How Does Nature Define Profit?

It is traditional to define an organization’s health by the amount of profit it makes. But how does nature define profit and what lessons and implications might it have for how we lead our organizations?

In nature, profit is defined by the evolution of the system. As our ecosystems and their species and plant life become more diverse and interdependent, the system evolves. This evolution allows nature to create new possibilities and innovations that don’t extract value, rather they increase the collective value that exists within the system.

What if Organizations Defined Profit as Evolution?

What would change if we defined profit as evolution? In an industrial economy, profit is the difference between costs and revenue. At its core, this definition extracts resources (minerals, trees, land, labor, etc.) and privatize the profit by selling these resources to others to pay our bills and create net profits.

But nature doesn’t work this way. It doesn’t extract resources, it uses resources to add capacity to the system. Even waste is never just waste. It is something that creates conditions for future life in the ecosystem.

In earlier stages of an ecosystem, plants and species are more consumptive. It consumes nutrients from the ground without putting resources back. But as nature evolves to a type III ecology, it becomes more generous in its structure and design. It depends on the cooperative sharing between species and plants to gain nutrients and contributes nutrients back into the ground. This capacity to be generous is embedded in diversity and the expanding interdependence of a type III ecosystem. The relationships between species and plant life allow for greater sharing of nutrients in a way that benefits the whole system.

If organizations shifted their definition of profit or even expanded it, we would measure not just net profit, but also its evolution as an organization and its contributions back to the larger system. This shift would force our organizations to consider not just extracting resources to privatize profit but would also measure value based on the organization’s contributions back to the larger society and the earth. The triple bottom line of society, environment, and economy would be an example of defining profit with more of a nature view.

Implications for Leadership – Reconstructing Value

If we were to apply this lesson from nature, part of leadership would be to reconstruct value in the organization. Instead of placing financial profit at the center of the organization and society, we would place the environment, community, and economics in an interdependent relationship of importance.

There are three implications for leadership if we defined profit as the evolution of our organizational system:

1.     Part of our leadership practice would be measured on how we develop the people in our organizations.

All our employees have a mindset and worldview that is influenced by their experiences, education, and deep background assumptions. If employees view an organization as separate from the environment and see its impact on society as irrelevant, then as a leader, we need to help employees reconstruct what they see as valuable. Traditional leadership literature suggests that leading is about helping achieve goals and productivity. Nature suggests that part of our legacy as leaders is attached to the evolution of the human beings who work in our organizations. That is another thing entirely.

2.     Leaders would need to reflect on the resources they use to create their products.

Are we extracting, or adding to the larger ecosystem? Does the way we make a profit create a greater capacity within the larger society and the environment, or does it diminish the natural resources without regard to the long-term deficit we leave to future generations?

3.     Our higher purpose for the organization needs to reflect the notion of profit as evolution.

Most organizations use mission, visions, and values as an internal measure of what they stand for and what they organize around. A higher purpose is a statement that transcends the boundaries of the organization. It exists in the space between the organization and the environment and society. It asks the question, what is the deep need in our society that this organization is designed to fill? Leaders need to take time to articulate and share the organization’s higher purpose.

If we defined profit as evolution, organizational leaders would be in the business of reconstructing organizational value. The value would no longer just be the difference between costs and revenue. It would also include the organizational benefits to society, the environment, and future generations.