Teal organizations and Benefit Corporations

Do you know B-Corp and Teal organizations? In America both the Teal organizations and the B-Corp have already taken hold and, little by little, are also growing in Italy.

According to Wikipedia, a Benefit corporation, or B-Corp, is:

“A legal status admitted in some American states and in Italy as a Benefit Company, designed for for-profit companies that want to go beyond the goal of profit and maximize their positive impact on society and the environment.”

Teal Organizations and B-Corp.

An example in Italy is the “Fratelli Carli” olive oil producer.

The Teal organizations share the purpose with the B-Corp and differ in two key principles that characterize them. Wholeness, in the sense that people show all their work at work, so not only the cold and impassive professional side but also their feelings, problems and passions; and self-management, in the sense that since there is no hierarchy, every individual takes on a role that fascinates him, and is responsible for the whole organization. A striking example is the company Gore (producer of Goretex), which has more than 10,000 members (so call associates) and no boss; their revenues are over $ 3 billion.
The Teal and B-Corp organizations are an evolution over the economy based on the protection of mere capital, where companies work hard for the sole purpose of making money. From a financial point of view, the following paradigm makes perfect sense: if I temporarily deprive myself of a substantial sum of money, I claim to have it back with maximum profit.

What should the entrepreneur do to make investors happy?

Use capital to found a company that produces goods or services to meet the needs of the market. The paradigm continues to make sense also from the operational point of view of individuals. The company, satisfying a latent or explicit need of the market, is paid by consumers, and subsequently remunerates employees and shareholders.

The paradigm begins to falter, however, when one looks at it from the point of view of society.

• What did the company have to do to maximize profit and meet financial needs?
• Has it used ethically paid or specialized labor or has it outsourced production to lower costs, perhaps exploiting the children of an impoverished country?
• Has it created a safe and sustainable production facility, or has it spared preventive and environmental protection measures?
• Did it create an high  quality product or designed it with programmed obsolescence techniques?

From these questions, obviously extreme, one can understand how companies can meet the needs of the market in completely different ways. It is also clear that the right organization is the one that acts ethically, producing quality products that are sustainable, respecting the environment, the safety and health of its employees and society.

How many companies work ethically?

Probably all would like to do, but then doing the math, they find that installing the filters at the chimney has a cost, that implement security systems at the factory turns out to be an excessive investment, that the skilled Italian labor costs four times that of China. They must therefore compromise on operational terms while guaranteeing maximum remuneration for shareholders.

With this I do not mean that the shareholder shouldn’t be paid, indeed. Without them, companies would not have enough capital to start and grow, they remain a key partner. Instead, the purpose of the company must be changed, we must move from maximizing profit to maximizing the benefit to society and the environment.

Maximizing the positive impact on society does not mean going into loss or not paying back the funding, it means remunerate all the stakeholders in a balanced manner, also guaranteeing a benefit to society.

One example is Benefit companies and Teal organizations around the world. For now they are not enough to have relevant statistical data, but research has shown better growth than standard companies. Numerous examples can be found in this LinkedIn group and in the book by Frederic Laloux “Reinventing Organizations“.

A positive impact on society and the environment

As a last reflection, I invite you to think of a world where all organizations have a purpose with a positive impact on society and the environment. In an economy of this type, the destructive competition currently in force would cease to exist; organizations with similar goals would stop fighting and help each other to achieve common goals together.

Try to think of nice and clean factories, like those built by Olivetti, surrounded by greenery and with glass walls. Think of a sustainable world, without pollution, with farms of animals that live in nature, with fields without pesticides …
If we want to get out of the crisis and create a better world, we must first change the purpose of our organizations.
To conclude, I quote a quote from Olivetti to emphasize that this is not an utopia but a feasible dream:

“The term utopia is the most convenient way to get rid of what you do not want, able, or courage to do. A dream seems like a dream until it starts somewhere, only then becomes a purpose, that is, something infinitely bigger. “