Leading Sustainable Organizations
Even before launching the MIT Center for Collective Intelligence, Thomas Malone was trying to imagine how work could one day be done differently. A professor at the MIT Sloan School of Management, he was a founding co-director of the Initiative on Inventing the Organizations of the 21st Century, and in general has continuously explored how “to help society take advantage of the opportunities for organizing itself in new and better ways made possible by technology.”
Some of those ways offer interesting paths to sustainability—but the paths are to sustainability as Malone defines it, which doesn’t mean a world in which everything is built to last. “It’s often the case that good things are sustainable, but sometimes things are sustainable but not good,” he says. “And sometimes things are good but not sustainable.”
In this installment of the MIT Sustainability Interview series, Malone addresses the mental models that impede management progress, the role of collective intelligence in solving climate problems, and his view of how wrong people are about what business is for. He spoke with MIT Sloan Management Review Editor-in-Chief Michael S. Hopkins.
How do you define sustainability?
I can tell you what I think people usually mean by the term, and then I’ll tell you why I’m not a huge fan of it. I think by sustainability people mean a quality of organizations or businesses that makes them sustainable over the long term. Certain kinds of practices will work for a while but are not sustainable over the long run, and sustainability is about the need to call attention to doing things differently in an economic sense, an environmental sense, a social sense, or even a personal sense.
I’m not a huge fan of that definition. There are some times when it is good, from a human point of view, to do something for a little while that isn’t sustainable in that form indefinitely. Some companies can serve a very valuable purpose for a few years, and then go out of business. For instance, I’d say that Netscape made a huge contribution to our whole society by popularizing the technology for web browsing in the mid-1990s. And the fact that Netscape has now mostly disappeared into the bowels of AOL doesn’t decrease the importance of what they did then. I’m sure you remember Jim Collins’s famous book called Built to Last, about how to create companies that will last for a very long time. Well, longevity is nice, but it’s certainly not the only good thing for companies to aim for.
You mean, for example, alternatives like the classic “Hollywood” model of putting an enterprise together to do a particular thing—make a movie, in Hollywood’s case—and then disbanding it when the project’s done?
Right. So here’s how I think about sustainability. There is a large group of people who think that Milton Friedman had it right when he said that a company should be in the business of making profits for its shareholders—as much profit as it can without “breaking the rules” of society or governments—and that anything else is just inefficient use of societal resources.
MALONE’S SUSTAINABILITY TAKEAWAYS
How do you define sustainability?
- Putting a broader range of human values—not just economic ones‐at center of business
Which sustainability issues will have the biggest implications for managers?
- Environmental consequences (and related carbon tax, cap and trade policy, etc., over next 5-10 years)
- Rising personal and social costs, including burn-out, psychic bankruptcy, organizational inefficiency
- Managers realizing they need to serve stakeholders beyond shareholders including employees, customers, suppliers, and society in general
Threats and Opportunities
What threats and opportunities will sustainability-related concerns present?
- Threat: “If we don’t figure out some way of dealing with environmental sustainability, it’ll take care of all other problems, because we won’t be here to have them”
- Opportunities: Can serve the many people frustrated that their jobs are “incompatible with their human needs”
What obstacles keep organizations from acting on sustainability problems/opportunities?
- Conventional assumption that maximizing shareholder value is sole business goal
- Conventional assumption that centralized, hierarchical organizations and decision-making are only ways to approach operations
…“Sustainability” as a concept doesn’t take into account that sometimes things are sustainable but aren’t good, and sometimes things are good but not sustainable … Radically open computer modeling will be a key way to harness collective intelligence toward bigger picture goals
I think that that argument is much more limited than is usually believed. The most important limitation is that Friedman assumes all stockholders want to maximize profit. That’s true for some stockholders, but certainly not for all. When I last looked at this number—about five years ago—roughly 10% of all the investment funds under professional management used some form of social responsibility screening in their investment decisions. Ten percent is not a majority, but it’s a pretty significant minority, up from about zero percent 10 or 20 years earlier. That says to me that some significant fraction of people already are making important financial decisions on the basis of criteria that are not solely financial.
The last chapter of my book The Future of Work: How the New Order of Business Will Shape Your Organization, Your Management Style, and Your Life (Harvard Business School Press, 2004) is really about what you could call a larger, more ambitious notion of sustainability. The chapter title I used was “Putting Human Values at the Center of Business,” and by that I meant that businesses can be used to accomplish a very wide range of human goals, not just making money. Business is a human enterprise, not just an economic one, and if we lose sight of that fact, we run the risk of undermining what businesses could do for us.
The assumption that goes along with that assertion is that if we put human values at the center of business, then we will, of necessity, be thinking about sustainable activities. Things that are lasting, nurturing.
Yes, but here’s an important point: we will often be thinking about sustainable activities, but not always. Which is one reason I’m not a huge fan of the term “sustainability.” It’s often the case that good things are sustainable, but sometimes things are sustainable but not good. And sometimes things are good but not sustainable.
Do you think “sustainability” isn’t a useful term, and should be avoided?
There’s a collection of articles several of us put together in 2003 called Inventing the Organizations of the 21st Century. One of the chapters is a manifesto we wrote called “What Do We Really Want?” You’ll recognize a lot of the names of faculty who were involved with this. And we did use the term sustainability there, I think partly influenced by Peter Senge, who was a member of the group. We talked about environmental sustainability, social sustainability and personal sustainability. So, it’s not that I’m completely opposed to the term; I’ve used it. I just worry that it’s too limited.
Which sustainability issues do you think will have the biggest implications for business, and what do you think those implications will be?
I think that there are lots of reasons to believe that environmental issues are going to become much more important for businesses. Something like a carbon tax or cap and trade policy is very likely to become important in the next five years, or 10 at the most. There are many people who believe if we don’t solve this environmental problem, we won’t have to worry about any other problems.
Are you one of those?
I consider myself open to evidence on this question. My current belief, based on what I know so far, is that that is correct. That if we don’t figure out some way of dealing with this problem, it’ll take care of all the other problems, because we won’t be here to face them.
We have a big project in the Center for Collective Intelligence on global climate change. We call it the Climate Collaboratorium. The starting premise is that many people would say that global climate change is one of, if not the most, important societal problem we face. And if ever there was a problem that needed the most collective intelligence we can muster, this would be one of them.
So what can we do? How can we harness the collective intelligence of thousands of people all over the world and whatever computational resources they can take advantage of to help us humans figure this out?
Why do you think harnessing collective intelligence can be so powerful in tackling climate change?
To solve the climate problem, we need a huge range of expertise. We’ve got to know things about the physics of the upper atmosphere and the chemistry of the oceans and the economics of carbon taxes and the psychology of consumers who are making decisions about when to drive versus take public transportation. Collective intelligence mechanisms are ideal for bringing together those diverse kinds of knowledge.
Alternatively, just consider the main way conversations about problems happen today: in meetings. A bunch of experts get in a room and talk to each other. You can do some very good things that way, but you can’t begin to constructively and quantitatively put together the knowledge of all these different kinds of experts, not to mention non-experts whose knowledge is also relevant, in just a meeting.
MIT World Video
In this talk based on his seminal book, The Future of Work, Thomas Malone describes the evolution of organizational life
The more potent way to address climate issues is with quantitative models, which, in the case of this problem, means computer simulation models. And there are some people who are doing that today. One of the best groups in the world, for instance, is here at MIT: Henry Jacoby and others at the MIT Joint Program on the Science and Policy of Global Change. We think that’s a good approach, but it’s not ideal because everyone else has to rely on the experts to say what they found and then to make any changes other people might suggest. Very, very low bandwidth interaction between the models and the rest of the world.
What we’re trying to do here at the Center for Collective Intelligence with our Climate Collaboratorium is what we call radically open computer modeling to bring the spirit of systems like Wikipedia and Linux to the problem of global climate change. We want thousands of people all over the world to be able to interact with and modify the system, create real quantitative representations of plans for what we could do.
We also want them to be able to discuss the advantages and disadvantages of different plans in an organized way, and we want them to be able to collectively select the most promising plans from all the possibilities that have been proposed.
In a sense, we want to combine a kind of Sims Online for climate change, a Wikipedia for controversial topics, and a form of electronic democracy on steroids!
Where are we in the project? What’s the status of it now?
We’re in an early stage. We hope to release very soon our first prototype of a system that combines all three elements: simulation, deliberation, and collective decision-making. We are also actively soliciting funding and volunteers to help.
Now I’d like for you speculate with me for a minute. Imagine I’m an executive, interested in understanding how my organization is going to need to function differently in the fast-coming future as the result of growing concerns about sustainability. What would you say I should be prepared for?
One thing, I think, will be a reconsideration of the “centralized mindset,” a term that comes from another MIT colleague, Mitch Resnick. The idea is that most of us have grown up with the concept that hierarchy is the answer to most organizational problems. That if there’s a problem to be solved, we should put someone in charge of it, and if things are not well organized, that’s because there isn’t strong leadership. It’s very pervasive in our world—and for good reasons, because it actually has worked quite well for the last century or so.
But organizing things this way is becoming less useful in many situations. There are now more decentralized ways of organizing things that are becoming more desirable in many situations. In Wikipedia, for instance thousands of people all over the world have created a very large and very high quality intellectual product with almost no centralized control. And in Linux, a loose band of programmers, with very limited top-down control has developed an operating system that rivals Microsoft Windows. As these examples show, sometimes, the best way for a leader to gain power is to give it away.
What’s going to get in the way of that happening?
I actually think the toughest part will be dealing with our own assumptions about what’s true and what’s not. Peter Senge uses the term “mental models.” The basic idea is that we all have a lot of assumptions about the world and how it works. Some of those assumptions will need to change. Not all, of course, but some.
In addition to the belief in centralization, what other assumptions will need to change?
I think the heart of the answer is that managers and especially executives will need to serve the interests of a broader range of stakeholders. Many, many managers, including many of those trained at this institution, go out into the world thinking that their job is just to serve the interests of stockholders. Well, that’s part of the job. But I think the most important change that will happen in the coming years is that more managers will become much clearer about the fact that the shareholders are not the only stakeholders whose interests they need to serve. To list the obvious, they also need to worry about serving the interests of their employees, their customers, their suppliers, and society in general. That’s another mental barrier that I think people need to get past.
What do people say when you give them this message?
It all depends on the individual. Almost every class I teach has some students who are convinced that the purpose of business is obviously to make as much money as possible and anything else is kind of a sissy way of looking at things. Some people feel that way so strongly that nothing I say is going to change their minds. But other people are vitally interested in these new possibilities. And many people are somewhere in the middle and can be influenced.
This is an interesting avenue you’re taking—thinking about the larger possibilities for business reinvention that be found in the course of addressing sustainability….
I guess one way of summarizing the point I’m trying to make is to say that social responsibility is often thought of as a “should.” It can seem like somebody’s always saying, You should not pollute the environment so much. You should treat your workers better. And, to use mathematical terminology, that often leads you to think of sustainability as a constraint rather than an objective. In this way of thinking, the goal of business is to ‘maximize profits subject to the constraint of fulfilling your obligations to society.’
But what I’m saying here is that you can flip that around. You can say there’s no reason at all why a business cannot maximize its contribution to society subject to the constraint of producing a reasonable financial return.
Last question: if you could undertake any sustainability initiative, what would you do?
In the preface to my book, I talked about what I wrote on my college applications when I was a 17-year-old high school student, saying that I wanted to solve the problems created by technology changing faster than society could adapt.
Over the years I have refined that to be: I want to help society take advantage of the opportunities for organizing itself in new and better ways made possible by technology. That’s, in some sense, my life’s mission, my life’s work. And I believe that the Center for Collective Intelligence is the best way I’ve been able to figure out so far to try to advance toward that goal.
About Thomas Malone
The Patrick J. McGovern Professor of Management at the MIT Sloan School of Management, Thomas Malone focuses on both information technology and organizational studies. He is founding director of the MIT Center for Collective Intelligence—where, among other projects, work is being done on a web-mediated discussion and decision-making forum called the Climate Collaboratorium, “a kind of Wikipedia for controversial topics, a Sims game for the future of the planet, and an electronic democracy on steroids.”
Malone’s most recent book is The Future of Work: How the New Order of Business Will Shape Your Organization, Your Management Style, and Your Life (Harvard Business School Press, 2004). He also has co-edited three books: Coordination Theory and Collaboration Technology (Erlbaum, 2001), Inventing the Organizations of the 21st Century (MIT Press, 2003), and Organizing Business Knowledge: The MIT Process Handbook (MIT Press, 2003). He also has been a cofounder of three software companies, and before joining the MIT faculty in 1983 was research scientist at the Xerox Palo Alto Research Center (PARC).