Conscious capitalism. The business model of the future.
The world is on the cusp of the biggest employment disrupter it has ever known. It has been brought about by the technological revolution and will be accelerated with the world of robotics and artificial intelligence.
The old model of business primarily driven by short term thinking, short term shareholder value, and short term management remuneration systems is not sustainable. The acute focus on reducing labour costs, the largest expense for most businesses, will not create enough jobs to sustain the working population.
With the dawn of the technological revolution, a new model of doing business needs to be created which must include societal value. What is the alternative?
As William Beverage a social policy thinker famously said we need to organize our society that the market is the servant not the master.
The revolution is in its infancy and already social divides are being widened. Those people who have access to the internet and smart phone technology already have a social and economic advantage to those that do not.
60{01332a80e2e652688e18927fa9a6162580960d47bc08263a3993439d666dcd52} of the world is still offline. This is 4 billion people.
2 billion don’t have a cell phone and 500 million don’t live near a mobile signal.
One third of Americans do not have a smart phone.
Historically business is driven by efficiencies and reducing costs. Many companies perceive their largest cost is people and have systematically developed strategies to reduce the cost of labour. The primary reason for outsourcing manufacturing, call centres and professional services to other countries like Latin America, China and India has been to capitalise on cheaper labour costs.
With the rise of robotics companies are bringing their manufacturing business back home because it is cheaper. It is not necessarily bringing a lot of jobs home.
Some analysts suggest the number of jobs will be as little as 1{01332a80e2e652688e18927fa9a6162580960d47bc08263a3993439d666dcd52} of the existing workforce.
Adidas is only one example of the impact of robotics. They announced that they are going to resume making shoes in Germany and the US calling them speed factories with massive increases in production. They will employ just 160 people to oversee the robots, a fraction of the staff in the Chinese factories.
As robotics become more sophisticated and develop self-learning capability those existing jobs will continue to decrease. Of course different jobs will be created, like installing configuring tuning and monitoring robots, however the only modelling to establish if there will be enough jobs is based on hope. If the current business model is reducing labour costs, there is little motivation for business to create jobs.
Many poor citizens around the globe are already being disaffected by losing their jobs to the cheapest alternative. The results in some areas like Mexico have been catastrophic. Australia is not immune. Already young people are struggling to find work, and almost 20{01332a80e2e652688e18927fa9a6162580960d47bc08263a3993439d666dcd52} of the population is either underemployed or unemployed and the revolution has just begun.
It is estimated almost 15{01332a80e2e652688e18927fa9a6162580960d47bc08263a3993439d666dcd52} of Australians, not through choice, are currently underemployed.
As a part of my consultancy, I provide data, insights and facilitate discussions with managers on what the impact, the changing nature of work, will have on their businesses. Doing this work I have come to realise there are three basic organisational approaches. I believe these approaches are not dissimilar to societal views as a whole.
Company one. They get it. They are engaged in learning and evolving fast. They know technology is the major driver of change in organisations and job types are going to be lost. The types of skills required are going to have to morph quickly. Training will be required and resources re-aligned. Some are considering the consequences of their decisions and factoring in societal implications.
Company two. They get that technology is here. However, they are not investing time or money to invest or learn. They are focused on what they know and the here and now. Often the priority is cost reduction.
Company three. They don’t get it. They believe it all worked out before and have an attitude of she will be right jack or it won’t affect us.
One comment by an executive was: “They said there would be a paperless office and that hasn’t happened. They said we would work less and that hasn’t happened, nor will robots take over white collar jobs”. If only he had looked at the data.
Forty percent of all jobs will be lost by 2025 including
white collar and blue collar jobs.
The new model of business, starts with a change in language. It is time that we consider people as citizens not just consumers. That capitalism becomes two words not one. Namely conscious capitalism, which is defined as:
Conscious business enterprises and people are those that choose to follow a business strategy, in which they seek to benefit both human beings and the environment.
The new model of business is role modelled by executives like CEO of TNT Express Ted Gunning who said:
“Average leaders take care of themselves and their families.
Good leaders take care of themselves, their families and the community.
Great leaders and great companies not only take care of the stakeholders but they want to change the world. They want to leave the world a better place”
The new model of business takes courage. Time needs to be taken to learn from those who have embraced the new business models and learn how it has been done and could be done.
Those include companies like Warby Parker who in six years have created a business that is valued at more than a billion dollars by selling $95 trendy eyeglasses.
For every pair bought they distribute a pair to someone in need.
To date two million pairs have been distributed world-wide.
As technology evolves, new business models need to evolve. However, those models have to include the impact of decisions on citizens and society. It is no longer acceptable to say its only about the shareholder. In the new world it must be about citizens as well.
