There is nothing like being independent to make you realize how interdependent we actually all are. I love feeling that I am in control and under my own power. I am walking to the market, propelling myself. Of course, I am walking on a sidewalk that my town built and maintains, created from bricks and gravel and sand for which an entire supply chain had to be built. This feeling of both existing with others while driving towards my own destination is only reinforced at work.
As a consultant, I go into businesses to help them with their sustainability goals. As I work primarily with small organizations, I am operating with the understanding that there are going to be limits on time, money, and energy. My clients have limited resources, so my proposals need to be worth the expense. I thus rely on supportive systems to enable my clients to improve their impact. For example, a state environmental agency offering free energy audits of manufacturing facilities allows me to recommend such activity without imposing significant cost burdens on the company. When a government mandates and covers paid family leave, the burden to manage that is shared amongst the whole society, not leaving it to the small businesses to try and offer it as a benefit. I guide clients to the resources that exist and help them use said resources to become a better business.
On a more basic level, businesses thrive with predictability, stability, transparency, and accountability in society. We need to know that money will have value, so that we can receive and give investment. We need to know that when we purchase a product or service that the contract will be fulfilled. We need to know that our employees can get to and from work safely. We need to know that there will be a workforce ten or twenty years down the line to replace our workers as they retire. None of these things can be guaranteed by individual businesses, especially those in my target market.
This is not to say that risk will or should be eliminated. Individual businesses can jump ahead and societies can be transformed with disruption. Part of the promise of competition is that businesses are kept on their toes and made to continuously innovate and improve their offerings so that they stay relevant to their customers. Some industries end as their base resources or markets change. Whale hunting is no longer going to keep an entire New England town swimming in gold, and that is fine. Though pain will certainly occur for those involved in declining industries and arguments can be made to support workers and regions transitioning from periods of prosperity, we cannot as a society spend our precious resources keeping work in circulation that is not needed. (I will pause here to say that disruption for the sake of disruption, forced obsolescence, etc. are not the kind of transformation I am referring to here. I am thinking more in terms of systemic value. As more people receive tuberculosis vaccines, the sanitariums close down. Yes, that is unfortunate for those workers, but the lives saved with the vaccine represent a net positive.)
Uncertainty is an inherent part of the world and can represent opportunity as well as threat. Each business has a base level of uncertainty it is willing to take on in its projects. This is how the domain of risk management functions, allowing for risk-based decision making to guide resource allocation and strategy. However, when there is a high level of macroeconomic uncertainty, companies will hesitate to invest in the business for the long-term. For business to run, there needs to be an immense amount of trust.
In small societies and industries, this can work on a person-to-person basis. I trust John because we went to high school together and John trusts Amanda because they are cousins, so I will hire Amanda. To accomplish large scale industry, however, and to operate any economy beyond the social bonds of the average person, that trust needs to exist in society itself, not just the individuals in the group. In other words, you have to trust the system – both the individual components and their relationship to each other. This doesn’t mean that you need to like the system or trust that everyone in it is aligned with you, but there does need to be a base level belief that the society you are setting your business up for will continue for long enough in the future for the sacrifice today to be worth it.
We need an economy that is transparent and accountable, not one that relies on and is constrained by person-to-person relationships. Because businesses are so reliant on this, they are incentivized to support the development of a society where that trust can exist at scale. Things like mandatory disclosures, responsible tax payment, transparent and limited political donations, ethics standards, anti-bribery and corruption activities, accreditation, etc. are all mechanisms by which we account for the lack of person-to-person trust and facilitate societal level trust to smooth the way of business. Though the day to day of most businesses is not going to be concerned with this level of thought, business leaders should be taking this birds-eye view to understand and bolster the social context in which they operate.