Kristoffer E. Nelson
As I’ve discussed recently in my blog Integral Business, the future of sustainable, profitable and socially responsible companies rest well beyond what is now commonly referred to as “triple bottom line” organizations. Indeed an evolutionary step, achieving a triple bottom line status is a great challenge that inspires great merit—it’s a huge accomplishment. And, we need more.
There is a lot of talk in the business world, especially the post-modern business world of value and vision, about the triple bottom line: profit, people and planet, which I think is a great start towards building businesses that are sustainable in the long-term and meaningfully impacting in the short term.
I know some of us are just getting our feet wet to the idea and practice of the triple bottom line. For some of us, it’s not even yet on the radar—especially in a market in which most businesses are struggling to stay afloat. However, in order to save the world and business we need to take a huge leap. I believe an integral business of profit and impact needs a Penta Bottom Line. The Penta Bottom Line includes the three elements of the triple bottom line while adding two more value and success measures: Profit, People, Planet, Principles and Progress.
For the integral buffs, I view the triple bottom line as the business expression of the green meme (SDi)—the end of first tier human experience teetering on the razor’s edge of second tier perception and interpretation. And, while this isn’t a “my development is bigger than your development” contest, I see the Penta Bottom Line holding the principles that will assist in birthing second tier or yellow meme (SDi) organizations.
When we talk about a “bottom line” we’re ultimately talking about what is valuable. Bottom lines express value. Traditional businesses had a singular bottom line, and thus a singular value: profit. We’ve seen the damage that this has caused, and the response that has emerged over the last four decades is the triple bottom line business. Sadly it seems that most visionary, triple bottom line businesses fail, unless they’re tech, internet or ice cream (Cherry Garcia, anyone?). Just as past companies focused almost entirely on profit today’s new triple bottom line businesses focus entirely on value and vision. I see the Penta Bottom Line as a descend of the pendulum back towards the middle—I see the Penta Bottom Line balancing excessive greed with excessive vision creating a sustainable and equitable business culture.
Most when talking about the triple bottom line, put profit last, as in: planet, people and profit. I think this is wonderfully visionary, and yet it fails to acknowledge that a business exists, in my perspective, to primarily create capital. The assumption held in LOHAS circles is that organizations that focus on profit do so at the expense of the planet and people. This is certainly a valid reasoning, and rudimentary observation will produce much evidence to support it. Much harm has been done, in the extreme, due to greed and, in the lesser, because of ignorance. However, I don’t see profit as a zero sum game—we don’t need to detract from society, the planet and our sense of moral rightness to forever increase profit and growth.
In a sense, economy is an abstraction, and it also, clearly, has a strong bond to the gross, material world. I am not arguing that the abstract side of money does not affect our real world human experience—it does. And at the same time, for example, the world has lost a third of its wealth in the last 18 months. Where did it go? Though it affected the material, the wealth lost didn’t actually exist in the material world—it was based on how we valued things in the abstract: companies, real estate and so forth.
Abstract systems, like the economy, knowledge, and language that have a solid bond to the material world can grow without taking from or creating harm in and towards the material world. The exponential expansion of human knowledge and understanding in the last century has generally not removed anything from ecosystems or humanity. Simply, I believe that we can continue growing the economy without creating harm to people and planet (we will though need to solve the energy dilemma).
There are many examples in near and far history that rapid growth generally leads to harmful impact. I feel that the other four principles of the Penta Bottom Line create balance, consideration and strategic vision that will enable continuous, sustainable and healing expansion in our revenue generating systems (business).
I often express the Penta Bottom Line as a hierarchy. It’s an effective and often helpful expression. I also simultaneously hold it another way: as five interlocking and circling spheres of interaction and experience. Five circles merging, interacting while remaining separate but influencing one another. The Penta Bottom Line is a hierarchy and heterarchy, and when these perspectives are held simultaneously, magnificence and potent holarchy emerges.
I assume most readers understand profit, people and planet, so I will explain principles and progress.
Principles: Rules are out. Principles are in. Principles act as guides, influencers, and measures in vision, strategy, process, operations and out-reach. They are interactive, directive voices in the process of decision-making. Rules are rigid, limit creativity and exist to create measured and tested results (and are sometimes necessary) in repeating patterns. Principles, on the other hand, acknowledge that our world is complex, changing and unstable. No longer will rigid rules work to guide organizations that need dynamic and responsive action in a rapidly changing market and business landscape – we need interactive principles.
More-open-than-rules, principles are guidelines that ultimately question the decisions that we are making. In their openness, they acknowledge polarity, paradox, complexity and ambiguity of each circumstance and decision. When Four Seasons Hotels and Resorts went from customer service protocols and checklists to customer service principles there was a huge upswing in customer satisfaction and profit.
What are the known and unknown principles that guide the decisions in your organization? Do you know them? Does everyone know them? Do you practice them? Does everyone? Are they enabling the outcomes you desire?
Progress: I forced myself to stick with P’s as I enjoy the meter of consistency, but by progress I really mean development. Integral businesses consider the development of their people, culture, organizations and the systems they interact with as equally important as profit. A direct investment in the development of each employee in your organization is a direct investment in your organization.
In the triple bottom line we find a massive valuing of people. I think this is important, but it fails to address how people are valued. In most organizations that practice a triple bottom line, I see the main valuing factors as basic needs, basic freedoms and ontological value (people are valuable because they’re people)—this is great. The Penta Bottom Line agrees that this is important, and acknowledges that humanity distinctly desires growth and development as an innate aspect of our being. Evolution is wired into our being.
In testing the various concepts and applications of the Penta Bottom Line on LinkedIn discussion boards and blogs, many felt that Progress was redundant in consideration of People. I decided to keep it here because I think significant attention needs to be paid to the development of every organization’s employees—they are valuable as humans, they are valuable as developing humans, and their development is valuable to the organization.
In organizations where development is important, development programs are generally geared towards management (which is great and certainly needed) and those that are severely screwing up (also great and needed), but what would your organization look like if it valued the development of each person, group and the world around you? Where do your individuals and teams need development in capacity, skill and practice? How can you create systems where each person is given the chance to build capacities and self?
I am still exploring the implications and applications of The Penta Bottom Line practice, while searching for organizations that are already engaged. Early this year I engaged in a short launch project for an emerging and visionary company called GoHuman.Com. Anticipating that GoHuman.Com is on its way to becoming a Penta Bottom Line organization I interviewed two of its founders, CEO Wade Fransson and CCO Andy Swindler. Here’s what Wade and Andy have to say:
What is your role in and at GH?
Wade: CEO, Partner & Visionary Founder
Andy: CCO & Partner
Why did you created GH?
Wade: An abiding desire to improve the condition of humanity, coupled with a practical respect for the power of quality work, the dignity of the laborer performing it, and an abhorrence for the tendency of human nature to abuse power and wealth for personal enrichment and advancement.
You guys claim that you’ll rival Google.com, how will you do it?
Wade: Google seems like a warm, fuzzy company, but like Facebook, YouTube, Twitter, Microsoft, Apple or any other company you can name, they are corporations built on classic capitalist principles. That means that a few people sit at the top of the structure and control, govern and benefit from it.
We, from the start, believe in a shared ownership model that rewards anyone equitably who is contributing to the value. We foresee an eventual backlash against Google, as well as Facebook, Twitter, YouTube and others who essentially established a culture in which they supposedly were not making money off the people that built them, but increasingly must turn to profit-making measures to keep their shareholders and stakeholders, who are governed by the profit motive, happy.
It’s in the DNA. we’re seeking to establish a shared ownership model that rewards everyone who creates value, and these formerly disenfranchised folks will ultimately understand that the value equation has changed, giving them back the control over what they are and have, to the point they will resist and boycott companies who do not share this new, improved DNA.
Do you really think all of those copies are all bad?
Wade: No, but they’re not all good either, and they can do better. We want to own that model – the better model. We want to do better by doing good. This is how we’re going to change the way the world works.
What is GH’s social vision?
Wade: To reconstruct the contract between workers at all levels of any business structure, including the relationship of business to its customers, from the ground up – at the human level. To empower the individual and small business to compete effectively against conglomerates retain – to enable individual humans to throw off the slavery being imposed by our global financial institutions. This is why we pre-launched on Independence Day.
What is GH’s business vision?
Wade: To leverage the power of technology to disrupt, dis-intermediate and remove the impediments of fragmentation and transactional friction. To further leverage the evolution of technology integration into our daily lives, and the resulting impact of Social Networking on the web, to tackle the “last mile” integration problem of the web – making it work locally for small businesses and individuals. And building a platform through which any number of goods and services can be more efficiently and effectively deployed to individuals and the smallest of small businesses. Once in place, our ability to provide aggregate value to larger enterprises is a slam-dunk.
Andy: GH seeks to re-distribute the unbalanced power and influence large corporations wield over local economies. We believe that the strength of America lies with the individuals who use their diverse talents to provide localized services that are more tied to regional cultures and needs than any aggregated mass-marketed product or commoditized service that bleeds money from those areas.
By providing sophisticated reputation features that represent as accurately as possible the quality of service offered over time, GH will become the central point of marketing for thousands of small businesses. GH does offer a central point of aggregation for disparate small businesses, but it does so while empowering those businesses rather than disenfranchising them in the name of corporate greed.
GH exists to swing the pendulum back in favor of the independent business owner who is more flexible and agile, and able to provide more customized solutions.
How will GH generate profit (while changing and challenging our economic and social structure)?
Wade: We provide needed, valuable Software as a Service (SaaS) at extremely reasonable rates. Our first area of profit is to provide the results of local advertising at a fraction of the cost. This is done by replacing just the negative aspect of marketing, the delivery of “brand” in exchange for large advertising budgets, with a more positive substitute, transparent on-line reputation for quality, that will deliver the same results: increased business. There are many other ways we will do this, but this is the first and most accessible example.
Andy: Most companies in the social networking space are not profitable. They have created an unsustainable culture of “free” in a consumer world where people are more than willing to pay a fair price for a quality service.
GH services are offered at fairly priced subscription levels to allow small businesses to leverage the Internet as needed to find new customers and strengthen relationships with existing ones, all while allowing them to focus on what they do best – providing quality service.
Additional revenue streams for GH include creating products for specialized vertical markets, aggregating social review and institutional certification data for franchise and other fairly distributed corporate models, partnering with other software as a service companies and more.
How will GH challenge our current financial structures and powers?
Wade: In the wake of the Financial Meltdown, the masses who have lived in Democratic Capitalist societies will realize that they have empowered and created Corporations larger than governments, overpowering the balance of power created by the Founding Fathers of America. As mankind and its systems evolve people are waking up from the binge of consumer driven economic growth model. we’re seeking to leverage the democratizing power of the Internet and available, transparent information, coupled with the power of Social Networking, to create improved social and economic contracts that will empower people with better choices, which will cause the further erosion of the control by the powerful, wealthy and elite. It’s the nature of the evolution of human society.
How will GH value people and create social change?
Wade: We are creating a “gated” Internet Community that has an inherent technical and social bias against flaming, vulgarity, slander, misinformation and many other negative elements found on the web. Our Home Page features the “Make It Right” Icon, which is a principle in opposition to the go-for-the-jugular attacks that are celebrated in our hyper-information-sound-byte culture. You might say inside our Firewall we have a “flame-wall”.
Andy: The name GH is more than catchy. It speaks to the root issue we’re trying solve. Corporations do not serve individuals in the same way that individuals can serve individuals. Recent advances in the Internet are providing a democratization of voice that the world has never seen before. GH seeks to harness these millions of voices and skills by allowing people to create their own economies based on the quality of their work and their willingness to make it right when something goes wrong. Mistakes are human nature, after all. Attitude and accountability are the tenets by which GH operates.
How will GH create a better environment?
Wade: We celebrate sustainability and inhabit local whereas many other businesses spend enormous amounts of energy and money trying to convince the world that they do. We will also be eliminating the need for massive amounts of local print advertising. If successful in our grand vision we will certainly support a global move towards smaller, sustainable, local, where these things make sense. We are not remotely against globalization, but we are about retaining local viability wherever possible.
Andy: GH’s focus on local businesses reduces undue waste associated with shipping products and services from centralized locations to various areas. Corporate models of distribution are based on avoiding the true environmental cost associated with an emphasis on efficiency of profit rather than waste.
As GH continues to develop our institutional reputation component, we will be partnering with Green certification providers to feature those businesses who are offering truly green services. Emphasizing these businesses in this manner will provide them with even greater exposure and credibility within the site and their local communities.
What are a few of GH’s guiding principles?
• Think holistically, but honor the individual.
• Work is Sacred – and those performing it are to be celebrated.
• Sustainability at all levels, which means equity and fairness that does not enable oppression and exploitation.
• A sustainable economic system, a sustainable marketplace that builds sustainable communities of people who are connected at a human level, locally.
• Our primary interest is to improve the world.
• We recognize the need for scale, but have created a sustainable business model.
• Enact a profitable business model offering economic value to the people who use it the most.
• Success depends on contributions of ideas, time, evangelism and trust.
What will GH do to develop its staff, customers and the world of people it interacts with?
Wade: We are building an inverted pyramid structure, where we avoid the investment and ownership of the powerful until after we allow the “bottom” level to secure the maximum amount of ownership and responsibility. From there, as we grow and expand, the benefits can flow down from the inverted “bottom” to the inverted “top.” Those who are investing and building this will benefit from the value they create, by first making sure that anyone no matter how small who invests and builds some piece of this will benefit from the value they create.
Andy: The GH Pioneer Program was designed to achieve two related goals:
• Creating vibrant communities featuring unique service postings rather than tired directory information and
• Recruit a volunteer army of like-minded individuals who want to change the way the world works.
we’re well on our way to reaching these goals, and as we get busier we recognize the need to build a core team that is directly compensated for their efforts. We are engaging third-party development and support resources to make sure that we will be able to accommodate the demand we’re working to create. Most importantly, we are far more focused on culture than raw numbers, as we understand how difficult, if not impossible, it is to change corporate culture once its been developed. Core culture and values are what bonds “GoHumans” together, and without them we would serve no purpose to the world.
Since inception and inauguration earlier this year what are you guys getting done? Are you hitting your targets and deadlines?
Wade: We get things done. Broadly speaking, we’ve incubated our business model as planned, we’ve conducted our pre-launch phase as planned and we are launching as planned. We have not hit all our targets and have had to reshape our approach to the market. We have adapted our execution in keeping with our core vision.
We abandoned, for example, the multi-level-marketing aspect of our business model, to simplify our message and avoid negative connotations. We’ve moved from leading with a viral approach to leading with a local service growth model through, for example, the Local Marketing Coordinator role. We suspect that growth will be slower now, but more solid while setting a much better foundation for viral growth.
On the 100% positive side, here are additional accomplishments that were not part of original plan:
• Rollout of Canadian Zip Codes / simultaneous launch in Canada
• Integration of Video Profiles
• Incubation of England in progress, tentative launch date in January
• Pilot of a “Concierge” service serving the local integration of Hispanic populations through the Local Marketing Coordinator role
• Establishment of a 4-man team of executives (beyond the core team) working on the establishment, funding and rollout of an automotive vertical (originally intended to commence after launch).
Lastly, are you guys having fun?
Wade: More than ever – This is a seven-year dream-effort in the making.
Andy: Absolutely. There’s nothing else I’d rather do.
I am consistently engaged in searching for other examples of Penta Bottom Line companies in the market place. Gore-Tex might be one. Google.com, especially with the Google.org arm, might be another. I am actively looking for others while I am deeply interested in creating many—I think our shared future might depend on it.
A Penta Bottom Line company creates a crossroad of vision, value, profit, and change allowing for the growth of the human experience and our shared economy. By operating with a Penta Bottom Line, the organization opens up the sphere of success and value consideration. When an organization’s Penta margin is valued as highly as their profit margin, greater success is sure to exponentially increase.
Kristoffer Nelson is Founder & Principal, Krama Consulting and Development and has over 10 years of experience helping businesses and individuals succeed, and holds certificates in Generating Transformative Change in Human Systems and Integral Organization and Individual Assessment from The Leadership Institute of Seattle via Pacific Integral. Kristoffer integrates the skills and experience of a manager, analyst coach, change agent, and facilitator drawing insights from psychology, organizational dynamics and other developmental sciences successfully and consistently delivering exceptional and profitable change. Current clients include organizations in the wellness and media industries, labor and non-profit organizations, and individual executives within these organizations.