Part 5 The Human Centric Constraints

The constraints that define a human-centric business.

A human-centric business:

  1. Makes Money.
  2. Puts humans first.
  3. Has strong vision, values, and mission and knows it’s why
  4. Inspires rather than manipulates.
  5. Operates from the perspective of abundance.
  6. Respects the environment.
  7. Is Collaborative

Makes money.

I start with money for clarity and to reassure you that a crucial part of a human-centric business is making money. Investors and business owners should earn a good living. You should buy a boat if that is what you are into.

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 company 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. Providing a return to investors isn’t wrong. It is incomplete and, in an unconstrained state, can be detrimental.

If you own, 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. Money is the allocation of scarce resources; if you are solving a valid problem, you should receive enough scarce resources to live.

I suspect that over time, human-centric companies will do better financially, be better able to weather crises, and be more competitive.

Puts humans first and makes the journey worthwhile

This is, after all, in the name. Yes, the business should make money, but it should put humans first, not money. 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, to make 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 the fear, anxiety, and long hours hoping they can make the pieces fit together long enough to get rich.

At my business school, the Anderson School of Business at UCLA, the Entrepreneurs Club was organized under the motto “All the risk, all the reward.” When I fully endorsed the concept, I was strong/intelligent/dedicated (pick your adjective) enough to accept the risk and get the reward. I did hard. I was dedicated.

I didn’t understand how many business ventures fail and how necessary a team is. There is only so much one human can do, so if you take all the rewards, what is left for the team that makes success possible?

But still, entrepreneurs in the US are expected to take all the risks. If you leave a job to start a venture, you lose access to healthcare, pension support, and, in many cases, even the opportunity to return to a job.

That is no way to run a business and no way to live. Piling risk on the entrepreneur to feed the investor beast only makes the journey harder, less rewarding, and ultimately less attractive.

Rather than investor first, we suggest this Order of Priorities within the human first constraint:

  • Self – you must care for yourself before you can think of anyone else.
  • Family – your family must be well, or you will not have the mental space to work.
  • Employees – Content and 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 ensure your organization is strong and healthy.
  • Investors – often in business, when we say customers first, we mean investors first. However, investors will 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.

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 attract customers/clients more effectively.

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 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 gives meaning to what we do and makes us more attractive to others.

Another part of knowing your mission and why is recognizing a business’s mortality (which I discuss more below).

Buggy Whip manufacturers faced this problem around the turn of the century. They helped drivers of horse-drawn carriages control the horses. Then everyone bought cars, and nobody cared about buggy whips anymore. Their why and the problem they solved disappeared, so the companies had to adjust or die.

Inspires rather than manipulates

If you have the values-vision-mission glue, you will find inspiring others, employees, partners, vendors, and clients/customers to join you is much easier.

Without the glue, you must resort to manipulation and trick them into joining and participating. You can see this manipulation all around you: Cable companies quietly add fees and raise prices, and SAAS companies lock you into subscriptions and make canceling hard.

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.

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 play an infinite game.

In an infinite game, I don’t need you to lose for me to win. The competition allows us to hone our skills and define our niches better – we don’t defeat the competition. We perform better for our niche, and we reinvent. Businesses come and go – competition will cause some to leave the market, which 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.

The infinite game is inherent in our economic system, where we grow the economy through spending. A dollar spent becomes income that, in turn, is paid, becoming income, and on and on it goes. There is a name for this: the money multiplier. 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.

When wealth accrues only to very few people, they don’t spend it. The multiplier effect is less, and the impact creates a drain on the economy.

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 intelligent ways to create that respect environmental constraints. This doesn’t mean we don’t travel and wear hemp clothing that we never wash. But it does mean fundamental changes to how we do things. We can travel less or 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 our choices 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 progress toward sustainability.

To be clear, I am not suggesting a light touch here: if we do not change our environmental approach, we will face extinction. But there is also no reason we can’t solve the problem and live well: the sun delivers 173,000 terawatts of energy to the planet continuously, that is 10,000 times the energy we use. There’s plenty of energy; we have to operate differently.

Is collaborative

I wavered on the collaborative constraint for a while because I 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 are a part of a human-centric business.

However, I 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; businesses should prioritize doing so.

A human-centric business has to contend with its mortality

One aspect of solving problems for humans is that humans may not always have the problem you solve.

In my coal example, we simply don’t need or won’t need long-term coal for energy. That is an old technology whose time is coming to an end. In a human-centric world, that is okay: we can reallocate those resources to solve other human problems. The people running that company were very smart, so why not put them to work running a company that solves a current problem?

Bailing out GM in 2008 was a bad idea. The company was failing because management made bad decisions; they were no longer solving problems for humans. This doesn’t mean that we don’t support the people involved.

When Congress considered bailing out GM in 2008, they didn’t do so because the bailout bill did not include enough pay cuts. Their message: we would support bailing out the company as long as the employees are worse off.

Bush eventually got a bailout package to GM that did not punish employees, but the logic of punishing the people in favor of the business is backward.

(I’ll add here, given the situation, Bush probably made a good decision. I don’t want to raise political ire by saying he did something wrong; the concept or philosophy guided the wrong thinking.)

The human-centric scenario would have gone something like this: let GM fail, but take care of the people. Retrain them or support them in some way. Liquidate GM’s assets so that someone else, someone capable of solving a better problem, could take advantage of the discount to get their business running.

This process is precisely how Tesla acquired their first factory in Fremont, California. Tesla’s first factory was the failed GM-Toyota NUMMI production facility. Before Tesla took over, California offered incentives to Toyota to take it over and was focused on keeping the factory productive as it had been. But the incentives were not enough to keep a non-productive plant alive.

So GM-Toyota sold the plant. Tesla bought it and a bunch of equipment at bargain prices and started producing their cars in the old factory.

Now, Tesla is a more valuable company than GM, with excellent prospects, paying people well while solving an important problem.

Eventually, Tesla will die as well. That is okay. That is how the world works. As business leaders, we must be aware of our products’ mortality and constantly strive to solve better problems. Societally, we must recognize that not all businesses will solve problems effectively forever and must find ways to support human beings through change.

How to be human-centric

The challenge is that most businesses operate according to the Sisyphean principle of working harder. Keep pushing a stone up a hill.

One company I worked with had a motto: we do hard. They made their work hard, and they were all miserable. They came to work every day and hated it, but they did hard things. That was what they did.

Not all companies have a motto, but many operate similarly.

Rather than push a rock up a hill, a human-centric business creates a machine to do the work efficiently. Whereas Sisyphus does the job 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.

Similar Posts