How to detoxify your business

If you buy into the concept that business is — by design and structure — an inherently “toxic machine”, then one question that has to be asked is…. How would one go about truly detoxifying their business? While a fundamental belief of this initiative is that ultimately we need to change the rules such that businesses have strong economic incentives to detoxify (and by extension, are penalized in the market and possibly by regulators for “being toxic”), one could see a small group of enlightened business leaders getting the jump on the broad market and developing strategies for figuring out what “detoxification” looks like for them.

So here they are: three straightforward — and far-reaching — strategies for detoxifying your business:

  1. Recognize the costs that your business externalizes, and build a first-order model to approximate and better understand the extent, nature, and potential liability of those costs. Respond to this new information set accordingly;
  2. Don’t provide any commitments – whether explicit or implicit – that take on future liabilities owed to your employees. Make no commitments or promises that you cannot afford or deliver within your standard budget planning cycle; Work to evolve your talent management system from a traditional employee model towards a model that engages around accomplishing “business outcomes”. This will drive improved business discipline, provide significant cost advantages, and unleash your talent to truly innovate and prosper;
  3. Provide full transparency to your consumers about the origins and risk profile of your products. You will be able to do this only once you yourself have full transparency of your own global supply chain and are able to verify that all downstream contractors and subcontractors are meeting their obligations.

Of course, these are not easy things to do, although conceptually they are very straightforward. The larger and more complex the business is, the more challenging moving on each of these strategies is. The good news is that these actions align very well with a number of accepted “business strategies” that currently exist in the business world.

Based on these, it would seem to be fairly straightforward to develop some kind of rating/measuring scheme about both (i) the toxicity of specific businesses and industries, and (ii) the degree to which specific companies (and whole industries) are committed to detoxifying, based on their annual progress in measuring and managing toxicity levels. I think this would align very nicely with a lot of the current voluntary schemes for measuring CSR (corporate social responsibility) performance of companies.

Any comments on the applicability and value of such a measurement scheme?

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