Stewardship in the new economy

Written by
Andr?? Nijhof

23 May 2016

23 May 2016 • by Andr?? Nijhof

Companies acting upon stewardship invest in creating a sustainable “license to operate” and “license to grow”. This requires not only a focus on good business, but also a transformation of how markets function – often referred to as ‘the new economy’. Such an economy has great potential for developing new business models based on open innovation, co-creation and partnerships with both expected and unexpected parties. 


How can one change the rules of the game?

If corporate cultures are oriented towards maximizing profits, the impact on stakeholders will only be sustained as long as there is a solid business case to do so. These cultures are embedded in the business case for sustainability that asks “can we afford to invest in it?” Companies that embrace stewardship should turn this around and instead start from a sustainability case for business, asking “can we afford not to invest in it?” This triggers a discussion about the connectedness between companies and society and how crucial it is to manage these interfaces for the well-being of us all.

Such a starting point requires organizations to go further than simply doing something nice for society. It requires a profound understanding of how the actions of one party trigger different reactions of others and how the formal and informal rules of the business game determine the outcome of corporate activities. If you’re working in a sector where the ‘grab it while you can’- mentality is rewarded, it will be almost impossible to enact real stewardship. For example, many are already aware that the current business model of companies like Shell are on the wrong side of history. Models based on extraction of fossil fuels simply cannot be sustained in the long term, and have to be transformed at some point. It might be wise to remember the words of Margaret Mead: “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it’s the only thing that ever has.”

Market transformations are apparent in many different sectors. For example, just 10 years ago electricity was solely produced by big plants owned by a handful of anonymous companies. Nowadays electricity production is increasingly decentralized, small start-ups in renewable energy are flourishing and the big companies face challenges in surviving without subsidies. More importantly people are (and feel) involved in their use of energy.


What is happening in the new economy?

Once we accept that traditional sectors have to change their ways, the next question is “how?” In every sector, we see leaders stating a stronger commitment towards sustainability. A well-known example is Elon Musk, who created Tesla to transform the automobile sector and harness renewable energy.

Even more interesting are the many unknown examples in the new economy. Peter Heijen, the initiator of LendaHand, created a new way of banking, connecting people with savings accounts directly with entrepreneurs looking for access to capital. Or the founders of Mpesa, a company which facilitates monetary transactions via mobile phones throughout Kenya, that add up to about 30% of the countries GNP. Successful leadership or entrepreneurship in the New Economy cannot exist without a commitment to stewardship.

Whether we like it or not, business is the most powerful institution on earth. So if we want to create more sustainable eco-systems, companies must become part of the solution. The aforementioned leaders all apply open innovation, because they trust that sharing their technologies, dilemmas and solutions openly with others will contribute to a stronger case for transition. And, since their organisations take a leading part of this, it can benefit them in the long-term too.

How can HR contribute to a stewardship approach?

“Tell me how you measure me and I will act accordingly”. This might be an oversimplification, but still it reminds us of the relevance of what kind of implicit or explicit norms are embedded in how we hire, fire, train and motivate people. For example it would provide valuable information if leaders had the courage to have open and honest exit conversations with people leaving their organisations. If this became routine it could generate a great deal of knowledge about what employees walk out of, and into, in our current age.

Stewardship starts with real attention for each other, including the intrinsic motivations, concerns and taken-for-granted assumptions that we all have. It also requires a different set of leadership qualities. Research of the Academy for Business in Society shows that in the sustainable economy, leaders are selected based on systemic thinking, embracing diversity, balancing global and local views, emotional awareness and - maybe even most importantly - initiating meaningful dialogues. What these qualities have in common is that they do not, first of all, reflect characteristics of individuals but characteristics of relationships. This is needed for sustainable development because the issues we are facing can only be dealt with through co-creation. This might sound like a bigger challenge, but the good news is that issues like climate change and social inequality are based on collective interests, which implies that the best solutions might be found by co-operating with the “unusual suspects”; competitors, start-ups and governments.