Why should businesses avoid becoming stuck in customer-centric solutions?
“We cannot choose between growth and sustainability. We must have both.” – Paul Polman, former CEO of Unilever
In recent years, the customer-centric approach has been seen as the ultimate model for good business. Regardless of sector, all businesses have taken pains to explain that they place the customer at the centre of all their activities. More progressive companies have refined this model by replacing the word ‘customer’ with ‘people’ or ‘humans’. What does customer-centricism tell us about the world of business and why do we propose that routinely placing the customer at the heart of the business models is short-sighted and not suited to advance sustainability?
In this white paper, we delve into the underlying assumptions about people and the world that are so prevalent in the so-called ‘business-as-usual”. By questioning these assumptions, we present a vision of a Life-centric approach which, we assert, has the potential to meet the needs of the future better than the more traditional customer-centric approach.
At the heart of the Life-centric® approach is life on Earth in all its diversity. This approach extends the focus from humans to the whole ecosystem, harmonising the economic, ecological and societal impacts of the business or any organisation. The aim of this approach is to encourage leaders to define the worldview of their organisation in relation to the system of life as a whole, not only in relation to the customer segment they are serving.
The Life-centric approach may, at first, sound fairly idealistic to some, or even naïve to others. Even so, we genuinely seek to challenge the traditional paradigms of organisational culture, leadership, and business, and we employ this intriguing juxtaposition as a way of provoking debate. Our purpose is to help organisations grow Life-centric, i.e. to grow in a sustainable and meaningful way – as suggested in the quote by Paul Polman.
Businesses Seek Ever-Deeper Meaning for their Existence
Milton Friedman, a free-market ideologue, published a seminal article exactly 50 years ago in The New York Times Magazine, in which he argued that companies should not go beyond the letter of the law to combat environmental or societal challenges. Companies, he said, have no social responsibilities except the sacred responsibility to make money.
Since then, one of the business world’s fundamental principles has been the idea that companies should, as it were, mind their own business and leave politics to the politicians. Habitually, business leaders have sought to minimise the extent to which societal questions can impinge upon the way businesses are run, if indeed they do so at all. Those in the business world were encouraged to focus their attention solely on what would have a direct effect on their core business activities.
From the perspective of managing a business, quarterly profit and annual dividends have come to be considered among the most important measures of success. This, in turn, has led to a shortening of the timeframe guiding companies’ decision-making processes.
For the past decade, corporate citizenship, or the more well-known notion of corporate social responsibility (CSR), has risen to shake the idea that businesses would exist in a vacuum. Increasing conversations on corporate citizenship, CSR, and corporate sustainability connect businesses all the more strongly to the societies that surround them. And even more to the natural ecosystems that they are part of.
During the COVID-19 pandemic, companies’ role in relation to society has once again rose to the agendas at the top tables of the business world. Now, instead of simply thinking philanthropy, impact branding, or ‘green sheen’, an increasing number of pioneering businesses are becoming more ambitious, and strategic, in their approaches to the societal and environmental roles and responsibilities that their companies have in today’s societies and global market economy.
Increasing conversations on corporate citizenship, CSR, and corporate sustainability connect businesses all the more strongly to the societies that surround them. And even more to the natural ecosystems that they are part of.
A Renewed Worldview at the Forefront of Change
Above, we gave a short depiction of the development of businesses’ role in society from a historical perspective. Such depiction can be considered useful in that the majority of businesses effectuate a worldview typical of their own time: views and values widely prevalent throughout society have also been shaping business activity. The notion that businesses need to concern themselves with nothing except profit, is founded upon a different worldview to that of the businesses being societal and environmental stewards.
At present, the assumptions and worldviews informing ‘businesses-as-usual’ are being challenged on many fronts. In an age in which a climate emergency has been declared and in which species are becoming extinct at an unprecedented rate, it is hard for businesses and their leaders to react to this shift with mere indifference. Also, when the political decision makers talk about “building back better” from the current pandemic, it is becoming evident that this will not happen without companies redesigning their business models. In addition, the current social justice movements across the globe are forcing all organisations to up their game on Diversity and Inclusion (D&I) issues.
In the current context, traditional CSR is fast becoming a ‘hygiene factor’, giving businesses a mere license to operate. Moving beyond CSR, companies are starting to rethink their role of being in relation with the world that is facing mounting changes in the economic, social, and ecological spheres. This could mean for companies to reconsider whether their current corporate citizenship and sustainability practices are applied to their maximum potential or whether they could leverage their core business and the scale advantages it offers to resolve some of the world’s most serious evolving challenges.
Shift in Human Conception and its Effect on the Business World
A central part of our worldview is the notion of the person, the self. Traditional worldview underlying many businesses still today see humans as agents seeking to foster their own interests, guided by a heightened notion of rational logic.
The Life-centric® approach, however, believes that balancing out such individualistic notions are communal endeavours in which the principle of reciprocity is deemed more important than seeking one’s own interest. This approach understands that customers, employees, and business leaders do not want to see themselves as self-indulgent agents, who serve only their own interest and who dismiss the impact that their own decisions and actions may have on society and nature at large.
As our view of humanity changes, so too does our image of the principles of business models; if customers, employees, or leaders no longer consider themselves agents seeking only personal gain, they will find it increasingly difficult to accept such a facet of a given company. Conversely, a company that assumes a greater role in societal and environmental matter, can effectively avoid, or avert the claims of those who criticise businesses as selfishly focussing solely on profit and gain.
Being in tune with what is emerging around, companies can seize immense, but not instantly obvious, business opportunities. By taking a greater role on the societal and environmental front can, indeed, open a door to alternative ways of thinking, acting, and doing business. However, in most cases, such changes are neither easy, cheap, nor risk-free.
Time for Businesses to Accept their Role
In his book Myten om Framsteget (The Myth of Progress), published 26 years ago, Georg Henrik von Wright described the ways in which the power axis of science, technology and industry has precipitated humankind’s negative environmental impact to unprecedented levels.
If we accept this contention, business leaders – as representatives of the industrialised production and mass consumption – find themselves playing a central role both in the creation of the problems as well as in providing solutions to these exact same problems.
In practice, whether it is creating substitutes for plastics, developing vaccines for life-threatening diseases, reinventing food systems, coding ethical artificial intelligence, or advancing equal human rights and opportunities, companies are key actors in designing, manufacturing, distributing, and selling sustainable market offerings and facilitating sustainable consumption.
This responsibility is a heavy burden, perhaps unreasonably so, and it is hardly surprising that a large proportion of business leaders would much rather continue conducting their business in the old, tried-and-tested manner.
The Core of the Life-centric® Approach
It is our belief that organisations, and the people who work for them, should, to an ever-greater extent, seek to see their own actions as part of the surrounding world. This means appreciating the social realities surrounding economic life and viewing this social reality as fostering a deeper understanding of natural ecosystems and their founding principles. We call this approach the Life-centric® approach.
By coining this new term, we wish to draw attention to the ways in which the customer-centric approach, traditionally employed by businesses, can be detrimental in that it views people primarily as customers, consumers, or clients. In our view, the traditional customer-centric approach no longer serves as the founding principle of a company wishing to advance sustainability through its operations. Indeed, the mere concept of a customer-centric strategy may actively prevent us from moving towards business models and value creation that are renewable, circular, and, more broadly, that take all life into consideration.
Life-centric® Approach Calls for Moral Agency
Firstly, we challenge the notion that the world would be a narrow realm shaped only by science, technology, and markets, a place where decisions are based only on rational thinking and the never-ending wielding of power.
Rather, we assert that in addition to the above, the world is also a realm shaped by people who enjoy playing, culture, art, and nature, and whose life experience is unique, subjective, and socially constructed from a plethora of meanings. Furthermore, it is a place, in which the interdependence of different elements and events will only start to reveal itself during the disruptions such as the one we are currently living in.
It is becoming self-evident that a company, or any organisation to that matter, that does not recognise these interdependencies and reciprocal relationships in the current system, is deceiving itself and others, and will eventually lose the ability to renew itself. While letting go of the old ways of being in relation with the world is not easy, it is the only way to stay relevant in the future.
Secondly, we believe that a company is a moral agent not an independent island, detached from the surrounding system.
The apparent, yet all too easily forgotten truth is that all organisations are utterly dependent on nature’s ecosystem services, such as energy, or raw materials, among others. Also, in order to produce products and services and other grand new innovations, they need people with different skill sets, mindsets, and cultural backgrounds, people who think, organise and operate in different ways. People, who together form the organisation and who makes things function.
By acknowledging their moral agency, organisational leaders, board members, and employees can create systemic value to the surrounding society and system of life and eventually even change their respective industries. It is highly probable that social and environmental capital will be shown in the companies’ balance sheets in the future – listed as something other than the monetary value of a given brand.
The Life-centric® approach, that we propose in this paper, is at the core of those organisations, who seek to become key actors in shaping our common future for economically healthier, environmentally friendlier, and socially more balanced modes of production and consumption. Let’s just say, a more harmonised way of living together on this planet.
Ia Adlercreutz, MA, EMBA
Strategist, Partner, Co-founders
Creating distinction is what drives Ia. She has almost two decades of experience in branding, business development and design management.
Max Mickelsson, MMSc
Strategist, Partner, Co-founders
Max has spent the last fifteen years combining his passion for politics, technology and business to promote positive change.
Sonja Lahtinen, Dr. Econ.
Research & Insight Manager, Co-founders
Sonja holds an MSc and a PhD in marketing and a BSc in risk management. In her doctoral dissertation, she studied the new role of companies in sustainability from the viewpoints of strategy, management, and co-creation.
Minna Näsman, Dr. Theol.
(Previous) Research Director, Co-founders
Minna is a researcher, business developer and a senior advisor in stakeholder relations. In her doctoral thesis she examines the role of life views in environmental conflicts.