What Brexit? European B Corps and the New Economic Paradigm

(originally published on Linked In on July 10, 2016)

After the UK’s stunning Brexit vote, I expected a somber mood at the First European B Corp Summer Summit in Rome last week.

Instead, I joined 150 attendees from Europe’s 170 Certified B Corps celebrating their community and the joys of co-creating a more humane approach to business. Our group in Rome, including the Brits, was far more interested in developing solutions to make capitalism more inclusive and sustainable than agonizing over the Brexit vote and the harsher effects of globalization.

The most exciting thing about the summit, however, was that many core principles of a new economic paradigm became clearer. I wrote this post to share the inspiration with the B Corps community. In the interest of full disclosure and journalistic fairness, I am on the advisory board of B Lab Europe and have done my best to curb my enthusiasm in favor of objectivity. Those outside of the B Corp community may find this post useful because it highlights some of the key characteristics of new paradigm businesses and their leaders that may be helpful in your businesses. For those unfamiliar with Certified B Corps and benefit corporations, please refer to prior posts

Defining the New Paradigm

Whether we like it or not, capitalism and its principal agent, the corporation, are evolving. Benefit corporations, Certified B Corporations, the Economy for the Common Good, social entrepreneurship, impact investing and corporate social responsibility all reflect the natural evolution of capitalism. All of these movements signal a global shift in our collective consciousness about business, from a narrow focus on profits to a triple bottom line orientation – planet, people and profit – and recognize that we need to take better care of each other and our shared common home with its finite resources. The common theme is that business has great potential as a force for good. In the emerging paradigm, corporations strive to not only be the best in the world by conventional measures but also to be the best for the world.

One challenge for the global business community is to develop a common pattern language to describe the emerging paradigm that works across multiple languages and cultures and is intelligible to all. Many of us at the summit discovered that we already shared the outlines of a common pattern language because we had read Frederick LaLoux’s Reinventing Organizations, which suggests some of the key characteristics of a new paradigm business and its leader. Laloux’s book is written through the lens of integral theory, but one doesn’t have to become expert in the theory in order to understand the book and his observations.

The 12 organizations profiled in LaLoux’s book shared three key characteristics. These characteristics enable organizations to be “self organizing” by empowering individuals (self management), creating safe environments which encourage people to show up fully at work (wholeness) and having evolutionary purposes that transcend and include just making a profit.

B Lab and Certified B Corps suggest two additional characteristics: a legal commitment to provide a material positive effect on society and the environment and a multiple stakeholder approach to business as embedded in the benefit corporation. Without these last two components, the prevailing myth and, in many common law jurisdictions, law that the corporation exists solely to maximize profit for stockholders will ultimately undermine the effectiveness of the first three.

Such organizations also require leaders with particular qualifications and courageous boards of directors willing to support what may seem to be an unorthodox approach to leadership.

The leader has two crucial roles in LaLoux’s framework –“holding the space” and “role modeling behaviors”. “Holding the space” ensures that the workplace remains a safe place where everyone is safe to show up fully as who they are and are becoming. “Role modeling behaviors” means living by the core values of the business and managing one’s moods. In addition, the leader leads with courage and kindness rather than from fear and greed, has an abundance mindset rather than one of scarcity, and empowers others rather than exerts power over them.

To put LaLoux’s observations in the context of neuroscience and the science of consciousness, the leader’s state of being determines the collective “space” or field of consciousness in the business. In short, leaders who lead from the heart emanate harmonious work environments while those who lead from fear emanate dissonant work environments. The emerging neuroscience of leadership indicates that when we work in environments where we are cared for and trusted, we are twice as happy, twice as productive and have job tenures that are twice as long than in fear driven workplaces. It costs nothing to lead from the heart, and doing so is essential to reduce employee turnover and attract and retain millennials.

Finally, new paradigm leaders cultivate acute present moment awareness because they understand that everything they do is a leadership communication that determines whether the “space” they emanate either runs on courage and kindness or fear and greed. This acute presence allows them to remain in the heart and to “sense and respond” appropriately to reality as it unfolds. This ability to remain in the present and sense and respond to ever-changing business conditions is the key to enabling new paradigm leaders to handle the increasing complexity of global commerce. As the Little Prince says in St. Exupery’s Little Prince, “One sees clearly only with the heart. What is essential is not visible to the eye.”

The key principles of the new paradigm that emerged at the summit are summarized in the headings that follow:

Empower Others

It was no accident that the three US founders of B Lab, the not-for-profit catalyst of the Certified B Corp and benefit corporation movement, were conspicuously absent from the summit. B Lab recognized that it is a part of a larger, global movement to evolve capitalism into a force for good and intentionally bestowed authority and autonomy on B Lab affiliate organizations in other parts of the world. All of the B Lab parent organizations – B Lab Europe, Sistema B in Latin American, B Lab Portugal and Lusophone Africa, B Lab Australia and NZ, and B Lab Asia, share a common philosophy and tool to measure business’ social and environmental impact, the Certified B Corporation Assessment, but are free to develop best practices that reflect the unique cultures of each region. B Lab is, therefore, a self-organizing movement that is global, not American, in scope.

Create a Safe Container

The co-founders of B-Lab Europe, Marcello Palazzi and Leen Zevenberger, clearly run a self-organizing organization that empowers others. Marcello Palazzi “held the space” with his enthusiasm and conviviality, and he and the entire team of B Lab Europe “role modeled” the behaviors with their gracious hospitality. It was clear that B Lab Europe was a team with each member fully empowered to implement his or her assignment. Rome was the perfect host city because Italy just passed benefit corporation legislation last year. The Church Palace Hotel, an old church and monastery set in a park in the middle of Rome and Europe’s newest Certified B Corp, was the perfect venue. In sum, Marcello and his team leveraged an inspiring venue to create a safe environment for intimate conversations and collaborative dialog.

Build an Inspired Business

The businesses at the summit have evolutionary purposes that transcend and include the usual focus on profits. Their leaders also “hold the space” and “model the behaviors” to create safe and inspiring places to work. Perhaps the most inspiring story was Triodos Bank of the Netherlands, which has taken a triple bottom line approach to banking since 1980 and views banking as a tool to improve the quality of life. Loyco is an insurance company that has endeavored to create a safe workplace where people matter, there is full financial transparency, and each employee owner gets one vote regardless of size of ownership interest. After losing his parents to cancer in 2012, Patrick Vieljeux sought more purpose to his life and started Cause Direct, an on-line platform to connect corporations with social impact projects, as a way to help people help others.

Measure What Matters

Mission driven Danone used the Certified B Corp assessment to measure the social and environmental impact of 14 of its business units across its four principal business groups, – Dairy, Beauty, Water, and Medical. The surveyed business units are spread around the world in Malaysia, Brazil, United States, Mexico, UK, Italy, Egypt and Turkey across many languages and cultures. Danone found the assessment valuable because it gave its employees a common pattern language to talk about sustainability and social responsibility and measure and compare how each business unit is actually doing with respect to its environmental and social impact. Danone’s use of the assessment “models the behavior” for other large multinationals and suggests how they can also use the assessment to measure and improve their social and environmental performance. Danone is not yet a Certified B Corp but intends to become one.

Get Things Done

The global B Corp community is clearly a self-organizing collective with many members building key ecosystem components for the new paradigm on their own initiative. Alissa Pelatan helped create the European Social Enterprise Law Association. Bill Clark, the principal architect of benefit corporation legislation, recently organized a similar association in the United States, the Association of Benefit Company Lawyers. Jonathan Normand, founder of Codethic, is organizing a leadership academy for leaders of B Corps. B Corps have a penchant for identifying problems and prototyping and implementing solutions. Finally, Sistema B inspired pending benefit corporation legislation in Brazil, Argentina, Columbia, Chile, Uruguay and Peru and Corey Lien has led the effort to get benefit corporation legislation passed in Taiwan.

Tell a Great Story

Great storytelling emerged as a key strategy to invite others into the new paradigm. Danone’s Director General Emmanuel Faber’s recent graduation speech at HEC in Paris about what he learned from his mentally ill brother created a buzz at the summit and has been likened to Steve Job’s graduation speech at Stanford. Birus debuted a video about B Corps and the products of the community. Bryan Welch introduced B the Change Media and its new B Magazine and shared the elements of great storytelling. Bryan predicted that business journalism will develop a new central myth about how much good one can do in the world that will replace its current central myth about how rapidly a person can acquire wealth.

Lead from the Heart

This summit was led from the heart. Pedro Tarak, the co-founder of Sistema B, inspired all with his talk, the Heart of the Movement, and Lorna Davis, Danone’s Chief Manifesto Catalyst, spoke of leading by “loving fiercely.” Coco Tache, who founded the web platform and book, 7sky.life, which is built on the core values of positivity, love and responsibility and invites people, initiatives and businesses to share their inspiring stories and connect with like-minded people, inspired us to tell our stories. Part of the challenge of leading from the heart, however, is describing this leadership style in language that makes people feel comfortable. Calling leading from the heart “love-based leadership” is true but may be uncomfortable to many. Perhaps it would be more inclusive to say that new paradigm leaders lead from the heart, and are compassionate, courageous and kind.

Next year’s summit will be in Lisbon, Portugal. I can’t wait to hear the stories of what this group gets done in the interim.

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