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Want an Impactful Business? Focus on Design of Culture

Many business leaders today are trying to step up their game and do more than create profitable businesses; they are attempting to use their skills to better the world. Yet in the current business culture, return on capital and financial profit are the sole metric of success. But we can apply tools from cultural evolution to “redesign” business culture — beginning with startups — so that businesses are better equipped to solve social problems.

By Geoff McNeely | Published 9 years ago | About a 7 minute read

A Sea of Tools

Currently, the set of tools available to social entrepreneurs are fragmented and haphazardly deployed. Each has its own practitioners, test cases, and training materials for solving problems in the context for which it was designed. While you may have heard of a B-Corp, you may not yet know about self-managing organizations, regenerative capitalism, slicing pie, or teal organizations. And you are unlikely to have a sense for how they all fit together because no one has taken the time to integrate them yet.

Lean Startup is a great example — a method for discovering “product/market fit” and conducting customer discovery. It provides a set of methods and tools for a startup to “iterate” and “pivot” until a scalable business model is uncovered. But it provides no insights into how the culture of the organization impacts its employees, vendors, shareholder, or customers.

The question left unasked is how Lean Startup could be combined with other tools to evolve organizational cultures toward desired outcomes. Like a well thought out toolbox, there are different tools for different needs. Missing is the unifying framework of cultural evolution to see how the tools themselves need to be adapted to a given context for them to work properly.

There are many variables for how a business could determine social impact, and each dances around the central topic of “doing good” in their own way. B-Corporations are a structure to directly measure the impact a business has on multiple stakeholders. Teal organizations define the way an impact organization might work with employees, ownership, and management for empowered decision making. Slicing Pie creates a simple risk/reward evaluation in order to share effort equitably.

I suggest that, from an evolutionary perspective, there is an ecosystem emerging that covers all of these variables. But without an understandable, easy-to-use map the conflicted (and confusing) interpretations of “social responsibility” get in the way and keep this integration from being achieved. Are you a corporation? A small business? A local business? A large franchise? A non-profit? A social purpose corporation? All of these entities approach constituent needs and engage stakeholders differently. Without an over-arching framework there is no uniform place to start when evaluating all the different ways a business can have impact.

The gap here is that entrepreneurs start with product and customer development tools and are taught to “let the data lead” with the idea of “building traction.” The problem with this situation is that when you don’t consciously define your organizational culture, there isn’t a lack of culture — your organization defaults to the culture it comes from. In the case of American startups, that is neoliberalism with growth and profit as the underlying (and frequently myopic) reason for a business. In fact, the definition of a lean startup includes scalability at its heart: “a temporary organization designed to search for a repeatable and scalable business model." [HBR] By focusing on one set of outcomes first — repeatability and scalability — culture, purpose and impact will be stumbled upon by accident, or only as a secondary consideration. Worse still, culture may not be considered at all.

Culture design addresses this by helping us combine the tools needed for shaping a given culture with the techniques for incubating businesses. By approaching this from an evolutionary perspective, we are consciously selecting the traits used by mindful, social impact businesses and grafting them onto startup organizations BEFORE they set out on a quest for product/market fit. When we begin to understand the organization as an ecosystem, (casting off the machine metaphor of a past era), the underlying operating principles begin to surface.

We see that the “lean startup engine,” is a tool for discovering an emerging need for a product within a given market, which runs at default settings built for a machine to be optimized and made efficient. This in itself is not bad, but when the operating principles running the business begin to scale they quickly outpace all priorities aside from financial performance.

Culture Design Lab

By building the story around why we are building businesses, we can lead a wholesale transformation of capitalism. Addressing this situation requires that we bring together the best of social impact practices and make them available to entrepreneurs who want to build businesses that make a profit and create a positive impact on the world. I am convinced we can leverage the best traits of the Cultural Creatives — those conscious consumers who value the environment and life experiences more than material consumption — that represent the largest growing sector of society based on the social values to which they give preference. This is a massive values shift in society that will only be served when startup ventures are instilled with resonant values before they set out to validate their product or service ideas. By changing the story at inception, we can change the outcomes down the line.

I have begun organizing thought leaders in this space to create a Culture Design Lab that will document the cultural ecosystem around startup ventures. Our plan is to study the cultural patterns that naturally evolve around social impact businesses. We will allow social entrepreneurs to experiment, not only with business models, but with organizational culture, allowing them to create tests for their social impacts early on in the startup phase.

This experimentation will give founders the tools to answer deeper questions like:

Why are we trying to solve this problem?
What if solving this problem creates other problems?
How will we respond when a pivot takes us away from our core values?
How can we ensure that product/market fit conforms to our beliefs and values as an organization so we don’t toss them aside in the name of profit further down the road?

By giving founders a collaborative space and helping them identify what is really important to them, we expect to learn and refine our own techniques for designing the future of social impact businesses. We will pay close attention to the cultural factors that shape whether these ventures scale in a sustainable manner. And we will attempt to manage the ecological limits to growth by balancing social impact and company performance, paying close attention to social norms and values.

In conclusion, I am approaching the startup process as a practice of intentional social change where the goal is to align cultural values of the organization with its social impact mission. And I am doing this by applying insights and principles from the field of cultural evolution to systematize the diverse tools that populate this domain of practice.

Does this resonate with you? Have you been looking for a way to build a business that is social on purpose? Let’s learn together. Please join our conversation on designing businesses that work for all of humanity, (not just the investors), by sharing your feedback.

This post first appeared on the Evolution Institute blog on August 3, 2015.