How legal structures are evolving.

I spent the early part of my career as a corporate lawyer, working for large companies in different parts of the world. For a long time I was happy in my work, finding it fulfilling and meaningful. Over time, however, I became troubled by the vast disparity between the lives led by my colleagues and me and most of those whose lives we affected. I traveled widely and could not ignore the relative poverty that many people lived in and the increasing and negative impact that human beings were having on the natural world.

In 2002 I could take it no longer and left the corporate world. I felt baffled and bemused at how the intelligent and responsible people I was working with could collectively behave so stupidly and irresponsibly in relation to society and the planet. They (or rather we, for I was no better) were mindlessly and selfishly pursuing growth without caring about its impact. I left to try to understand what was going on. I had a hunch that a big factor in all this was the way businesses were structured – the invisible architecture of the corporation that subtly affected our behaviour.

After leaving my corporate job, I spent time in the not-for-profit world and I noticed similar dynamics.  NGOs like ActionAid, Amnesty International and WWF have far more in common with the likes of HSBC or BP than they would like to admit. In particular they are over-sensitive to the needs and whims of funders, and too insensitive to the real needs of their beneficiaries. Every now and then, we see symptoms of these problems – Amnesty paying huge fees to dismiss incompetent executives, Oxfam ignoring sex exploitation issues in Haiti. These high profile cases are indicators of deeper, systemic problems in such large institutions – this becomes clear if you talk to people who have worked in large NGOS or corporations.

If we are going to find more sustainable and caring ways of living on this planet, we need large scale organisation. But large organisations will have to shift to a more enlightened way of being and operating – currently they are not serving us.

I see this as a question of evolution. Our governance structures are still relatively immature, and need to evolve to a more mature state to respond to today’s world. If you think about a company, for example, which is by far the most common legal form, it is a very simple structure – there are two sovereign bodies: owners (otherwise known as shareholders or members) and a board of directors/trustees. Corporate governance focuses on the dynamic between these two bodies. If companies are to be fit for purpose, they need to evolve to a more complex form.

In recent years in my legal practice I have increasingly found myself developing such complex structures for clients. They have included:

  • hydrogen car company Riversimple,which is committed to sustainable transport and wanted to embed a commitment to a meaningful purpose into its structure;
  • the group of entrepreneurs and academics who founded Dataswift, offering a new technology in the personal data space, who wanted to create a business that has trust and integrity built into its DNA; and
  • the Library of Things, founded by three young entrepreneurs, Rebecca, Emma and Sophia, whose business encourages the sharing of goods and who aim to serve both investors and the community, profit and purpose, people and planet.

These innovators are not shy about embracing a complex structure since they recognise that their aims and approach are complex.

Here’s my attempt to draw out some of the key shared aspects of such structures:

  • power is distributed. Modern corporations are, not infrequently, compared to one-party states. The next evolution of company will be more like a democracy, where no individual or group can be said to be in charge and power is shared amongst different groups that interact in complex ways. In Greaterthan we created a “minimal viable board”, shifting most decision-making to the operational parts of the organisation and reserving only a small number of governance and finance questions to the board.
  • tolerance and diversity is encouraged, in recognition of the wisdom to be found in hearing diverse and sometimes apparently opposing views. For example, in Riversimple, the board is made up of two parts that have different but complementary roles. The operating board is focused on leading the business forward, the stewards board is focused on the needs and views of stakeholders. In joint board meetings, they bring together these different perspectives, which encourages rich dialogue and a broad perspective. In Dataswift, we established two companies, a for-profit and a not-for-profit, and created inter-dependence between them. Such hybrid structures are reminiscent of the way the human brain is structured, with two chambers that perceive the world in different ways. The magic comes from the weaving between the two, so that the whole is greater than the sum of the parts.
  • information flows freely. Traditional organisations (and repressive governments) recognise information as a source of power, and seek to control it. Enlightened leaders encourage the free flow of information, and this can be formally encouraged through the organisational structures. The British retailer John Lewis does this through its constitution, stating that any employee can write to the company newsletter, even anonymously if they wish, and the responsible director must publish a response;
  • deliberative decision-making for major decisions. Such decision-making is sometimes described as consent-based, or no objection. This can be contrasted with more familiar approaches such as voting (the tyranny of the majority) or consensus (the tyranny of the minority). Einstein famously said that “No problem can be solved from the same level of consciousness that created it.” Deliberative decision-making is a way of accessing a different level of consciousness.
  • ownership is not the exclusive domain of a separate group of distant investors, but is held by and on behalf of the collective. In a business this might mean, for example, that voting shares are held by trustees on behalf of the community and investors are issued with non-voting shares.

One notable aspect of these developments is that such organisations are far more differentiated one from another than traditional organisations. This I feel is another indicator of evolution. Mature adults vary hugely in appearance, dress, behaviour and character, whereas teenagers are far more likely to look like and copy their peers.

complexity in plants

Do you have a complex initiative, and are struggling to squeeze it into a conventionally shaped box? Let’s have a chat!