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Excerpts from article written by Ryan Honeyman and originally published in the Stanford Social Innovation Review

B Corps have an opportunity to dramatically increase their social and environmental performance by upgrading their internal management practices.

The B Corp movement is one of the most effective frameworks for using the power of business to solve social and environmental problems. The success of many B Corps (including Etsy’s recent IPO and multi-billion-dollar valuation) has shown that its management philosophy—considering the interests of all stakeholders when making decisions, cultivating a values-driven culture, and empowering employees—can create highly effective and highly profitable business models.
After reading the book Reinventing Organizations by Frederic Laloux, however, it occurred to me that B Corporations now have an opportunity to upgrade their internal management practices to create an even greater, longer-term positive impact on people and planet.

The organizations Laloux chose to research had the most advanced practices from a management point of view—not necessarily from an external social and environmental point of view. It left me wondering: Aren’t the two meant to go together? Laloux told me in an interview that he agrees they are. The 12 organizations he researched had advanced internal management practices, but some of them were no more advanced from a social or environmental perspective than your average company.

Without adopting Teal practices, I believe the B Corp movement will eventually reach a ceiling in the amount of positive impact it can create (regardless of a strong focus on culture and values).

 I believe B Corps have an opportunity to create unprecedented impact if they let go of their hierarchical pyramid structure in favor of self-management, and learn to view themselves as a living entity, with their own creative potential and evolutionary purpose.

This is already starting to happen. Several B Corps—such as Mightybytes, CauseLabs, WorldCentric, LIFT Economy, and the Ian Martin Group—have been inspired by Reinventing Organizations to make the leap to Teal. Fitzii, a line of business within the Ian Martin Group, for instance, has made some major changes in the last six months: sharing compensation structures in full transparency, instituting a number of practices supporting “wholeness,” and making plans for instituting peer-based performance evaluations. [See their report on their experience in Enlivening Edge, here.]

These are early days for this new management paradigm. But one thing seems clear: High-impact, Teal B Corps could be an incredible force for good. It’s time to open a conversation within the B Corp community, and within the circles of social entrepreneurship more broadly, about next-stage management practices as a way to accelerate the positive impact we can create in the world.

Ryan Honeyman (@honeymanconsult) is a sustainability consultant and author of The B Corp Handbook: How to Use Business as a Force for Good (Berrett-Koehler Publishers, October 2014).

COMMENTS

  • Thanks for your timely, relevant and needed article, Ryan.

    Laloux’s book gave structure and clarity to thoughts that our founding CEO has had through the history of our organization yet has been unable to institute. The real examples in Reinventing Organizations of companies who have successfully transformed their organizations provides the template for the organization our CEO has long envisioned but did not know how to create.

    World Centric was born as a non-profit and transformed into a for-profit, Certified B Corp organized as a California Benefit Corporation, yet there has remained a conflict between that non-profit vision and the demands of a for-profit corporation (even a benefit corporation). Laloux’s articulation of evolutionary purpose as one of the three principal breakthroughs of these organizations has provided the context we needed to re-vision our mission as a purpose that bridges that conflict.

    Additionally, our deep study of the organizations in Reinventing Organizations has illustrated to us the need for strong, core processes as the stability around which self-managing teams can operate with agility and flexibility. Yet, we realize there are three key things we need to do as an organization before we can fully operate in self-managing teams—build the necessary skills and competencies across the organization, ensure the appropriate access to information through reporting and data sharing, and finally develop the processes and tools to support distributed decision-making across self-managing teams.

    Any attempt to transform a business as you suggest is a journey into unknown territory as we are all writing the future along the way. The deep community among B Corps provides the opportunity for undertaking this journey with others who share our vision for more responsible business models and practices. The model revealed in Laloux’s groundbreaking book enables us to also do that with deeper awareness.

  • by Edwin Jansen

    on May 24, 2015 06:12 PM

    At Fitzii (mentioned in the article), we transitioned so smoothly to “no managers” that it was almost anti-climactic. When you believe that people are unique, creative, and trustworthy, they naturally rise to those expectations. It’s a beautiful thing.

    I believe that shifting the paradigm from command and control to self-management has more potential to drive improved employee engagement and business results than any other new “strategy” we’ve seen over the last few decades. And when you combine this with a B Corp mandate to serve all stakeholders, it’s a recipe for exponential benefit.

     

    by Shawn Berry

    on May 27, 2015 11:10 AM

    Yes! Thanks for this fundamental observation Ryan. We do need them both. I am trusting that the B Corp movement will naturally move towards Teal in the spirit of continuous improvement. We applaud many of the social and environmental achievements of the B Corp movement, but as we assess their management structure they are mostly in the Orange to Green range. This leaves no lack of opportunity for these early adopter companies to keep moving forward and push responsibility and ownership out to all edges of the company and abandon the old command and control practices of the past that leave everyone feeling incomplete.

     

  • by T.J. Cook

    on June 2, 2015 01:45 PM

    Your articulation of this confluence between B Corps and “Teal” organizations is spot on, Ryan. And, like Barry, the book (and, more importantly, the companies on which examples in the book are based) provided the concrete guidance we needed to take action.

    We are in transition to effect the change that teal holds out in promise, but I can report that energy levels are higher, efficiency is increasing, and our growth strategy is more exciting and aligned than I can ever remember it being. Previous to B Corp and Teal, I feared growth for what it could do to our culture, our way of life. Now I’m excited to see that culture and way of life expand organically yet quickly.

    Featured Image/graphic link added by Enlivening Edge Magazine

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