How equality is changing the face of business
As published on Switch & Shift on September 8, 2014. Equality typically suffers from a bad reputation in capitalist environments, even to the extent that some consider it to be the biggest threat to capitalism itself. Looking at equality as the even distribution of wealth, it is indeed painstakingly clear that “all animals are created equal, but some are more equal than others”: the 85 richest people in the world have as much wealth as the 3.5 billion poorest, less than 15% of women hold Executive Officer positions in Fortune 500 companies and the US income inequality is at its highest peak since 1928. Yet, is it right to look at equality only in terms of wealth distribution?
When the Red Hot Chili Peppers were referring to equality in their song ‘The power of equality’, they were talking about equality in the sense of equal rights and people empowerment. In the same vein, Nobel Prize winner Milton Friedman made a great comment:
“A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.”
When defining equality as creating more freedom for anyone to contribute to and gain business success, the future looks bright, with anyone having talent, motivation and creativity being able to make a dent in the universe. Here are 4 global shifts towards more equality that will fuel future growth and change the face of business forever:
Equality through Open Information
Today’s society is flooded with the promises and virtues of openness: open collaboration, open working space, open sourcing, open innovation, open universities, open government. Ever since Johannes Gutenberg ignited the printing revolution, people around the planet have an increasing access to information and knowledge, with Google obviously accelerating the name of the game with Executive Chairman Eric Schmidt willing to provide everyone in the world with all of the world’s information. Similarly, Tesla’s CEO Elon Musk publicly released Tesla’s patents in the belief that applying an open-source philosophy would strengthen rather than weaken Tesla’s position.
Young people around the world can learn about nearly any imaginable subject using platforms such as Khan Academy, supercharging the democratization of knowledge and skills. According to McKinsey research, the open information revolution creates a yearly additional value of more than $3 trillion, spurring hundreds of entrepreneurial start-ups and helping incumbents drive efficiency and effectiveness.
Equality through Zero Marginal Costs
In addition to knowledge and intelligence getting increasingly distributed and disaggregated, digital technology is dramatically lowering transaction, communication and collaboration costs. In today’s ‘maker’ movement, smart people with few resources can actually create highly disruptive, world-changing businesses. For Jeremy Rifkin, author of The Zero Marginal Cost Society, the dominant force behind this is the shift from vertical to lateral resource allocation. As a result, he claims we are about to reach the optimally efficient state where it is feasible to sell at a marginal cost of zero. Critical business functions such as finance, production, distribution, sales and marketing are indeed being radically democratized thanks to crowd funding, 3D-printing technology, efficient global distribution and powerful social media communication channels.
Think of the development of Jibo, the world’s first family robot. Having raised close to $2 million through crowdfunding (largely exceeding the target amount of $100,000), social robotics pioneer Dr. Cynthia Breazeal is able to add more features to Jibo as more funds become available, keeping the robot’s price affordable at just $499. The majority of the seeding money can be spent on engineering the robot itself, with costs related to marketing, sales, ordering and distribution being close to zero.
Equality through Mass Collaboration
Mass collaboration is reshaping the way businesses operate. In the participation age, more and more companies are tearing down the walls they have built around them, embracing an outside-in perspective and leading people on the basis of purpose rather than managing them on the basis of control. In their book Firms of Endearment, Jag Sheth, Raj Sisodia and David Wolfe point out that companies helping all stakeholders to thrive – customers, investors, employees, partners, communities and society – have grown no less than 3 times faster compared to ‘Good to Great’ companies over the last 10 years.
Taking such a broader stakeholder approach implies building a culture of equality, where all stakeholders have equal chances to participate and drive value and meaning. With nearly 3 billion brand conversations taking place around the world every day, consumers have become a highly powerful global marketing machine themselves, either boosting or working against the effects of traditional brand advertising. The recent success of the ‘Ice Bucket Challenge’ is a relevant case in point, having raised more than $40 million in donations for the ALS organization so far. The organization left behind the classic fundraising path by actively engaging anyone around the world in what you could call a trivial act, from celebrities like Bill Gates, Oprah Winfrey and Ben Affleck to everyday people like myself.
Equality through Sharing
Owning assets and intellectual property is less and less a required ingredient of business performance. I had the pleasure of meeting up with Santi Pozo, a young entrepreneur from Barcelona who is in the process of creating a helmet that not only protects users of minority sports, but also stays intact after several crashes. Aiming to show the world that it is possible to have more with less, he reached out to NASA requesting them if they could send him a sample of material they use in space. And guess what: they did!
Gradually, we are moving from an owning economy to a sharing economy, with resources being shared among a wider population of users, thereby making a better and more equal use of existing capacity. Despite defensive legal actions and counter-lobbying to protect current business models, the growth of the sharing economy is unstoppable with companies like Airbnb, Uber, Skillshare and Zopa breaking and redefining the rules in the hotel, transportation, education and finance industries (and many more to come).
Equality is becoming ever more central in modern businesses with open information, zero marginal costs, mass collaboration and sharing creating more freedom in the business world for everyone. After the dominance of the command and control management model over the last century, “thank God Almighty, we are free at last”! How does equality create new opportunities for your business?