frog: Broken Bond Between Society And Business Necessitates Cultural Changes

Company legitimacy is at a new low, with movements like Occupy Wall Street reflecting the growing need for new values, not just economic change.

The current economic crisis presents an opportunity to realign our collective moral compass. First, by understanding the values that underlie our economies. Second, by reconciling the agendas of business with the true needs of individuals.

Clearly, the bond between society and business is broken, and the legitimacy of companies is at a new low point. Movements such as Occupy Wall Street express a growing indignation over the disconnect between the perks for a few and the rights of many. When Harvard undergraduate students stage a walkout of an Economics 101 class in sympathy with the Occupy movement to protest the ‘corporatization’ of education, it might indeed indicate the beginning of a “New Progressive Movement.” It is not just the redistribution of wealth that’s being scrutinized, however. What citizens, in the U.S. and elsewhere, demand are new, more collaborative and inclusive models of value creation that produce meaning as much as profits.

Many leading business thinkers, from Gary Hamel to Michael Porter are listening to this groundswell. Beyond conventional concepts of corporate social responsibility, the discourse has shifted to more fundamental questions that prompt us to rethink the very gestalt of the enterprise. Hamel proclaims the “reinvention of management” to make our organizations more human-oriented, Porter promotes the concept of “Shared Value,” and Umair Haque heralds the “Meaning Organization.” Rosabeth Moss Kanter, in a signature piece for a special issue of the Harvard Business Review on the ‘Good Company,’ makes the case for the enterprise as a “social institution” that thrives on a shared social purpose, a long-term view, emotional engagement of all stakeholders, community-building, innovation, and self-organization. In a similar vein, but at the macro-level, the economist Robert C. Solomon, in his book A Better Way to Think About Business – How Values Become Virtues, asserts that “Market systems are justified not because of efficiencies and profits, but because humans are first and foremost social and emotional beings, and markets provide a sympathetic community for social exchange.”

And yet, the reality in many companies today is that there appears to be a gap between the articulation of lofty principles and their application, despite all the talk about purpose, social power, emotional engagement, and community-building. A 2010 survey by Deloitte showed that nearly half of the workers polled who plan to seek out a new job say they have been motivated by a loss of trust in their employer. Startlingly, 46 percent of those surveyed reported a lack of transparency in their current company’s internal communications. Forty percent said they have been treated unethically by their employer.

It is important to understand the Values Gap, which manifests itself in several ways: First of all, the high-level frameworks designed to support shared values at the corporate level (e.g. the Codes of Conduct crafted by most Fortune 500 companies) often fall short of being meaningful at the individual level. A recent study conducted by the Boston Research Group, surveying thousands of U.S. professionals across industries and hierarchy levels, found that 43% of them described their company culture as “based on command-and-control, top-down management, or leadership by coercion,” and 54% as top-down, but with “skilled leadership, lots of rules, and a mix of carrots and sticks.” Only a modest 3% believed their firm to have a culture of “self-governance,” in which everyone is guided by a “set of core principles and values that inspire everyone to align around a company’s mission.”

But even if employees genuinely buy into the values of their company, self-governance remains challenging, since well-articulated and generally supported principles—from transparency to corporate social responsibility—are hard to translate into day-to-day individual decision-making. The ‘netizens,’ or the digital generation of Millenials, in particular, are keen on doing ‘good business,’ but may be at odds with their managers, making it harder to practice universal moral principles in the workplace. A 2010 IBM study, for instance, found that young people born after 1980 found were 35 percent more likely than CEOs to include sustainability in their lists of top three leadership qualities.

The good news is that the pervasiveness of social networks and micro-blogs, ubiquitous computing, and smart devices present a new opportunity to drive adoption of values-centered management. The transparency and reciprocity inherent in these social technologies have created new, innovative models of ‘prosumption’ (the consumer as producer) that can not only engage business professionals in a dialogue on values but also provide them with practical tools to make more values-based decisions every day. These tools can be software apps and services that take advantage of network effects, instant feedback, and peer pressure, as well as insights from behavioral economics and gaming to design compelling interactions and user experiences.

Think of a mobile app that uses real-time peer feedback from social networks to help business professionals resolve ethical dilemmas; an online portal serving as a repository of case studies tailored to users’ respective business context; a web-based Happiness Index that measures the happiness and well-being of employees on a regular basis; a data visualization tool that illustrates the unintended consequences or the externalities of decisions at a global level; an augmented reality app that maps out and archives decision-making paths; a web service that personalizes a company’s Code of Conduct, etc. If we can make the moral economy tangible for users, we can make it real.

Lastly, the most acute and possibly widening gap is between individuals and governmental institutions. People—and not only young people who grew up online—are adapting quickly to social technologies; think of Facebook’s population, at more than 800 million to date, nearly triple that of the U.S. and rapidly approaching those of India or China. In a hyper-connected, trans-national world, people move faster than institutions, as we have witnessed in the Arab Spring and experience on the Social Web every day. Social power evolves into movements long before institutions decide where they want to move, and in the lack of action, activism is born.

The new social movements may be leaderless and have multiple and even conflicting agendas (see Occupy Wall Street) but it doesn’t matter when the platform is the medium and social technology-enabled collective action, bottom-up, is driving radical, immediate change that can be aligned with a more succinct purpose later. The point at which agency becomes more important than agenda is the very point at which social power becomes stronger than institutional authority. This is a true leveling of the playing-field. As economist Bernard Lietaer pointed out in a recent talk at the Poptech conference: “In the information age, every country is developing. There are some who realize that and some who don’t.”

Those who do, trust the power of social technologies, the principles of self-governance, and the passions of entrepreneurs and other change-makers to restore trust in business and create the social capital we need for a new social covenant. Only if we move from a merely transactional to an interactional concept of business, will our economies produce the morale we need to live in connected, happy, and sustainable societies, and the Values Gap will come closer to closing.

(Continue reading here.)

[Written by Tim LeberechtReprinted with kind permission from design mind, a publication of global innovation firm frog.]

design mind is a publication of global innovation firm frog that is updated daily to keep the design and innovation community updated with fresh perspectives on industry trends, emerging technologies, and global consumer culture. Learn more about design mind and frog.


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