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The Chrysalis Economy— How Citizen CEO’s and Corporations Can Fuse Values and Value Creation
By John Elkington
Copyright 2001
Capstone Publishing Ltd.
$29.95
Reviewed by Richard Walthers
With Enron, WorldCom, Global Crossing, and Adelphia, among others in the news on a daily basis, and in light of President Bush choosing not to attend the World Summit on Sustainable Development in Johannesburg, I thought it was time to review John Elkington’s last book, The Chrysalis Economy. Although this book was published about a year ago it is worth revisiting in light of what has been transpiring with the aforementioned companies, and how the U.S. government is abdicating its leadership role in helping Third World countries develop.
Despite the subtitle, How Citizen CEO’s and Corporations Can Fuse Values and Value Creation, this is not a how-to manual for CEO’s, rather it describes Elkington’s vision of how capitalism will be dramatically transformed during the first decades of this new century. The book also addresses the fact that sustainability will be the premier business challenge as this new century progresses, and finally it provides some preliminary navigation tools for companies that chart their course towards the moving target of sustainability.
To describe this metamorphosis the author characterizes companies in a clever matrix as either degenerative or regenerative. Caterpillars and locusts represent the prevalent degenerative configuration today, and butterflies and honeybees portray the regenerative business model to be emulated in the future. These four types are separated on the vertical axis by the value barrier, or how they extract value as they move toward sustainability. On the horizontal axis they are divided by the values barrier or those core beliefs from which a company operates. It is a dynamic vision that both business and government should study if any progress is to be made on the growing social and environmental problems we are facing.
The author lists several criteria that he believes will be conditions for sustainable development to become successfully instituted in the 21st Century. Corporations will have to be transparent and open, with equal opportunity and true diversity actively practiced. Companies will be evaluated in the future by how well they utilize all three forms of capital; human capital - knowledge, social capital – co-operation, and natural capital – Earth’s resources. This will be a difficult agenda for most companies and maybe impossible for many to attain when you consider that various levels and forms of government will also be involved in the implementation.
John Elkington is a brilliant thinker who has written many books on sustainability and business. He coined the term "the triple bottom line" in his last book, Cannibals with Forks and the term has now been assimilated into the popular business lexicon. It has become de rigueur to invoke it in any discussion of sustainability and corporate social responsibility or CSR as Elkington who is so fond of anagrams likes to label it. He is committed to the belief that language can help change behavior, however with terms like "downsizing", and "lean and mean" still in the popular jargon, and still being employed as standard operating procedure, there remains a strong incentive to change the vocabulary.
The Chrysalis Economy is more accessible than his previous book, and there are many ideas to explore as the author quickly moves from one concept to the next. While this makes for quick reading there were times when the discussion could have been expanded without derailing the pace of the book. Even though this is a book about values, the spiritual foundation of values was largely ignored. The book is filled with interesting anecdotal side boxes – stories to enhance and demonstrate the concepts being examined. It is an important book for anyone involved in business whether they have a current interest in sustainable development or not. That interest, Elkington makes crystal clear, will not be optional in the near future.
Since all companies have been affected by successive waves of management trends such as total quality management, information technology, health and safety, and very recently corporate social responsibility, Elkington believes they will surely have to integrate sustainable development in some fashion into their businesses. How they responded to the previous waves of change will be a good indicator of success in integrating this new critical challenge.
The author proposes that corporations and their CEO’s begin to act like good citizens and take active roles in promoting the social and environmental health of society. In a very specific discussion of CEO character traits and leadership qualities necessary for corporate sustainability success, Elkington risks perpetuating the myth of the heroic CEO. Stakeholders have come to believe that CEO’s bear full responsibility for either positive or negative corporate performance. It is clear even considering all the recent scandals and bankruptcies that this is not the case, and the success or failure of sustainable development should not be dependent on only one group of people.
The subject of values and how they relate to the creation of valuable companies is the central theme of The Chrysalis Economy. Amid the confusion and distrust in the economy today is a longing for corporations to exhibit values that reflect citizens’ aspirations for the future. Is it a coincidence that on the same day that the images of Adelphia management being led away in handcuffs flashed across America, the stock market rose almost 500 points?
Towards the end of the book the author writes that "of the world’s 100 largest economies, 50 are now corporations; the world’s largest corporations employ only 0.05% of the world’s population, but control 25% of the world’s economic output". It’s no wonder that people around the globe are upset and have shown in numerous polls that they believe that industry doesn’t pay enough attention to social responsibility considering that these 50 companies control more wealth than the vast majority of the 192 countries presently operating on our planet. These kind of statistics make the U.S. government’s lack of leadership in assisting the transition to sustainable development all the more puzzling.
Elkington writes "the older I get the more I realize that culture change often moves on a generational time-scale, much more slowly than I had expected in the late 1960s. But then as the time-scales extend and the changes finally begin to happen, the transition can happen extraordinarily fast…". The Chrysalis Economy is one of the books that will help accelerate the coming transformation.