Diagonal's steward-owner

We started Diagonal because we wanted to build technology responsibly and for the benefit of our cities. We made Diagonal a steward-owned company to ensure that we are guided by purpose, not profit above all else.

What is steward-ownership?

There are many articles that eloquently describe what defines a steward-owned company (like this one, this one, and this one.) And there are many successful companies that follow a steward-ownership rather than a shareholder-ownership model. For example, Patagonia recently joined this growing list.

Adopting a steward-ownership model meant making two principle legal commitments:

  1. Our purpose drives our business, not profit.
  2. Ownership of the company must stay within the company (effectively locking capital in the company to serve our purpose.)

We added a third commitment, to lock our purpose to a social benefit:

  1. We will develop technology that is responsible (definition at the end of this blog.)

Our steward is a not-for-profit, Guardian Shareholder — an entity which holds the right to veto key decisions. It is responsible for holding us to account on those three principles, and receives no dividends. In this way, we ensure a separation between purpose from profit.

You can see the detail behind Diagonal’s steward-ownership in our Articles of Association, here. Our Articles are open and available under a Creative Commons licence.

Why we did it

We started Diagonal because we want to improve the quality of life of those living in cities. We want to uphold the right to the city, and support regenerative, inclusive cities. And use our skills as the builders of technology products for social good. To bind ourselves to this purpose, we need something stronger than a slogan.

We have all seen cautionary examples of tech companies founded with lofty aims that have ended up scaring the built environment or altering our social fabric for the worse. When shareholder profits become the driving success metric, a company’s purpose becomes profit. We chose a steward-ownership model to prevent Diagonal from falling into the trap of growth-at-any-cost.

We know the potential impact of technology on people’s lives. Our technology can be used to influence physical infrastructure in our cities, which may have a lifespan beyond our own. We want Diagonal’s purpose to drive how we work, in the short and long-term. With a steward-owner we have a strong mechanism in place that guarantees our commitment to our mission in 10, 20, 50+ years.

And we want to work with team members, collaborators, and clients who share similar goals. If the challenge is to uphold the right to the city - we can’t can’t achieve this on our own! By establishing ourselves as a steward-owned company, we hope to find and inspire others to join us on this journey.

Working in a steward-owned business

While our steward-ownership model added complexities to the set-up of our business, we value many benefits of our governance structure. Employee ownership means:

We control how we work and what projects we work on. For example, we secured public innovation funding to open source our core technology. We spend our time on meaningful projects, like working with climate scientists or the Scottish Government to tackle climate modelling and inclusive town-centre revitalisation.

We can embed our definition of responsibility into our policies and the way we operate. For example, we created a parental leave policy that covers team members who might be contractors but are ‘long-term collaborators’.

The journey ahead

There have been some challenges, establishing and running a steward-owned business but it is worth it for us at Diagonal. Starting with a strong foundation will help us avoid forces that could make us a company that does not reflect our mission. And we know there are benefits for us, and any future employees or collaborators. Beyond our ethos, research shows that purpose-driven organisations perform better than other companies across multiple factors, including: employee satisfaction, financial performance, and customer loyalty.

Our steward-ownership model attracts like-minded people, who also want to build responsible technology. We are excited about where these relationships will lead us.

If you are interested in creating a steward-owned business, or want to work with us, get in touch: hello@diagonal.works.

Our definition of responsible technology

Our articles of association define ‘responsible technology’ as: ‘meaning the Company develops and deploys technology with a principled and transparent approach to evaluating its downstream effects on society as a whole; the Company is transparent about the ways in with the technology it develops will be monetised over the long term; the company develops and deploys technology with an appropriate level of human oversight and audit; the company neither develops nor deploys technology that contravenes any article of the Universal Declaration of Human Rights.’

Over time we intend to dissect use cases to put more practical, applied detail around what it looks like to develop technology responsibly — and where the mark may have been missed. We will write more about this in the future.


November 2022