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Build and grow a company ready for the next generation of consumers
In Seeding Innovation: The Path to Profit and Purpose in the 21st Century, veteran entrepreneur, award winning author, global strategist, speaker, and Rice University Innovation and Entrepreneurship professor, Robyn O’Brien, delivers an insightful and data driven roadmap to authenticity and smart leadership in the face of accelerating technological, environmental, and social change. In the book, you’ll discover how to build resilience, authenticity, market share and purpose into your business plan and move beyond box-ticking, virtue signaling and one-dimensional metrics, in a way that strengthens your business model, enhances your bottom line, attracts investors, fortifies employee retention, and more.
With her characteristic candor and attention to data and deep experience on the frontlines of industry change, Robyn explains how you can transform concepts like paradigm blindness, scarcity, imposter syndrome, rejection, and fear to build durable, lasting, and profitable businesses that integrate social and environmental principles, with courage and integrity to drive long term shareholder and stakeholder value.
You’ll also discover how to:
Gen Z and the modern consumer are looking for companies with authenticity—they want transparency and purpose from brands that are future proofing for the planet they’re inheriting. With this changing consumer focus and mindset emerges an urgent need for emotionally intelligent leadership. Along with profitability, 21st century leaders must focus on environmental stewardship, equity and justice, employee retention, recruiting, collaboration, and emerging other key aspects of modern business.
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Seitenzahl: 365
Veröffentlichungsjahr: 2024
Cover
Table of Contents
Title Page
Copyright
Dedication
Author's Note
1 Blind Spots and Big Opportunities
From the Shower to the Spreadsheet
How Paradigm Blindness Costs You
Rebooting Fiduciary Duty
Creative Destruction's ROI
A Glassdoor for the Planet
The Audacity of Vision
The Courage to Change
Action Steps: Inspiration Inventory
Resources
2 Finding Fearless Friends
How to Design Your Scaffolding
Building Your Supportive Scaffolding
The Big Risk in Playing Small
Find the Ones Who Mirror Your Potential
Unshackling Your Courage
Coach Lasso's Lesson
Action Item: Fear Inventory
Resources
3 The Eye-popping Return on Authenticity
Disruption Takes Courage
Your First Ingredient Is Capital
NoLo's Superpower
Flip the Script
How to Trend Spot
Eco-anxious Institutional Investors
Land Investors Using Your Secret Sauce
Action Steps: Resilience Inventory
Resources
4 Venture Capital's Biases
The Power of the Purse
Diversity Pays Dividends
Finding Meaning
Partake in Changing Markets
Creativity Is Magic
Nonbelievers and Naysayers
Pitching Your Idea
The Junk in Your Head
Disrupting Venture Capital Funding
Action Steps: Blind Spot Inventory
Resources
5 The Liability of Ignorance
The Urinal Lesson
Listen to Learn
Don't Shrink and Pink
The Missing Infrastructure
Investments Are Values on Display
Action Steps: Values Inventory
Resources
6 Imposter Syndrome and “Not Enough-ness”
Negativity Bias in Your Brain
Talking Heads and Algorithms
The Voice in Your Head
The STOP Protocol
Not Enough-ness Syndrome
Action Steps: Naysayer Inventory
Resources
7 Nature Is the Bottom Line
Economies Need Nature to Survive
Insuring Your Model
The Impact of Climate Change on Your Bottom Line
Another Ashley Madison Moment
Light It Up
Faith's Fuel
Permission to Pause
Action Steps: Healthy Practice Inventory
Resources
8 How to Handle the Curveballs
Building Your Resiliency
Handling Curveballs
Assembling Your Hype Squad
Detoxing Your Capital
The Thumb on the Scale
Who Sleeps with Your Capital?
Action Steps: Description Inventory
Resources
9 Risk Mitigation and Transparency
The Value of the B Corp Certification
Staying Lean
Authentic Power
Accountability Is Coming
Scope 0 and Avoiding Bogus Claims
Diversifying Your Cap Table
Defining Your Scope
Where Do You Start?
Follow Your Values
Action Steps: Values Inventory
Resources
10 Fourteen Steps to Your Personal Sustainability Plan
You Are on the Balance Sheet
Best Practices to Prevent a Toxic Leak
Invest in You
Resources
A Your Personal Balance Sheet
B 101 on Funding for Startups
Acknowledgments
About the Author
Index
End User License Agreement
Cover
Table of Contents
Title Page
Copyright
Dedication
Author's Note
Begin Reading
A Your Personal Balance Sheet
B 101 on Funding for Startups
Acknowledgments
About the Author
Index
End User License Agreement
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“In Seeding Innovation, Robyn charts a practical and heartfelt call-to-action for leaders who are eager to build something better—for the planet, for our food system, and for themselves. Robyn is one of those unique people who sees possibility and works to build bridges (not divisiveness) between people to solve our biggest problems. And, she brings her authentic self to this book—it's grounded in courage and faith—and I think it's the perfect guide at the perfect time from a true thought-leader.”
—Steve Young
Managing Partner, Manna Tree Partners, a private equity firm focused on improving human health through nutrition
“Women have always been the backbone of society, culture, and the economy. That reality is finally getting the recognition it deserves in the twenty-first century, with women leading businesses and organizations that not only outperform their male peers, but also inspire the next generation of all people…. Seeding Innovation is a must-read for anyone who wants to better understand the opportunities that lay in front of us and to claim their role in this seismic shift.”
—Erin Gallagher
CEO and Founder of Ella, Fast Company's World's Most Innovative Recipient
“Finally, a book, Seeding Innovation, that creates a real guide for practical and tangible innovation and change from the old, outdated limited measurements of GDP and capitalism. Robyn paves the way through her brilliance and expertise to help create a new and expanded lens of how we move forward here and now, together with greater purpose and impact in business and how we live on this planet.”
—Darin Olien
Author and Emmy Award Winning Host of Down to Earth with Zac Efron
“What does advice for entrepreneurs look like when the markets, the investors, the services and products are changing before your eyes? How do we shed the orthodoxy of the existing, failing system? Well, the answer is you dig deep, you move from the linear simplistic mindset and into a circular, holistic one that embraces complexity in all its forms.
Robyn's personal journey, her wisdom acquired though years of wanting to be the change she wanted to see is reflected in this book. It's holistic in its eloquent framing of the macro business environment in poly crisis world (Planetary Boundaries, Economic, Political, and Social). It explains why ESG, DE&I, and personal work is central to building resilient, profitable businesses. Seeding Innovation presents both sober and practical tools for entrepreneurs and leaders wanting to create lasting value for people and the planet.”
—Erik Bruun Bindslev
Global Impact Leader and Entrepreneur
ROBYN O'BRIEN
Copyright © 2024 by John Wiley & Sons, Inc. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data:
Names: O’Brien, Robyn, author.
Title: Seeding innovation : the path to profit and purpose in the 21st century/Robyn O’Brien.
Description: First edition. | Hoboken, New Jersey : Wiley, [2024] | Includes index.
Identifiers: LCCN 2023057809 (print) | LCCN 2023057810 (ebook) | ISBN 9781394227105 (cloth) | ISBN 9781394227129 (adobe pdf) | ISBN 9781394227112 (epub)
Subjects: LCSH: Leadership. | Business planning. | Personnel management. | Organizational change.
Classification: LCC HD57.7 .O2688 2024 (print) | LCC HD57.7 (ebook) | DDC 658.4/092—dc23/eng/20240116
LC record available at https://lccn.loc.gov/2023057809
LC ebook record available at https://lccn.loc.gov/2023057810
Cover Design: WileyCover Image: © oscar tang/ShutterstockAuthor Photo: Darcy Sherman of Sassafras Photography
Dedicated to my four incredible children,
Lexi, Colin, John, and Tory
DEAR READER,
If you have this book in your hands, you've decided to be part of the solution. Thank you.
There are so many titles this book could have had: Atomic Courage, A Smarter Future, Creating Solutions, Catalysts for Change, Informed Leadership.
In Silent Spring, Rachel Carson warned us what would happen if we didn't address our toxic systems. The World Bank recently did the same in a report called “Detox Development: Repurposing Environmentally Harmful Subsidies.” The data shared in Seeding Innovation, The Path to Profit and Purpose in the Twenty-first Century proves Carson's words true, with the help of entrepreneurs, innovators, thought leaders, the World Bank, and other asset managers. It also highlights the important role that women and whistleblowers play when it comes to change. As our clean air, clean water, clean soil, and biodiversity are depleted, we find ourselves in deep need of a diverse array of talents and innovative skill sets. As the European Central Bank shares, nature and our economies depend on it.
In April 2023, I was meeting with a friend who shared his concern about the world his kids are inheriting. I said, “Someone needs to write a business leadership book on best practices that protect our kids' futures and the planet, that inspires people to participate in the solutions.”
Two days later, an email appeared in my inbox from a senior editor at Wiley Publishing: “Hello Robyn. My name is Brian. I'm Sr. Editor at Wiley publishing. I'd love to connect as I'm eager to know if you might have some interest in writing a book on how businesses can better implement sustainability practices, eliminate waste, etc. I'd love to connect and to discuss in more detail if you might have some interest.”
If that isn't the universe responding, I don't know what is.
The day I received his email, my youngest child had just turned 18. I was about to have an “empty nest.” I'd spent two decades raising four children, while working in the food and finance industries, founding everything from nonprofits to financial service firms, all aimed at making clean and safe food affordable and accessible to anyone who wants it. To me, food security is a national security issue. I'd worked on these issues since my kids were little. I'd taken them to meetings with investors, members of Congress, to events at the State Capitol, and into product testing kitchens. I wanted them to understand that love is an action and that action is an antidote to despair.
In meetings, I watched as food and finance executives struggled with integrating meaningful, long-term change, whether that was around equity, diversity and inclusion efforts, environmental stewardship, conservation, or impact. I heard from countless investors and entrepreneurs, and I could still sense the fear and uncertainty in the capital markets. The industry hadn't fully mobilized.
There is clearly a hunger for change, solutions, and the courage needed to create them. I feel the demand for it every time I give a keynote. People are in search of inspiration and purpose and so hungry to be fueled by passion and courage.
I am fascinated by courage. It's something I developed early in my career, as the only woman on a team that managed $20 billion in assets, in an industry that is 98% white and male. We were a team of seven, and the guys asked me to cover the food industry. So I learned the operating models, the financials, which leadership teams were trustworthy, and which teams made me want to wash my hands after a meeting. I sat in on tech meetings to learn more. I wanted to not only understand what made a resilient business model, but also what made a resilient leader. I listened and learned.
When my youngest child suffered a life-threatening allergic reaction, I was called to display a courage I didn't know I had. I challenged the multinational food and chemical companies over their double standards, spoke out on price-gouging by the pharmaceutical companies, and found myself in situations where courage wasn't even a choice because staying silent was far riskier than any concern of speaking out. But courage also didn't come naturally. I had to learn how to be brave, how to find my voice, build a team, inspire a movement, again and again, and I found that a lot of people were asking for that: show me how I can be braver in my life.
What makes us brave? What holds us back? And what is it about fear and failure that keeps us playing small when we know something bigger like innovation and change need to happen?
I used to think that courage is the opposite of fear. I was wrong.
In fear, there is a sense of scarcity, that we may fail, that we may be abandoned and rejected. And so we convince ourselves that if we stay small, we can avoid the pain, discomfort, fear, and possibility of rejection.
Only it doesn't quite work that way. Because, when you abandon your potential and dreams, you essentially reject yourself, the truth of who you are, your hopes, dreams, and capabilities in order to play small. And that is the ultimate rejection. A rejection of your purest potential. You risk drowning under the weight of “what ifs” and what could have been.
But rarely can you just flip a switch and turn on courage. It usually isn't that easy. Courage is like a muscle, and the more you use it, the stronger it gets. It's also contagious and will inspire others to be courageous too.
I am not going to go into a long list of everything that ails us right now on this planet that we share. There are daily headlines about it. If our debt levels are any indicator, it's clear that we are living beyond our means. We've got some huge environmental issues confronting us, but that also means that there is enormous opportunity to get involved and create solutions.
It is a brave thing to stand up in business (and life) and say, “You know what? This is intolerable. Enough. There has to be something better.” And to go about figuring out what that is and how to make it happen. Innovation and change won't happen without courage. Courage is at its core.
So how do you find the courage to take an idea and turn it into something? A product, a company, a movement, a campaign? What is required to move something from an idea that hits you in the shower to something that you put on a spreadsheet and then build a team and a company around? Because it is so clear that the world, all that we are facing, needs inspired, almost atomic, innovation and courage.
In Seeding Innovation, you will learn not only the mechanics of building out a business, but also how to embrace an attitude of curiosity over judgment and wonder over blame. You will learn how to take action steps, and with deep humility and honesty, explore and challenge the beliefs, patterns, relationships, and behaviors that are holding you back. You will encounter naysayers and nonbelievers. Many people, maybe even those closest to you, will want you to stay where you are, to play small, because you are more predictable there. And you will have a choice: to stay or to move forward toward your calling.
A calling is exactly that, a call, with a chance to answer it or decline it.
Answering that calling to innovate and to drive change in a world that values conformity and sameness is one of the bravest things you can do. It sets in motion a series of events that you may not yet see, challenges for which you don't yet have answers, and possibilities that are unfathomable. But if you feel that calling inside of you, to do something more, create something new, build something better, get really quiet and figure out how to answer it. Because the day we abandon our dreams, decline that call, is the day that we give up on ourselves.
So fear? Fear of rejection? Fear of failure? Fear is going to ride shotgun to innovation most of the way. Instead of running from it, you will learn how to embrace it, as the familiar friend that it is, and learn how to work with it and move through it. I will ask you to take inventory of your fears, so that you understand them, and as you do that, to also consider and weigh the deep fear of regret.
I will ask you to consider who you surround yourself with on this Journey (and it's a journey with a capital “J”), to investigate how homogenous that group currently is, and if that homogeneity creates a blind spot. We will take inventory on that too.
And there will be plenty of times that you will be tested. A lot of the work of an entrepreneur has nothing to do with the company you are building or the product you are creating. It has everything to do with what's going on in your head, what is happening between your ears. Resiliency is a critical resource, and self-awareness is an asset.
We will address how you talk to yourself. We will get to work on changing that internal dialogue, the criticism and even self-loathing, and identify the media and noise that is fueling the negativity that you've carried around for too long. Because those hidden fears—the voice in your head and its incessant chatter—can self-sabotage and shackle you to past behavior. The negativity, feeding yourself those thoughts, won't serve you as you move forward. It's like trying to not eat junk food while keeping a bunch of junk in your head. It doesn't work. We've got to clean out the junk. So we are going to get really brave and take inventory of that too.
I will share data to motivate you and stories to inspire you. You will hear from entrepreneurs who were homeless, sleeping on the floor of the San Francisco airport, who are now running multimillion dollar venture funds. You will hear from entrepreneurs who failed forward, out of the trunk of their cars into adding Rihanna and Jay-Z to their cap tables. And you will hear from entrepreneurs who revolutionized how we think about everything from water to investors.
All of these friends created something that helps move us forward, making people's lives better and meets us where we are as humans, addressing our fundamental need to be seen, heard, and loved. And all of them, in their darkest moments, leaned into a purpose that was greater than themselves to help propel them forward. I'll help you discover what that is too.
And through all of this, you'll develop your “FQ score”—your unique power and purpose.
I think that's why this entrepreneurial journey of innovation and the lessons that accompany it are so rewarding, because of how fundamentally human it is with its mistakes and imperfections, its learning curve and humility, its self-discovery and growth.
Innovation is the hero's journey, and if ever there was a time for heroes for our planet, that time is now. Thank you so much for answering that call to do something. I am here to support you, with resources, data, inspiration, and tools, because I've learned it is way easier to do this work when someone has your back. Let's get going.
—Robyn
“There is nothing in a caterpillar that tells you it's going to be a butterfly.”
—R. Buckminster Fuller
FAULT LINES ARE emerging in business as we know it, and paradigm blindness is catching a lot of companies off guard.
For those innovating, creating, and designing, the opportunity couldn't be bigger. You only need to look to the auto industry to understand how quickly change is happening, as the car industry electrifies to decarbonize road transportation.
But what gives innovation life? What turns an idea into a successful business model? Most of us have hundreds of ideas every day, but how do we get an idea out of our head and into action?
It has as much to do with mindset as it has to do with access to capital. It has as much to do with the structure of our belief systems and how we handle setbacks as it has to do with the structure of our balance sheets and how we handle the competition. And it has as much to do with how we respond to imposter syndrome and naysayers as it has to do with how we treat our team and employees.
If you're launching a business, a new product, or service, you'll confront all of this. My goal is to not only help you to seed innovation, but also to do it successfully, which means there is a lot to cover, so let's get started.
If you ask entrepreneurs what happened to them when their idea cut loose in their brain, they'll tell you it took on a creative life of its own. It became an obsession. We all have ideas. So many of them. But what makes us act on them? To write them down? What makes us brave enough to share them with someone? And keep working on them in the face of remarkable odds?
Nolan Bushnell, cofounder of Atari, said, “Everyone who has taken a shower has had an idea. But it's the people who get out of the shower, towel off, and do something about it that makes the difference.”
An idea that motivates you so much that it inspires you to take action. An idea that makes inhibition, fear, rejection, even ridicule and derision tolerable. Why do some people give their ideas life while others leave them tucked away in their minds? Why do some unshackle an idea and let it run, while others bury it?
How does a concept become reality? And how do you get an idea from the shower to a spreadsheet? Anyone can dream about building the Empire State Building, but how do you actually do it?
Ideas shape the course of history.
—John Maynard Keynes
There is an obsession with entrepreneurship. And wrapped around that obsession, you will find courage and naysayers, scaffolding, and failed ideas. You will find heartache and joy, monumental mistakes, and wild successes. You will find cheerleaders and support systems, and you will find dark nights of the soul.
When you were a kid, you probably had something that you obsessed over. Maybe it was cars, or baseball cards, BMX bikes, stickers, or unicorns. You collected them; you were all in. People knew you for it. You lived and breathed it. It was probably your first obsession. Mine? A collection of Coca-Cola cans from around the world, in varying sizes and shapes with different languages on them. I was fascinated by the ability of one brand to create universal awareness across hundreds of languages with its colors and fonts. I loved collecting them.
The passion, focus, and obsession in entrepreneurship is similar to that of the unbridled passion of a child. You lock in and can't not think about it, you can't not do it. When someone suggests that you do something else, it's as if they're asking you not to breathe or to unplug your heart. It's not an option.
Something makes you step out of the shower and into building out your idea, and you begin to live its creations, and life gets singular really fast. There is a fierce focus and courage, and a willingness to face fear, other people's opinions, and society's conditioning in order to make way for creativity and innovation.
Which may be why so many ideas fail to launch, because it requires so much of us psychologically, physically, emotionally, and even spiritually.
Too often, business leadership books only focus on the financial aspects of starting a business, the operational aspects, the team building, and the logistics. But what about the headspace of the entrepreneur? The internal dialogue? The ongoing criticism? Their support system? Their lack of one? How often is faith challenged when an entrepreneur is pushed to an unimaginable pain point? How often has imposter syndrome sabotaged more ideas than lack of funding?
The recipe for entrepreneurship contains all of this, and courage could not be more important.
We need innovation—new, collaborative ideas, and smarter business models, and we need courage to execute them.
Why? Because we are staring down some pretty sizable problems, and it's clear that business as usual isn't going to cut it. In fact, none of the world's top industries would be profitable if they paid for the natural capital they use. In a sobering report (TRUCOST, 2013), the world's biggest industries burn through $7.3 trillion worth of free natural capital a year. And it's the only reason they turn a profit.
Only it's not free, we're paying a very steep price for it.
So what is “natural capital”? Things like clean air, clear water, healthy soils, the basic things we need to survive. Think of them as “nature's capital.” They aren't on balance sheets, but every company on the planet depends on them, as does every person. So when a company burns through them, pollutes them, and destroys this natural capital, it's called “externalized costs.” These are the costs not paid for by a business but by society at large. For example, a corporation that pollutes local water sources with the spraying of its chemicals is externalizing the costs on to whoever drinks that water and whoever has to clean it up.
The concept of “externalities” is becoming increasingly familiar in business, from boardrooms to investors. Many first learned of this concept through the tobacco industry, when it became clear that smoking cigarettes causes cancer. The industry profited while people got sick. We then learned about it in agriculture, when lawsuits around the world linked glyphosate, a chemical sprayed onto food crops, to cancer. And we are learning about externalized costs imposed by the fossil fuel industry on all of us. It isn't just human health that's impacted by these externalities, though the cost there is massive and merits its own book; it's the health of the planet and those we share it with too. And it's presenting a liability to business as we know it.
Somewhere along the way, we forgot or ignored that we actually need the planet to survive. All business depends on natural capital.
According to Ceres, a sustainability advocacy nonprofit, and Lyon et al. (2018), 94% of S&P 100 companies acknowledge the science of climate change and 93% consider it a material risk factor, but almost 30% lobbied against some policies that would help address it. Think about that for a minute—there is almost complete consensus among all of the companies on the S&P 100 that climate change presents a material risk factor to business, and yet almost a third of those companies lobbied against policies that would help address it. It's corporate suicide.
So why is it so hard for companies to change?
One might argue that it's paradigm blindness.
According to Adam Smith in Powers of the Mind, a paradigm is a shared set of assumed facts.
In Discovering the Future, the Business of Paradigms (1993), Joel Arthur Barker goes further by suggesting that paradigm blindness is “a set of rules that define limits and establish what is necessary to be successful within those limits.”
But what happens when we exceed the limits? Things either break or change.
In the 1930s, there was an inventor named Chester Carlson. He'd developed a new system made of black powder, iron, wax paper, and a steel plate, along with a few other things, like cat fur. He reached out to IBM, Kodak, and more than 40 other companies with his new idea and was rejected by all of them.
Except one, a company called Haloid Photographic Company. No one understood Carlson's vision, except Haloid, who would not only develop it but also go on to change the company's name to Xerox, after the wild success of Carlson's creation (Bermúdez, 2023).
Too often in business (and life), someone sharing a new idea is met with the response, “That's not the way we do it here.” Or “If you had my experience, you'd know that wouldn't work.” Or even more condescending: “Good luck with that.” It's why inventors like Sara Blakely of Spanx share how important it is to keep your concept and new idea close for the first year. Not so much to protect the concept, but to protect your determination to see it through.
Rarely is something visionary seen or understood as visionary by many at the start. Why? Because it is so far outside of the status quo. It challenges conformity and stands to disrupt so much. Few have the audacity to dream that it can be done, even fewer the sheer determination to see it through.
One of my absolutely favorite terms to describe entrepreneurship is “creative destruction.” It was coined by Joseph Schumpeter, and I first learned about it in business school. It was one of those moments when it felt like something in my brain exploded, a total a-ha moment. It made complete sense. We've all lived it too.
For those of us that walked around with Sony Walkmans, we could never have imagined CDs, much less streaming devices like Spotify, but each company disrupted the one that preceded it, making it obsolete. We used to wear wristwatches; now we carry smartphones and wear small computers on our wrists. Creative destruction is innovation.
In Beautiful Economics, a handbook for rebooting the world with a new economic narrative that combines ecological, philosophical, and entrepreneurial wisdom, Howard Collinge writes, “In our current economic model, humans are one-dimensional units in a giant mathematical equation. If the equation leads to bigger and bigger Gross Domestic Product (GDP), higher share prices, and more cars, the economy is doing fine. (But) something doesn't quite add up.”
Collinge goes on to write, “GDP is the measure of all consumption, but it does not distinguish between good or bad consumption or take into consideration the long-term consequences and possible environmental damage.”
Our obsession with growth and GDP has been “catastrophically short-sighted.”
Business to date has focused on growth at all costs. It's the “fiduciary duty” of business leaders to drive shareholder return. Some call it cutthroat capitalism, some call it dog eat dog, and some call it business as usual. But the next generation is flat out calling it out, as the externalized costs, discrimination, and injustice become obvious. It's their future at risk, and they're demanding better not only from the governments, but also from the companies they both buy from and work for.
As my friend, Paul Hawken, author of Blessed Unrest, Natural Capitalism, Regeneration, Drawdown, and so many thought provoking books, says: “We are stealing the future, selling it in the present, and calling it ‘GDP.’” It's extractive capitalism.
If one business is mindful of its impact on the planet, while another burns down forests, isn't one creating more value than the other? And won't that impact market share? Employee retention? Recruiting? And should that factor into share price and even its role in GDP?
Soil holds more than 25% of all biodiversity and provides 95% to 99% of food to 8 billion people (Joint Research Centre, 2022). If a company destroys soil, should its contribution to GDP be discounted, compared to a company that protects natural resources? If a company destroys soil with their products, should they be held accountable? Is that product not only a liability on their balance sheet, but also a liability to an economy dependent on biodiversity?
In February 1937, President Franklin D. Roosevelt, the 32nd president of the United States, wrote to all state governors: “The nation that destroys its soil destroys itself.” He understood decades ago that business is dependent on nature.
I don't know a single company or business that doesn't source the food its employees consume from the soil. Business, all business, across all industries, play a role here. And many are starting to figure that out. From Patagonia to Bayer, from AI to NGOs, you're either part of the solution or part of the problem.
And fancy press releases, virtue signaling, and box ticking aren't going to cut it. Asset managers and investors are demanding more, consumers are demanding more, and employees are demanding more.
Business has to move to meaningful action to mitigate risk and capture market share. We can't just use the word “sustainability”; we have to become it. We can no longer abuse the environment we depend on; we have to regenerate and protect it. So what to do?
We all have a role to play. Increasingly, an important role is the role of the chief sustainability officer. As Robert Eccles and Alison Taylor (2023) wrote:
The role of the chief sustainability officer (CSO) is undergoing a rapid and dramatic transformation. Historically CSOs have acted like stealth PR executives—their primary task was to tell an appealing story about corporate sustainability initiatives to the company's many stakeholders, and their implicit goal was to deflect reputational risk. The role had virtually no involvement in setting company strategy or communicating it to shareholders; those responsibilities fell to the CEO, the CFO, and the head of investor relations.
Now, however, some CSOs have moved away from a role centered on messaging and instead are spearheading the true integration of material ESG (environmental, social, and governance) issues into corporate strategy. This pivotal change requires close collaboration with other members of the senior leadership team and active engagement with investors …. By integrating sustainability initiatives with risk and governance, CSOs can effectively tackle this conflicting messaging, address growing concerns over hypocrisy, and ensure that sustainability programs do not merely serve as a cover for shortcomings in ethics and governance.
I thought of my friend, Karen Fang, the CSO at Bank of America, when I read this article. She integrates ESG principles into her work, particularly in the food industry. She is focused on transitioning the supply chains of multinational food companies to regenerative agriculture. Why? It mitigates climate risk, which can drive profitability. It takes intelligent leadership against an entrenched status quo to drive change at this level, but a powerful CSO can play an incredible operating role in a company's profitability if their recommendations are followed, and they demonstrate the financial impact of both action and inaction.
So how do we motivate long-term behavior change?
Plenty of books and articles can tell you what not to do, to chastise. But shame is one of the hardest emotions, and while it may motivate short-term behavior change, it can also shut people down and create a defensiveness. What child responds well to that? And the truth is that there is a child in all of us. So how to inspire the change?
There will be lawsuits, litigation, policy change, and more. But how do we motivate a business leader to bravely move forward? How do we motivate an entrepreneur to take the risks necessary to step into innovation? It's been demonstrated over and over again that positive reinforcement serves as a much better motivational tool.
So my goal is to reframe this challenge as an opportunity, to give examples, showcase business models designed for the twenty-first century, and to offer suggestions of things that you can do—things that you can add to your business plan, your model, in order to build a business that you are proud of, one that is flourishing in market share and employee retention and happiness.
What we need is a diversity of creative thinkers, innovators, and problem solvers obsessed with developing smarter models, models that don't degenerate our limited resources like clean air, clean water, and healthy soil, but rather, business models that regenerate them. We need both entrepreneurs and intrepreneurs (which are employees looking for ways to innovate and improve their work inside of a company) who are obsessed with driving change. And we need to also address the ridicule and derision, the naysayers and the nonbelievers that often accompany this kind of innovation.
A great example of the ridicule that can accompany innovation is the story of Netflix.
I witnessed the Netflix story firsthand when I was sitting on the trading desk at Invesco (formerly AIM) when Blockbuster went public. Blockbuster's IPO valued the company at $465 million. The company had 100% market share. They were the movie rental king with 9,000 stores and 60,000 employees. It was the way we watched videos.
Which is what makes the story of Netflix so fascinating.
Netflix started in the late 1990s with a subscription model that had no due dates and no late fees when it came to renting videos, and the company was growing like crazy during the internet boom. It was such a fascinating time to be an investor, with companies like eBay also going public. At the time, I was meeting visionary founders like Pierre Omidyar and his newly hired CEO, Meg Whitman.
But then all of a sudden, the internet bubble burst, and as Marc Randolph, the cofounder of Netflix, and others share, where the .com at the end of a name had been a badge of honor, it was now three scarlet letters. The company spent $50 million getting to that point, and according to Randolph, it began to look like the success was going to bankrupt them.
He shared on LinkedIn,
The obvious strategic alternative for us was Blockbuster. Which is why, just a few weeks later, you found me, Reed (Hastings), and our CFO Barry McCarthy sitting at a giant conference table on the 37th floor of the Blockbuster headquarters in Dallas, getting ready to pitch Blockbuster.
The pitch was simple. We would join forces with Blockbuster. We would run the online business. They would run the stores. We would jointly develop a blended model. And everyone would live happily ever after.
And it was going great. They were leaning in. They asked good questions. Until they asked the most important question of all: “How much?”
Now, we had rehearsed this. We figured we were $50 million in the hole … so let's go with that! Reed leaned forward confidently and told them: “Fifty Million Dollars.”
There was perfect silence. Their words were “we'll consider it,” but we could tell they were fighting to suppress laughter. After that, the meeting went downhill fast.
Netflix was laughed out of the room. Can you imagine that car ride back to the airport or hotel? Either total silence or the face burning shame that is felt with rejection.
We all know how this story ends. Blockbuster had paradigm blindness. With 100% market share, they could not conceive of any other way beyond their existing store model. They'd set the rules (which were actually blinders), and Blockbuster's leadership lacked the vision, creativity, humility, and, importantly, diversity of opinions and perspectives that are essential to navigating change or to even considering a blended or hybrid model. Their blind spots were absolute.
And today, Netflix, the company that Blockbuster had the chance to purchase in 2000 for $50 million, has a market cap that exceeds $150 billion.
Blockbuster, afflicted with acute paradigm blindness, took itself out. Where the company once had 9,000 stores, it now has just one.
For the last decade, I've used this example in my keynotes to show the power of innovation, courage, and curiosity, as well as the risks of paradigm blindness. And as a reminder to always believe in the power of creative disruption, even against 100% market share.
So what's the lesson here? Systems change happens, paradigm blindness is dangerous, and innovation and entrepreneurship will always be working to tackle society's greatest challenges, to creatively build smarter.