Umair Haque / Bubblegeneration
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Design principles for 21st century companies, markets, and economies. Foreword by Gary Hamel. Coming January 4th. Pre-order at Amazon.


 
Friday, January 21, 2011

What Does a 21st-Century Business Look Like?


Last week on Bubblegeneration, I wrote about the potential of the social web to empower, uplift and inspire, especially for companies and individuals who know how to harness the power of group behavior.

It sounds grand in theory, of course, but this week, I want to come down from the realm of ideas and take a closer look at the ways that Bolder, Kickstarter, Kiva, Edot (stands for "every day one thing") and many other companies are enacting real social change on the social web (not just blogging about it).

The missions and business models of these companies vary widely, but there are three main things that they all have in common:
  1. They depend on the social web. There’s nothing brick-and-mortar about these companies – they thrive on digital interactions. Without the ability to reach millions of people regardless of geography and time zone, the model just wouldn’t work.

  2. They challenge traditional relationships between institutions and individuals. Rather than stick to the traditional advertise/buy/sell model of most institutions, Bolder asks individuals and organizations to make a difference together. Kickstarter and Kiva both democratize the process of getting funding for artists and entrepreneurs. And Edot is founded on the simple, elegant premise that if everyone does just one thing to make the world better every day, then the world will actually get better.

  3. They ask users to take some kind of action for a higher purpose. This is a big one. Unlike most institutions, they don’t, indeed can’t exist purely to perpetuate themselves and their profits. They depend on their users to engage and help shape a vision of the greater good, and it’s the strength of that vision – much more than the strength of the balance sheet – that determines whether the business sinks or swims.
In short, this is what a 21st-century business, one that’s based on mattering, not revenue, looks like. This is a big topic, and there’s lots more to discuss. Do you agree? Disagree? Have something to add? Please share your ideas in the comments.

Robin Cangie writes about 21st-century prosperity, institutional transformation and whatever is on her mind at robinoula.com. Follow her on Twitter at @robinoula.

-- Robin // 8:07 PM // 1 comments


 
Friday, January 14, 2011

Social Change on the Social Web


In October 2010, Malcolm Gladwell famously argued that social media would not bring about a revolution in social activism. And as he no doubt intended, the Twitterati, blogosphere and other social media elites immediately responded with all the reasons why he was “wrong, wrong, wrong.”

Actually, both sides are right; they’re looking at the same issue from two different angles. The social web is powerful in that it connects us instantaneously across time and physical space, but without authentically engaged human beings to make those connections meaningful, it becomes a bunch of real-time, self-absorbed drivel (see 10 Things You Need to Stop Tweeting About). When you look at it this way, the social web is a way to extend and amplify our fickle, flawed humanity.

And that’s a beautiful thing, because it means that every time we choose to be significant rather than mediocre, meaningful rather than merely profitable, and open to life rather than fearful of it, we can harness the power of our highly connected world to amplify our actions 1,000-fold. It’s wonderful when individuals do this on their own, but when we act boldly together, just imagine what’s possible!

This is why I love companies like Bolder. Bolder encourages businesses and consumers to act together for a better world. The model is pretty simple - complete a bold action (such as biking to work or a random act of kindness) and get a reward, often in the form of discounts from a sustainabily-minded company. This may sound pretty small in the face of the world's big problems, and it is... at the individual level. The great thing about individuals is that when you bring them together for a common purpose, you have a group that's capable of powerful, concerted action.

Bolder is harnessing the power of group behavior across the social web. For the first time in history, the physical barriers to collective, powerful action have been torn down, and Bolder gives you – yes, you, reading this blog, right now – the opportunity to enact real change by focusing that power into a single, common goal for a brighter future. It's social enterprise on the social web, and it's awesome!

One small action will make one small difference. That matters. And when you take all those small actions and put them together, not only will you make an even bigger difference; you just might impact real, lasting change.

That’s the promise of Bolder, and of the social web more broadly – to empower, uplift and inspire. Or, you know, you could just Tweet about what you had for lunch.

Robin Cangie writes about 21st-century prosperity, institutional transformation and whatever is on her mind at robinoula.com. Follow her on Twitter at @robinoula.


-- Robin // 4:17 AM // 0 comments


 
Friday, January 07, 2011

The Unrecovery (And What You Can Do About It)


Welcome to the curious case of the incredible non-recovering recovery. Call it, if you like, the unrecovery. By that, I mean a "recovery" which economists, pundits, and talking heads will continue to glowingly back-slap one another about, because industrial age measures tick marginally upwards--but one that won't be a lived, felt, breathed "recovery" in any meaningful economic or financial (not to mention social or political) sense for 99% of people, because those industrial age concepts and conceits are, in a hyperconnected 21st century, bereft of any kind of meaning. Result? an empty "recovery": one empty, null, and void of real prosperity, whether denominated in either incomes or outcomes.

To lend credence to my little point, consider the following (courtesy of
Emily Kaiser at Reuters).

"The unemployment rate dropped to 9.4 percent in December, even though employers reported hiring a disappointingly skimpy 103,000 new workers. But the reason for the big drop from 9.8 percent in November is somewhat disconcerting. While the Labor Department's volatile survey of households showed employment surging by 297,000, the labor force shrank by some 260,000.

Even though the U.S. economy added jobs in every month in 2010, hundreds of thousands of people gave up looking for work. The number of discouraged workers climbed to 1.32 million in December, from 1.28 million the month before."
Emily's right. The shrinkage in the labor force in relative terms outweighs any job creation effect. That's not just worrying--it's alarming--that after literally trillions spent trying to revive and resuscitate the economy, it's not like a patient sputtering back to life. Rather, it seems to be suffering through something akin to a malady, perhaps terminal, that no therapy seems capable of stopping.
Sounds hyperbolic, right? Then try this, from the Labor Department, on for size--because Emily's point is just the tip of the iceberg.
"Total nonfarm payroll employment increased by 103,000 in December. Employment rose in leisure and hospitality and in health care but changed little in other major industries. Since December 2009, total payroll employment has increased by 1.1 million, or an average of 94,000 per month. (See table
B-1.) "

So far, so not good (because, as you know, merely to keep pace with population growth, growth in employment is about half of what it must be). But here's what's really, really bad.

The fastest growing category within even this moribund, deeply disappointing employment picture?

"Employment in leisure and hospitality increased by 47,000 in December. Within the industry, job gains continued in food services and drinking places (+25,000). Since a recent low in December 2009, the food services industry has added 188,000 jobs."

Want fries with that Ponziconomy? The economy's not just failing to create jobs: the meagre jobs it is creating are literally mostly McJobs. Nearly half of all the new jobs created were low-wage, zero-growth, no-future burger-flippers, waiters, valets, dishwashers, and the like. When you factor in the fact that the second fastest growing category was Temporary Help, you might begin to feel just a tiny bit alarmed--because together, the majority of jobs created, devoid of earning power, spending power, saving power, skills gains, or, crucially, future real marginal productivity gains, are more reminiscent of an economy in terminal decline than one in anything even mildly resembling the word "recovery".

Here's what I'd suggest just might be worth beginning to consider, given the fatal dynamics above.

There's no recovery because it's not a recession. As I discuss in the Manifesto, It's a great reconfiguration--a great reboot of global economic institutions. This time, reigniting real, enduring global growth (instead of the zombified zero-sum game China, America, and Europe are playing now) is going to demand deeply rooted institutional innovation. "GDP", jobs, corporations, "profit", "Current Accounts"--these are the cornerstones of the global economy in the 21st century. But they were built in--and for--an industrial age.

Tomorrow's jobs? Yesterday's institutions create zero incentive to create them (anywhere). Yet, the deeper, less well understood, more troubling truth is that they fail to create lasting incentives for nearly any of the components of an enduring prosperity, whether outcomes, income, meaning, purpose, happiness, trust, or resilience. On all of these scores--and many more--industrial age institutions fail systemically, chronically, persistently, predictably. Instead, their characteristic long run dynamic equilibrium--their telltale signature, if you like--is transferring wealth (from the global poor to the rich, the young to the old, tomorrow to today) instead of creating authentically new, enduring wealth. This counter-recovery is that macro institutional failure writ both very large and very small, into the fabric of Europe's austerity and America's chronically, dispiritedly unemployed. And so every economy built on them is a house of cards.

Hence, though it's deeply counterintuitive to most, today's great challenge--and greatest opportunity, if it's envelope-shattering returns you seek--isn't in pushing "product", extracting resources, or brokering a few more deals. It's in reimagining and reinventing yesterday's institutions--and rewriting the tired, toxic industrial age recipe for prosperity.

-- umair // 4:46 PM // 0 comments


 
Thursday, January 06, 2011

A Tale of Two IPOs


So by now, you've heard endlessly about the Facebook/Goldman quasi-IPO. What is its larger significance? 


Consider, for a moment, a historical contrast. When Google IPO'd, it explicitly refused to play by Wall St's rules--instead, issuing equity in a relatively open Dutch auction:


"...Among other things, Google issued a firm warning to speculators hoping to make a buck by quickly flipping their shares, a hallmark of many hot technology IPOs in the past. Instead, Google hopes to place its shares in a way that avoids the typical investment banking strategy of intentional underpricing--and the volatility that frequently follows.



"Our goal is to have an efficient market price--a rational price set by informed buyers and sellers--for our shares at the IPO and afterward," the filing states. "Our goal is to achieve a relatively stable price in the days following the IPO and that buyers and sellers receive a fair price at the IPO."
To make that sharper:
"...According to its filing, Google seems willing, eager even, to start off life as a publicly traded company on the right foot, hoping to steer clear of some of the sweetheart dealmaking that characterized the last wave of go-go IPOs. Instead, Google plans an auction of its shares to raise up to $2.7 billion; a process open to all bidders."
Today, we have Facebook--not challenging Wall St's rules, but, instead, endorsing and subscribing to them. Facebook's quasi-IPO is a deal with Goldman to build an SPV through which high-net-worth investors can essentially buy blocks of Facebook equity.
The contrast couldn't be more striking. A closed SPV for a tiny number of clients, which skirts the SEC's rules on venture finance, is the antithesis of Google's open Dutch auction.
All of which is very revealing, and tells us a great deal about Facebook's culture--and hence, maybe just a little bit about its future prospects. Google had a Dutch auction for its IPO because it had what I call in the Manifesto a philosophy. That is, a set of principles for creating enduring value. One of Google's bedrock principles is a belief in democracy--hence, a Dutch auction. 
Companies that have philosophies are resilient--they're able to weather the fiercest of storms, because they focus on enduring value, not transient gains. What Facebook's Goldman deal might tell the astute observe of strategy is this. Facebook has no philosophy, no set of guiding principles that focus it on enduring value. Instead, it is focused--as it has been focused--on building an extractive ecosystem rife with subprime economics and tail risk, not creating value that matters, lasts, and grows. Needless to say, where ecosystems like the latter flourish, on the foundation of mutual incentives that spark acceleration effects in wealth creation, ecosystems like the former are prone not merely to long, slow decline--but to rapid, sharp collapse.
The difference between the two? In a word: resilience. 21st century advantage. Facebook's great challenge isn't cashing out; rather it's cashing out that vividly demonstrates the great challenge that Facebook, like 90% of industrial age firms, faces: learning to create thick, shared value. 

-- umair // 9:07 PM // 5 comments


 

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