Junto stood at the top of the climbing frame looking down through a hole to the wood chips below. Staring intensely down into the void, he took a deep breathe and said with a grave intensity “I have to do this”. Being the responsible adults that we are, we just stood and watched as his feet left the platform and he dropped into the hole almost twice his own height. He landed, unscathed, and outwardly proud of himself.
For some kids this wouldn’t be a big deal, but this sudden display of unprovoked bravery was unusual. There was no reason for him to do it and obvious reasons not to, yet something inside him in that moment told him that it he must. Without any coercion, he listened to his inner voice and trusted that it knew best.
Carrots and sticks
This week I co-hosted an event in London called Sense & Sustainability with fellow B Corps Hattrick, Priory Direct and Grain (no relation to my business, Wholegrain). The event looked at a few different aspects of sustainable business, from frameworks like B Corp and 1% for the Planet, to the pitfalls of greenwashing and the very physical nature of digital technology.
When we got to the Q&A, the panel were asked whether we would like to see more carrots or more sticks from governments to drive progress toward a sustainable economy. It sounds like a simple question, but on closer inspection I think it reveals some deeper truths about our society.
Who likes sticks?
When we talk about sticks in relation to responsible business practices, we're generally talking about government regulations that require businesses (or citizens) to either do things better or stop doing them altogether. There are clearly many examples from all over the world where regulations have helped protect society and the environment, ranging from seat belts in cars, to energy efficiency standards in buildings, to banning dangerous chemicals. The UK’s recent introduction of a plastic carrier bag tax is a very visible example of how regulations can drive behaviour change, as evidenced by the increasing number of people walking out of stores awkwardly balancing their groceries in their arms.
But regulations do have their limitations. Regulations tend to be one size fits all, meaning that edge cases get missed, positive and negative. They can also be hard to enforce, meaning that those who see profit in bending or ignoring the rules will often do so to the detriment of society and to the disadvantage of those who follow comply. Not to mention the fact that punishments are generally in the form of financial penalties, so it's easy for businesses to just do the maths and see whether it's more profitable to comply or simply absorb the fines as a cost of business.
Regulations aren’t perfect, and the more we have the more complicated life becomes, but they do have their place in protecting society from some of the negative impacts of business, and that’s generally a good thing.
Would you prefer some carrots?
I think all members of our panel recognised the importance of regulations, but there was a clear preference for carrots. Perhaps that shouldn’t be a surprise. Carrots are the gentler solution of the two, providing incentives to do the right thing rather than forcing it with the threat of punishments.
You can slice and cook carrots in many ways. Some people will be tempted by simple chopped carrot with a bit of houmous on the side. They might only need a faint possibility of self-benefit such as improved brand reputation or staff motivation in order to make some more responsible decisions. On the other hand, some need fancy julienne carrots prepared by a Michelin star chef to change behaviour. Big incentives often come in the form of financial subsidies offered by governments as a reward for changing business practices.
Carrots can be effective if they are well designed, but if they aren’t then they can create unfair markets, artificial dependencies or side effects in other areas of society where the government’s money might have been better spent. Worse still, they sometimes just funnel money from taxpayers into the pockets of corporate shareholders.
The power of coercion
There are pro’s and con’s to carrots and sticks in all their shapes and sizes, and of course they can also be used together. But no matter how we look at it, and whatever option we prefer, the uncomfortable reality is that all forms of carrots and sticks are forms of coercion. Coercion to do the right thing, but coercion nonetheless.
I believe that deep down, the vast majority of humans want to be responsible members of the community and yet even with our elaborate schemes of carrots and sticks, it still seems that we are struggling to create an economy that actually serves the collective good. How much more coercion are we going to need?
I wonder if we are asking the wrong question. Rather than asking whether carrots would be more effective than sticks, we should ask ourselves why we need either. In a recent issue of the Creative Destruction newsletter, Thomas Klaffke highlighted “The grotesque situation of having to make a business case for doing good”. It seems that in our current culture, it isn’t enough to simply do the right thing.
We all know the way
When Junto made that leap from the climbing frame, he didnt need any form of coersion. His motivation came from within. He harnessed the power of intrinsic motivation, that driving force inside us that compels us to do things even when they might be difficult, risky, or not make any rational sense.
Intrinsic motivation is the creative driving force of humanity. It’s what drove me to go out on a limb and tell Vineeta that I had fallen in love with her all those years ago. It's what drove us to start Wholegrain Digital and push through the years of struggle to get it where it is today, even when the logical thing to do was to give up and “get a proper job”. It's what drives me to write this newsletter.
Carrots and sticks on the other hand are forms of extrinsic motivation, external incentives to behave in certain ways, such as the promise of wealth, status, popularity or physical pleasure. They are the dog treat and the electric collar.
External incentives are only necessary when our inner compasses fail us and yet they are all we talk about as ways to drive more responsible behaviour in business. It appears that our compasses have been scrambled on a mass scale. While we are busy looking “out there” at what type of new incentives might help us behave a little better, we are ignoring the fact that the root of the problem, and solution, is “in here”.
Surely our aspiration for the evolution of humanity should be that one day, even if far in the future, we will have enough collective wisdom to not need to be coerced into behaving responsibly. Imagine a world in which businesses act responsibly, just because that’s the natural thing to do.
I believe that even though we all have different perspectives and belief systems, at our core most human beings are fundamentally good. Deep down we want to live in a harmonious, healthy and sustainable society. If we listen carefully enough, our inner voices all have wisdom to guide us in the right direction, but we are so distracted by external influences that we struggle to realise it.
A world in which businesses just do the right thing without any coercion might seem a long way off, but tiny progress is still progress and if we take it one step at a time, we might just be able to reduce our collective dependence on carrots and sticks and find ourselves somewhere profoundly different. It might seem optimistic, but I think we need a bit of optimism to lead us toward something better.
P.S. There’s no audio version this week due to time constraints, but I figured that done is better than perfect. Also, if I’ve missed any apostrophe’s in today’s post, it’s because I spilled candle wax on my keyboard during a meeting for
this week. But that’s a story for another day.
I suppose it comes down to if a company believes it exists to serve its customers, or if its customers exist to serve the company. It’s a fundamental question, and the later will lead to bankruptcy — in time.
Thanks for such a beautifully written piece, Tom. I feel relatable to every bit of it. The day that all businesses feel intuitive to act for the good of everyone seems far off, yet it gives much hope and optimism for an individual like me to have faith in it and do my good part first.