Buffer builds tools to help businesses manage and analyze their social media activity. One of Buffer’s practices is to default to transparency — it is relentlessly forthcoming about its operations, its learning, and its performance. By actively sharing information that most companies keep private, Buffer inspires others to shift how they do business.
As serial entrepreneur Kirsten Lambertsen, CEO of Kuratur, explains:
“Buffer’s transparency is simply the kind of sharing that entrepreneurs crave. … When other businesses share their truth, it helps you put your own business’s progress in perspective. That can be reassuring, eye-opening, and inspiring… I’ve gotten great ideas from Buffer that have helped me fix specific issues and that have encouraged me to stay bold with my own business.”
Generative companies like Buffer, Etsy, and Community Sourced Capital, among many others, are designing their business practices, their relationships, and their business models so that the work they do to grow their own businesses helps their stakeholders grow too.
Generative businesses have three key features:
- They design their work processes to power their own growth while sharing what they know, creating opportunities for other businesses to learn, experiment, or challenge themselves.
- They build an ecosystem of mutually supportive relationships with and between their stakeholders, so the group as a whole can benefit from interactions across the network.
- They create financial value as well as social value, which includes non-financial positive outcomes such as purpose, meaning, community, expression, and learning.
- Share what you know
Etsy, the online marketplace for handmade and vintage goods, uses similarly generative practices in its day-to-day engineering work. Etsy analyzes technical challenges on its public engineering blog, opens its professional development workshops to the local coder community, publishes success stories on its Slideshare channel, and gives away code on its GitHub repositories, all to help other software-centric firms accelerate their own learning and growth.
- Build a mutually rewarding ecosystem
Etsy helps its merchants sell more product in the Etsy marketplace, which increases Etsy’s revenue. And Etsy also helps its merchants expand their businesses at craft fairs, in local retail stores, or on their own websites. Etsy has even teamed with national brick-and-mortar retailers like Nordstrom and West Elm to open new sales channels to merchants. Without trying to capture additional revenue from each and every effort, Etsy actively coordinates its stakeholders’ efforts to help each other so that their whole ecosystem grows. Everyone wins.
At this point it might be sounding like a generative business is just another term for “platform.” That’s not the case. Consider the contrasting example of Angie’s List, a platform that has designed its stakeholder systems so that they profit from direct interactions with their customers, while also pitting stakeholders against one another. The crowdsourced customer review site lists client businesses by location and type of service provided, but reserves the top few spots for businesses willing to pay an additional fee. Those who don’t pay are penalized — even if their product or service brings more value to their and Angie’s List’s mutual customers.
This “pay for placement” strategy generates revenue for Angie’s List, but limits the potential growth of the larger network.
- Create social and financial value
Small business lender Community Sourced Capital (CSC) creates financial value by aggregating smaller sums from many investors to fund businesses that can’t access traditional commercial loans. CSC also structures its investor–borrower relationships to build community engagement. To investors, CSC offers the chance to “fund the world you want to live in.” To borrowers, CSC offers a direct connection to the customers and neighbors who believe in them. The local economy gets stronger while entrepreneurs and innovative business ideas get a boost. The social value created within and around CSC’s financial transactions attracts new supporters and opportunities, increasing each business’s ability to have a larger impact. Focus on creating value in the community has helped CSC expand from Seattle into five additional national markets, growing 350% in just one year.
NewWorkCity, a Manhattan coworking space, also designed its business model to generate both financial and social value. NewWorkCity earns recurring revenue by renting desks, Wi-Fi, and meeting rooms to small businesses. But these businesses get more than just a downtown workspace that they can afford. Because of how NewWorkCity crafts its physical layout, social norms, and events, members also get a community where they can share and learn informally, where they can test ideas and offer encouragement, and where unexpected encounters can trigger serendipity and collaboration.
NewWorkCity and CSC remind us that generative practices don’t depend on digital platforms or online products. Even the analog activities of renting physical space and lending money can be designed to go beyond a basic financial transaction and create social value that nurtures other businesses’ growth.
Generative business practices should be at the core of movements like corporate social responsibility, social entrepreneurship, and shared value strategies. Generative practices invite businesses to take a “pay it forward” posture and become generous citizens of their networks — not as an extra initiative but as a fundamental reorientation.
Generative businesses like Buffer, Etsy, CSC, and NewWorkCity reduce conflict, foster learning, and expand the breadth of value they create with their stakeholders. Generative practices can help a business grow the whole entire pie as well as its own slice.
by CV Harquail