As competition becomes ever more global, complex and intense, businesses are increasingly unable to differentiate themselves on traditional, material competitive levers like increased scale and reduced cost.
By Michelle Holliday, CEO of The Soularium LLC

By Michelle Holliday, CEO of The Soularium LLC

I have good news and bad news.

The bad news is that we are fooling ourselves if we think that the business world is going to respond to a moral or ethical argument for more socially and environmentally responsible behavior. The business world, by definition, responds only to the voice of profit.

The good news is that the voice of profit is beginning to speak our language. This change of tune is driven by the changing nature of competition, the increasing role and relevance of the human spirit in business, and a budding transformation of our economic system.

As competition becomes ever more global, complex and intense, businesses are increasingly unable to differentiate themselves on traditional, material competitive levers like increased scale and reduced cost. Instead, they are turning to three key intangible levers:

- Connecting with customers to create profitable value and loyalty;
- Engaging people to implement strategy effectively; and
- Harnessing relationships, learning and creativity to drive evolving value.

These new competitive levers are not physical resources, but organizational competencies. They reflect an organization's intrinsic ability to engage customers and employees on a continually regenerative basis. And these competencies are fundamentally products of the human spirit. The success of business now relies on its capability to cultivate relationship, passion and inspiration - the intangible, mysterious, creative forces that make us fully human.

At the same time, environmental and social crisis is escalating at an alarming rate -- powered by the current economic system's values and interests. Because the business community is the direct and indirect engine behind these self-destructive patterns, only that community has the power to reverse them. But business can do these things only by engaging the human spirit - by inviting stakeholders to pursue noble aspirations, by cultivating our most creative solutions, and by enabling rich collaboration in the creation of a sustainable future.

The goals of business (to ensure sustainable competitiveness) and the goals of the human community (to ensure sustainability of human life) are, thus, on the verge of coalescing for the first time since the Industrial Revolution. Our ecology, our social structures, and our economic systems together rely on industry's ability to engage the human spirit as the catalyst for evolution to a more integrated socio-economic system.

Already, there have been a small number of Innovators - pioneers offering compelling examples of an alternative value system. Southwest Airlines, The Container Store and Home Depot focus on building a culture of engagement - and experience dramatically superior economic results. A study of two hundred blue-chip companies in twenty-two industries shows that those companies with employee engagement as a core strategy dramatically outperform others in key financial indicators. Companies like 3M and Corning apply creativity as a core strategy and easily surpass those who cling to winning products of the past.

But as with any innovation, the majority hesitates, waiting to see if this thing will really stick. Tentative tactics have been much celebrated, like casual dress policies and "lunch with the boss" programs, but they lack the full force of the philosophy behind them, making the cynical Dilbert cartoon series the de facto documentary of the modern work experience . For most, the focus on and fascination with new tools and technologies has created only an updated version of the Industrial Era, with information- and knowledge-based production components in the familiar linear manufacturing model of our economy.

Why the hesitation, when the evidence seems so compelling? It comes down to values. The "food pyramid" of the Industrial Era (whose values still prevail) views human intangibles as candy and confection - extras and options (probably detrimental) to be sampled judiciously once the fiber of material process and productivity has been consumed to satisfaction. Relationship, emotion, and the mysteries of our souls do not currently feature in the corporate Recommended Daily Allowance.

But there are clear signs not only that this narrow diet has its limitations, but also that our understanding of organizational sustenance seems to be flawed. Signs like the costly and inefficient cycle of Talent Wars and layoffs. Like low levels of employee motivation - and resulting low productivity. And like the precipitous fall from grace of many of our corporate icons. Amid the current flurry of high-profile accounting scandals, there has been a rising call for greater integrity among business leaders. In truth, it is our system that lacks integrity, in the sense that it lacks wholeness and unity. It lacks the integral role and value of the human spirit.

In reaction, the system is gradually and naturally evolving to integrate the power and possibilities of the unseen and immeasurable. And the outcome will be a fundamental shift in the way people, systems, organizations and economies operate. The emergent era (whose very defining characteristic is the intrinsic role of the human spirit) carries with it starkly contrasting values, attitudes, definitions of success, relationships, and even vocabulary. Just as a traveler must understand and adapt to the local culture to make her way in a foreign land, business success is now contingent on understanding and adapting to an emerging and unfamiliar value system.

Though the incentives and early examples are increasingly compelling and momentum is beginning to build, the obstacles to evolution remain considerable.

- First, it is almost impossible to perceive one's own cultural system, its inherent weaknesses, and suitable alternatives from within it. As a result, there is not yet broad recognition among business leaders of the full scope of change taking place.

- Second, behavior change of this scope and scale is overwhelming and laden with risk and uncertainty. Rather than embarking on a total overhaul of the organization, the leader's strong temptation is to carry on with familiar patterns, despite their limitations.

- Third, even when business leaders recognize the motives to change and brace themselves for a challenging transition, the path ahead is unclear. A comprehensive framework has not yet been offered for engaging the human spirit.

When all of these challenges are considered, the villain is not the greedy executive at companies like WorldCom and Enron. They were victims of an over-extended value system. The enemy becomes the system itself and the obstacles that prevent us from reforming it.

What can we do, then, to break down these obstacles and to let loose a needed evolution?

Collectively, we can speak with one voice - the voice of profit. This is the only language of relevance in the business world that we hope to transform.

Beyond finger-wagging messages of social and environmental responsibility (as valid as they are), we can focus on the ample and compelling evidence that the current model is no longer serving the interests of its own commercial institutions - that it has reached the end of its usefulness as an all-encompassing system. We can illustrate that (1) prevailing assumptions about the way things work are assumptions, not firm facts, (2) business dynamics have shifted and current assumptions are no longer optimal, and (3) there are new and more viable assumptions emerging.

And beyond somewhat vague prescriptions about acting with more integrity and less self-interest, we can work together to paint a picture of a system in which these two things are not mutually exclusive. Because the truth is: we need not to abandon capitalism but to evolve it, to integrate the human spirit into a soulless system. And, we need to do this because it's good for the bottom-line, as well as for society and the environment.

Finally, as we join forces to mend and amend a broken system, we can engage in a collaborative, creative search for the path that leads to the soul of business - the place where the highest passions of employees mingle with the noblest aspirations of customers and community. This search should be our guiding cause.

The new era heralds a time of great innovation, prosperity and human fulfilment, if only we will work together to continue down the path that lies ahead. As John F. Kennedy said in his inaugural speech: "The energy, the faith, the devotion which we bring to this endeavor will light our country and all who serve it -- and the glow from that fire can truly light the world." The best - and most important - part of the journey lies ahead. Bon voyage et bon courage!

Michelle Holliday is CEO of The Soularium, a business laboratory providing research, thought-leadership and guidance in engaging the soul of the organization: the purpose and passion of its people.

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