When Your Business Model Costs You $650 Million In Damages
The Kimberly-Clark Fire And The Unintentional Results Of Extractionary Business Models
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When Your Business Model Costs You $650 Million In Damages
The Kimberly-Clark Fire And The Unintentional Results Of Extractionary Business Models
Written by a human, for humans, always.
Let me start with this...
I absolutely do not endorse or support the actions that happened in the recent Kimberly-Clark Fire.
There is a significant difference between “understanding” what happened and “supporting” what happened.
What I am going to discuss is “why” this event happened...
That led to $650 million in damages.
But in case you have not heard of the events, let me fill you in...
It was 12:30 am in a 1.2 million-square-foot warehouse in Ontario.
Around 20 employees and distributors were working.
Suddenly...
The sky turns orange as the entire warehouse becomes consumed.
The roof collapses, causing the fire suppression system to become compromised.
It becomes a six-alarm fire.
175 firefighters work hard to keep the fire suppressed.
Perhaps we should not be too surprised at how quickly the fire spread, as the warehouse was filled with paper products.
One person on the premises is missing.
Robots are blamed initially...
Until a post on social media is discovered...
“If you’re not going to pay us enough to [expletive] live or afford to live, at least pay us enough not to do this [expletive]...”
The post comes from the missing person...
Chamel Abdulkarim.
29 years old.
Text messages are discovered.
“Pay us more of the value WE bring. Not corporate. Didn’t see the shareholders picking up a shift.”
“I just cost these [expletive] billions.”
(Physical damages are estimated at $650 million, but perhaps there are other types of damages, such as stock prices, especially when combined with a recent multi-billion dollar acquisition and struggles with consumers choosing non-name brand options.)
Abdulkarim also compared himself to Mangione, the 27-year-old who allegedly killed the CEO of United Healthcare, and mocked the 1%.
Abdulkarim is arrested...
And Kimberly-Clark now has fallout of their $150 million warehouse being burned to the ground and $500 million of products lost.
Again, I do “not” support what was done.
It was reckless, dangerous, and could have cost people’s lives.
Not “just” at the facility...
But the firefighters and first responders...
As well as other collateral damage and lives at risk that could have happened if the fire had not been contained.
In my opinion, there are absolutely no reasons that make this right.
I do understand how things led to this result, however.
See...
As the vast majority of businesses are today...
Kimberly-Clark has an extractionary business model.
These types of businesses make profit their ultimate goal...
At nearly any cost.
The result often becomes this...
Executives are so far removed from the realities of their workforce and suppliers...
That they make decisions that actively harm their workforce and suppliers.
We see this in the horrible rise of burnout...
Which is now impacting over 80% of the workforce from extractionary businesses.
Do you see how features of this come up in Abdulkarim’s messages?
Now...
What happens when human beings enter burnout?
We become less productive...
Dropping down to 5% or less of our productivity potential...
Which “can” become negative productivity...
As we see here perfectly with someone starting a fire that causes hundreds of millions in direct damage...
And unknown amounts in indirect damages.
Being in burnout also causes us to become less able of problem solving and more prone to making mistakes in our lives...
Which typically makes the burnout worse...
And over time...
The consequences higher.
How dire of a situation do you believe that Abdulkarim must have been in...
With whatever was happening in his life...
To come to the decision that his actions were “ok” in the slightest?
Even potentially worthy of praise, as seen with the comparison to Mangione, who is seen as praise-worthy in certain circles (which, again, I do not agree with nor condone - Neither arson nor murder are ever ok)?
What circumstances cause someone to become so ethically compromised to begin to see these types of actions as acceptable?
The type of circumstances where you have been “so” extracted from that you see no real hope for anything better in your life.
Even if the final decision was a terrible one, caused by the psychological impairment created from extreme levels of burnout...
There is a cause that is perfectly explainable.
But this is also what is important to understand, which many businesses will miss...
Abdulkarim was “not” a direct employee of Kimberly-Clark.
He was actually employed by NFI Industries, a third-party distribution company for Kimberly-Clark.
See...
The impact, and potential costs, of extractionary business models are “not” limited to the direct employees of a company...
But also from their suppliers, partners, and even customers...
In this case, a distribution company likely facing extractionary challenges from its business relationship with Kimberly-Clark...
Leading to them being unable to pay Abdulkarim whatever amount he was looking for...
While also likely demanding more of him from his physical work...
Which then brings us to this final result.
All businesses exist within an ecosystem...
And “every” aspect of the ecosystem plays a role that can have deep impacts.
In what happened here, we are seeing how the ecosystem creates a larger problem...
That ended in this horrifying result.
What ends up happening in these extractionary businesses...
Is that they begin to become similar to zombies.
As more is extracted from employees, suppliers, partners, customers, and every other part of the ecosystem...
The ecosystem begins to decay and die.
But the business still “needs” to extract more...
So it consumes more and more...
Until either the business collapses on itself, as there is too much decay...
Or someone, a person or competing business, comes to “slay” the zombie.
In this case...
An employee of a distribution partner attempted to slay the zombie.
Did it work?
Probably not.
Based on category design economics...
As well as Kimberly-Clark’s estimated $16 billion in revenue and $32 billion in market value...
The company will likely continue to survive.
But was this a painful result?
Absolutely.
Especially when it could have been avoided by looking at a different type of business model...
What I call a Regenerative Legacy Business Model.
Instead of extracting from everything to attempt to get the highest revenue possible...
The goal needs to be to create a healthy ecosystem...
Which creates a better workforce...
That naturally gets significantly better financial results...
Faster and cheaper...
By focusing on how human psychophysiology actually works...
Instead of doing everything possible to work “against” psychophysiology...
Causing harm all along the way.
This particular event is truly a horrifying final result...
But one that is, sadly, not surprising when you understand how humans work.
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So, how do we go about changing these types of circumstances?
Hopefully, long before they erupt into such a catastrophic result?
That is what we will look at next.
Let’s Dive In…
