> For the complete documentation index, see [llms.txt](https://4revs.gitbook.io/handbook/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://4revs.gitbook.io/handbook/chapters/bold-business/global-insights.md). # Global insights 21st-Century Businesses Centered on Purpose, Governance, Networks, Ownership, and Finance Future-fit business will require a paradigm that moves away from the pattern of take-make- dispose of our natural and human resources, and instead makes room for consciousness to evolve and for creativity to flourish. We are moving away from the monocrop corporate model of the twentieth century, which was founded on Milton Friedman economics, who said, “the business of business is business and the sole purpose is to increase profits for that business.” The world in 2023 has changed dramatically since then, and with a nexus of focus shifted from profits to visionary sustainability. We are beginning to see a growing movement of unique, alternative business structures emerging all over the world. There are millions of enterprises and individuals voluntarily choosing to operate according to a new economic story and new rules. These organizations are working across various economic sectors, income levels, language barriers, and regional divides to innovate new systems approaches to tackle some of the most complex challenges of our time. Economist Kate Raworth, known for her creation of “[Doughnut Economics](https://www.kateraworth.com/)”, introduces a novel economic model, the Doughnut. This model visually illustrates the container which we live - the outer circle of the donut - representing the planetary boundaries. The inner circle represents the social factors that economic activities must respect to secure a prosperous and equitable future for all, no one must slip below this threshold. Thus, between these two circules of the donut is the safe operating space for humanity. Raworth points to five important ways in which these organizations are set up according to a new economic model that is different from old ways of thinking: purpose, governance, networks, ownership, and finance.
## 1. Purpose The current social norms and rules of the global economy prioritize value-extraction over value-creation; profit maximization, accumulation of money, and continuous growth over human wellbeing and environmental stewardship. But guided from the new point of purpose, the survival of living systems that evolved over 4.6 billion years, the immediate wellbeing of the 8 billion people living on the planet, and the future of the 8.7 billion other species we share the planet with, are at the center of how this new economic system works. For example, the the Sustainable Living Plan (USLP) as directed by Unilever CEO, Paul Polman, a guiding North Star for aligning core values with broader needs. ### Waste as Purpose Another example is a Finnish multinational company rooted in the oil refining industry. Over the past decade, Neste (not to be confused with Nestle) has embarked on a transformative journey under visionary leadership, establishing itself as a pioneer in the evolution of renewable and sustainable aviation fuels. Driven by a resolute purpose, Neste is dedicated to nurturing a healthier planet for future generations through the creation of circular, renewable solutions that counter climate change; curtail carbon emissions; and nurture a responsible, global ecological landscape. As the preeminent global producer of renewable diesel and sustainable aviation fuel - derived from waste and residues, such as used cooking oil and animal fat - Neste's commitment to sustainability transcends its industry expertise, reshaping the fuel sector. Their dedication to sustainability is reflected in their goal of making the Porvoo oil refinery Europe's most sustainable by 2030. Furthermore, they aim to achieve carbon-neutral production by 2035. ## 2. Governance This is about how a company is run and who makes decisions. According to Frederic Laloux, corporations retain a hierarchical structure, but, in the modern model, previously rigid barriers in class and status are less strict. Direction, goals and objectives come from the top, yet it’s those at the bottom who determine how those goals are put into practice. But, in the new governance approach, everyone gets a say in making decisions - it is not the traditional top down approach and it's not just the bosses who make all the decisions. People have more agency and freedom to be creative and have a say in how things are done. It ensures that the decision-making process is transparent and always in the best interests of the stakeholders. How is it accomplished? New organizational modes include new assumptions about how people work, fluid power structures, self-management, peer-driven performance, and healthy techniques for conflict resolution. ### Re-envisioning the Board For example, the UK-based car manufacturer Riversimple developed an innovative technology and a new business model by pioneering the next generation of electric cars powered by hydrogen rather than batteries. The company’s forward-thinking Governance structure incorporates “six guardians”–each staekholder representing a fundamental aspect of modern life– which ensures an 'alignment of interests.’ These Guardians are: the Environment, the Customers, the Community, the Staff, the Investors, and the Commercial Partners. The board's primary responsibility is to balance and protect the benefits delivered to these six stakeholder groups - thinking beyond just Board dividends. Additionally, the company is answerable to the six custodians, who represent the various stakeholder groups and hold voting shares, ensuring that their voices are heard and taken into account in shaping the company's direction and actions. The legal instrument to officially protect a company’s purpose is a “mission-lock”. This is a lever to preserve its social and ethical goals, and to prevent mission drifting over time and during changes in operations. For example, earlier this year the Dutch chocolate manufacturer [Tony Chocoloney](https://tonyschocolonely.com/int/en/our-story/serious-statements/tonys-mission-lock) wanted to make sure that their mission to eliminate child labor and other illegal labor from the chocolate industry is safeguarded “for the rest of eternity”. This approach can have positive externalities in the future of the company, because it ensures that any investors and shareholders which come on board are aware and committed to preserve the company’s mission. ### Decentralization Another example, Schneider Electric, embraces a decentralized and collaborative approach to governance. The [global company empowers local teams](https://www.gallup.com/workplace/267995/schneider-electric-stays-local-global.aspx) and divisions to make decisions that align with the needs of their specific markets and customers. This decentralized structure fosters agility, responsiveness, and local innovation while maintaining a unified strategic direction (This example is covered in more detail at the end of this Chapter). ## 3. Networks This refers to the connections and relationships that exist between different parts of a system or between different actors within an economy. Networks play a crucial role in shaping the interactions and flows of resources, information, and influence within the economy. In big companies under default practices, these networks can be spread all over the world and be highly fragmented and siloed with little communications between one another. Raworth emphasizes the importance of strong and diverse networks for creating a resilient and sustainable economic system that can thrive within the ecological and social boundaries of the Doughnut. In the new way, these networks are guided to be more inclusive, considering the potential to include collaborations between businesses, communities, governments, and other stakeholders, working together to address complex challenges and promote positive outcomes for both people and the planet. Everyone is an important part of the network, not just a small piece. For example, [Good Market](https://www.goodmarket.global/info/) is a curated online platform that makes it easier to find, connect, and exchange with social enterprises, cooperatives, responsible businesses, civic organizations, networks, and individuals who are creating a better world. It functions as a marketplace commons for the new economy movement, where the curation process and online platform are shared resources that are governed by the community that uses them. The goal is to catalyze the transition to a new economy by making the collective sustainability movement more visible;by making it easier for people to preferentially source from purpose-driven companies; and facilitate the collaboration with value-aligned organizations for collective action. In a network sharing information improves learning, builds trust and relationships, and speeds the rate of change. Another example is [The Austin Materials Marketplace](https://austinmaterialsmarketplace.org/), as described in the chapter [Materials Reimagined](/handbook/chapters/materials-reimagined.md). ## 4. Ownership The emerging paradigm entails a departure from conventional, centralized ownership structures that often prioritize profit-maximization for a select few. Instead, the new economic narrative envisions a shift towards localized and community-centered ownership models, where businesses and resources are owned by and accountable to the communities they serve. Future-fit companies could adopt ownership structures that involve various stakeholders, not just traditional shareholders. This might involve incorporating employee ownership, community ownership, or customer ownership, where different groups have a vested interest in the company's success and contribute to its growth. Here are some examples of companies that have embraced new ownership models: * Cooperatives: Cooperatives are businesses owned and democratically governed by their members, who can be employees, customers, or community residents. Examples include Organic Valley, a cooperative of \~## organic farmers in the United States. Also the remarkable example of Mondragon Corporation in the Basque country of Spain, a network of ninety-five autonomous worker-owned cooperatives, which achieved a revenue of 12.2 billion euros in 2019 and employed over 81,000 employees. The significance of Mondragon Corporation lies not only in its size but also in its economic impact. Its various cooperatives contribute significantly to the local and regional economy, generating substantial revenue and fostering economic development. Mondragon's unique structure is characterized by its emphasis on worker participation, democratic decision-making, and profit-sharing. Workers are considered members and co-owners of their respective cooperatives, which creates a sense of ownership and shared responsibility. In challenging times, cooperatives rally together, pooling resources and reshuffling their workforce to safeguard jobs. Amid the pandemic, employees in various Mondragon co-ops opted to voluntarily cut their salaries or working hours temporarily until markets rebounded, while those feeling unwell were given trust and encouragement to take sick leave. Today Mondragon is one of Spain's largest employers, and is the [world's largest](https://www.newyorker.com/business/currency/how-mondragon-became-the-worlds-largest-co-op) group of worker cooperatives. * Employee-Owned Companies: These are companies where a significant portion or all of the company's ownership is held by its employees. Examples include The John Lewis Partnership in the UK; Bob’s Redmill in Oregon; and New Belgium Brewing in the United States. * Community Land Trusts: These organizations collectively own and manage land to provide affordable housing and prevent real estate speculation. Dudley Street Neighborhood Initiative in Boston and Champlain Housing Trust in Vermont are examples. * B Corporations: B Corps are for-profit companies that are legally required to consider the impact of their decisions on society, the environment, and their workers. B Corps demonstrate a commitment to stakeholder welfare beyond just shareholders and emphasize a broader sense of responsibility. Examples include Patagonia, Ben & Jerry's, the Guardian, Kickstarter, AllBirds, and UMITO Partners. The outdoor clothing and gear company, Patagonia, has embraced the concept of "benefit corporations", by committing a percentage of its sales to environmental causes and donates millions of dollars to grassroots environmental organizations every year. * Platform Cooperatives: These are digital platforms owned and controlled by the people who use them, such as workers or customers. Fairbnb, a cooperative alternative to Airbnb; Eva, a ride-sharing application; and Up & Go, a worker-owned home cleaning platform, are examples. * Social Enterprises: These companies prioritize social and environmental goals alongside profit. Grameen Bank in Bangladesh, which provides microloans to alleviate poverty, is a well-known example. * Open Source Companies: Similar to Wikipedia’s open-source management style, some technology companies–such as RedHat, IBM, SUSE, Hortonworks (for Apache Hadoop), Chef, and Percona (for open-source database software)–have embraced open-source models where software code is shared openly, and revenue is generated through services and support. * Municipal and Public Ownership: Some cities and municipalities own and operate utilities, public transportation, and other essential services. An example is the publicly-owned Berlin Water Works in Germany. Additionally, in Germany, a bottle return system called ["Pfand"](https://allaboutberlin.com/guides/pfand-bottles) encourages recycling and reusing by requiring a deposit for containers when purchasing certain products, which is refunded upon returning the empty container. * Community-Owned Enterprises: Communities can collectively own and operate local businesses, ensuring that profits benefit the community. The Evergreen Cooperatives in Cleveland, Ohio, encompass several community-owned businesses. There are many notable success stories in sustainable energy initiatives. In Ireland, pioneering communities like Templederry Wind Farm and The Aran Islands Energy Co-operative have been leading the way in community-owned energy schemes for the past 15 years. The Dutch cooperative, Windvogel Cooperative, owns and operates wind turbines across the Netherlands, whereby cooperative members share in the ownership and revenue generated from wind power. The Findhorn Ecovillage in Scotland generates renewable energy through community-owned wind turbines, selling excess electricity to the grid to generate income for the community. * Participatory Commons: In certain cases, communities collaborate to manage shared resources like forests or fisheries, such as the Maine Lobstering Union. The Monteverde Cloud Forest Reserve in Costa Rica is a pioneering example of community-based forest commons management, where local residents own, protect, and sustainably manage the cloud forest while engaging in eco-tourism and scientific research to support conservation and community development. This holistic approach has garnered international recognition for its successful blend of environmental stewardship and economic sustainability. It is time to move beyond the short-sighted Environmental, Social, and Corporate Governance (ESG) goals and greenwashing. Bold Businesses change before being told, and are aware of the urgency to shift from financial shareholder primacy to broader stakeholder capitalism — and determine how to translate these goals into practical, measurable, and trackable ESG efforts in their businesses. ## 5. Finance In the Milton Friedman business models 1.0, lots of investors put money into big companies. In the new way, Bold Business 2.0, most of the money comes from the customers themselves. This means the people who use the products are the ones who support the company the most. Future-fit companies with innovative finance models include: * Etsy: An online marketplace for handmade and vintage goods. Etsy allows sellers to connect directly with buyers, promoting a sense of community and empowerment. The company's Initial Public Offering (IPO) included an allocation of shares for individual investors, allowing its community of sellers and buyers to become part-owners of the company. * Kickstarter: A crowdfunding platform that enables creative projects to be funded by the public, Kickstarter offers a model where individuals can contribute small amounts to support projects they believe in. Backers receive rewards or products related to the project, creating a sense of shared ownership and collaboration. * Cooperatives: Many cooperative businesses, such as the Mondragon Corporation, have innovative finance models where ownership is shared among employees. Profits are distributed among workers, and decisions are often made democratically, fostering a sense of ownership, equality, and shared purpose. * B Corps: Benefit Corporations, or B Corps, are legally bound to consider social and environmental impacts alongside financial returns. B Corps demonstrate a commitment to stakeholder welfare beyond just shareholders and emphasize a broader sense of responsibility. * Divvy Homes: Divvy Homes offers a rent-to-own model that helps individuals transition from renting to homeownership. Customers pay monthly amounts that include both rent and equity contributions, allowing them to build ownership in the property over time. * SolarCity (now part of Tesla): SolarCity utilized innovative financial models like solar leasing and power purchase agreements to make solar energy more accessible. These models allowed homeowners and businesses to adopt solar energy without the upfront costs of purchasing solar panels. * CNote: CNote is a financial platform that allows individuals to invest in Community Development Financial Institutions (CDFIs) that support economic development in underserved communities. Investors earn a competitive return while supporting positive social impact. * M-KOPA Solar: M-KOPA Solar t provides solar energy solutions to off-grid households in Africa. Through a pay-as-you-go model, customers make small daily payments using mobile money to access clean and affordable solar energy. This approach democratizes access to renewable energy while offering a unique financial model that aligns with customers' income streams. * Ricoh: A Japanese company, Ricoh, has been proactive in incorporating sustainable finance practices. It has issued green bonds to finance environmental projects, such as energy-efficient technologies and renewable energy initiatives. This aligns with their commitment to environmental responsibility and showcases an innovative approach to financing sustainability efforts.