Tensegrity: How do we divide equity?

The following is excerpted from a letter I have sent to some business partners.  I thought some of you might find it helpful.

Dear Colleagues,

When we met several months ago, I did my best to introduce what I refer to as the “Breathing Enterprise” business model.  As the name implies, this process seeks to insure that our efforts carefully consider each element of a healthy and organic process that is aligned with how life quite literally happens.  Informed by the way the living cell unlocks the power of sunlight from glucose, the Breathing Enterprise model is both prescriptive and diagnostic.  We can use it as a template and it serves equally as a means to diagnose how an effort is not running as it could.  And before we get caught up in dividing the baby, let’s make sure we’re super clear on what we have locked in and what we have ignored.

Let’s start with the key elements.  Within the model, there are 6 domains of value which require equivalent attention and stewardship.  These have to do with the Alchemy of how we transform effort to value; how we make Apparent our organization of effort into a reproducible product or service; and, our Essence – what we know and how we are known.

Any successful venture will recognize that holding these 6 dimensions in tension and balance (Buckminster Fuller’s notion of ‘tensegrity’) is the only way to build an organization that requires no external intervention as all the energy required is based on the structural integrity itself.

The mistake that is made by many (dare I say, most) organizations is to prioritize technology and money and leave the other things to be relegated to ‘solvable with money’.  This – by definition – is unsustainable.  When we place equivalent value on each of the 6 dimensions, we learn that we also see the need to reward, incentivize and compensate in equivalent ways.  A ‘preferred’ return in one dimension without preference in others means that enterprise failure is most assured.  When a “financial” investor is preferred over the personnel team or the branding manager – the institution suffers a fatal cultural (and ultimately, existential) harm.

So, before we start divvying up “equity” (a horrible abuse of a poorly understood term), let’s make sure that we allocate equivalence across the domains of value so as to insure appropriate and suitable value recognition to all participants.  And yes, for those of you who are doing the math, if an investor wants more than 16.7% of a business (one-sixth of the enterprise), he or she better be accountable to deliver on the other dimensions of value.  If it’s for money alone – run, don’t walk away.

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