Strategy and Interdependence Critical for the Startup

 In Benefit Venture Blog, Insights, Purpose, Reflections, Stakeholder Capitalism

Strategy and Interdependence

We are coexistent; we can achieve nothing on our own; we are all inter-dependent. We are encouraged to be independent from an early age, even while being coexistent with others. But we are codependent, since both our actions and those of others have interlocking impact.

They are pieces of a jigsaw—if one is missing, the picture is incomplete.puzzle pieces to indicate interdependence

Acknowledging inter-dependence is critical to entrepreneurial success. The chains of cause and effect are much shorter than for the established business and the speed of impact is much faster.

Cause and effect is a concept well understood, but poorly applied to intent and behavior as we go about our business. We are all interdependent with other beings and with nature.The new venture will only flourish if the founder and team consider the way in which both strategy and action has impact all around us.

Ignorance of Consequence

Individuals inside and outside the company experience business ignorance of consequence almost daily. The consequences result from conflicts between declared intent and the behavior of management and staff. Here are just six examples of when consequences are ignored and :

  1. customer relations function is outsourced, such there’s no direct customer/producer contact that can produce negative results;
  2. payment of below living wages means that an employee can be forced to make choices that in conflict with work priorities;
  3. corporate claims of sustainability are belied by packaging that is not Eco-friendly;
  4. bonuses to senior executives based on increases in sales volume/share price may produce behavior at odds with corporate purpose;
  5. considering ‘downstream’ negative consequences of operations are not the company’s responsibility may result in sanctions;
  6. acquisitions or mergers that may only benefit shareholders may lead to many negative consequences to other stakeholders.

Not only are there potential negative financial effects of conflict between intent and action, but there is likely be long term negative impacts on the firm’s reputation. Henry David Thoreau asked, “could a greater miracle take place than for us to look through each other’s eyes for an instant?”

Difference Between a Transactional and a Relational Focus

If you search widely for the best practices of strategic management, most of the teaching, guides and accepted wisdom has a heavy focus on things with labels like financial strategy, marketing strategy, sales and brand strategy. Such a compartmentalized focus is based largely on transactions, rather than relationships—numbers more than people or market share more than user satisfaction.

The transactional view of business is most likely to exist in larger and more established businesses, where functions are separate and well defined.  Also, in a large corporation the parts of the business will not only be separated in thinking, but also by location. Frequently, a silo mentality results from performance evaluation and pay being largely based on functional results.

In the entrepreneurial business on the other hand, a relational view where ‘everybody does everything/we’re all in this together’, is a sentiment more likely to prevail. For instance in the startup, marketing, sales and customer service are unlikely to be dis-aggregated functions operating in silos where departmental boundaries can result in conflicting, rather than interdependent goals. Relational strategy is much more likely to involve both vertical and horizontal thinking.

Build Interdependence into Strategic Thinking

Startups need to build a deep appreciation of interdependence into their strategic thinking—and practice. First, the entrepreneur’s purpose must be based on big-picture thinking and a model of strategy—>behavior—>consequences all the time. Thereby the new venture will embody a policy of relational focus and inter-connectedness.

So here are Five Behaviors that need to be endemic within the startup, through their embodiment in strategic thinking:

  1. require an agenda item for any strategic and operational management meeting: ‘unintended consequences’
  2. allow and encourage direct communication across staff functions and levels of authority
  3. create a culture of inter-connectedness among all stakeholders (ask: do we even see each other?)
  4. ensure that both the  recruitment and contractor selection/appointment process involves a mutual commitment to interdependence
  5. enable employees to feel a sense of personal responsibility and accountability for the whole business.

These Five Behaviors will create an atmosphere where a complaining customer will never hear a response like, “… because that’s above my pay grade”, or “…company policy would not make that possible”, or “… of course that’s your right”.

Interdependent Behavior at Work Impacts the Community

People who work for startups are likely feel like their job matters, that their voices are heard, and also and that their work contribution is directly connected to the company’s performance. They feel personally connected to the firm and its culture. Chances are high that the work experience will impact their behaviors and relationships in the community.

Another Venture Founders page, called Remaking Capitalism explores the concept of interdependence on a wider basis. The underlying impetus for the remaking of capitalism comes from a sense of interdependence, as is shown by the well of support for policies of sustainability, stakeholders, and social fairness. In Buddhist philosophy the three ‘poisons’ are greed, hatred and delusion. An interdependent world, on the other hand manifests generosity, love and wisdom (See Benefit Entrepreneur and Buddhist Economics).

It is not just Venture Founders that emphasizes the need for building interdependence into both strategic and operational thinking in businesses seeking to make significant change to the economic system for the benefit of society and the planet. Here’s a few places to read more: Changing Culture: 5 Principles for Interdependent Leadership; here’s an example from my hometown, Keene, New Hampshire; We need to retain our interdependence; Interdependence: The Key To A Better World.

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