Change the algorithm — Future Prosperity First

In sport we tend to accept that context is everything, as without it we have players running around a field with no purpose. League tables and cup competitions matter, context matters. It can be argued that context can detract from the fun of being involved in sport. However, do we ever just play without adding some context, even in our heads? As we kick the ball, we often imagine we are that hero scoring the winner for the team.

Context matters. It shapes us and we shape it. A simple thought experiment, where we imagine ourselves to be born in a different country reinforces this.  A different location realises a different you, your beliefs would not be the same, your wants and desires would be different. In short, change your context and you would not be the you, you are now. Context shapes us, it informs our acts, our desires, our wants, how we live.

It is the same with business. Without context there is no situation in which to solve the problem, thus any one product or service is without use-value. Use-value only matters in a relevant context. To perfect the use-value of any one product or service a business, ideally, would try to perfect the product or service and the context in which it operates – an inside out and an outside in perspective, a double-handedness, a duality, a both not either-or. However, for so much of history, we have theorised and reinforced that businesses’ master operating algorithm is making a profit, selling things for more than they cost to produce, and that context only matters in how it adds or detracts from this master operating algorithm. This situation is reinforced through us keeping score with financial accounts. Yet financial accounts no more tell the full story of a business than your bank account tells the full story of you. You are not reducible to your bank account, and neither are the actions of businesses.

To get around this short-sighted manner of keeping score, an answer may be to pursue more advanced forms of accounting that keep score of more things. These strategies exist as evidenced by initiatives such as social and environmental accounting, integrated reporting and evermore Environmental, Social and Governance (ESG) measures. However, while an expanding range of measures is part of the answer, that argument is not the purpose of this piece. The argument of this piece is that to create real change, the master algorithm of the organisation needs to change, it needs to account for context too. The algorithm should not just be about making profit, it should be about context and then profit.

But that's not what's happening. Where are we currently?

We live in an era in which many of us spend much of our time giving our attention to software through a screen. We also know and accept that our attention is gamed by the providers. The software companies use algorithms to grab our attention and hold it - ‘if you like this, you might like this’ or ‘people who liked this, also liked this’. Generally, we are remarkably complicit in our acceptance of these algorithms. We know they are designed to catch and keep our attention in order that our eyeballs register advertising. Algorithms ensure we see more adverts, adverts that shape our wants and desires. The more adverts we see, the more the software provider makes money and the more company driven wants and desires are reinforced in us. If we listen hard, we can almost hear the cry in the boardroom - ‘keep their attention and we keep the money flowing’.

And so, it goes on, a loop, more adverts, more profit for the companies, more money to spend on innovating and creating better attention-grabbing algorithms, and so more attention, more adverts, more profit. The loopy circularity is clear, we shape the master algorithm of our businesses (make profit) and thereafter to achieve the desired outcome of that algorithm, the business acts to shape us.

But the profit-making algorithm also shapes a business. It shapes its psychology, structure, actions and strategic direction, irrespective of context. Thus, a business is a profit hunter, the algorithm dictates business evolution and ensures all is aligned in service of that algorithm. Furthermore, if that alignment is hindered or not optimal, the business pursues strategies of change, either internally in the organisation or externally to it, changes to the context. Products are redesigned, individuals are made redundant, political parties are donated to, laws are changed, and marginal voices ignored. This situation must be the case, because the core algorithm, making profit, means that its logic must totalise everything, the inside, the outside, the complete context in which we live.

Do we want to live in a context that is so heavily shaped by such a limited algorithm? Is this the best we can do?

Surely we can do a whole lot better. Not because the profit motive is wrong per se, but rather, it needs to be put in service of how we want to live, rather than it being completely free to reign. We need to change the algorithm for business and start from context first and profit second - the outside in, not the inside out. We should start with the world we want to live in and from there ask our companies to serve that, to align to that. Asking organisations to innovate, make returns and operate while serving the context, the desired state of affairs.

We have a way to reach this desired state of affairs. We have agreed at the level of the United Nations on sustainable development as a way forward, and within it seventeen sustainable development goals.  These goals talk about education, inequality, biodiversity, healthy ecosystems, climate change, health, well-being, and more. They are an agreement on what we as a species would like as the context in which to live. They are more akin to guidelines than a detailed blueprint and so they still leave room for our politics, our loves, our hates, our innovation and our desire for wealth.

Critically, a context centred on the core notion of sustainable development is one that hinges on enabling future generations’ prosperity.  Consequently, we should put a sustainable context first and profit-making second, this should be the operating algorithm for business.  Profit making should serve context, it should serve the enabling of future generations' prosperity.   This is a change in logic compared to where we are now. It is a change that offers businesses and business academics a whole new framework for theory development.

Such a flip in thinking has flow on impacts, not least because we don’t like change. Change is resisted. For example, inordinate amounts of money have been spent resisting the science of climate change, resisting the link between smoking and cancer and further back in time resisting the emancipation of slaves, equal pay for women, the vote for women, pensions and healthcare in companies. Resistance to change is to be expected, yet it's always best to ask who wins and who loses with change, and what history shows us is that the sky does not fall in when we make space for the silenced and the marginalised. At this time, the marginalised are our future generations, we should bring them into the tent. Now absolutely, a change in the operating algorithm for companies will create challenges, exploding heads and just maybe a billionaire might have a few billion less. However, the sky will not fall in, and billionaires can still be billionaires. We may also give them a medal and a statue that outlines how they won capitalism, rather than have them suck up evermore wealth.

So, it's time to change our logic from old normal thinking to future normal thinking. Business theorists and most importantly business practitioners all need to change. Start with a new algorithm, a more appropriate and up to date algorithm, one that puts future generational prosperity first, and making profits second. And you might find that it's not a case of either-or, but both. To make this change there is much to do. We need to (1) change the purpose of our businesses, (2) change the metrics by which we keep score and (3) we need to ensure the governance of organisations can account for future generations' prosperity.

Is your business perpetuating a world you and your progeny want to live in? For most businesses, the answer is likely to be no. Be Future Normal, make the answer yes, making it yes is change, change by another name is innovation and innovation is key to long term success.

Nick's purpose is to help business become Future Normal (www.futurenormal.net) - enabling them to act meaningfully in our surroundings and purposefully to benefit society. A Future Normal business is one where the CEO and their teams are enabled to meet the challenges of the coming decades and that which is top of mind; optimizing enterprise value in the context of net-zero,DEI and sustainability. To achieve this, he researches with and advises business domestically and internationally and teaches into Griffith University's world-leading MBA.

Prior to academia, he worked for Ernst and Young and Virgin Media in a variety of roles from strategy consultant through to Head of Business, Head of Strategy and Head of Marketing.