5. Riversimple: Redesigning ownership
Riversimple is a car manufacturer that has taken value creation to a completely different level. The business was founded to address the enormous environmental damage created by personal transport, with the purpose ‘To pursue, systematically, the elimination of the environmental impact of personal transport’. The founders recognised that they serve not only investors but a total of 6 different stakeholders: The Environment, Customers, Communities, Staff, Investors and Commercial Partners.
“We believe that it’s possible to design a business model that aligns the interests of the business with those of people and the planet but the mindset of the business has to be aligned in order to conceive of and implement such a model, so this is a further reason for redesigning the governance.”
Comments Hugo Spowers, Chief Engineer and Founder of Riversimple
As Buckminster Fuller said, “you never change things by fighting the existing reality; you change things by making a better model that makes the existing model obsolete” and so the intention is to make more money from doing the right thing than business as usual makes from doing the wrong thing.
“If a business is designed to maximise financial return, delivering environmental and social return as well is inevitably a cost on the bottom line and competes with the financial return. However, if a business is designed to deliver environmental and social return as well as financial, it enhances rather than competes with financial return.”
The company did decide not only to include these actors in the governance model, but also to make them the key decision makers in the ownership structure. The aspiration was a business model with the capacity to ‘see’ in all directions and then ‘deliver’, even in the face of complex challenges.
“The original intention was to serve the ‘basket of interests’ so often referred to by economists. However, the interests of investors are not always well correlated with the interests of society and the planet, so we decided to embed the Purpose structurally in the governance of the company, rather than relying on altruism.”
comments Hugo Spowers, Chief Engineer and Founder of Riversimple
With that in mind, 6 ‘custodians’ with separate legal entities were put in place, each being a separate and independent entity, representing a set of members that represent each stakeholder.
“Shareholder value has primacy in UK law, so we felt that the simplest way to deliver that without a conflict of interests was to make the Environment and other key stakeholder groups shareholders.”
adds Hugo Spowers
A Stewards Board ultimately ensures that the board is abiding by its fiduciary responsibility, “To balance and protect the benefit streams” of each of these stakeholders.
“The Board’s duty is to pursue the Purpose while balancing and protecting the benefit streams of all six stakeholder groups, rather than maximising the value of one. It is essentially a partnership model and you cannot have a partnership in which one partner has control, because then it’s not a partnership.”
explains Hugo Spowers
While governance is distributed, money flows in a similar way to any normal business:
“Dividends still go to the equity holders but that does not mean that control all goes to the equity holders. Equity and control are decoupled and addressed separately – ownership of all the equity does not mean control of all the business.”
This ownership model has especially proven its value in difficult moments, where the solution to balance all interests was not obvious.
“Having stakeholders actively interested and involved in the business means that we have the benefit of their wisdom and perspective and they hold us to our Purpose, which is fundamentally dedicated to the wellbeing of society and the planet.” comments Hugo Spowers
Riversimple has developed a unique business model that aims to completely rethink the automobile sector, from open-source design to a circular economy approach to car use, with the goal to minimize environmental impact deeply rooted in the organizational backbone.
- This is an extract from the forthcoming ‘The Business of Wellbeing – Alternatives to Business as Usual’ Guide, launching in January 2020. For more extracts, please click here
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