I have read every posting on Umair Haque’s blog for about six months now. That is rare for me. Even though I am a loyal person, this is not about loyalty but about deep meaning, innovation and practicality in the business sphere.  Those three qualities are rarely found in the same mind, and it’s especially rare to find all three in the minds of business bloggers, or business leaders for that matter.  Haque is a person who “rails” against the insanity of the current business approaches for most of the same reasons I do. He has a worldview with which I resonate, and my readers likely will as well. The basic concerns we share are:

  • Current business axioms do not make the best businesses in the most practical terms
  • They do not foster the best in human nature, which would bring the business more success and meaning
  • They do not build a foundation for a healthy working capitalist market
  • They do not create health and vitality for all they touch, including Earth, community, suppliers, and governing processes

Haque has written a book, on top of his daily blog, to address these shortfalls. It is called The New Capitalist Manifesto: Building a Disruptively Better Business. It is based on the idea of moving from a competitive to a constructive set of assumptions and methods. With examples that are undeniable distruptive, he points to why moving away from seeking cost advantages, brand propositions, strategic dominance of a marketplace, captivity of customer, suppliers and regulators, and attempts at differentiation can and most often do lead to a less powerful business and certainly a less powerful working of capitalism. The competitive model, as Haque sees it, leads to depletion of resources, one-sided conversations with customers about the value being offered, and a reduction in real gains by blocking innovation; builds barriers to the entry of fresh approaches; and results in offerings with only shallow differences that do not have deep meaning, or what he calls “thick value.” (Love that term.)

Haque offers instead what he calls a source of “constructive advantage” built on “loss advantage, responsiveness, resilience, creativity and differences that matter.” These five steps to the constructive advantage approach provide guidelines for creating a “disruptively better businesses.” This approach also creates a map for a disruptively improved economic model. Knowing that I cannot do the book justice in this short space, I beg you to buy it and read it all the way through. But to tempt you a bit more, I will give you my interpretation of what Haque offers for building a constructive advantage. And I will, for those who have followed me and been engaged in my work or with the companies that have allowed me to work with them for years, add the frame I have for some of his ideas. It will be obviously to everyone quickly why I so value what Haque has done.

Step One: Move from Value Chains to Value Cycles. Haque’s offering is similar to that of Bill McDonough’s cradle to cradle, and demonstrates the need to stop seeing anything as having a life and death. Waste is not an end, but a potential beginning. Hague adds to the usual conversation on this topic by saying that value can be spun either backwards or forwards. The value is thickened and made more dense and real when spun forward, and made thinner and shallower by going backwards. You will recognize this idea of forward and backward spinning from my book, in that I describe spinning the relationship with stakeholders either forward or backward, resulting in either value-creation or value-absorption, respectively.

For those that have been connected to my work for a long time, you know that the original idea of value-adding was created by Procter and Gamble’s detergent businesses in the 1960’s. The business was built on the idea of a “value-adding process,” using a living metaphor instead of the mechanical metaphor of a chain. When several Harvard professors came to study P&G , they asked what “value-added” meant–changing the word to the static past tense. They were corrected repeatedly but still they wrote their books and reports on creating “value-added” chains, which later got shortened to value-add and value chains. We have fought this banalization of a powerful idea for decades with little success.

An alive system cannot be divided into “before” and “after” someone touches a material or resource. It is a flow and a cycle. The first chapter of my upcoming book, The Responsible Business, tells this story. And there is also a chapter on moving from value-added chains to value-adding processes that are not only cyclical but also alive. So, you can imagine how extraordinarily thrilled I am to find this well told and compellingly articulated idea offered by Haque.

Step Two: From Brand Propositions to Value Conversations. Haque points out something that is so obvious that we cannot imagine how we have not seen it before. It is based on the problem Haque sees with our love affair with branding. I had not made the complete connection he had and was elated to see it. Haque argues for democracy in business, and for very practical reasons rather than ideological ones.

By “democracy,” Haque means something very specific. We have come to think of democracy as a representative process. We elect people and they represent us. Haque reminds us we are actually founded as a “participative democracy” with freedom to interact and act with whom we chose as a way to deliberate and decide. After that, we have the right of dissent, calling for reconciliation across those affected. Haque suggests that this whole process of democracy needs to be applied to every entity affected by the actions of the business. This is a very clear contradiction of the idea of the corporation having a right to do as it pleases regardless of its effects or of broad dissent.

I would add to this idea the thought that many things that businesses do get in the way of working with their stakeholders, from customers to employees to communities to Earth’s bio-regions to investors, in a “whole” way. One example of this is relying upon what I call “disintermediating information,” including market research, market surveys, and climate, culture, customer, and supplier surveys. When a business relies on these sources of information, there is no conversation between the business and the stakeholder. Because the research is translated and consolidated so many times by intermediaries, the information given has lost its meaning. Even worse, on the surveys themselves, the responses to the questions given have to be precise and are often seen as widely missing the mark.

This loss of conversation between business and stakeholder has become endemic, and as a result the real stakeholder’s voice is unheard. Haque makes the argument that real engagement is the way out, towards real connections that reduce the confusing friction and provide a way to reconcile conflict.

Haque also suggests that businesses, in order to create constructive advantage, have to build better institutions, better management structures, and better business models. This goes beyond innovation in products and process improvement into innovation in management. An unsticking, if you will, of the frozen institutions that make it hard to conceive of any other way of working. The changes need to be radical and deep–the result would be that the new organizations would no longer be connected to their former form. This is a very hard sell; I know, having worked with businesses who call themselves socially responsible and while remaining stuck in their hierarchically controlled models of work and management systems. They literally cannot see another way.

I also tell stories in my book about businesses, like Colgate South Africa and Kingsford Charcoal, who created “jazz organizations” that obliterated long standing infrastructure of management and dissolved walls between layers of management, functional groups, and internal and external stakeholders. Even though many of us are telling the stories of various innovative management practices unfolding, the differences in their foundational paradigms are hard to grasp. Hague points to such changes when he suggests this as a cornerstone if large swaths of businesses are to really succeed in the new capitalist way. He is redefining success.

Step Three: From Strategy to Philosophy. Haque calls for businesses to go back to find their “First Principles.” For what do they stand? Businesses can return to these principles in the face of tough decisions–or even everyday decisions. He takes us back to Google’s ten principles, which give them a way to focus on value-creation rather than value-extraction. First Principles lift up what people are working toward. They underlie everything, and provide a “golden rule” sense of guidance.

But how to you get to such fundamentals? Haque calls for businesses to spend time in Knowing. To understand where they do and do not, and can and cannot, create the thick value that really makes those affected by their decisions and actions thrive. It is a inward reflective diagnostic process. In particular, businesses must search to find the addictions they have to competitiveness. What gives the business an advantage, to the disadvantage of all other players? How does the businesses subtly not play fair with pricing, supplier control, rigging and kickbacks for bids, and so on? For Hague, no organization is conflict free whether it is in minerals supply or marketplace manipulation. Finding such shortfalls should not be the job of the FCC or other regulators, but can and should come from inside the organization based on its own First Principles.

I have long seen the same challenges with strategy and strategic planning. I long ago realized I needed to educate people about the difference between reactive, ego and purposeful strategic thinking. When purposeful strategic thinking (not strategizing, but thinking) is at work, it begins with what I call Global Imperatives (social and planetary). Global Imperatives describe how human and living systems operate when fostering health, regeneration and evolution. These Imperatives (First Principles) become guides for creating managing principles and systems for the business that allow the building of different kinds of questions into the planning and execution processes. The questions that are most likely to be disruptive to the industry they are in, and yet the most able to be evolved by them, come into clear focus. These questions are used for designing innovation into product development and process flow creation–and to do so each and every day. They are used to design work systems that give co-creators the opportunity to express uniqueness toward meaningful (thick value) ends. It is the basis of strategy rather than a program in the CSR office.

I think one of the greatest things that Haque is adding to my thinking is how to language ideas in powerful metaphors.

Step Four:  from Protecting a Marketplace to Completing a Marketplace. Businesses have for generations built a way to be protective regarding any hard-won markets. They do everything they can to prevent intrusion, block openings, or smash their competition. Their metaphors are that of war.

Haque changes the metaphor again to one that is about creating new value, filling in gaps, and opening new segments and categories. In the Constructive Advantage company, there are no people without access to needed products and services. The world becomes what Haque calls disruptively fairer. That is not the way capitalism works now, as Haque says. The current working of capitalism leaves gaps and voids with increased disparities.

In my work, I have called for regenerative processes. These require the ability to see a system at work and understand what it takes to make it more whole and complete. But to do this you have to build in people a missing capability, one that is not currently developed in lower, secondary or university-level school. Because of this missing capability, most people cannot even see what Haque is talking about, much less take on doing so in their business, even with his wonderful examples.The first completion that is needed is that of development of people as beings who can manage our own egos and see ourselves as part of a system.

Step Five: From Goods to Betters. This is my favorite term of Haque’s. Businesses have created goods and services without asking if they make lives better. Those familiar with my work will recognize my take on this concept in the principle that all business must “enrich lives and life.” Haque is calling for bundles of products and services that make a difference in tangible, meaningful and enduring ways for those that are receiving them or are affected by their creation or use. In my terminology, we are measuring success at the wrong place in the value-adding process (cycle in Haque’s terminology). We currently measure success at the point it leaves the warehouse, or the hands of the creator, and not at the point that it is used in the customer’s life. It is the output in the customer’s life that matters, not that of the businesses’ life. The same applies when we are talking about other stakeholders, such as suppliers, communities, and Earth. Businesses need to measure success in terms of the value created in the lives (or living processes) of each of these stakeholders.

How can business ensure that customers’ lives are made better in a meaningful way? Hague calls for ensuring that customers achieve better outcomes, and taking responsibility for their well-being and wellness. This is a big step away from aiming to satisfy or even please a customer. The business seeks to determine whether they are contributing value to or extracting value from the customers’ lives, and, if the latter, to do something about it.

Step Six: From Dumb Growth to Smart Growth. Growth has to be built on the previous ideas that produce thick value for all players. Dumb growth is thin value and value-extractive at its worst. Haque provides a game board, which I will leave you to explore. But it is based on some pretty high values that include trust, empowerment, compassion and purpose. My favorite line in the whole book is “better is better—for people. Communities, society, the natural world, and future generations—is better for boardrooms and shareholders.” There are no trades.

In my work, I say there are three kinds of growth. The first is expansion which is selling more of the same to more people. The second is extension, which brings something out that was not there before. And the third, evolution growth, is what Haque calls Smart Growth. This type of growth evolves all those affected to a level which lets them express their uniqueness in more fulfilling ways. It gives all entities affected the ability to regenerate their own being.

I recommend this book with out one reservation or caveat. And for those of you who know me, that is big deal. This book needs to be read by anyone who considers themselves responsible for the future and believes business can and must be a part of that.

The following is a list of questions I hope to get Umair Haque to answer (do you have others?).

  1. How does innovating capitalism relate to the “go local” movement, the new push for co-ops such as in Cleveland, and entrepreneurs just starting up, particularly social entrepreneurs?
  2. Which is the most highly leveraged place to work on such reinventions? Policy with Government, corporate board leadership, executives who manage the business? Why the one(s) you point to and not others? (In other words, how do you start?)
  3. How do you think about the concept of “better” with different constituencies such as citizens, consumers, and small businesses? Does it vary and how might you assess success with each?