The Regenerative Business: Redesign Work, Cultivate Human Potential, Achieve Extraordinary Outcomes

INTRODUCTION: PURSUE DISRUPTIVE INNOVATION

“When you change the way you look at things, the things you look at change.”

Max Planck, Quantum Theorist, and Nobel Laureate

These days, the idea of disruptive innovation is a hot topic among business leaders of every stripe. Many are coming to believe that disruption is core to their longevity and market position in a fast-changing world. Customers expect the companies they buy from to be on top of what’s evolving in their environments and to help them address the emerging challenges and aspirations that they are discovering. Many companies complain that customers are fickle, but actually they are engaged in a process of ongoing change, just like the world around them. A well-developed capacity for innovation is the way that modern companies get out ahead of continual change.

When it’s done well, disruptive innovation has the power to regenerate whole industries and markets. Beyond this, it also has the potential to regenerate the social and ecological systems within which an industry operates. This kind of innovation requires what I call enlightened disruption—and it takes courage. It calls for leadership that lives on the edge and is willing to introduce changes that reinvent the game for all of the businesses within an industry.

Unfortunately, most businesses work on innovation in entirely wrongheaded ways. In general, they focus exclusively on innovating their product offerings. Instead of designing new ways to work that lead naturally to great products, they seek out how-to templates offered by so-called experts. This severely limits the scope and significance of potential innovation, and it leaves companies dependent on outside expertise as the templates they adopt become outdated.

From my perspective, the potential for disruptive innovation exists in every aspect of a business, not just in its offerings. It is possible and important to innovate with regard to management, production, distribution, customer relations, marketing, supply system, investment, and at least a hundred other arenas. Foundational to all of these is innovation with regard to how organizations develop [RN1] their people.

Human development builds a company’s capacity to generate the thinking that will evolve its operations, industry, society, and world. Designing work systems to grow this capability in every member of the organization is essential. This, I believe, is the only way to create a business that consistently produces enlightened, disruptive innovation in a fast-changing world.

Regeneration is a process by which people, institutions, and materials evolve the capacity to fulfill their inherent potential in a world that is constantly changing around them. This can only be accomplished by going back to their roots, their origins, or their foundings to discover what is truly singular or essential about them. Bringing this essential core forward in order to express it as new capacity and relevance is another way to describe the activity of regeneration. In other words, regeneration is the means by which enlightened, disruptive innovation happens.

Disruption takes know-how, which has to be grown into an organization. That is why this book focuses on work design. More specifically, it focuses on work design that intentionally develops people’s capacities and capabilities. A regenerative business grows its members, every single one of them, into innovators with a shared commitment to bring forward radically disruptive ideas. It also grows the capability of its members to think like CEOs, with a clear enough understanding of markets and strategy to ensure that every new idea is not only compelling in its own right but also has the power to advance the company as a whole. When these complementary conditions are present, a business becomes a pipeline for innovation. This[KB2] is the way to create a powerhouse, an organization that is fast, flexible, resilient, and unique enough to keep pace with the twenty-first century.

The Regenerative Mind-set

At this point, you may be wondering, “Well, it sounds good, but why isn’t everybody already doing it?” In practice[RN3] , there are some real and not-so-obvious challenges built into creating regenerative organizations. The single greatest barrier to innovation is our unconscious attachment to comfortable and habitual patterns of thought—that is, to our mindsets. These mechanical habits are precisely why we find ourselves stuck with borrowed ideas, unable to generate anything profoundly creative and new.

How then do we learn to cultivate the unique qualities of thinking that are required for a regenerative innovation process? How do we become masters of innovative thinking, so that we are able to innovate the process itself? In my experience, we must each start by becoming aware of our mindsets and the effects they have on how we think and what we think about. By working to make ourselves conscious of these effects, we can develop the ability to choose and evolve our mindsets, which will enable us to proactively create the thinking that we will need for regenerative business practice.

A mindset is a lens through which we view and make sense of the world. It determines what we can see, how we make sense of what we see, and how we act. For example, if we envision the world as a machine, then it becomes very easy to see humans and other living systems as interchangeable cogs. In fact, this particular mindset has shaped many of the ways businesses, sciences, and governments have been organized for at least two centuries.

One of the subtle hazards associated with mindsets is that they can be the source of a host of problems. For example, one of the reasons people hang onto the machine mindset is that it has enabled us to build efficient systems for the creation and distribution of products. However, it has also generated dehumanized workplaces, damaged ecosystems, and loss of local cultures around the world. To paraphrase Einstein, these problems cannot be solved with the same mechanical mindset that created them.

In business, the regenerative mindset is actually quite rare. Yet the capacity for disruptive innovation depends on the ability to see the world through precisely this lens. To create and continue to evolve a world-changing business, the regenerative mindset must be intentionally built-in, not unconsciously designed out.

Consolidated Diesel

Again, it’s essential to note that there is more to the idea of enlightened disruption than just bringing breakthrough products to market. A regenerative organization also shakes up the status quo in ways that make it possible to build new social systems, new capabilities for critical thinking and engagement, and new energy for democratic institutions.

I know from experience that all of this can be accomplished through the skillful practice of work design. Let me describe for you a startup that I worked on in the early 1980s, where I learned firsthand the power of regenerative business.

Consolidated Diesel Company, a joint venture between Cummins Engine and J.I. Case, was formed to build small engines for an array of consumer and industrial applications. When the startup team received the charter to create a new, state-of-the-art manufacturing business, they quickly realized that it would also need to be a state-of-the-art operation with regard to how it worked with people. I was part of the team of consultants that helped them determine how[RN4] to step up to these challenges.

We began by developing an inspiring direction: to usher in a new era of engines that were of such high quality that the most demanding customers in the world (at that time, Japanese manufacturers) would insist on using them in their own products. To achieve this, we committed to connecting every employee as directly as possible to the customers. “The customer’s dream guides every decision we make!” became our motto.

Within a year and a half of its launch, Consolidated Diesel had distinguished itself as the world’s leading manufacturer of small engines. Japanese manufacturers quickly recognized and took advantage of the superiority of its products, and they were followed soon after by manufacturers in the West. In particular, companies in the United States were drawn by the fact that Japanese imports were entering the country with American engines in them. Beginning with motorcycle engines, Consolidated Diesel quickly branched out to make products for almost any function that required a small engine: everything from lawnmowers to farm equipment.

The company’s workers were completely self-managing; we never could come up with a good reason to have supervisors. Instead, on-site experts with deep experience in manufacturing provided the operator teams with the information and education they needed to act in ways that would evolve the capacity of their customers. Every member of the organization became an active cocreator of every aspect of management, from strategy to hiring to pay system to customer service.

This non-hierarchical structure was backed up with a strong culture. Every employee was expected to develop a profound understanding of what would strategically increase customers’ successes. Based on this, they were encouraged to take on critical responsibilities and challenges beyond their own current capability and then grow into them. This created a cohesive spirit, as everyone pulled together to achieve something that would truly benefit the users of their products.

What made this success even more extraordinary was that the business was located in rural North Carolina, a society deeply divided by racism. One of the startup design team’s explicit objectives [RN5] was to adopt new business practices[RN6] that would dismantle racism within Consolidated Diesel, its parent companies, and its suppliers. The team [RN7] identified five key areas—including hiring and promotion—where discrimination usually occurred, and then they established principles and practices that would disrupt the subjective, often unconscious biases that went into decision making. They also placed strong emphasis on transparency, so that it was possible to challenge any decision that might be interpreted as discriminatory. This emphasis on transparency was carried into the design of the facility, which used glass walls to define private work or meeting areas. The results were immediate and profound, and they soon spread beyond the company. Employees developed a training program for Consolidated Diesel’s suppliers that was based on their own growing expertise; it successfully broke down deeply engrained patterns of discrimination.

Consolidated Diesel’s accomplishments turned out to be enduring. Twenty years after the start-up, I read a cover article in Fast Company magazine that touted the revolutionary nature of the company’s work design.[i] I still see the work we did together cited from time to time in books and magazines. As my first massive work-design effort, Consolidated Diesel represented a steep learning curve for me. Now, more than three decades and one hundred organizational designs later, I’ve been able to deepen and significantly evolve my understanding of what it takes to create regenerative businesses.

Throughout this book, I will share my discoveries about the business practices that are fundamental to becoming regenerative in how we work. They represent my best effort to understand what makes people whole, creative, and capable of making valuable contributions to successful businesses. Insofar as these discoveries are universal, they are also true about me and about you, the reader. Consequently, the work of growing great companies turns out to be, as well, the work of growing ourselves. I invite you to join me in this process of discovery.

Who Is This Book For?

Most people spend 60 percent of their waking lives at work, which is the cornerstone of our society and our economy. Consequently, we ought to have work that works well. This book is written for people who want to design new and better ways of working: ways that address the preponderance of dissatisfaction that most people experience with their work.

When I use the term design, I refer to the act of intentionally generating something new, something that responds creatively to the specific needs and opportunities of a business, its customers, and its employees. I do not mean implementing yet another off-the-shelf, currently popular program of the week. For this reason, I focus on the overarching principles and criteria that designers need to hold consciously in mind, whether they are setting up brand new companies or redesigning venerable institutions with many generations of success under their belts.

My emphasis on principles and criteria, rather than prescriptive recipes, is deliberate. My aim is to grow a higher level of discernment and creative thinking into the practice of work design, and offering another book that simply tells people what to do would undermine this intention. My hope is that readers will find this book stimulating and challenging, a pointer to the path we need to take if we are to harmonize the needs of businesses with those of their markets and of society as a whole.

This is a book for people who love the ability of businesses to foster innovation and creativity by unleashing the inherent intelligence of everyone involved. Unfortunately, business education and corporate cultures continually reinforce the idea that supporting the people in an organization comes at the expense of profitability. But with a number of pioneering business leaders, I’ve been able to demonstrate again and again that the opposite is true. Not only can leaders tap into the intelligence of their people as a way to grow powerfully profitable businesses, but also they can grow this intelligence to make their businesses disruptive and therefore non-displaceable and future-proof in their chosen markets.

Are you a pioneering business leader, a decision-maker who is responsible for setting direction in your organization or for designing and implementing the way people work? Then I want this book to help you build financial success while blowing the roof off the creative potential of your team.

Overview

This book is divided into three sections. Part 1 provides an orientation to regenerative work design—what it is, why it matters, and how it addresses the business challenges of the twenty-first century. It describes the core characteristics of a regenerative approach and the paradigm shift this approach represents with regard to human development and disruptive innovation.

Part 2 provides the basis for assessing your business and its work design. What are its practices, where did they come from, and what are the hidden consequences of using them? For anyone who wants to create a regenerative business organization, this assessment is critical. A regenerative approach is not something that you just add on to everything you’re already doing. It requires a radical re-envisioning of what business is and how it works. Thus, the first step to evolving your business is to create a plan for cleaning house, eliminating and replacing old practices that no longer serve you. (An obvious example might be replacing performance reviews and incentive programs, which are increasingly recognized as toxic practices, without bringing in something equally destructive.)

Part 3 lays out five necessary phases that your business will move through as it grows into a regenerative organization. It provides tested concepts and guidance for creating a work design that enables you to attract and keep great people, generate extraordinary financial returns, and contribute to a better society. Rather than promoting a one-size-fits-all approach, it offers a framework for stimulating your own creativity with regard to the unique conditions of your business, so that the work design you generate will be yours and yours alone.