattering and snapping photos. The magic of being in such an incredible place was being broken and my heart sank a little. However once we got into the ruins themselves I snuck off away from the group to explore the ruins on my own and before long they were completely out of earshot and all I could hear was the rustle of the trees, the wind, birds and my own footsteps as I wandered between trees and the round stone foundations of houses the houses, complete with tombs for their ancestors inside each house. The fortress is spectacular, set on a mountain top with perimeter walls over 30 feet high. Unlike European castles where everything is inside the walls, the Chachapoyas people created a huge platform using these walls so the settlement was up high with breathtaking views of the surrounding mountains.

After exploring the ruins, we made our way back to Chachapoyas. I checked in at my hostel where I was told off by the owner for using all of the hot water for a long shower, having not had a wash for four days. I slept really well that night.

The plan from here is to go and explore the waterfall at Gocta – one of the highest in the world – then make my way over land and then ferry up the Amazon to the jungle city of Iquitos.

I will add some photos to this post once my laptop is fixed and I can get them off my camera. If you´d to see them, just add a comment below and tick ´notify me of follow-up comments´ and you´ll get an email once they´re up there.

A simple and powerful idea that everyone needs to know

Laboratory section, Japan Baptist Hospital, Kyoto, 1955

WARNING: Daft piece of terminology coming up, but don’t be put off! It’s called The pessimistic meta-induction from the history of science  from Kathryn Schulz‘ essay of the same title. I read it in a book called ‘This Will Make You Smarter‘ (I thought I could do with the help, OK?)

Here’s what it means in plain English:

Because so many scientific theories from bygone eras have turned out to be wrong, we must assume that most of today’s theories will eventually prove incorrect as well. And what goes for science goes in general. Politics, economics, technology, law, religion, medicine, child rearing, education: No matter the domain of life, one generation’s verities so often become the next generation’s falsehoods that we might as well have a pessimistic meta-induction from the history of everything.

It’s powerful and incredibly obvious when you think about it. We find it easy to look at the past and shake our heads at how wrong we used to be about taking other humans as slaves, drilling holes in the skull to cure disease, tulip bubbles, and burning people as witches. The list is endless and we wish that we knew then what we know now in order that we might have avoided the awful consequences of our naivety.

So why do senior leaders in politics and business have such strong courage of their convictions, as if they believe we’ve finally reached the apex of human understanding where we have nailed what’s right and what’s true? They act as though there’s no possibility of their ideas being completely disproved – not just being wrong, but held to be massively damaging by future generations.

If the world understood this concept it would be incredible humbling and perhaps frightening as we face up to how pathetic we will look through the lens of history. But the world would also be filled with more possibility and hope. Things can be so much better than they are today. Perhaps leaders would become more open to ideas which seem radical today, but which may become mainstream in the future. At the very least, just asking the question ‘What will seem laughable tomorrow about what we are doing today?’ would be extremely powerful.

Umair Haque talks about this same concept in The New Capitalist Manifesto. Today our economic system is mostly based to a large extent on the ideas of two men. Adam Smith believed that in the pursuit of profit, an ‘invisible hand’ would deliver positive benefits for society through the provision of useful goods and services. John Maynard Keynes believed that it was the sole duty of a company to pursue profit, and that markets will self-regulate and end up with the best outcomes. However the financial collapse of 2008, and other mega-trends like impending climate crisis are thoroughly proving these theories insufficient and harmful.

Is this really the best we can do? Do we expect to have the same economic systems in place in 100, 200 or 300 years time? Surely things will look almost unrecognisable that far into the future, and our current ways will seem hopelessly naive and flawed. But we don’t see our leaders facing up to this, and the challenge of discovering what better systems will come next.

The first step is to recognise that the way things are today is going to be proved to be almost entirely wrong. Then with this shift in attitude we can move away from fixed ideology and dogma and become open to what the future might look like, including both small and radical ideas. If we do this then we stand a much better chance of avoiding catastrophe and reaching a better future, faster.

Happy IN work vs. Happy AT work

I had an email from a reader who gave me permission to anonamise it and share:

[After working in sales and feeling something was missing] I moved into the care sector, retrained and was running the company after 3 years. He’s where it differed, there was and still is very little margin in the sector for any financial rewards. Care practitioners are on slightly more than minimum wage and do not have a reasonable fuel allowance. In domestic care they are accountable legally for the care/support they give and must attend quarterly supervision (by law) and have to retrain yearly. They work 24/7 365 on a rota.

Last year I moved to a new company and had to explain to 300 staff why their duties would expand due to ward closures, their area of travel would increase, but I wasn’t or rather couldn’t pay them any more. They were not happy. As qualified care practitioners, they were on less than staff on supermarkets check-outs.

I had of course checked the budgets, asked the directors for an increase and took another look over the council contract, where I realised that the contract was worth less than the previous year. When I queried this, I was told “carers do it because they care, not for the money“.

How about that for assumption. I handed my notice in soon after…

Classic management screw up, making an assumption about their people ‘they do it because they care, not for the money.’

The huge flaw in that logic is not understanding the difference between being happy IN work and happy AT work. The carers were happy to be IN work in a profession where they had real meaning and improved people’s lives, but it´s impossible to be happy AT work if you’re paid so little that money is a huge, pressing stress and you’re worried sick about paying the bills.

This is all too common in the charity sector where employers believe it’s enough for people to be working for a cause they feel passionate about and so don’t pay people enough or create a good working environment. At best, this is de-motivating, and at worst it makes great people leave and take their talents elsewhere.

Conversely, in many corporate jobs, including sales much of the time, the opposite is true. You get paid really well and have a nice comfortable life so you feel happy AT work but if you feel like you’re just being paid in order to make even more money for shareholders then there’s very little to make you happy IN work. And again this can cause great people to lack motivation or leave.

The key therefore is to create organisations with a very clear, higher purpose that people believe in and want to be a part of, and to ensure that you pay people enough to take money off the table as an issue so that they can focus on work. Once these base level needs are met you can then work up to higher levels of human satisfaction through recognition, social belonging and mastery of their craft which will take their motivation and performance to soaring heights.

Marketing idea: The Disloyalty Card

Umair Haque’s New Capitalist Manifesto inspired me to think of a little idea for a restaurant loyalty card. The idea would probably work in other industries too.

It uses Google-inspired logic. For example, Google make it very easy to take your data out of GoogleDocs and import it elsewhere. Unlike Microsoft with its archaic proprietary formats, Google never try to keep anyone as a customer by locking them in. Clearly this benefits the customer, but it’s also to Google’s advantage too. It forces them to focus on product innovation and customer satisfaction since users can easily move to a competitor at any time. This internal focus on constant improvement keeps the product at the sharp end, and they have a very direct feedback loop with customers because they know that if they´re retaining them then they must be doing a good job. Compare this to MS Word which has barely evolved in years and survives only because of its ubiquity, all the while being threatened by the rapidly improving Googledocs.

So I was wondering how you could apply this to a cafe/restaurant. One of the ideas I’d previously been thinking about is a monthly subscription so that customers can eat a certain number of daily specials for lunch each month or have the same amount taken off other meals.

This would be convenient and good value for regulars. But it kind of locks people in, which of course is the goal of most loyalty schemes. Perhaps people would use the subscription because it’s good value for price but it wouldn’t force quality and innovation to continually improve and it could make the place lazy and boring, at risk of disruption by a new competitor.

So I thought, how about allowing customers to use their credit at ANY cafe in the city for exactly the same value (the most basic way to do this would be to refund receipts from other cafes although that´s a bit clunky – I’m sure there would be a smoother way.)

Allowing your hard-won subscription revenue to go to competitors flies in the face of conventional logic, but I love the feedback loop it would create: Every month I could measure the percentage of the subscription that was being used in MY cafe to see if we’re doing a good job. We’d never take a subscriber’s business for granted and only make money by ensuring we were the place they come back to the most often, voluntarily. It would send a strong and different message to customers that we don’t just appreciate that they have a choice about coming to us, we actually give them MORE choice by promoting disloyalty.

What do you think?

Obituary from the future: Public Companies. 1602 – 20XX

wreath_2

After a long struggle with their terminal condition, the last public companies finally passed away when the New York stock exchange – the last of its kind in the world – closed for the final time yesterday.

PLCs enjoyed an exciting life, becoming hugely more than their parents ever expected. Mr Adam Smith, a close friend of the family and a huge influence on the PLCs throughout their lives had high hopes for what the PLCs would achieve for the world. Through their relentless pursuit of profit for their owners, he saw a world made better through innovative products and services delivered to the masses.

Well the PLCs certainly delivered that and more to boot, with consumer products fulfilling every need and want imaginable. Some were clever enough to make money out of money itself without actually delivering any value at all. Those PLCs were from the Banks family. Many people were able to earn a living working for the PLCs and a few people (not the masses working for them of course) got very rich. Fantastic.

But after a happy childhood there was trouble ahead for the PLCs . They got fat. Not just the fat kids in the class, but fatter than the whole school. In fact fatter than many countries! That’s pretty fat, but that was OK because everyone was still working very hard and a lot of money was flying around, especially to the PLC’s owners on the stock markets.

The first big sign of trouble for PLCs came from those troublesome Banks adolescents. It turned out that what they had been trading was actually just hot air. Well really it was worth less than hot air because at least you can use hot air to dry your hands after washing them in the bathroom. The fat kids fell over and landed hard. Fortunately, there were some countries who were still fatter than the PLCs (other less fat countries were unfortunately squashed when they fell – oh well.)

The fat countries did the sensible thing and fed the fat kids enormous piles of sweeties to keep them really fat and get them happily up on their podgy feet again. After all they were so fat and took up so much space they if they didn’t get up then nobody in the fat countries would be able to move at all. But even with all of the free sweeties that the normal people in the fat countries paid for them to eat, they didn’t really change at all. But for a while everything looked like it was going to be OK again.

At the same time, the other PLCs were also feeling the first signs of trouble. They gradually started to realise that their masters were a group of owners who care purely about how much profit they made, and preferably QUICKLY. This was supposed to be a good thing because it kept the PLCs on their podgy toes. The owners could sell them to new masters or throw out their management if they didn’t stay fat enough. But in worrying so much about pleasing their owners, they didn’t focus on the people who mattered the most – all of those little people who actually did the work and created 100% of the value! It regrettably seems so obvious now that they’ve passed away but yes, in every PLC the employees were less important than the shareholders! And that was bad news for customers too (where 100% of their income comes from) because customers only get served the best when the employees are fully engaged.

What’s more, the focus purely on financial results turned out to not always be so good for humanity, societies and the planet. Life for many people got worse and the environment was being destroyed. They had a little go at countering this with ‘Corporate Social Responsibility’ which meant it was OK for a bank to invest several billion in a company making landmines because it allowed its employees a day off a year to paint a fence outside an orphanage for landmine victims.

The PLCs struggled on into their adult lives, but there were other leaner, fitter competitors around. These weren’t even new kids on the block, they were grown-ups too and had been around for just as long as the PLCs, but their day had finally come. These companies didn’t have to worry about shareholders pressuring them for short-term returns at the expense of the employees, because the employees WERE the shareholders. Imagine that – inmates running the asylum! And it turned out that these companies were more innovative, faster and provided better service to their customers. There was something very powerful about a business being owned by the people who actually did the work. And because the companies now existed for the benefit of people (not pension funds, hedge funds and city traders) they actually care a lot about creating value for, and not destroying societies and the environment.

One of these competitors, a guy called John from the Lewis family in England was already the most successful retailer in the UK. He was free from the pressures of the stock market and could attract and keep the best people who then delivered the best service to customers because they were owners of the business and cared the most.

These employee-owned competitors grew in number, size and power as the PLCs faltered in their later years. The best people flocked to them and they were able to think and plan long-term unlike their short-term sweetie-addicted old classmates.

Many of the smarter PLCs allowed the sensible thing to happen – they came out of the stock markets and were bought by the employees who paid for them out of future profits which were now higher because they performed better, and weren’t going to be bled out of the company to shareholders who contributed nothing.

A few tried to hang on for a bit too long and found that they just couldn’t innovate and deliver to customers as well as their more nimble employee-owned competitors. These final few were ultimately consigned to the history books when the last stock markets shut down yesterday.

I apologise because it’s wrong to speak ill of the dead, but the world is a better place now that the PLCs are gone. We now have businesses where people serve people for the benefit of everyone. And people have a conscious so now societies and the environment are better off too through their more thoughtful actions.

The slow and painful death of the PLCs surprised the pure capitalists who thought that the markets would take care of everything. In fact they actually did – the free market allowed these better competitors to make the PLCs irrelevant. And the socialists were both right and wrong too. It turned out that business wasn’t so bad after all, but they were right that things work best when the people own and control the means of production.

R.I.P.