New project: a monthly newsletter

When my friend Xavier took an interest in my master’s thesis –that was a few years ago ;)– he started suggesting books and journal articles that he thought might be useful to my research. Soon thereafter I started doing the same whenever I bumped into something I thought might be useful to his doctoral dissertation (and later to his research and classes).

I also began doing this to other friends and colleagues. It had been (and still is) a great experience for me and I wanted others to experience the same.

This has been going on for decades now. Of course, paper cuttings and photocopies have become emails with links and attachments.

I am thinking it is time to broaden the circle. And that is why I am creating a monthly newsletter.

The content of the newsletter will follow my consultancy practice and intellectual pursuits: leadership development and executive coaching, that is, people managing themselves, others, their team, and their organization.

My hope is that as a subscriber to the newsletter you will also become a contributor of material that might be interesting to other subscribers. Please send your suggestions by replying to the newsletter email you receive – subscribe here.

Happy reading!

Become more worldly, not more global

Henry Mintzberg and Karl Moore suggest that “managers should be urged to become more worldly, not more global.” I think it’s a relevant suggestion for all.

The Oxford Dictionary defines worldly as “experienced in life, sophisticated, practical.” The worldly person seeks out diversity as a way to enhance his understanding of other cultures while adding nuance and appreciation to his inherited background.

The global person, on the other hand, conforms to an emerging singular culture.

via Forbes.

Not just for profit: corporate design for social purpose

When Muhammad Yunus and the Grameen Bank received the Nobel Peace Prize in October 2006, one endeavor lifted into the limelight was Grameen Danone Foods Ltd.

This was a pathbreaking collaborative enterprise, launched that year as a 50–50 joint venture between Groupe Danone — the US$16 billion multinational yogurt maker — and the Grameen companies Yunus had cofounded. Yunus called the joint venture a “social business,” which he said could be a pioneering model for a more humane form of capitalism.

As Yunus explained in his book Creating a World without Poverty: Social Business and the Future of Capitalism, a social business is a profit-making company driven by a larger mission. It carries the energy and entrepreneurship of the private sector, raises capital through the market economy, and deals with “products, services, customers, markets, expenses, and revenues — but with the profit-maximization principle replaced by the social-benefit principle.”

The mission of Grameen Danone Foods is to bring affordable nutrition to malnourished children in Bangladesh with a fortified yogurt, under the brand name Shokti Doi (which means “yogurt for power” in Bengali, the country’s language). (…)

Like a conventional business, Grameen Danone must recover its full costs from operations. Yet, like a nonprofit, it is driven by a cause rather than by profit. If all goes well, investors will receive only a token 1 percent annual dividend, with all other profits being plowed back into the business. The venture’s primary aim is to create social benefits for those whose lives the company touches.

—

For years, critics of the corporation have argued that the prevailing design of publicly held corporations is innately flawed. That design involves a board that is elected by shareholders — with votes allocated proportionately to the number of shares held — whose members then appoint a semiautonomous CEO as the shareholders’ agent, who in turn delegates authority down through the ranks. In many ways, this has been a highly effective model. The “managerial hierarchy” structure, as corporate historian Alfred D. Chandler Jr. called it, has accomplished more in a short time than any other form the world has known.

But this shareholder-centric model has also contributed over the years to what former Citigroup CEO John Reed has called the “iron triangle of short-term pressures” — hedge funds, stock options, and stock analysts — that keeps companies narrowly focused on quarterly profits.

The financial meltdown of 2008 was a direct result of the pursuit of immediate profit by investment bankers and mortgage brokers who disregarded the impact of their actions on customers, on the larger economy, and indeed on stockholders and the company itself in the long term. Those who wanted to operate with integrity found it difficult. They were constrained by a corporate design that reinforced the need to “make the numbers” by any means possible

—

One helpful way of thinking about these designs is as representing a hybrid between the traditional for-profit archetype, which has profit at its nucleus, and the traditional nonprofit archetype, which has social mission at its nucleus. This type of hybrid has been dubbed the “for-benefit enterprise”, (…) a new type of organization with a blended purpose at its core: serving a living mission and making a profit in the process.

The essential framework of such a company — its ownership, governance, capitalization, and compensation structures — are designed to support this dual mission. And it is this design that enables companies to escape the pressure to maximize short-term profits and instead to fulfill a more fundamental purpose of economic activity: to meet human needs and be of benefit to life.

—

Today, at least three broad approaches to for-benefit architecture offer promising models:

Stakeholder-owned companies, which put ownership in the hands of nonfinancial stakeholders;

Mission-controlled companies, which separate ownership and profits from control and organizational direction; and

Public–private hybrids, where profit-driven and mission-driven design elements are combined to create unique structures.

Read on at Not Just for Profit.

Nobel Prize: Money not the whole story

When he was awarded the Nobel Peace Prize last year, Yunus said that Grameen Bank had lent nearly $6 billion over the last 30 years in loans that average $130 each. A key stipulation of the program is that its loans must be for income-producing activities, not consumption. But, perhaps more important, Grameen’s borrowers also must commit to the program’s “16 decisions,” which include family planning, educating their children, not accepting or giving dowries, and embracing “discipline, unity, courage and hard work” in all walks of life. (…)

The most important lesson from Grameen is that cultural values, even those long entrenched, can be successfully modified. Bangladesh is a Muslim country, where concepts such as charging interest or using contraception are considered “un-Islamic.” Yet, by using micro-loans as a cultural stimulus as well as an economic instrument, Yunus changes the attitudes of his fellow citizens at the grass-roots level. (…)

The operational details of Grameen are equally noteworthy. By requiring weekly payments, borrowers are constantly reminded of their obligations. The close relationship between borrowers and lenders means that they know exactly the consequences of non-repayments: other potential borrowers — often fellow villagers — will be deprived of their opportunities. Grameen’s emphasis on behavioral changes alone may indeed be more of a help in easing people out of poverty than the money itself. (…)

The Grameen Bank miracle is in using those micro-loans as a social stimulus to effect needed changes in personal behavior and cultural values. This key point is often missed by those enthusiastic in replicating the bank’s success. (International Herald Tribune)