Generating Systemic Wealth — Part 7: The Third Wealth-Generating Source, Assets
The creation or acquisition of assets provides the ability to continually transform the value of the output of the two earlier arenas. A completely human construct, an asset can repeatedly engage with a flow of inputs, making possible the recurring generation of value. Deployed with intelligence and industriousness, it can provide value to a variety of constituencies, thereby generating a return. Through machines, methods, and other means, one can fairly predictably produce a higher order offering from the commodities one acts upon. This is the essence of a manufacturing corporation like Dupont, or a consumer products company like Colgate — to take raw materials and bring them into a state where they can be used for purposes that would otherwise not be possible.
From a closed system view, the asset and the value it can produce are considered the sole domain of its owner. The owner has the right to utilize that asset in any way that it sees fit, and is accountable only to itself for the means employed and the returns generated. It resists either public or regulatory scrutiny beyond what is mandated by law. For example, through its ownership of the plane, an airline feels it has a right to limit any intervention in the utilization of that plane. In a similar way, land purchased for development is considered to be no business of anyone but the owner of record.
From an open systems perspective, an asset is understood to be an element in a flow of creative work. To enable that flow to yield the best possible results, it is important to be open and transparent with others in the same flow. Suppliers and regulators are considered partners, not obstructions. This makes evident to all involved how wealth generated by the flow can be shared and equitably distributed. From this perspective, concepts like fair trade can emerge, where native harvesters or producers are considered in the wealth-generating measurements of the asset owner.
Merida Meridian makes its books open to its Brazilian early stage converters, providing them 10 percent of the earnings in that region for their contribution to the creation of wealth. Distributors may also be engaged in specific agreements that use the owner’s asset in ways that will also benefit the distributor. For example, Seventh Generation makes special versions of its products and/or packaging for retailers like Target or Costco. Because an open system approach creates multiplier effects through leveraging the resources of multiple stakeholders, it has proven itself again and again in the world of modern manufacturing.
From a living systems perspective, the asset becomes the means to raise knowledge and intelligence, and therefore viability, throughout the entire production process. This view sees assets as a means for the owner to generate wealth for all along the value-adding stream that have a stake in the productivity of those assets. Because an asset leverages the transformation of a material flow, it provides a powerful means for people to influence the world they live in. Thus, the asset is a source of creativity for operators who work with it, as well as for suppliers who provide its inputs. Understanding this, Seventh Generation brought its manufacturing partners into the creative process long before the formulas were developed. Many companies have also moved into open source product design through on-line wikis that invite in consumers as well as technicians. When an asset is understood to be part of a living system, this kind of cooperative and reciprocal use becomes possible.
In South Africa, Colgate worked with raw material suppliers from rural areas in the northern part of the country. It provided support for business development, ensuring not only a steady supply of raw materials for itself, but also vitally important new possibilities for economic activity in places where starvation and illiteracy were high. Colgate’s ownership of a manufacturing facility and distribution system gave it the credibility, leverage, and resources it needed to persuade rural jurisdictions to improve the conditions that would make business development possible. By leveraging the power of its assets, Colgate was able to take responsibility for the entire flow of work of which it was a part, regenerating dozens of rural areas in the process that otherwise might have received no economic development assistance. It did this not through philanthropy, which would have been costly and relatively ineffective, but instead through the way it did business, creating wealth both for the company and for the communities providing their material inputs.
This story is part of a series on regenerative economics and generating systemic wealth. To read the rest of the series, see the links below.
About Carol Sanford
Carol Sanford is a regenerative business educator, the award winning author of The Regenerative Business: Redesign Work, Cultivate Human Potential, Achieve Extraordinary Outcomes, and executive in residence and senior fellow in social innovation at Babson College. She has worked with fortune 500 executives and rock star entrepreneurs for 40 years, helping them to innovate and grow their businesses by growing their people. Learn more about Carol and her work at her website.