Despite Unprecedented Advantages, Businesses Still Struggle With Growth. Here's Why.

These days it looks as if businesses have nearly limitless opportunities for growth. By all appearances they have unprecedented advantages. Barriers to entry have never been lower. Access to critical knowledge has never been more available. And collaborative opportunities have never been more accessible. Yet despite these advantages, businesses still fight to survive. And many won’t make it. The Data Look Grim Washington University has reported that 40% of current Fortune 500 companies will be gone by 2024. If you're thinking that’s because all the hot new start-ups will be taking over, think again. The Wall Street Journal has reported that 75% of all venture-backed start-ups will fail. So it also makes sense that most unfunded, college-buddies-starting-in-a-garage enterprises stand even less chance. So, what gives? The Perilous Symptoms Data may give us one side of the story. The numbers indicate that economic volatility, accelerating globalization, and rapidly-changing demographics have created conditions that strongly oppose long-term growth. While that may be true, those factors are merely symptoms of a much deeper, more basic defect. One that fails to take into account key aspects of human nature and how people relate to one another. The result is an underlying disconnect that      ●   impedes resilience      ●   stifles creativity      ●   discourages collaboration, and      ●   smothers growth. And without effective interventions, over time these problems will only get worse. Grabbing The Biggest Slice Of The Pie The problem rests with the underlying logic of traditional business thinking. This logic, drawn from Adam Smith's economic theory, bases all human interaction on economic self-interest. The logic of economic self-interest is simple: Everyone does their part in order to get the biggest slice of the pie they can. This thinking is a holdover from our industrial past and goes back to the days when most people made their living through manufacturing or some form of production. Economic self-interest assumes that the pie–or what economists might call a “value chain”–is only so big. As a result, the bigger your slice, the smaller mine. In this system everyone is in competition and, thus, ultimately a threat. That includes bosses, subordinates, colleagues, customers, you name it. That is because the more of the value chain they control, the less there is for me. Pssst: The Industrial Era Is Over! In the industrial era, such thinking made sense.  Raw materials, worker output, and market opportunity were all limited. So survival depended on having the most control of the value chain, while making sure others had the least. But we no longer live in a manufacturing economy. In the hyperconnected world of today, economic self-interest is no longer an advantage. In fact, today this logic is a perilous liability. That's because in physical materials–iron, lumber, cotton, etc.–are no longer the primary source of value creation. In the 21st century, the key source of value creation is knowledge and networks. And unlike physical material, knowledge and networks are infinite and easily accessible to almost anyone. This shift from raw material to knowledge and networks has created a profound transformation in the nature of business. Business is no longer about connecting supply with demand. It is about connecting people with a more meaningful experience of themselves and the world. As a result, for most organizations the “pie” (i.e., their ability to create value) has become infinite. This also means that those once seen as “competitors” (i.e., customers and employees) are now its greatest resource. But Business Still Acts The Same Old Way Yet many businesses, both old and new, seem unaware of this tectonic shift. They assume the pie is still limited and they are still holding all the cards. Consequently businesses continue to act in ways that alienate customers and employees, thus squandering the knowledge and networks that would otherwise ensure their sustainability and growth. For companies, the life-or-death challenge is to hastily start moving away from the strict reliance on economic self-interest and begin to adopt new thinking based on what I call mission-centered benevolence. The Growth Potential of Mission-Centered Benevolence The logic mission-centered benevolence presumes that the more a company empowers others, the more others will empower the company and its mission. The result is a virtuous cycle of benevolence that ultimately promotes growth by increasing commitment, resilience, and innovation. Granted, transforming a long history of policy and practice is not an overnight matter. It involves adopting new ways of thinking and strategizing. But all such change begins with awareness. Integrating mission-driven benevolence means learning how to recognize opportunities, craft strategy, and scale processes that create empowering relationships with all key stakeholders—employees, customers, suppliers, you name it. But business has made similar changes before. Like the shift from mainframe computers to PCs to mobile devices, shifting to mission-centered benevolence will create new resources and opportunities for growth and we cannot presently envision.

These days it looks as if businesses have nearly limitless opportunities for growth. By all appearances they have unprecedented advantages.

Barriers to entry have never been lower. Access to critical knowledge has never been more available. And collaborative opportunities have never been more accessible.

Yet despite these advantages, businesses still fight to survive. And many won’t make it.

The Data Look Grim

Washington University has reported that 40% of current Fortune 500 companies will be gone by 2024.

If you're thinking that’s because all the hot new start-ups will be taking over, think again.

The Wall Street Journal has reported that 75% of all venture-backed start-ups will fail. So it also makes sense that most unfunded, college-buddies-starting-in-a-garage enterprises stand even less chance.

So, what gives?

The Perilous Symptoms

Data may give us one side of the story. The numbers indicate that economic volatility, accelerating globalization, and rapidly-changing demographics have created conditions that strongly oppose long-term growth.

While that may be true, those factors are merely symptoms of a much deeper, more basic defect. One that fails to take into account key aspects of human nature and how people relate to one another.

The result is an underlying disconnect that

     ●   impedes resilience

     ●   stifles creativity

     ●   discourages collaboration, and

     ●   smothers growth.

And without effective interventions, over time these problems will only get worse.

Grabbing The Biggest Slice Of The Pie

The problem rests with the underlying logic of traditional business thinking. This logic, drawn from Adam Smith's economic theory, bases all human interaction on economic self-interest.

The logic of economic self-interest is simple: Everyone does their part in order to get the biggest slice of the pie they can.

This thinking is a holdover from our industrial past and goes back to the days when most people made their living through manufacturing or some form of production.

Economic self-interest assumes that the pie–or what economists might call a “value chain”–is only so big. As a result, the bigger your slice, the smaller mine.

In this system everyone is in competition and, thus, ultimately a threat. That includes bosses, subordinates, colleagues, customers, you name it.

That is because the more of the value chain they control, the less there is for me.

Pssst: The Industrial Era Is Over!

In the industrial era, such thinking made sense.  Raw materials, worker output, and market opportunity were all limited. So survival depended on having the most control of the value chain, while making sure others had the least.

But we no longer live in a manufacturing economy. In the hyperconnected world of today, economic self-interest is no longer an advantage. In fact, today this logic is a perilous liability.

That's because in physical materials–iron, lumber, cotton, etc.–are no longer the primary source of value creation.

In the 21st century, the key source of value creation is knowledge and networks. And unlike physical material, knowledge and networks are infinite and easily accessible to almost anyone.

This shift from raw material to knowledge and networks has created a profound transformation in the nature of business. Business is no longer about connecting supply with demand. It is about connecting people with a more meaningful experience of themselves and the world.

As a result, for most organizations the “pie” (i.e., their ability to create value) has become infinite. This also means that those once seen as “competitors” (i.e., customers and employees) are now its greatest resource.

But Business Still Acts The Same Old Way

Yet many businesses, both old and new, seem unaware of this tectonic shift. They assume the pie is still limited and they are still holding all the cards.

Consequently businesses continue to act in ways that alienate customers and employees, thus squandering the knowledge and networks that would otherwise ensure their sustainability and growth.

For companies, the life-or-death challenge is to hastily start moving away from the strict reliance on economic self-interest and begin to adopt new thinking based on what I call mission-centered benevolence.

The Growth Potential of Mission-Centered Benevolence

The logic mission-centered benevolence presumes that the more a company empowers others, the more others will empower the company and its mission. The result is a virtuous cycle of benevolence that ultimately promotes growth by increasing commitment, resilience, and innovation.

Granted, transforming a long history of policy and practice is not an overnight matter. It involves adopting new ways of thinking and strategizing. But all such change begins with awareness.

Integrating mission-driven benevolence means learning how to recognize opportunities, craft strategy, and scale processes that create empowering relationships with all key stakeholders—employees, customers, suppliers, you name it.

But business has made similar changes before. Like the shift from mainframe computers to PCs to mobile devices, shifting to mission-centered benevolence will create new resources and opportunities for growth and we cannot presently envision.

David HolzmerComment