Generating Systemic Wealth — Part 7:
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. An utterly human construct, an asset can repeatedly engage with a flow of inputs, making the recurring generation of value possible. Deployed with intelligence and industriousness, it can provide value to various constituencies, thereby generating a return. One can reasonably predictably produce a higher-order offering from the commodities one acts upon through machines, methods, and other means. 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 otherwise impossible purposes.
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. Similarly, land purchased for development is considered no business of anyone but the owner of record.
From an open systems perspective, an asset is understood to be an element in the flow of creative work. To enable that flow to yield the best possible results, it is essential to be open and transparent with others in the same flow. Suppliers and regulators are considered partners, not obstructions. This shows 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 opens its books to its Brazilian early-stage converters, providing them 10 percent of the earnings in that region for their contribution to creating wealth. Distributors may also be engaged in specific agreements that use the owner’s assets to benefit the distributor. For example, Seventh Generation makes unique versions of its products and packaging for retailers like Target or Costco. Because an open system approach creates multiplier effects through leveraging multiple stakeholders' resources, it has repeatedly proven itself in the world of modern manufacturing.
From a living systems perspective, the asset becomes the means to raise knowledge, intelligence, and viability throughout the production process. This view sees assets as a means for the owner to generate wealth all along the value-adding stream that has 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 and 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 online wikis that invite consumers as well as technicians. This cooperative and reciprocal use becomes possible when an asset is considered part of a living system.
In South Africa, Colgate worked with raw material suppliers from rural areas in the northern part of the country. It supported business development, ensuring a steady supply of raw materials for itself and vitally critical 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 took responsibility for the entire flow of work it was a part of, 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 for the company and the communities providing their material inputs.