Managing Sustainable Organizations

Industrial organizations are managed to maximize productivity and profits—through specialization and standardization—which facilitate routinization, mechanization, digitization, and consolidation of control to achieve economies of scale. Specialization and standardization also lead to homogenization and loss of diversity both within and among industrially managed organizations—including individual businesses, corporations, communities, and even nations. Economic sovereignty is sacrificed for the sake of more efficient resource extraction and exploitation. Individuals, organizations, communities, and nations lose their ability to sustain their distinctiveness and their unique usefulness. Any one person, organization, community, or nation becomes interchangeable with others. When the usefulness of one has been depleted, it is abandoned and replaced with another—in a never-ending quest for productivity and economic growth.

Sustainable organizations are managed to maintain ecological, social, and economic integrity rather than maximum productivity or profitability—through diversification, individualization, and decentralization of control. Productivity is sustained through mutually beneficial relationships among the diverse components of sustainable organizations. Economic sovereignty is protected in order to maintain diversity and individuality both among and within organizations. Sustainable organizations—businesses, corporations, communities, nations—maintain their distinctive usefulness to society and humanity.

Decision-making in sustainable organizations is not consolidated but is dispersed among smaller organizations and is delegated within organizations to those in the best positions to make personally informed decisions. Organizational structures evolve to accommodate changes in organizational leadership and membership and the ever-changing ecological, social, and economic environment in which organizations function. The sustainability of an organization depends on sustaining healthy, productive relationships among its purpose, people, and place.

During the industrial era of economic development, people have been encouraged to accept free markets, open borders, and homogenization of global society as signs of progress. However, all healthy living systems are defined by selective boundaries and mutually beneficial relationships among the diverse elements and organisms of which living systems are composed. The cells that make up living organisms are delineated by semipermeable membranes or boundaries that allow some things in but keep others out, and allow some things out but keep others in. Living organisms, which are composed of living cells, also have semipermeable boundaries. If these boundaries were either permeable or impermeable—if they either kept everything in and out, or let everything in and out—the organisms would die. For example, we humans are selective in what we inhale and exhale and eat and excrete. Otherwise, we would die of starvation or poisoning.

The sustainability of an individual cell, organism, or community of organisms depends on its unique ability to contribute to and benefit from the diversity of the organism, community, and ecosystem of which it is a part. This conclusion is derived from the physical law of entropy, as explained in a previous post on the laws of nature. A state of entropy, or uselessness, is characterized by a lack of form, structure, hierarchy, or differentiation. When a living cell or organism loses its ability to choose what it keeps and lets in and what it keeps and lets out, it loses its ability to maintain its uniqueness or differentness--and its usefulness. Whenever a business, corporation, community, or nation loses its unique form, structure, hierarchy, and differentiation, it becomes useless and is no longer sustainable.

The sustainability of a community, like the life of a living organism, depends on the selectivity of its boundaries. Sustainable communities have characteristics that make them unique or set them apart from other communities. These distinctive characteristics reflect the past experiences of community members in their attempts to preserve and promote their safety, health, and overall well-being. A community’s ability to thrive and contribute to and benefit from society depends on its uniqueness. If a community loses its ability to choose what it lets in and out, it will lose its ability to protect and support the health and well-being of its members and its unique ability to contribute to the larger society of which it is a part.

The same is true for the economies. Sustainable local and national economies must keep some things out, but allow other things in, and allow some things to leave, but keep other things in. If an economy doesn’t impose these restraints on itself, they must be imposed on the economy by the larger society of which it is a part. If a national economy loses its economic sovereignty or freedom to choose, its society is left vulnerable to economic exploitation from the outside or economic atrophy from within. The same is true of local communities that sacrifice their economic sovereignty for the sake of “economic development.” Without economic sovereignty, the resulting depletion and pollution of natural and human resources will degrade and ultimately destroy the usefulness of any community or nation to society and humanity.

Consequently, managers of sustainable organizations must maintain selective boundaries that allow them to choose what they let in and keep in and what they let out and keep out—regardless of whether they manage a household, business, for-profit or nonprofit corporation, community, economy, or nation. Organizational management then is a matter of arranging the diverse components essential for sustainability, across space and over time, in ways that carry out the essential economic, social, and ecological functions of sustainable organizations. Management of a sustainable organization is a matter of maintaining harmonious, productive relationships among the purpose of the organization, the people who support it and are supported by it, and the economic, social, and ecological place in which it functions.

John Ikerd