Convergence: Evolution of Sustainable Business
Posted by Hemant Puthli on August 26, 2009
The diagram below represents the three generations of evolution of organizations and corporations, ending with convergence, in the 3rd generation.
Historically, through the Industrial and post-Industrial era, we have seen the rise (and rise) of the traditional ‘profit-oriented’ corporations whose main objective was to create wealth for its stockholders and investors. Several such corporations also felt a moral obligation to give back to society, and accordingly funded charitable initiatives to help and support various elements of society, mainly the underprivileged communities. In more recent times (especially post WW II), we saw the emergence of the traditional ‘purpose-oriented’ organization whose main focus was on social development and/or environmental protection. In the organized sector, some of these were Government-funded donors of ‘aid’ while others were Non-Government Organizations (NGOs) funded privately. In the unorganized sector, individuals, associations, clubs etc. took up social and environmental activism towards the same or similar objectives albeit at a smaller scale and perhaps more locally focused.
The second generation (mostly in the present time) is manifesting two trends: (a) the move towards efficiency and competitiveness on the part of the purpose-oriented organizations, and (b) the move towards responsible citizenship on the part of profit-oriented corporations. Purpose-oriented organizations are focusing on cost management, productivity and other parameters of efficiency and effectiveness (‘cheaper / faster / better’) that have typically been characteristics of the traditional approach, culture and discipline of mainstream business. The emergence of the ‘social enterprise’ and ‘social entrepreneurship’ is a key milestone in this journey of evolution. Social enterprises are just like other enterprises, except that they focus on social causes and serve ‘customers’ of a different type. On the other hand, profit-oriented corporations are taking on more responsibility for their actions and for the impact of their operations on the environment as well as their host societies in locations where they operate. This is visible through their Corporate Social Responsibility (CSR) programs and ‘Green’ initiatives (in syncretic co-existence, but seldom integrated with the mainstream business), which are signs of a growing awareness and the sense of urgency to respond to challenges in these key areas, on the part of the corporate sector.
In a not-too-distant future, we will see a confluence of these two streams of evolution, converging into a single type of organization / enterprise — the sustainable business. The sustainable business will seek to make a profit, but through a purpose. It will try to be socially relevant, environmentally responsive and economically viable all at once, in a cohesive fashion. It will develop its own way of integrating what were hitherto seen as diverse and contradictory objectives, into the holistic goal of sustainability.
This entry was posted on August 26, 2009 at 2:42 pm and is filed under Economics, Environment, Organization, Society, Strategy. Tagged: Business Transformation, Charity, Climate Change, Convergence, Ecological Economics, Evolution, Patient Capitalism, Profit, Purpose, Social Enterprise, SRI. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.