Business Transformation (I/III)
This is the first of a three part articles series that originally appeared on the SOMESSO blog. It is re-published here on the 21st C/N blog with kind permission by its author.
This first installment, examines how companies need to move from pushing a message to galvanizing people around an idea. Part 2 will then explore in more detail why companies need real values, and the final part will look in more detail at how organizations structured around values and relationships work in practice.
The social dynamic and the transformation of business
With something of a perfect storm of food, energy and water shortages being forecast by 2030 and the combined forces of social technology, economic recession and environmental change making their mark, the possibility of a new social ethic is emerging with the potential to transform the way we do business. Whilst ensuring we bring the intangible assets and existing equity of established businesses with us into this new commercial domain, new business models are required that involve a recalibration of organizations and businesses as we know them. And this means that marketing and organizational development needs to be reinvented.
This new social dynamic calls us to shift our approach from pushing a message to galvanizing people around an idea. Marketing strategies that do no more than prime the pump to achieve sales have become a tax paid for being unremarkable; if your ideas are big enough you don’t need that spend. Organizations now need to be propelled by ideas big enough and inspiring enough to bring communities together – employees and consumers alike – based on a common belief in the value of their activities.
The idea of forming a strong group around a purpose has been central to brand identity for a while. And when this idea is placed within a social ecosystem – and the social tools and practices loosely called web2.0 – the implications for traditional organizations are huge. The social dynamic challenges most of the marketing and organizational development fundamentals of conventional business.
Dysfunction is an operational cost
Needing a large media spend to promote business opportunity is only one symptom of operational dysfunction. When what an organization says and what it does are not aligned, when they aren’t compelling or credible as a brand and when they lack a strong sense of communal purpose, huge – and hidden – operational costs are incurred.
We know how it makes us feel when promises aren’t kept. When we feel let down, when people or organizations cannot be trusted, we’re inclined to give them less attention. This is a fundamental aspect of any social contract.
In brand identity and organizational terms, trusted networks have value both commercially and socially. But in bricks and mortar organizations, tacit knowledge and networks of trust exist invisibly, in parallel to official channels and hierarchies. When things go awry, corrective strategies that are insensitive to trust networks create opportunity and operational cost by making cuts based on abstract efficiency, thus remaining blind to – or often destroying – locations where commitment and affinity networks mean proven delivery as well as innovation could continue to flourish.
In the absence of affinity, commitment and shared values, companies over-engineer their management structures, building in the risk of system failure. Organizations built on industrial production principles – command and control – have heavy infrastructure, capital cost and tangible asset overheads that are expensive and hard to maintain. Time, money and energy is spent on management plans based on outmoded ideas of how things should work, rather than on understanding how they actually do work. This does not constitute streamlining, improving fitness for purpose or generating stakeholder value.
More broadly, our current model for how business should work assumes infinite needs and resources, but the reality is that we don’t have an infinite number of needs, and ecologically we don’t have an infinite amount of resources. This, combined with the current global recession – driven by creative accounting itself inspired by the drive for constant growth at any cost – sounds a death knell for the single-minded capitalist focus on corporate value as judged by investor return and based on financial value alone.
Investors in organizations have expected annual returns of 15%-20% p.a or more. But there is a growing appreciation for the welfare and the fragility of our ecosystem and a realization that there are limits as to how far we can use consumption as an engine for corporate growth.
A new social dynamic
We have to learn to live with the meaning of ‘enough’ and refocus on new kinds of corporate opportunities, opportunities that move from making ‘more’ to making what we have work ‘better’, and businesses that are socially driven by the power of big ideals. What’s emerging now takes the place of consumption at all costs: businesses that focus on what we really need, and have an inherent permission to operate within the ecosystem because the work they do makes them valuable, as opposed to the old organizational notion that interruption via marketing creates sales.
The organizations that will be most successful moving on from here are likely to be those that make it their mission to meet these needs well, that are additive and supportive, fun to be around, inclusive, that people care about, that connect people and inspire them, that solve problems and are on a social mission.
We need to re-examine how we measure worth and how, in this context, worth is linked to achievement. Are we going to value organizations that take from the system only to benefit themselves, or are we going to value organizations that replenish the ecosystem and the people who are creating value for and with the system? It’s a stark choice. I think social networks are encouraging us to think in terms of systems, to address how we can create achievement for the ecosystem, to reassess how we place a value on that and how we invest in that. The paradigm shifts from ‘profit from’ to ‘profit with’. That’s our future.
It’s only a matter of time before CEOs start having to ask themselves: ‘What is our strategic goal within a socially-led ecosystem?’ How do we redefine and view our marketplace? How can we sustain ourselves within an ecosystem, and how can we recalibrate what we have in order to do that?
Anne McCrossan, Twitter: @Annemcx, is the founder of Visceral Business, a social business consultancy that specializes in helping organizations create social leverage through strategic change initiatives, brand management, leadership training, and social marketing capabilities.