What is a human-centric business?
We are committed to building successful, healthy, human-centric businesses.
And this is what we mean by that:
The essence of business is a human being (or group) solving a problem (providing a transformation for) another human (or group). Business transforms people from incomplete to complete in some way and as a result, the person experiencing the transformation shares some of their access to scarce resources (money).
Delivering this transformation takes many forms, from mining to hairdressing. Whatever you do, you or your product is solving a problem.
Somewhere along the line, we tarnished the idea of business and turned it into only a money-making machine for investors.
Business Schools teach that business exists to benefit investors, and all else is secondary. Investor returns come first.
This idea is rooted in the belief that buyers will allocate scarce resources to the businesses that solve their problems the best, rewarding the most useful companies. If the investor earns a return, it means that the customer is happy because they are spending money on the company’s product. The bigger the return to investors, the more satisfied the customers must be.
If the investor and the customers are happy, then the employees have a job, so they are happy. And everything works out in the end.
As a result, all business school and business teaching focus on returns to the investor. Investors come first, customers/clients second, and employees third. The focus becomes on getting stuff done to make the equation fit. Human needs, society at large, and the environment fight for attention and are generally left out of the equation altogether.
Sometimes companies launch social responsibility initiatives for public relations reasons or to meet the legal requirements of local jurisdictions. But these are limited programs with the ultimate objective of satisfying a strategic need rather than core to the business.
This, they teach us, is the way we balance the economy efficiently.
Investor first is wrong
Putting the investor first means that business owners, managers, and even employees will do anything to increase the value of equity investment.
This mentality leads to all kinds of market manipulations and games that do nothing to improve the life of anyone beyond a few investors. The company may fix a customer’s problem, but often even the customer isn’t entirely satisfied with the results.
There is even a term for this in economics: dead weight loss. It is all of resources lost to these manipulative activities. To make the investor theory work economists just assume that there is no deadweight loss in a free market and look the other way.
In truth, even investors only reap short term rewards. And we know this about our economic system, short-termism is a defined thing people write books about. But short term rewards for owners/investors are how we have structured the system.
In the interest of investors, owners, employees, and customers we suggest that businesses should be more human-centric.
we believe that this is better for all stakeholders including society as a whole and definitely for owners of small businesses but also investors in large businesses.
There is no magic to a human-centric business. Build the company using the right tools and keep the focus on people. A human-centric business continues to optimize profit but within a set of constraints (described below). The constraints recognize that long-term, there is no value in maximizing profit at the expense of employees, customers/clients, and the external world.
The challenge is that most businesses operate according to the Sisyphusian principle of work harder. Keep pushing a stone up a hill.
One company we worked with had a motto: we do hard. They made their work hard, and they were all miserable. Every day they came to work and hated it, but they did hard things. That was what they did.
Not all companies have the motto, but many companies operate the same way.
Rather than push a rock up a hill, a human-centric business creates a machine to do the work efficiently. Whereas Sisyphus does the work manually, the alternative is a crane that efficiently lifts the stone, puts it at the top of the mountain, and looks for the next one. Humans operate the machine, choose which stones to go after, and build the next machine.
We believe that this is better for all human stakeholders and delivers better business results over time.
So here are the constraints that define a human-centric business. A human-centric business.
1. Makes money.
I start with money for clarity and to reassure you the reader that a crucial part of a human-centric business is that you earn a living. You should earn a good living. You should buy a boat if that is what you are in to.
Money isn’t more important than other factors, but it is essential.
If you own and run a business but do not make enough money to live an extraordinary life, the business is not human-centric (and YES this applies to non-profits as well).
There is no point to a business that doesn’t make money (in the case of a non-profit there is no profit at the end of the year, but the money is still necessary to run programs.
There is truth in the idea that money flows to the best ideas: money is how we reward work and allocate scarce resources. So businesses that attract customers or clients are solving a problem for those customers or clients.
If you own or manage or work in a business, you are part of that solution, and you should earn money as a result.
Making money is entirely consistent with human-centric businesses. In fact, we think that over time human-centric businesses will do better financially, be better able to weather crises, and be more competitive.
2. Puts humans first and make the journey worthwhile
This is, after all, in the name. Yes, the business should make money, but it should put humans first, not money first. If your business prioritizes humans, it will solve problems better, be comprised of more dedicated people, and therefore attract more clients, customers, and investors. Then the money comes.
There is a perception that we must put money first. We bury the needs of ourselves and our employees, often even customers, in the name of making more money for investors. The problem is that this creates weak organizations. Managers must micromanage, employees dedicate effort to escaping work, and the business is no one’s top priority.
Well, almost no one. In small businesses, lonely at the top, there is the owner, with all of the fear, anxiety, and long hours hoping he or she can make all of the pieces fit together long enough to get rich.
That is no way to run a business, and no way to live.
Rather than investor first, we suggest this Order of Priorities:
- Self – you must take care of yourself before you can think of anyone else.
- Family – your family must be well, or you will not have mental space to work.
- Employees – content, dedicated employees will strengthen your business.
- Customers/clients – we always say that “customers come first,” but they shouldn’t. The best way to serve your customers or clients is to make sure your organization is strong and healthy.
- Investors – often in business, when we say customers first, we mean investors first. But investors will most likely get the greatest reward when the rest of the organization is working. Investors should insist that the business is healthy. This isn’t altruistic: it is best for investors.
3. Has strong values, mission, and vision and knows its why.
Values, mission, and vision are the glue that keeps a company together. If you hire for values, you will create a strong team. If you give them a clear destination (vision) and a way to get there (mission), the team will deliver, and you will more effectively attract customers/clients.
Woven through these is the “why.” You must understand your “why.” Through the years of advising hundreds of companies, I have had many people tell me that their “why” is to make money. They are more often than not busy, hustling needlessly and not making as much money as they’d like. Because if your “why” is money, there is no emotional connection. Money isn’t attractive.
We all work to earn money, but emotions drive us, and an emotional connection to what we are doing is what gives meaning to what we do and makes us more attractive to others.
4. Inspires rather than manipulates
If you have the glue, you will find it is much easier to inspire others, employees, partners, vendors, and clients/customers, to join you.
Without the glue, you must resort to manipulation – you must trick them into joining and participating. You can see this manipulation all around you. Cable companies quietly add fees and upping the price, SAAS companies lock you into subscriptions and make it hard to cancel.
Much of digital marketing is manipulating people to take action, trying to trick them into spending money, or believing a thing. But manipulation is weak. The marketing that works best inspires.
5. Operates from a perspective of abundance.
The world is either a zero-sum game: my win is your loss or an infinite game: we grow the pie and create more opportunities as we win. Human-centric businesses are playing an infinite game.
I don’t need you to lose for me to win. Competition allows us to hone our skills and define our niches better – we don’t defeat competition we perform better for our niche, we reinvent. Businesses come and go – competition will cause some to leave the market, but this also creates more opportunities.
There is space for everyone. And when we build together, we realize that we create opportunities and spaces for more activity and creation, not less.
We believe that the infinite game is inherent in our economic system, a system in which we grow the economy through spending. A dollar spent becomes income that, in turn, is spent, becoming income, and on and on it goes. There is a name for this, it is called the money multiplier, and a dollar spent has a multiplicative effect of something like four times its value. That means that spending creates opportunities.
Hoarding stops this effect. Savings significantly reduce the multiplicative impact of money to something just over one. Savings are essential, and we need to save, but we also need to realize the power of spending. There is a balance here, and the point is those who buy goods and services and invest in their production are participating in creating the infinite game.
6. Respects the environment
We live on a planet with finite resources. If we treat the earth well and respect the needs of this planet, it will continue to provide for us indefinitely. If we don’t, humanity will die.
That fact suggests that we must live within our means and find smart ways to create that respect environmental constraints. This doesn’t mean that we don’t travel and wear hemp clothing that we never wash. But it does mean that we make an effort – we perhaps travel less, or better year we reinvent ways of traveling that are more efficient (electric cars, for example). We produce goods in factories geared to efficiency and sustainability. We invest in proper disposal. We use efficient lighting.
We come up with solutions that allow us to do all the things we want to do without destroying the environment within which we do these things. We pay attention to the choices we make and are mindful of the impact.
We have a choice to exploit or live in harmony with our environment. We can’t avoid all damage today: most of us drive internal combustion cars and won’t be able to transition away from them any time soon. But we can respect the environment and make choices in the direction of living within our constraints; then, as a group, we will make progress toward sustainability.
7. Is collaborative
We have wavered on the collaborative constraint for a while because we feel like “collaborative” is overused. But, the reality is that human-centric businesses are collaborative. They respect and build on the ideas of others. This does not mean they sit around the lunchroom singing kumbaya all day. Performance reviews and the need to get work done is very much a part of a human-centric business.
But we have noticed that human-centric businesses listen more and are more open to new ideas. They more easily incorporate the ideas of others into what they do. The alternative is more of a “gotcha” approach to management: looking for and pointing out mistakes.
There is strength in listening to and incorporating new ideas, and businesses should prioritize doing so.