Our business model optimizes for shared value
Our business model optimizes for measurable value that is shared with customers and partners, not captured solely for the business and its owners. It takes into account social and environmental benefits and costs as well as the responsible management of financial capital and profit that is essential to a lasting business.
We can never afford to be disconnected from the role of money in our business; so we pay constant attention to cash flow, burn rate, margin, and other financially derived performance metrics. During seasons of fundraising we can be consumed with yielding the least control to get the most capital; and in seasons of strategic and operational planning there is some financial implication to every scenario and decision. These dynamics have always been present for enterprise builders.
Yet today, the finance sector has affected every growing business, regardless of how it is capitalized, by normalizing the expectations of return maximization—faster growth, higher returns, and earlier exits. While this has been productive at a macroeconomic level and enabled a rarefied class of startup “winners,” it has also borne troubling fruit for many leaders and ventures, creating finance-driven practices that lead to team burnout, alienated customers, socially damaging business practices, and squandered value.
In this heightened race toward profitability or growth, we can easily lose sight of the vital balance between profit and the purposes it exists to enable. When we design and execute on a business model—value propositions, unit economics, revenue streams, pricing structures, practices for customer acquisition and retention, and economies of scale—our choices will lead to much more than just financial outcomes.
For example, many “attractive” business models rely on below-living-wage labor under conditions tantamount to slavery (much of fashion), non-renewable extraction from the environment (much of food and energy), or even the long-term elimination of the business’s own workforce (much of the “gig economy”). These models spot purely financial opportunity within the lines of established systems of power (and often exploitation). Even when businesses constructed on these models become aware of abuses located outside their direct operations, they often are so dependent on those external systems that they cannot effectively confront or exit from them.
Furthermore, in some sectors, aggressive goal-setting—especially when tied to compensation and promotion—can have a perverse effect. This practice leads people to behave as though all that matters (above some minimal legal baseline) is the transaction and the bottom-line results. While incentive-driven models are becoming more common, these often lead to trickle-down damage on corporate culture, customer care, and even the mental and relational health of the team members affected. In the worst cases, such purely financial incentives become institutionalized in such a way that even the business’s own leaders lose control of the behaviors of their workers. The “winners” of such a system add so much profit that they are untouchable because “they make too much money for the firm.”
Instead, we long for deliverance from the distortions of treating money as supreme. We steward it as the essential fuel that allows our business to deliver sustained value—in financial and non-financial terms—for all stakeholders.
1. We operate with transparency in valuing and pricing our products and services, entrusting our customers with uncommon visibility into how we seek to make a fair profit.
2. We take great care with the integrity of our supply chain. We design and operate it not solely for financial optimization, or even merely to appeal to customer expectations, but to actively curtail the exploitation of persons and natural resources.
3. We set sustainable growth and pace targets that honor our stakeholder commitments—not only to our investors but also to our customers, our team, and the communities in which we operate. We plan for intentional seasons of more modest growth to build capacities in R&D, team, and infrastructure that will allow us to grow over the long run.
4. As a leadership team we actively model financial decision-making that prioritizes people. We invest in our team’s fluency with our financial model, believing that a more widespread understanding of our profit drivers will lead to more prudent decisions that conserve capital and preserve our mission over the long term.
5. Though our management system of goals and metrics drives action and accountability at the team and individual level, we carefully limit the use of direct performance-based incentives for individuals, recognizing the often perverse effects on workers, teams, customers, and even families.
6. We invite team participation and visibility into the ways we use our profits for long-term reinvestment in the business and generous mission-aligned corporate philanthropy.
THE GOOD NEWS
As leaders pursuing both faithfulness and impact, we can develop a healthier relationship to the goals and dynamics of growth. We can begin by challenging the common assumption that all businesses should seek to scale as much as possible. We know that many healthy small businesses grow consistently, serve their customers and communities well, and never achieve significant scale. And we must remember that in God’s upside-down economy, bigger does not necessarily mean more blessing, importance, or honor.
Freed from the trap of letting others determine our financial model or growth curve, we can set our own course in light of our capabilities, ambition, priorities, and constraints. We will wisely consider what scale, reach, replication, and impact means—and doesn’t mean—for our organization. From there, we can contemplate one of the most important and overlooked questions about profit: what is the right amount?
Indeed, we will be reoriented to a more purposeful understanding of the relationship between why we exist and how we exist. Instead of serving and satisfying customers in order to win and grow, we are free to grow so that we may serve and satisfy more customers, partners, and team members. Instead of inheriting business models that enshrine existing inequity, we can seek to design new ones that create entrenched good. We can hope to experience God-given satisfaction in mastering the art and science behind our financial engine, never forgetting that the business model is made for people, not people for the business model.