Posted on

Rebooting the New Economy

When I finished my engineering studies, a little under twenty years ago, the digital revolution was in full throttle. The digital world, with its start-ups and innovation labs, represented both technological and social progress. It was an optimistic time. A new economy would boost individual freedoms throughout the world; it would bring down dictatorships and corrupt regimes and help all those left behind by the old economy.

Like many other people, I responded to all the fine words with scepticism, but I continued to believe that my work had meaning and information technologies would usher in a new socio-economic model that more closely reflected my generation’s values. User-centred innovation, business agility and continuous improvement were all new innovation techniques that would enable us to bring about deep-reaching change to the economy.

As the years passed and my experience extended to different industries, it became increasingly clear to me that the digital revolution actually suited monopolies and the powers that be. The tech giants engaged in endless partnerships and acquisitions to maintain their dominant position. Digital innovation had been standardized, with young tech companies marshalled into hubs funded by the big corporations and governments, with no choice but to fall in line, sooner or later, with their industry’s standards and practices. The innovation techniques that had accompanied the boom in digital technologies entered into general use and, with varying degrees of success, become absorbed into the conventional hierarchical structures of large business, applied equally in China, Europe and the USA to defend democracy as well as exploit its tiniest loopholes, offer more freedom as well as contribute to a widespread surveillance system. 

I wanted to draw on my experience as an engineer, consultant and entrepreneur to find which practices rooted in the digital economy have led to the current situation. What struck me was not the damaging effects of any one practice, but how entrepreneurs are struggling to align their business’ growth with a form of governance that stays true to their innovative ideas and desire for disruption.

The myth of the start-up, the little laboratory developing its products in total secrecy, is fascinating. We have all dreamt of playing the mad scientist, working away in some garage inventing the next big innovation. This myth does indeed reflect the way many traditional businesses work, with laboratory type companies characterised by the mysterious nature of their creations, their bigbang launch announcements and the control they exert over their image. 

I had the opportunity to observe this lab culture in every size of business, from the small group of co-founders to unicorn start-ups with their exponential growth and large international conglomerates. The culture suits small creative companies particularly well. The myth of the laboratory company encourages experimentation and rewards ambitious ideas. The conviction of participating in a wonderful project no one knows about strengthens the bonds between co-founders and their first employees and creates a feeling of pride. This belief is boosted by constant interactions with their future clients, the users of their products and services, through well-tested innovation techniques such as ethnographic research, prototyping and the systematic collection of user feedback. These innovation techniques allow companies to confirm the validity of their ideas and theories as well as giving practitioners the opportunity to meet their customers and grasp the impact of their work. These encounters can reinforce their beliefs or, on the contrary, sow the seeds of doubt so that they question their personal goals and switch to an entirely different project. 

The modest size of young tech companies means that their founders and first employees have to confront on-the-ground realities and take an interest in the immediate consequences of their project. Governance of these small structures can be seen as intrinsically ethical since it is being guided by the personal convictions of their members, who are fully aware of the impact of their project on society. We may agree or disagree with their scale of values, but they are fully capable of exercising their judgement. 

This lab culture becomes more problematic when companies begin scaling up. The founders and first employees then tend either to keep their new ideas to themselves and treat new employees as underlings or, in more modern organizations, create multiple innovation hubs internally, with autonomous team pursuing a specific objective defined by the executive management team. In both cases, the founding members unintentionally usher in a culture where the company’s employees are no longer encouraged to develop a sense of the bigger picture in terms of their actions. 

Founding members continue to believe in their own discernment and entrepreneurial qualities. But they are no longer directly confronted by the consequences of their project, or else their project has grown to such an extent that they can no longer monitor its every development. Their decision-making process ends up triggering distrust, whereas from their viewpoint they are simply applying the management methods underpinning their company’s success.

As for the innovation teams, they adopt the same agile methods and user-centred design as their company did at the start, except that the methods are applied in an increasingly utilitarian manner, offering no real opportunity to question the ultimate purpose of their work. The focus shifts to measurable and scientific techniques, a Taylorist interpretation of innovation wherein debate and questioning are limited to the pursuit of ever more fragmented and tactical objectives. I have observed that this transition from reflexive innovation to Taylorist innovation is typically completed when the business is listed on the stock market, or, more specifically, when the company’s founders find themselves no longer able to make their own choices and be entrepreneurs. Instead they need to serve as an administrator hemmed in by what Max Weber calls the iron cage: a cage where all decisions are taken in a supposedly rational fashion, based solely on accounting factors and maximization of economic gain without taking externalities or the purpose of the activity into account.

Strong-minded business owners can delay this tipping point, stand up for ideas their investors feel are foolish, cultivate their image as gurus, lead the way and describe the things that, over and above financial results, are worthy or unworthy of engagement. But the size of their company puts an end to their credibility in this role and in the absence of any other forms of governance, the transition to accounting- and scientistic-based management of the company is inescapable. 

To avoid the Taylorization of innovation and a scientistic paradigm whereby every financial profit is equally valid and no one cares, the people heading high-growth companies need to transform their governance mechanism. They need to be brave to effect such a transformation because it involves abandoning some of their prerogatives, but that is the price to pay for their company retaining its unique features and continuing to pursue objectives above and beyond maximizing financial results. This transformation can take place on several levels; I do not intend to talk about employee involvement in boards of directors, the freedom-form companies movement (a term popularized by Brian M. Carney and Isaac Getz) and self-managing organization models (e.g. sociocracy and holacracy). Instead I am focusing on actions that are closer to workers’ everyday experience, techniques I have already observed in the innovation field and that could be tweaked to allow companies to grow while continuing to move the goalposts, do things differently and transform the economy in the area where they operate. These actions can be grouped into three stages. 

First Stage: Encourage Each Employee to Form their Own Opinion

The first stage is to allow and encourage each employee to form their own opinion on the purpose of their work. Innovation techniques that focus on interactions between team members and the people using their products and services are a step in the right direction. The approach whereby all their tasks are defined beforehand by analysts and business owners, without any opportunity for the team to participate and find meaning in their work, is neither right nor effective. It prolongs time to market, demotivates employees and results in bad decision-making. Most digital companies have learned the lesson. But they need to go further: encounters with users should not be reduced to data gathering but be rooted in a spirit of dialogue where employees are encouraged to do more than simply create or enhance a product or service, but to feel sympathy for the people they meet and find lasting and fair solutions to their problems.

Open source development and co-design workshops are examples of innovation techniques in which users are not only observed but encouraged to take part in the creation of products that they will end up using. These techniques are a way to move from a purely utilitarian mindset and enter into a dialogue with customers and users, to understand their circumstances and the externalities of a business activity.

This greater awareness on the part of practitioners can also be fostered via collaborations and partnerships with public bodies and non-profits, via events open to the public, hackathons and open days. In all the various posts I occupied in a company — engineer, manager or consultant — it is these encounters and interactions that remain fixed in my memory, that most inspired me during my work and guided me in my career. Hierarchies and ROIs evaporate for a moment; you are no longer the literal “employee” but a person in dialogue with others, each contributing their own ideas, desires and opinions.

Second Stage: Give Employees a Voice

Once employees have been encouraged to become aware of the purpose of their work, the second stage is to give them a voice. Members of an organization never fully pursue the same goals, they never have exactly the same priorities and may think of the purpose of their work in different ways. The variety of ways people have of finding motivation in their work is a richness. Expressions of this variety are a positive sign, implying that everyone can appropriate the company’s mission and that this understanding can change over time, an essential characteristic for a business that wants to endure. To give employees an opportunity to articulate the meaning of their work in their own terms is to allow the corporate culture to live and evolve in line with its environment.

This is something that information companies too have understood, albeit forced by social media, encouraging their employees to write online articles and to talk and participate at conferences. They recognize that it is a way to get themselves talked about, promote their expertise and attract new talents. But the practice is generally encouraged only in what we might term a technological élite (developers, architects, UX designers, etc.). The opinions employees may express in public tend to become increasingly codified as the business piles on more and more levels of hierarchy. Not frightening investors becomes imperative, not rocking the boat during publication of quarterly results, not contradicting the press releases and not putting a spoke in the wheels of the latest marketing campaign.

Perhaps more harmful still is employees’ tendency to self-censor, to seek to satisfy their superiors in the hope of promotion, or simply to avoid problems. The resultant “corporate correctness” sees a progressive tailing off of references to their concerns in all company internal and external communications. The upshot of this phenomenon, which we have all experienced, is the organization of soporific industry conferences where participants carefully avoid broaching dilemmas and tricky subjects where their management has not previously provided an official response.

A tongue-tied and consensual communication culture is a long-term handicap to any business seeking to meet the challenges of the day, it increased the chances that one way or another it will be caught out by the questions it tries to avoid, whether in the form of a scandal that gets media traction, a competing business that is ahead of its time, or an effort by policymakers to impose regulations.

Third Stage: Open Up Ethical Debates to Staff

After finding a new sense of meaning in their work and acquiring the freedom to talk about it, a final change needed in fast-growing businesses is to open up the debate about ethics to staff. It is almost as if certain leaders of large corporations were unable to admit their powerlessness in the ethical sphere, seeking instead to curry favour via set-piece events where they make empty promises to their staff, followed by the announcement of a handful of symbolic actions. Their aim is to convince employees and public alike that they are righteous leaders with the ability to settle ethical questions relating to their industry at the highest level of their companies.

But can the ethical behaviour of large corporations really be dependent on a handful of individuals? Are business leaders destined to forever feel ashamed about their lack of credibility in this regard? Instead of attempting to curry favour, would they not be better advised to usher in a transition and empower a community of individuals to assume this responsibility?

An example is the startling failure of companies like Uber to anticipate the ethical problems of the gig economy. Tech employees for the first wave of gig economy companies were clearly not encouraged to address these challenges. Even if they had been able to discuss them and arrive at a consensus among themselves, the impact of the gig economy on certain socio-professional classes would have required them to open up the debate to those impacted as well as to the wider society. If we accept that such debates are unavoidable and that ethical shortcuts ultimately come at a cost to companies, would it not be sensible to encourage employees to debate such issues at an earlier stage? 

It is very much in the interests of leaders of fast-growing businesses to tackle ethical issues in very close consultation with their staff and without ever pronouncing how such values should be put into effect. This approach might seem laxist and highly convenient for business leaders. Seen in isolation, it allows them to lay claim to the best intentions without ever assuming the consequences. Unless true debate on the values of their business is encouraged, a debate visible to outsiders and where everyone is invited to take part.

This is an approach already followed by a good many business leaders, and it demands far greater tenacity and courage than when they control every corporate utterance, resulting in inevitable omissions and bland, timorous messages. 

Across different industries, countries and cultures, I have been surprised by the consistency with which managers appropriate vocabulary and talking points of their leaders to navigate internal politics at their company, defend their projects and push their successes to the fore. Defining a broad outline of a business’ values, expressed in contrasting language and terms (modernity over status quo, durability over throwaway, generosity over greed) provides a fertile terrain for discussions that has a more far-reaching impact on the business than any form of top-down initiative, however praiseworthy.

Unfortunately, few business leaders are prepared for this transition, torn between the role of Schumpeterian entrepreneur that characterizes young businesses and the role of administrator focused entirely on maximising shareholder profit. A third way is possible, encouraging both innovation and debate, employees to think about the implications of their work, to speak out and debate ethical issues relating to their sector.

If a new economy is reduced to its start-ups, it will never reach maturity. It is necessary to incorporate a transformation in the way its major corporations and organizations operate. Agility and lean methodologies, intrapreneuriat and continuous improvement are all examples of practices whose full potential can only be exploited in decentralized organizations. Rather than defining a new economy in purely technological terms, should we not also include a reversal of the role that employees play in organizations, a transformation of governance rooted in collective intelligence? Would this not be the most natural use of the innovation techniques available to us, and the best way to give meaning to the digital revolution again?