Straightforward self-interest serves ‘survival of the best fitting’
21 april 2008
I believe straightforward self-interest is a four dimensional phenomenon, which can be summarised conveniently in a matrix (see attachment). On the X-axes of the matrix I position the direct and indirect dimension of self-interest, whereas the Y-axis covers the time dimension (immediate and delayed self-interest).
The bottom left quadrant encompasses everything that is needed to successfully run “business today”. This is the bottom line orientation on performance and reputation that secures the basis of any business. Next to that, still an immediate interest, is what I call “the extra-financial current account”. Because of an indirect self-interest businesses support all kinds of activities that are outside their core processes. Sponsoring, charity and other kinds of support are part of the “social contract” a business has with stakeholders.
Top left is the direct, yet delayed, self-interest which refers to all kinds of specific investments made to continue success into the future. For example: investments in innovations. These are investments for a known purpose or strategy, but yet the outcomes can be unknown. For example: a more eco-friendly product or process. Whether the investment is going to generate the desired return is still to be seen, but a calculated decision has been made.
A smart entrepreneur also tries to navigate through the fog. He makes bets on the future, hoping that some unknown unknowns will proof to be future winners for the company.
Let’s try an example. Some companies started internal emission trading in the mid nineties, well before any international sense of urgency or consensus had emerged. They placed a bet on the future, anticipating that a price tag might be put to emissions and thinking this would optimise investment decisions and actual emissions. While time progressed more focused investments were justified (the subject being transferred to upper left corner). And now it is part of bottom line orientation of many companies. The well prepared proofed to be more fit for the future.
Whereas the direct dimension of self-interest is dominated by the direct stakeholders of the company (clients, employees and stakeholders), fringe stakeholders are increasingly relevant in the indirect part. The dialogue with fringe stakeholders helps to identify new trends, opportunities and threats. They will open your eyes for aspects you would not have noticed in isolation. The indirect dimension is the territory for creative partnerships with groups you didn’t imagine to be of value for your business. The top right segment is the most challenging part of self-interest. Many examples of misjudging the future, proof the value of mastering fog navigation and partnerships. For example: the American car industry was not at all prepared for rising oil prices. This made someone conclude: “Detroit is like the Soviet Union before the fall of the Berlin Wall, so slow in moving, adapting . Their SUV sales came down 40% and what do they have to offer? Nothing.” They misunderstood their self-interest and lobbied accordingly.
How does self-interest relate to the greater good of a more sustainable world? I believe these two are ever more aligned. In an open and transparent economy, with activist stakeholders, it is in the self-interest–be it (in)direct, delayed or immediate- of any business to find optimum solutions. Both business and society have to allocate resources across the four dimensions. For business can not be successful in a failing society, and vice versa. Only mutual success serves our self-interest.
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