The Courage to LeadJohn Fullerton
Henrik O. Madsen joined Norway’s DNV, the world’s leading ship and offshore classification company in 1982. Thirty-two years later, as Group CEO of the recently merged DNV GL, now a Euro 2.5 billion global enterprise, Henrik made a speech few CEOs will ever have the opportunity to attempt.
He chose not to waste the opportunity when he addressed a crowd of 4,000 guests gathered in Oslo last June to celebrate the company’s 150th anniversary. The “V” in DNV, after all, stands for “Veritas,” which translates from the Latin to “truth.” Without a doubt, Henrik spoke it on that day as I suspect he always does.
In addition to moving reflections on the culture that has endured through a century and a half in business, he boldly articulated the profound challenges and opportunities ahead, and reminded the audience that, “unlimited growth on a limited planet is a physical impossibility.” He went on to describe DNV GL’s commitment to sustainability, both for the organization itself and for its eighty thousand customers around the world. It takes uncommon courage to discuss limits to growth of material and energy use when your largest client industry groups include shipping and oil and gas.
In a press interview following the anniversary event and a two-day roundtable on sustainability that I was privileged to participate in, Henrik repeated his mantra, “You can’t have unlimited growth on a limited planet,” to the entire Norwegian business and political community. He and his colleagues went on to criticize the State-owned oil company Statoil for their decision to invest in the environmentally destructive and carbon-intensive Canadian Tar Sands. Statoil is DNV GL’s largest client.
During the two-day roundtable, we assessed and critiqued the concept of a “Regenerative Economy,” grounded in an understanding that living systems that survive are by their very nature regenerative. We agreed that as a living system, the human economy must itself operate regeneratively to be truly sustainable. It was a vision, we concluded, for an honest conceptual framework to describe how economies must work on Henrik’s “limited planet” if humanity is to change course and is not to destroy its own nest.
DNV GL’s intuitive commitment to Regenerative Economy thinking is well grounded in its own culture and business practices. In a very real sense, like the many projects described in Capital Institute’s Field Guide to Investing in a Regenerative Economy, DNV GL is already living the principles described in the conceptual framework. It is showing that not only is it possible, it’s already very real, if only we had the economic framing to better describe it. As Einstein famously said, “it is theory that determines what we can observe.”
There is probably no such thing as a truly regenerative global company today, but DNV GL is one of the few large global corporations that demonstrates many of the key regenerative qualities that together lead to long-term prosperity. It is undoubtedly no coincidence that DNV GL just celebrated its 150th anniversary.
What is particularly interesting about DNV GL in the context of sustainability is its ownership structure. Never a public company with absentee so-called “owners” placing short-term capital market demands on company decision-making, DNV was owned by a foundation until its merger with GL in 2013. It now has a minority partner, the German family that owned GL for decades. This means the owners are in deep relationship with the company (and now with each other), and assume the responsibilities and long-term stewardship that goes with such a genuine ownership relationship.
This stewardship has been defined by an unwavering commitment to a clear purpose: “Safeguarding life, property, and the environment,” and core values (integrity, non-hierarchical, open communication) that drive its business throughout the world.
The second foundational element of DNV GL’s stewardship is its commitment to invest an impressive five percent of its revenues in long-term research. This investment is not limited to product research directly linked to near-term revenues. It includes, for example, the cost of convening a series of multi-day roundtables on deep, long-run sustainability challenges with a group of leading thinkers from around the world. DNV GL’s goal is to grow smarter and wiser, in order to better position itself as a leader for the new opportunities that the world will offer in the future.
DNV GL’s ownership commitment to purpose and values, and its commitment to research is also quite profound from a living systems perspective, and therefore a key to DNV GL’s “regenerativeness.” As living systems thinker, Jane Jacobs once said, “it’s not how big you grow, but how you grow big.”
Systems scientist Sally Goerner teaches us that living systems can only grow sustainably through increasing their structural intricacy and through continuous reinvestment in learning. A cell divides into multiple, more differentiated cells (becoming more intricate) rather than simply growing into a larger cell lacking the necessary infrastructure to support itself. And as Darwin taught us, living systems are continuously learning and adapting qualities best-suited to long-term survival.
DNV GL is able to sustainably “grow bigger” by honoring these same principles. For example it builds the intricacy of its own management structure by remaining non-hierarchical despite its global reach. It insists on, and measures, the continuous and relentless communication of its values and encourages open discussion about the tensions where those values may be hard to translate into other cultures around the world, or conflict with short-term business objectives. And its commitment to reinvest profits in long-term research (rather than have that value extracted by short-term “financial engineers”) to ensure the organization is in continuous learning mode demonstrates in part what it means to be a regenerative organization. Spending a few days with the people at DNV GL convinced me these values are authentic. Capital Institute will illuminate the full DNV GL regenerative story in an upcoming Field Guide.
Is Henrik the type of business leader for whom we are desperately searching as we face the daunting challenges of the transition to a truly sustainable economy? Is his team at DNV GL able to compete in the global marketplace while stewarding these seemingly utopian, but I would call, regenerative principles?
One hundred and fifty years of experience suggests that the answer is a resounding “yes.”
This blog post is part of the Plan B for Business series produced by The Huffington Post and The B Team community to help articulate a Plan B for Business. To see other posts in the series, click here. For more information about The B Team, click here.
This post is also part of a month-long series produced by The Huffington Post in conjunction with a variety of events being held in September recognizing the threats posed by climate change. Those events include the UN’s Climate Summit 2014 (that was held Sept. 23, 2014, at UN headquarters in New York) and Climate Week NYC (Sept. 22-28, 2014, throughout New York City). To see all the posts in the series, read here.