Triple Value Leadership

Creating Sustainable Value for Your Business, Your Customers and Society

Sander Tideman

• Publisher: Routledge
• Year: 2022
• ISBN:
  9781000575262
• Edition: 1
• Topic: Commerce
• Subtopic: Développement durable en entreprise

With the sustainability emergency, businesses can no longer give priority to commercial interests (and financial gains) and close their eyes to societal and environmental interests. We need a new, higher perspective to close the gap. We need to formulate a new business logic and a sustainable value creation method for sustainable business, for their customers and society – that is, all business stakeholders, as well as the planet.

This book will do just that. This book presents the insights gained from action research with leading companies across the world to discover a comprehensive method that works: a practical framework for CEO and business leaders who want to lead their organization along the sustainability transition. Building on the latest insights from science, summarized as the systems view of life, the book identifies six principles that provide a new leadership lens on how to understand the changes taking place in business. Based on these insights, the book offers the Triple Value mindset model, consisting of six distinct leadership qualities, which shows how to create sustainable value from a systems perspective. This model is unique as it enables business leaders to scale their intended impact from the organization to all stakeholders in the value chain, thus transcending the conflict between business and society.

Not only that, the book will also offer you a leadership journey – an adventure that will transform the way to think, feel and execute the new perspective in your company, while perfecting your leadership potential and inspiring the people you work with. On the journey you will be supported by models, tools and best practices, which will help you to reimagine your business strategy and your role as leader in driving sustainable transformation and success.

Part 1Why?Why do we need a new approach to value creation?

Chapter 1The challenges facing the business world

DOI: 10.4324/9781003119302-3

This chapter will explain how drastic changes in the environmental and societal context of business are posing a fundamental challenge to the sustainability of the current economic model. This current model is no longer equipped to deal with the unprecedented changes we are witnessing today, which is fueling a growing disconnect between business and society. We will look at the impact of the challenges, before recognizing that there are at the same time enormous opportunities for (sustainable) value creation as well.

We will see that the international response to this challenge – expressed in the Sustainable Development Goals – can only be successful if business becomes a proactive partner in the realization of these goals.

Unprecedented changes in the context of business

After the Second World War, society and business entered into a new “social contract”: business was given a free reign in reconstructing the post-War world.¹ With the rapid globalization of the economy and technical and social innovation, business fully seized this opportunity by contributing to tremendous positive developments across the world. In all countries where business was given the purpose to create economic growth, we have witnessed substantial improvements in health and wealth, access to education and higher life expectancy – a big boost to the standard of living of humanity.

But the economic growth came at a price. Globalization ran parallel to the rise of the consumer culture, as mass consumerism became the main driver of growth, which fueled an insatiable demand for more and more production, as well as runaway amounts of waste. Within the same period of time, more than half of the planet’s ecosystems that support human well-being have been degraded and are used unsustainably.² This is compounded by the rise of a nationalist and populist politics that challenge the very system that has created so much improvement to our standard of living. People are not only polarized largely due to rising social inequality but also burnt out from a mental health epidemic like never before: it is estimated that 792 million people live with mental health disorder, mostly anxiety and depression. This is more than one in ten people globally.³

Given these fundamental challenges, the post-war social contract between business and society needs to be revised.⁴ The economic growth paradigm isn’t working well any more, and business will need to find a new purpose in its role in society.

Inequality threatens social cohesion and trust

In the West, even before the outbreak of the COVID-19 pandemic, stagnant incomes among a large part of the population caused people to be angry at elites. Large group of people feel victims of globalization; they see others get rich, not themselves. How much inequality is there really?

Since 1980, it is reported that the top 1% captured twice as much global income growth as the bottom 50%.⁵ In 2018 the poorest half of the world became 11% poorer, while the wealth of billionaires rose 12% ($900 billion), which is $2.5 billion every day.⁶ In comparison, almost half of the world population has to live on less than US$ 5.50 per day. The American economist Joseph Stiglitz stated, “40 percent of the world’s wealth is controlled by 1 percent of the people”.⁷

The story is a bit more complicated, as there is a difference between perceived and actual inequality, where perceived inequality is a more fundamental threat to political stability.⁸ In any event, the International Monetary Fund (IMF) warned that inequality within nations has risen so sharply that it threatens to undermine economic growth and may well result in further political polarization.⁹ Too many are left behind in a globalized world.

The ongoing technological innovations, the so-called fourth industrial revolution, may have created an amazingly connected world, with more than 50% of the world population having access to the Internet, yet it leaves many people also concerned about the future of work.¹⁰ Elsewhere, too, people are losing out: either environmentally, such as the citizens of polluted cities, or socially, through the breakdown of traditional and rural communities.¹¹

There are growing groups of citizens organized through social media that are very cynical about the current role of political and business elites across the entire political spectrum. They simply don’t trust the current system anymore, as they witness a growing sense of inequality and unfairness in the system.

The Edelman Trust Barometer 2020 shows that a majority of people do not believe they will be better off in five years’ time: “56% of respondents globally believe that capitalism in its current form is doing more harm than good in the world, while 66% don’t believe that our current leaders will be able to successfully address our countries’ challenges”.¹²

Environmental degradation and climate change

Everywhere we can observe that economic development goes hand in hand with stark environmental degradation and climate change. On land, in the seas, in the sky, the devastating impact of human economic activity is laid bare. Scientific evidence also suggests that the apparition of new pathogens such as COVID-19 is linked with the continuing destruction of our biosphere,¹³ the thin sphere around the planet, which provides all we need to for our life on earth.

The pandemic shows that this destruction of our biosphere is not merely damage to the environment: it is a direct attack on humanity as well. Planetary health and human health are interrelated. As the corona crisis has demonstrated, it has literally made the world sick. Separating the current global health and social crisis from the larger climate crisis would not make sense.

We slowly but surely destroy our natural habitats through deforestation, illegal wildlife trade, intensive agriculture and livestock production and global warming.¹⁴

And we can’t deny that we have something to do with it. We hear much about climate change and extinction, but how bad is this really? Well, cutting-edge research has tried to summarize these threats in a “planetary boundary framework”. It tracks where we are exceeding our limits. For example, one million animal and plant species are now close to extinction.¹⁵ In 2050, our oceans will contain more plastic than fish. Some 30% of all food is wasted, while of all packaging, 91% becomes waste. Only 9% is used. Whether it is deforestation, air and water pollution, pandemics, global warming, plastic soup, chemicals in our food – they come as inevitable by-effects of globalized markets driven by our economic demands for ever more food, clothes and energy.¹⁶

Moreover, our planet simply has insufficient resources for unlimited financial and economic growth. Since our current economic indicators ignore the societal and ecological context in which businesses have to operate, we have reached a point that the cost of not acting for a sustainable world – containing food security, climate adaptation and mitigation, gender equality or epidemic prevention, to name a few basic human and planetary needs – becoming higher than the cost of acting. For example, the cost of conflict prevention and wars is estimated at 12% of global gross domestic product (GDP), whereas implementing the Sustainable Development Goals, the world’s sustainable development agenda, only costs 3%–4% of GDP per year.¹⁷

“We are clearly the last generation that can change the course of climate change, but we are also the first generation with its consequences”, says Kristalina Georgieva, Chairman of the IMF.

The invisible hand of the market – can we still trust it?

The model that has brought us here – known as “free-market capitalism” – has been the dominant organizing principle for economies for the last century. The system was based on a number of simple beliefs. Society can place its trust in the “invisible hand” of the market to deliver increased collective welfare. Companies were structured on the metaphor of a machine, with the CEO as chief engineer, managers as efficient soldiers, in pursuit of profit for shareholders. This mechanistic logic led to the idea to structure organizations centrally and hierarchically, with its typical control-oriented bureaucracy.

The invention of capital, the virtual form of money that can be endlessly leveraged, enabled shareholders to make “return on capital” the ultimate goal of the economic system.¹⁸ Even though we may not learn this at school in exactly these terms, the machine metaphor operating in free self-regulating markets permeates much of our conventional thinking in business, economics, finance and even in politics, education and health care.

But now people ask: where is the invisible hand leading us? The logic dictates that nations should be generating GDP, just as the purpose of companies is to create shareholder value. However, by now we know that, after a certain threshold, there is no direct correlation between increasing GDP and well-being of citizens.¹⁹ Money only helps with basic material needs, but beyond that does not create happiness. Moreover, our citizens are motivated by more than commercial value or money: we need belonging in family and community, healthy food, clean water, meaning, self-development and care, equality and trust in our social interactions – which are needs that the current shareholder value-based model doesn’t recognize or steer upon.²⁰

By relying blindly on the invisible hand of the market, we ...

Table of contents

• Cover
• Half-Title Page
• Title Page
• Copyright Page
• Contents
• List of figures
• Acknowledgments
• Introduction
• Part 1 Why?: Why do we need a new approach to value creation?
• Part 2 What?: What is the new approach to value creation?
• Part 3 How?: How can leaders execute the new value creation approach?
• Index