It is hard to imagine that it has been over a year since Business Roundtable released a revised Statement on the Purpose of a Corporation. For many, the question was whether these statements and others in the same spirit truly represented the beginnings of a fundamental shift toward stakeholder capitalism, or whether it was all an exercise in PR. Then came the pandemic, widespread social unrest, and a declining economy, all wrapped in the unrelenting uncertainty of 2020. By Fall, the initial report card was mixed: early research found that signatories had not made significant progress toward these goals compared to peers engaged in business as usual.
One explanation is that transformational change frequently encounters obstacles in terms of organizational readiness, priorities, scope, and timing. It simply takes time. Consequently, even as leaders and the zeitgeist have embraced the vision of stakeholder capitalism, many organizations may lag behind in terms of their capacity to act on otherwise good intentions.
As we look ahead to 2021 and beyond, we believe that firms will need to demonstrate more concrete actions toward stakeholder centricity and a commitment to preferable futures – both in response to increasing external pressures and as a means of making organizations more resilient in the face of continued uncertainty.
So, how might we do that?
Designing a more responsible future
Human-centered design (HCD) is a starting point. Traditionally, this has meant engaging stakeholders and users, identifying challenges, unmet needs and opportunities, co-designing and prototyping solutions, and iterating throughout execution and delivery. As a first step toward stakeholder centricity, integrating more human-centered processes is a proven approach to creating more meaningful and relevant products, services, and interventions. But it’s not enough.
On its own, the strength of HCD is also a limitation. A disproportionate focus on users can create critical blind spots and limits our ability to consider impacts to other stakeholders. This can lead to the sort of significant negative externalities that we experience from products and services every day – for example the effects of social media on political polarization, the gig economy as a contributor to income inequality, delivery services and the environment, and so on. In each case, exceptionally good solutions lead to negative effects. Indeed, almost everything we make creates a long cascade of systemic impacts that shape the world around us, both immediately and over time.
Moving toward a more fair and inclusive form of capitalism will require that design and innovation leaders adopt a more holistic approach to shaping the future. In our own work, we have built on the strong foundation of HCD and expanded the definition of stakeholders to include users as well as others impacted by a product or policy, the commons, society as a whole, and even the planet. We also advocate a long-term perspective that brings futures literacy into the innovation process. This approach to stakeholders and futures requires the development of new mindsets and methods adapted from multiple disciplines – systems thinking, business design, foresight, and ethics, among others. We are calling this integrated approach to stakeholder centricity “responsible design.”
Responsible design means the products and services we create should account for impacts to all stakeholders – today and in the future.
The current state of responsible design
Responsible design is an emerging discipline, though we see evidence of the trend in movements related to ethical technology, the circular economy, healthcare, design for social change, and elsewhere. Even so, we wanted to better gauge whether these ideas were becoming mainstream in large organizations, and whether firms were investing time and resources in responsible design as a path toward corporate purpose and/or stakeholder capitalism. To answer this question – and to better understand potential barriers to change – we surveyed a group of 50 senior leaders in design and innovation, drawn from multiple industries including technology, healthcare, pharma, retail, and mobility.
Long-term thinking and outcomes-focused design
We asked participants to rank a series of responsible design attributes in terms of whether their organization would value it highly or not at all. These included “taking a long-term perspective,” “being cognizant of the wider impact of solutions,” “working toward preferable futures,” “understanding complex systems and root causes,” and “being inclusive of all stakeholders.” Using the same attributes, we then asked whether firms were devoting more or fewer resources to each compared to five years ago. Notable findings include the growing importance of thinking and planning in long timescales, and the importance of being more cognizant of impacts – both of which run counter to the “move fast and break things” ethos of the previous decade.
Stakeholders in theory vs. practice
Participants also ranked “inclusive of all stakeholders” as the least-valued and lowest-trending attribute, suggesting that stakeholder-centric thinking remains emergent compared to the more established mental models and practices of human-centered design. While there seems to be recognition that stakeholder capitalism itself represents a worthy ideal (60% of participants say that it is increasing in importance, when asked directly), our survey also revealed the lack of a common definition and a variety of interpretations of what it might look like in practice.
Barriers to organizational change
Other qualitative responses revealed a range of tensions between the attributes of responsible design and perceptions that such an approach would be slow, inefficient, or costly. Many organizations – particularly in technology – are aligned to values that may limit the near-term prioritization and adoption of responsible design (e.g., customer obsession, short-term results, data-driven decision making, etc.). This condition is exacerbated by differing priorities, incentives, and motives across departments and up and down the organization.
Our research suggests that positive change is occurring and the trend toward responsible design and stakeholder capitalism will likely continue, particularly in light of the shifting global role of organizations and leadership amidst the larger backdrop of social, political, and economic uncertainty. As the pandemic has stressed so many global systems, we see an opportunity for new thinking and a more fundamental reset of business as usual. Now is the time.
We are also optimistic that the business case is clear, even as the transition to stakeholder capitalism is unevenly distributed and variously interpreted. Responsible design will enable firms to command greater influence over desired outcomes and actual impacts while better anticipating and managing risk. This will allow organizations to more effectively align corporate purpose, values, and actions, creating more durable brand value and attracting critical resources.
Lastly, we believe stakeholder centricity will change how we do innovation. It will be critical to better define the meaning of key mental models and concepts as a precursor to more ambitious organizational change. And we will need to create new tools and frameworks that help us do our work. This may take some time, and we should be patient in measuring progress toward these desirable goals, while continuing to advocate for change at all levels of the system.
A special thanks to Executive Creative Director Neeti Sanyal and Strategy Director Jeff Turkelson for their research support.