Moving Beyond the TRIPLE BOTTOM LINE

“Become the change you want to see in the world.” 
- Mahatma Gandhi

“Problems cannot be solved at the same level of understanding that created them.” 
– Albert Einstein

Bringing change and solving problems in the world of business and corporate practices is something sustainability leaders have been pursuing for decades.  One of them, John Elkington, the founder of the consultancy SustainAbility, formulated a way of framing that change way back in 1994.  He argued that companies should be thought of in terms of three different bottom lines: in addition to the traditional profit and loss, he saw the need to account for two other business impacts - the social and the environmental.

Triple Bottom Line looks to turn attention to the idea that managing well is more than just about financial performance. As both metaphor and moniker, Triple Bottom Line has been very successful: a veritable army of consultants, writers and advocates, 16 million search results on Google, a convenient shorthand ( 3BL ), and a straightforward message – profits yes, but people and the planet too.  Simple, easy and communicable. 

But is Triple Bottom Line the best frame for thinking about the problems of the 21st century?  How might it be adjusted to get influential stakeholders to actually see their stake in a sustainable future? How might it change so that the corporate mindset sees sustainability as something beyond a reallocation of resources away from financial performance?  What if a new framework implied an interdependence between people, planet and profit, where the bottom-line could only be optimized when considering the relationships among all of them?  What if sustainability were perceived not only as the work of the decent and noble, but also as the work of the most visionary and innovative business minds? What if instead of a triple bottom line we thought of sustainability in terms of profit beyond measure?

The Bottom Line and the Industrial Age

The concept of a bottom-line comes from seeing business as a machine whose multiple inputs result in a single output: profit.  This is a legacy of the industrial age, when hand craftsmanship was supplanted by machine-made replaceable parts.  This led to mass production, reduced costs, wealth creation, and a level of prosperity that lifted much of humanity from subsistence living.  The roots of this industrialization can be traced back to Sir Isaac Newton. 

Knowledge comes from theory, and the right theory can change the world.  Isaac Newton certainly did with his theories of gravity and motion.  Newton took something as simple as the movement of an object and broke it up into parts – reducing it to displacement and time.  Newton’s reductionism - breaking things into parts, reducing them to their components, and observing them – created the science of physics and, brought about the Industrial Revolution and the modern world.  Just as significantly, reductionism shaped the economic theory used by those that owned the factories and ran the machines, leading directly to the idea of a business operation as a machine whose single output – or bottom line – was profit.

From Reductionism to Systems Thinking

A century and a half after Newton, along came Charles Darwin.  He had a theory too, and it also had a huge impact on the world.  The scientist and author Richard Dawkins has called Darwin’s Theory of Evolution “the greatest idea of all time.”  If Newton’s thinking was foundational to the industrialized, modern world, Darwin’s thinking brought a new understanding of the workings of the natural world.  Newton was one of the greatest reductionist thinkers, and Darwin was one of the greatest systems thinkers.  His theory led to the advancement of sciences from botany to zoology.  Darwin was also able to understand a deeper truth, that the natural world was one system organized around a single aim – life – and human beings were very much a part of that evolving process.

Darwin’s legacy is seeing the natural world as a system.  Reducing things to their components and studying them in isolation in Newtonian fashion does not help in understanding the natural world.  In the natural sciences, new knowledge comes from recognizing interdependence, convergence and emergent properties of the system as a whole.  To use reductionism to study the natural world would be to fail to understand its very nature.

Two World’s Collide

The biggest challenges of the 21st century come from the collision of Newton’s reductionist world with Darwin’s systems world.  Will the solutions to these challenges come from breaking problems apart in reductionist fashion, or from seeing solutions as the creation and improvement of connections and alignments between systems?  Let’s look at geo-engineering, for example.  Geo-engineering looks at the problem of a warming planet and addresses that one piece, how to cool down a planet that’s getting hotter.  One particular reductionist solution is to pump sulfate aerosols up into the atmosphere to cool the planet really quickly.  As one geo-engineering advocate has said “If you want a 2º C global reduction in temperature – we can get that in two weeks with geo-engineering.”  Little consideration is given to the system from which human-induced global warming is an emergent property, and little consideration is given to the impact on that system that reductionist solutions would have.  Alternatively, a Darwinian systems solution to global warming would look much different: less Geo-engineering, more Biomimicry.  A systems solution would look at how the natural world energizes itself - perhaps spurring human ingenuity to design a solar panel that works as efficiently as a leaf. 

Albert Einstein once said “Problems cannot be solved at the same level of understanding that created them.”  Triple Bottom Line reflects an understanding of separation and reductionism, with the allocation of desired outcomes into separate silos.  But rather than reducing and separating, we need an understanding that expands and connects, appreciating economy, ecology and humanity as interdependent parts of an evolving system.  With sustainability as the organizing principle, the desired outcomes of financial reward, a robust natural environment, and healthy people, are actually emergent properties of the system.  How can this kind of thinking be made accessible and relevant to business now?

A Foot in Both Camps

One of the great business minds of the 20th century was W. Edwards Deming.  Famous for improving quality in Japan, he wanted people to understand that his work went deeper by emphasizing “I introduced them [the Japanese] to the principles of a system.”  Those systems principles helped take Japan from economic devastation to become one of the most powerful forces in the global economy.  To this day, the highest quality prize awarded annually in Japan is The Deming Prize.

Deming’s ideas anchored him in both Newtonian and Darwinian camps: an expert on statistical methodology, a consultant to the world’s major manufacturers, and at his core a systems thinker.  He said that every business should be thought of as a system made up of smaller subsystems, and part of larger super-systems like economies.  Every system must have an aim.  If it doesn’t have an aim, it is not a system.  If the aim is unclear, the system can’t be optimized.  Every subsystem must align with the aim and workings of the other subsystems and the overall system.  Lack of alignment to aim inevitably leads to sub-optimization, decay, and the ultimate destruction of the system.

The global economy and the biosphere are systems.  But they are not separate.  Indeed one is a subsystem within the other.  Since the Industrial Revolution the human economy has – more or less – been treating the earth as a subsystem, to be shaped and used by the economy for the aims of the economy.  Today requires a new way of thinking – it’s called reality.  The global economy is one of the most powerful subsystems of the earth, and unless it is aligned with the workings of the earth, it will continue to lead to sub-optimization at best, and decay and destruction of the system at worst.

If, as Gandhi encouraged, we need to become the change we want to see in the world, and if, as Einstein suggested, solutions require thinking at a deeper level, then building a sustainable future means thinking in a new way.  We need to become system thinkers, where building the future begins with an understanding of the interdependence, alignment and convergence of people, planet, and profits rather than a reduction of these to bottom-line outcomes.  [Next Post: Profit Beyond Measure.] 

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