Traditional business thinking often operates with a one-eyed pursuit of economic growth, trapping leaders in a world that no longer exists. A new model aims to offer a better way forward.
Business leaders are facing some difficult dilemmas – how to achieve business growth yet reduce their environmental footprint, ways to create wealth for investors while giving back to society and achieving high performance yet maintaining the health of staff to name a few.
Nations also face similar choices, for example deciding between propelling economic growth or tackling climate change. While at a personal level, many of us are torn between our commitment to work and to family life.
According to Dr Lance Newey, an entrepreneurship expert with UQ Business School, the problem stems from traditional business thinking that drills into leaders a focus on economic benefits with little understanding of how to achieve that as well as other aspects of wellbeing. They have no effective way to leverage these competing demands. Several years ago, he set out to give leaders better frameworks to achieve both.
“As a business school academic, I have new generations of students coming through my classroom questioning all the assumptions on which my classical business and economic training are based.
They see the dark side of obsessive economic development and want a different value proposition. I realised I was stuck in an outmoded paradigm,” Lance explains.
In his quest to find a different approach, Lance developed a new leadership model, one which focuses on wellbeing – the capacity of a business, individual or society to flourish sustainably and resiliently. It recognises eight components of wellbeing - economic, environmental, social, cultural, psychological, spiritual, material and physical – but views them as interdependent factors that need to be counter-balanced rather than a series of independent siloes.
“In the past, we’ve trained leaders to specialise in just one or two components of wellbeing,” he explains. “But I would argue that this approach is why we aren’t moving forward. We have too many specialists and not enough systems thinkers”.
“Systems thinking requires us to hold two seemingly contradictory ideas in mind at the same time. Problems arise when we don’t service both sides of this polarity. Leaders have to learn how to approach issues in terms of two interdependent opposites rather than just seeing one side only. Over-emphasising one aspect to the neglect of its opposite lies at the heart of so many issues faced by societies.
“Traditional thinking asks what is best for the economy or the environment and treats it strictly as a problem to be solved. We would ask: how can we best create both economic and environmental value without excessively over-emphasising one over the other? The relationship between the economy and the environment is not just a problem-to-be-solved but a paradox to be leveraged.”
Dr Newey says that Western societies see financial wealth as central to wellbeing. “A thriving economy generates tax revenue to fund welfare, health, defence, and law and order. Governments measure wellbeing through GDP, an indication of production and consumption. Businesses see their primary goal as maximising shareholder wealth, while societies emphasise materialism.
“But the big price we pay are negative wellbeing cycles. Prioritising economic wellbeing without consideration of its interdependent opposite creates new problems such as environmental or mental health issues that cost money to resolve. Gains made in some areas have to be diverted to compensate for the adverse effects on others.
For example, think of the Barrier Reef and the recent Royal Commission into Banks. Both show how we have over-emphasised one aspect of wellbeing at the expense of others. These wellbeing costs come back to bite us all. Wellbeing is an ethical responsibility.”
Lance has just completed a study of 120 leaders from Alaska, Norway and India examining differences in how leaders go about creating wellbeing for their societies. A more in-depth on-the-ground study is now occurring with leaders in Anchorage, Alaska. The research is also being funded by local Brisbane primary and secondary schools who wish to implement findings in a new leader development program based on wellbeing.
The model identifies a number of polarities including:
Economic and environmental wellbeing
Society’s obsession with economic growth creates serious environmental consequences. By shifting the focus towards environmental wellbeing, we use more renewables and reduce waste, but go too far in that direction and we fail to develop the production systems required to guarantee people minimum standards of living.
Social and cultural wellbeing
While we need to be integrated as a society, we must also celebrate diversity. This tension plays out in societies which allow immigration, yet struggle to maintain a sense of unity and shared values. The current swing from rapid globalisation to nationalism in some countries represents one manifestation of our need to counter-balance integration and differentiation.
Material and spiritual wellbeing
Material possessions bring us joy but left unchecked, create dependence on external sources of satisfaction. Spiritual wellbeing helps us to cultivate inner contentment in matters beyond the material.
Physical and psychological
Doing and thinking are at opposite ends of the same pole. Businesses get caught up so much with the doing that they lose sight of or can’t find a way to allow reflection on purpose and direction.
A number of countries are now moving away from the reliance on GDP to the adoption of a framework which takes account of other components of wellbeing. Dr Newey believes this is encouraging and businesses need to do the same.
“To remain in either/or thinking and not shift to recognising and leveraging paradoxes sets us up for negative wellbeing cycles. We believe our wellbeing model offers a new paradigm for a better world, and will help to develop a generation who are the answer to that common refrain: we need better leaders!”