[LINK] 'business as unusual'

[stephen at melbpc.org.au]

Speaking of in-sightful, thoughtful articles, this seems another ..


"The future of capitalism in five minutes: meaning-driven business in 
fast times"

by Tim Leberecht  July 19, 2009 2:41 AM PDT 
http://news.cnet.com/8301-13641_3-10290185-44.html
also: http://www.ft.com/indepth/capitalism-future


Never let a crisis go to waste! Inspired by the transformative impetus of 
the economic downturn, we’ll soon be starting our series about “Meaning-
Driven Business”. 

The series is based on the assumption that the current crisis is also a 
moral crisis, a fundamental crisis of trust in business leadership. 

According to the Chicago Booth/Kellogg School Financial Trust Index from 
April 8, trust in business has reached unprecedented lows, with only 10% 
of Americans now saying they trust large corporations. The “future of 
capitalism,” it seems, is at stake.

All this serves as a clarion call for 'business as unusual', and new 
ideas and values are in high demand. 

Some distinguished scholars and thought leaders have staked the claim and 
produced some great thinking around this topic.

Let’s start with an unlikely expert: the Catholic Church. The New York 
Times reports that Pope Benedict XVI is worried about global capitalism 
going awry. In “Charity in Truth,” his first papal encyclical on economic 
and social matters, he posits that Roman Catholic teachings can help 
reign in Western economics by encouraging social justice (which always 
means solidarity with the poorer and weaker) and closely regulating the 
market. 

In the same article, the Times cites German archbishop Reinhard Marx, a 
close advisor to the pope, who has written a best seller titled “Das 
Kapital” (“The Capital”), in a not so subtle reference to his more famous 
namesake. Obviously inspired by the success of the German post-war model 
(and the European welfare state philosophy in general), the archbishop 
calls for a universal “global social market economy” but is prudent 
enough to acknowledge its limitations, quoting Jean-Claude Juncker, the 
prime minister of Luxembourg: “I approve of the notion that Europe sees 
itself, unpretentiously, as a model for the world, but the consequence of 
that is that we would have to constantly change that model because we are 
not the world.”

Like the pope and his archbishop, economist Umar Haique argues that we 
need to re-boot capitalism. 

And like Reinhard Marx, he focuses on a re-definition of “capital.” His 
concept of “constructive capitalism,” however, is more radical than the 
social market economy solution Marx proposes. Haique demands that 21st 
century economics fundamentally rethink “what capital isn’t – and what 
capital really is.” 

“The value equation of industrial-era capitalism was toxically 
imbalanced. Why is industrial era business so destructive – why does it 
slash and burn rainforests, endanger entire species, vaporize culture and 
community, marginalize the poor and disadvantaged, and erode our health 
and vitality? Because none of those have value in an industrial economy: 
none are capitalized. So the bean counters of the world are free to 
plunder and ruin them – because, economically, they actually don't exist. 
20th century capitalism, in other words, marginally valued pure financial 
capital too highly, while marginally valuing human, natural, social, and 
cultural capital at zero – or, at the limit, negatively." 

One example of the “capital deepening” Haique envisions are carbon 
assets: “Once they're capitalized, they become next-gen assets: assets 
that can be traded, hedged, remixed, tweaked, open-sourced, or shared. 

The difference is that they're assets with intrinsic, durable, human 
value – not the lemons Wall St was in the business of hawking. It is only 
by capitalizing the things we really value that the spark of value 
creation can be lit again.” 

As another example of really valuable capital Haique refers to Rypple, an 
ad-hoc social network that provides simple, direct, anonymous, and 
ongoing customer and employee feedback: “Rypple’s economic engine is 
powered by human and social capital – Rypple taps the connections people 
have with friends, colleagues, bosses, and mentors, to help them get 
smarter and more productive.”

Former Harvard professor Shoshana Zuboff would agree with Haique. 

She is the author of The Support Economy: Why Corporations Are Failing 
Individuals and the Next Episode of Capitalism, and in her recent 
BusinessWeek article “The Old Solutions Have Become the New Problems,” 
she proposes companies charter what she calls the “i-Space”: 

“Business is no longer just about the product. Now it’s about solutions 
for the individual. Economic value is hidden in consumers’ unmet needs 
and is released by providing people with the means to fulfill those 
needs. But in order to release new value, you need to get out of 
organization space and into the subjective space where individuals live. 
I call it ‘I-Space.’ This means shedding the ‘us-them’ mentality. Now 
everyone is an insider.” 

To succeed in i-space, companies “must federate and collaborate to 
compete:” “You can't do it alone because the needs of individuals don't 
conform to existing organizational and industry boundaries. This means 
learning how to manage what you don't control or own. These economies of 
trust are becoming even more important than economies of scale. (…) 

Amazon’s marketplace and eBay's webs of buyers and sellers are early 
prototypes of these federated networks. Apple and Facebook are struggling 
to understand the rules of engagement that should govern relationships 
with their applications developers. You can see them climbing a new 
learning curve through trial and error as they figure out how to build 
and sustain economies of trust.” 

Zuboff is wary of the old paradigms still taught in business school and 
calls all previous “compasses” obsolete: “You're in a new place. The bad 
news: There are no maps. The good news? You are the mapmaker.”

Similarly, Jeff Jarvis' concept of the "Share Economy” and Chris 
Anderson’s notion of the “Free Economy" are both based on the assumption 
that there is no viable business in markets in which information and 
content are abundant (i.e. the news industry) unless you add the value of 
aggregation, create artificial scarcity, or give away those abundant 
assets (i.e. music recordings) that drive attention to assets that are 
truly scarce (the live concert experience). 

Or as Kevin Kelly puts it in "Better than Free": "When copies are free, 
you need to sell things which cannot be copied."

Richard Edelman from Edelman PR believes we are entering a new era 
of “Mutual Social Responsibility,” in which “people (formerly labeled 
as ‘consumers’ by marketers!) contribute to society’s sustainability and 
well-being in partnership with business, government and non-governmental 
organizations. 

But they demand a seat at the table and real voice in the discussion.”

Noah Robischon from Fast Company coined the new, chic term “Ethonomics:” 

“We live in a world that's resource-constrained but ingenuity-rich. So an 
upstart generation of entrepreneurs – and innovators within the world's 
biggest companies – are founding businesses that are good for the world 
as well as the bottom line. They are practicing social change through 
urban revitalization, sustainable agriculture, green IT, alternative 
energy and online community-powered investing. 

Any business that claims to be truly sustainable and innovative should be 
increasingly efficient with energy and natural resources, transparent and 
accountable, and good on balance for people and other living things.”

Speaking of social, there are many who would argue that the future of 
social is indeed the future of business. 

This trend even extends to the world of finance – arguably the one 
industry sector that has suffered most from excessive short-term 
innovation and is in greatest need of real transformation. 

Social innovation platform Volans calls for a "WeBank" and asks: "Are 
people replacing institutions?" As an example of alternative micro- and 
real-time financing models it refers to Zopa, the world’s first online 
social finance company:”With no middlemen, less overhead, improved rates 
for lenders and borrowers, and a sense of transactions between ‘real 
people,' it creates trust and shared interests between lenders and 
borrowers.”

Peter Kim, together with Jeff Dachis, David Armano, and other partners, 
has launched “the first social business firm,” Dachis Corporation, and 
developed a "social business design framework" for "understanding and 
applying social constructs to business.” 

Social business design is “a mutually exclusive, collectively exhaustive 
way of considering how a corporation, business unit, or project can 
create and capture value from today's emerging technologies and evolving 
operating environment. The social business design framework captures 
ecosystem (community), hivemind (culture), dynamic signal 
(collaboration), and metafilter (content). 

Putting these into play creates improved business outcomes as well as 
emergent outcomes. Measurement provides the backbone to the entire 
framework, as driving change requires proof.” 

The most interesting archetype of Social Business Design to me is the 
Dynamic Signal, “the concept that every activity and action is recorded 
and made available, that every piece of data goes from being a database 
entry and is instead an event. An event which can be managed, shared and 
collaborated on by all of those in the organization,” as Dachis partner 
Jevon MacDonald explains. This concept resembles the familiar vision of 
the “Real Time Enterprise.” Rypple – mentioned before – offers real-time, 
ongoing customer and peer feedback, acknowledging that “Real-time 
business is inherently social – there is no real-time without social."

Yet the accelerated transactions and interaction cycles on the Real-Time 
Web need to be balanced with sustainable thinking. 

Quick decisions are easier to make if they’re grounded in a long-term 
perspective' agility requires stability; and the prerequisite for 
openness is a strong (and tight) community. It is it ever-more important 
that companies have a stable foundation, rooted in a set of shared of 
values and beliefs. 

At least that’s Charles Handy thinks: “....what enables a corporation to 
succeed in the longer term is a wish for immortality, or at least a long 
life; a consistent set of values based on an awareness of the 
organization's own identity; a willingness to change; and a passionate 
concern for developing the capability and self-confidence of its core 
inhabitants, whom the company values more than its physical assets. 

I suggest that those conditions are best met when organizations live up 
to the literal meaning of the word company –‘the sharing of bread’ – and 
regard themselves as communities, not property.....in time, the laws 
governing corporations will change to reflect (this) new reality." 
("Looking Ahead," HBR September 1997).

For former Procter & Gamble chairman and CEO A.G. Lafley “Balancing 
present and future” is one of the key responsibilities of CEOs: “Don't 
allow the short-term interests to take precedence over the company's long-
term objectives," he warns in a recent article for the Harvard Business 
Review (“What Only the CEO Can Do”). 

He describes the CEO as the only person in an organization who can link 
the external with the internal perspective. “It’s a job that the CEO must 
do because without the outside there is no inside.” 

You could argue, of course, that the real-time, hyper-transparent social 
web has made that distinction obsolete anyway: Inside and outside are 
congruent; they are one and the same.

There are numerous other thinkers that envision a faster and yet more 
sustainable, social business as the future of capitalism, and you can 
browse through articles and blogs post without end. 

Some recurring themes emerge though the more you read: On the 
organizational, delivery side, these themes are "social,” “real-time,” 
and “micro.” And on the cultural, the leadership side, they 
are “authenticity,” “generosity,” and “empathy.” 

If you combine the two layers, you get an interesting matrix – let's call 
it the "Meaning-Driven Business Matrix.” This is the playing-field in 
which all product, service, and business model innovation will take place 
from now on.

--

Cheers,
Stephen