How Social Technology Can ‘Reinvent Business’
Facing a crisis of corporate meaning, companies and their leaders must pursue a new definition of value.
From Occupy Wall Street to the publication of resignation letters in the New York Times, we cannot ignore the widening “trust gap” between business and society. Increasingly, consumers and citizens are demanding that companies match their actions to their words. Integrity must incorporate the values and principles of stakeholders, including society at large. Our current crises – referring not only to financial ones – are not the result of unforeseen disasters or natural market cycles. They are the result of our behaviour.
The crisis of capitalism is one of character and meaning. Employees now want a purpose beyond profits and consumers are courting the companies they believe are conscientious. The Harvard Business Review is even espousing happiness as a new economic paradigm. Being “in search of excellence” no longer suffices. Now companies and their leaders need to pursue significance.
Achieving this vision requires innovation in two key dimensions of our economy: what we consider to be “value” and the values that guide how we create it. We need a more inclusive definition of value, one that is respectful of the needs of all stakeholders, fully aligned with values and transcends the merely transactional.
How can the use of technology enable companies and the people within them to make better decisions and have a more positive impact on our world? Can creative minds help us rethink how business operates? Can the right group of people collaborate to reexamine and restore the social contract between business and society?
As members of the World Economic Forum’s Global Agenda Council on Values in Decision-Making, we are hosting a hackathon – a collaborative, rapid ideation and programming workshop – in San Francisco on June 9-10, jointly produced by frog and LRN, and in partnership with Carnegie Mellon University, Net Impact, Silicon Valley Bank, and Fast Company. The “Reinvent Business” hackathon will bring together software developers, designers, gamers, film makers, writers, leaders in business and academia, and other problem solvers to imagine, design, and build a more human and truly social enterprise. The goal is both simple and bold: to develop concepts and prototypes for products, services, and tools that have the potential to transform business from within.
This is one of many initiatives that the Values Council has been working on as part of an ambitious agenda to help organizations translate human values into practices and behaviors that strengthen our institutions and positively impact the state of the world. The Values Council was formed by the World Economic Forum in response to the current economic crisis – a crisis of values – to realign our collective mindset and develop practical approaches for a more moral economy. New challenges call for new approaches, and we hope that with this hackathon as the starting point, the Council can engage the tech and creative communities in an ongoing constructive dialogue on how technology, and especially social technology, can change corporate behavior. This need for behavior change, for “reinventing business,” is an urgent one.
In an op-ed piece for the Huffington Post, “The End of Capitalism – What Comes Next?,” WEF Founder and Executive Chairman Klaus Schwab responds to this ever louder swan song. Offering a more nuanced view, he draws a clear line between the original, defensible idea of the free market economy and the worrisome decoupling of the financial system and value-creation that makes an overhaul of its technical aspects mandatory. But he also argues that simply correcting excesses is not enough – we need a more radical reset. Schwab reminds us of the Stakeholder Principle he introduced in 1971, which is now more relevant than ever, propelled by the rise of social technologies:
“In an age when social networks are enabling greater participation and transparency, companies will only be able to achieve economic success if they can generate long-term benefits not just for their shareholders, but also for the common good.”
While most companies will subscribe to that point of view, the disconnection between business and society (and, as studies show, between management and employees) is indisputable. From Occupy Wall Street to public resignation letters in the New York Times, the widening ‘trust gap’ between business and society can’t be ignored.
In a recent column, The Economist contends that companies should worry less about their reputations and more about how they do business. And indeed, increasingly, consumers and citizens demand that companies match their words to their actions, far beyond just Mission Statements, Codes of Conduct, and Corporate Social Responsibility (CSR) programs. For today’s consumers and citizens, integrity means that a firm’s decisions and behaviors are fundamentally and consistently aligned with its values and principles as well as those of its stakeholders (which include society at large). Our current crises – financial, environmental, employment, debt, or otherwise – are not the result of unforeseen disasters or natural market cycles, they are the result of our behavior, of how we have been acting as people and institutions.
Yet the crisis of capitalism is not only a crisis of character, it is also one of purpose and meaning. With a growing number of employees expressing a strong desire for a purpose beyond profits and of consumers to buy from conscientious companies, and even the Harvard Business Review espousing happiness as a new economic paradigm, this appears to be a ripe time for reinvention. As the world becomes more interconnected and interdependent, the lines between the corporate and the social, the professional and the personal blur, and the younger generation of netizens in particular expects heightened levels of transparency, responsibility, and inspiration – both as consumers and employees. Being “In Search of Excellence” therefore no longer suffices; companies and their leaders now need to pursue significance.
Achieving this vision requires innovations in two key dimensions of our economy: what we consider to be “value” and the values that guide how we create it. We need a more inclusive value definition that is respectful of all stakeholders’ needs, fully aligned with human values, and transcending the merely transactional, and we need inclusive models of value-creation that are inherently social. We can indeed generate value from values.
One of the biggest barriers to broad adoption of this idea is the reality that for too long we have been measuring our successes and failures based on 19th and 20th century notions of growth and productivity. There is an old adage that “you manage what you measure.” We have become great at measuring “how much” and have made it our habit to manage in “how much” terms – as in “how much” GDP, debt, stimulus, resource, revenue, profit, friends, followers, page views etc. In our more interconnected and interdependent world, questions of “how much” matter much less than the question of HOW (i.e. HOW we think, behave, lead, govern, operate, consume, engender trust in our relationships, and relate to others). Instead of reflexively asking “how much,” we need new metrics that help us create organizations, societies, institutions, governments, and businesses that mirror our deepest values.
At the macro-economic level, Bhutan’s Gross Happiness Index, as an alternative to the Gross Domestic Product (GDP), has gained many admirers, and both the French and the UK governments have begun to emulate it. Moreover, there are supra-national organizations and NGOs such as the New Economics Foundation in the UK that have long proposed new indicators of economic progress grounded in the belief that we need a more holistic, integrated understanding of the economy instead of one that is purely based on financial terms.
At the corporate level, social media and networks have disrupted traditional paradigms of productivity and organizational behavior, and enabled participatory models of value creation that fully harness human potential by leveraging social technologies to maximize social capital (e.g. enterprise social networks, crowdsourcing). Consequently, the social enterprise of the 21st century recognizes social capital – in other words: talent, inside and outside of the organization – as its key asset. In his Huffington Post article, Klaus Schwab describes this as a significant paradigm shift:
“Capital is being superseded by creativity and the ability to innovate – and therefore by human talents –as the most important factors of production. If talent is becoming the decisive competitive factor, we can be confident in stating that capitalism is being replaced by ‘talentism.’ Just as capital replaced manual trades during the process of industrialization, capital is now giving way to human talent. I am convinced that this process of transformation will also lead to new approaches within the field of economics. It is indisputable that an ideology founded on personal freedom and social responsibility gives both individuals and the economy the greatest possible scope to develop.”
With the rise of “talentism,” the need for a real understanding of the common human values that connect organizations and individuals is becoming ever more important. Transparency, inclusivity, inspiration, and organizational responsiveness are crucial in nurturing businesses’ social fabric and facilitating empathy and collaboration. Yet, the challenge remains: How do we translate these values into day-to-day corporate behavior and into tangible, personal experiences? How can companies become open organizations that harness and build social capital both inside and outside of their institutional boundaries?
This is where our “Reinvent Business” hackathon comes in. True reinvention can only happen with multiple stakeholders contributing to the solution, sharing their ideas from the bottom up and not just the top down. Whether it is a mobile app that uses real-time peer feedback from social networks to help address ethical dilemmas, or a data visualization tool that illustrates the unintended consequences and the externalities of decisions, or an ‘empathy app’ that lets you see the world through someone else’s eyes, new concepts need to be created from people willing to collaborate and invent solutions that recognize that we live in a more interconnected and interdependent world, where we rise and fall together.
To be clear: We don’t expect this hackathon to produce any silver bullets, nor do we aim to “productize away” the deep and complex challenges of a moral economy and a more human enterprise. But we are poised to spawn a conversation by tackling concrete problem spaces that might inspire further-reaching, broader solutions.
Amplified by social technology, we have the potential to unleash the humanity inside organizations to change the world in new and positive ways. We have the opportunity to shape new behaviors that create competitive advantages and sources of growth in this new era. We have the ability to change business from within.
This article was first published by Forbes.