Remember Enron? Remember what happened to WorldCom? Those are two of the most notable scandals where large corporate entities saw their downfall because of mis-management. The outcry of the general public was enormous, and society did everything to make sure all the guilty were properly (and publicly) punished. These and other incidents have let to an increased demand for corporate governance. Today’s corporations are only driven by monetization of value (the price of one share.) The consensus is that Economic Value is the sole driver of monetization. We think that in the future monetization will increasingly be influenced by Social Value. But do we need a different form of organizing a corporation to maximize monetization of Social Value?
It is almost inevitable to conclude we do, if Social Value plays a major role. The corporation will not not be dramatically different on the one hand. But on the other hand it will be a total makeover. A corporation will still have to make money, it has to cover at least the costs. A corporation will also need everything it also needs now, labour for example, and an administration. And perhaps most importantly it has to exist in todays (legal) world, I don’t believe we will see revolutions on a global scale. In other words it will still be an enterprise.
But if a corporation is going to be evaluated (and monetized) on Social Value there is bound to be more. Where most of today’s corporations are hierarchical and top-down this might not be sufficient enough to achieve what is necessary. In the situation where an individual is only accountable to his direct superior (and the law, of course) pressure might be easily applied. If an individual is also responsible for the welfare of the corporation itself she will make other decisions. Perhaps the decision making in the corporation of tomorrow might be organized on democratic principles?!
A known form of organizing an enterprise with these characteristics is the cooperative. Wikepedia says
“A cooperative (also co-operative or co-op) is defined by the International Co-operative Alliance’s Statement on the Co-operative Identity as an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise[1]. A cooperative may also be defined as a business owned and controlled by the people who use its services. Cooperative enterprises are the focus of study in the field of cooperative economics. Cooperatives have a sponsored top level internet domain .coop, which informs users that they are dealing with a co-operative.”
Cooperatives can be found everywhere. Cooperatives are usually a grassroots initiative of individuals or the cooperation of existing companies. Cooperatives are popular in latin america. But Scandinavia has a relatively high percentage of their enterprise activity organized in this form. Sweden’s second most important company, Cooperative Förbundet, is a cooperative. Other interesting facts are that in Belgium cooperative pharmacies have a market share of 19.5% and in Brazil cooperatives are responsible for 40% of the agricultural GDP and for 6% of total agribusiness exports.
I think this form of organizing enterprise is promising, it might fit much better with the changes in our world…
an example of a cooperative in germany is telekommunisten.net
I don’t think their is a ‘new’ capitalism… Capitalism is more a dynamic than a state. The phenomena you describe is encapsulated in the process. Creative destruction is a term coined by Schumpeter:
“innovative entry by entrepreneurs was the force that sustained long-term economic growth, even as it destroyed the value of established companies that enjoyed some degree of monopoly power.”
The fact that ‘they’ say no to the IMF is my opinion just a result of ’supply & demand’. The conditions of the IMF are considered to be to harsh and are not accepted because there are alternatives… do the monopoly is broken and new entries will take over its role. A natural process within the capitalist system?! So my guess would be, no new capitalism.
Is there a Corporation 2.0 than? The cooperative idea is interesting and very good for its purpose (the common-good) but I doubt if you should state that corporations should be more like cooperatives… both have a different purpose in life and could well exists next to each other… maybe one becomes more favorite than the other? Why do you think Coops are popular in Latin-America and why do you think we should embrace that model? How is the coop different than the polder-model? =)
i have no idea who said it but with freedom comes responsibility. as ‘we’ are demanding more and more freedom there is more and more (individual) responsibility. perhaps a ‘traditional’ enterprise is not fit to deal with this shift (both shift in freedom and shift in responsibility.)
i think the cooperative is one end of the extreme, but because capitalism is relatively new the corporation as we know it is the other end. but the cooperative might be much better equipped to deal with the shifts in freedom and responsibility. only not everyone can function with all the responsibility and freedom.
i think a cooperative is not necessarily for the common good. it is good for itself, and because of some characteristics good for the people member of such a cooperative. this is in essence exactly the same as the incentive of a corporation. only the ‘itself’ is different.
the cooperative is better suited to a community style of organizing society, in my opinion. for latin america this style of organizing is interesting because it solves 2 things. the first is the distrust of bureaucracy. a cooperative solves it with making everyone part of bureaucracy. the second is lack of funding. the one freely available resource is time. and where a corporation is designed to organize the distribution of funds and the generation/monetization of value the cooperative is designed to organize the monetization and distribution of value to the cooperative and its members.
(one thing i have been thinking about is how joined/shared ownership (as in a cooperative) is different in it’s result than incentive measures like share/option plans. i think a share/option plan voices an implicit goal, to make as much money as possible. that is not bad or good, but there are more goals imaginable.)
I don’t really get you. Within a capitalist system there are different kind of entities, for some goals a cooperative is a perfect means in getting something done. Usually for a small-scale group of people with similar intentions. Like our study in community-building showed, there is often a maximum to the members a community or cooperation can maintain… with modern tools it is indeed true that cooperatives can maintain a bigger scale than ever before and therefor might regain some momentum. Corporations have a totally other intent, other scale and other function in society. Corporations are neither good or bad to my opinion… but there are companies with better and worse intentions, products, results etc. So I would like to say that indeed a corporation is not fit for all purposes especially not for all regions and that cooperatives sometimes fit better. But by no means should corporations resolve into cooperatives to my opinion.
I do agree on the fact that there are two ways of freedom. The first is just ‘letting go’… total anarchy… but is that real freedom? The other is freedom arranged by legislation like the basic human rights… that freedom can be truly perceived as freedom if one is willing to accept (some) responsibility. The amount of responsibily might differ whether you have more socialist or liberal ideas about who is responsible for what… especially since ons might look at the other side of the coin… if one is not experiencing freedom, is it their own fault? =) So let us assume that we believe that freedom works best with a certain amount of responsibility that comes with it. You write your comment as if a company has no responsability at all and a cooperative does. It find that BS. A corporation is empty it is a legal entity… it is ran, financed, created and kept alive by people… it is the people who need to be responsible and take it and not hide behind legal constructs… but for me that is applicable to any legal form. I like to quote prof. Barber on this that Capitalism can inherently be a good system as long as it comes with a moral (capitalism was complemented by the protestand ethos). Without a moral it becomes a hollow system.
If you say that a cooperative is better suited for running a society… how do you look at the ‘market’ (or do you want to get rid of that as well =)… I mean… poliitcial parties, NGO’s etc etc.. can choose the organizational model of a cooperative and often do in many parts of the world both developed and developing… but do you really think that replacing corporations with cooperatives will do anybody any good? Here again… ‘distrust of bureaucracy”? a bureaucracy is about the people running it… and as soon as you get into the scale of a society… cooperatives will have to deal with specialization, allocation of power and decision making etc… oops… that is exactly how ‘the company’ was created…
And since when is time the one freely available resource… in western societies we are too busy maintaining our level of wealth and in emerging regions most of the time is a struggle to stay alive… I would say that there is even a bigger scarcity of time and energy than money.
Joined ownership is to me almost the same as being a shareholder… Option plans and other products like it are not the common-good neither is it the construct that drives a corporation (for some it might). By all means, I will never declare companies as saints, again they are just a construct (means to an end)… but I do want to stress that it is about the people running them, the clients buying the products… and there are a zillion small and medium enterprises (corporations) out there that do a pretty good job to their community, clients, owners, employees etc… Do not think that every company is an Enron or so… a corporation is a legal form… and some of them go public and some of them might be lacking social responsibility yes… but I dare to claim that one could find bad cooperatives as well.
So YES… telekommunist is a great example of an orgazational form that might help for certain aspects… but still they use landlines or wireless systems that somebody needs to put in place and that is either a government or a corporation that dares to invest (in the people). Since it won’t do any good if either government or a corporation is in to much control… cooperatives might creat an interesting balance in further development of our society.
your last line is exactly what i think!
about the BS first
i agree with you that a cooperation is not more (or less) responsible than a corporation. the term responsibility i used was in relation to the desire for individual freedom and the effect it has for individual responsibility. because a cooperation is owned by ‘all’ (to some degree, but it is interesting to take the extreme) every individual has something to gain, something to loose. no one can run away from her responsibility.
another aspect about your BS remark (:)) and related to responsibility is that you say responsibility is for humans regardless of the legal entity. i think that is a true statement but empty. a corporation is designed to transfer rights from an individual to a more abstract entity called a corporation (or enterprise.) the term used in holland is BV (short for besloten vennootschap) but the term used in england is Limited (for limited liability.) the legal construct has been chosen to make it possible for entities to own stuff, most notably land and the ability to sue and be sued. it is a construct.
but this construct has removed the human from the responsibility, or at least widened the gap between the executive and the responsibility of the corporation. in recent years this is (a bit) on the return because of the considerable harm cases like enron and worldcom has done the image of the corporation and the intent of the executives. only a bit of a shame that the shareholders are never held responsible, they did not set the goals, but they are very difficult to satisfy with anything other than increase of (monetary) shareholder value.
but my post was not about this discussion on the distribution of rights and responsibilities.
i do see both systems of organization coexist. in fact i think they are two extremes and a lot of companies (enterprises, ngo’s, etc.) are already somewhere along this continuum. a cooperation is not a solution for the problems of the world. the way a cooperation is organized (ownership for all, democratic decision making, etc.) might be better suited to 2 things
- the desire of an individual to self determination (i referred to that as freedom and responsibility)
- the shift we see from hierarchy to network (to communities) in organized systems (with or without the goal to make money)
i say might be because we have not seen this tested on a bigger scale. (or i haven’t seen the examples yet.)
what i find remarkable of the telekommunisten example is not that they are cooperatively organized but that they choose to be seen as affiliated to communism. there is a book i read (and enjoyed,) coopetition, that uses the aspect of cooperation as well. it describes a change in perception from competition to cooperation. its outlook is on the market, not so much on individual enterprises. but with a much more ‘liberal’ feel to it. i think if we describe cooperative as ‘THE’ way to organize your corporation as a community everyone would love it…
I do not see a shift of management from hierarchy to network, sorry?! I think organizations need a hierarchy… how else to deal with leadership? Especially if groups get bigger you will form of representation. Consensus and cooperation is not a guarantee for long-term sustainability…sometimes single-person-leadership might even be better. Too often (especially in NL) we do not dare to accept leadership, or to take a stand… that’s why we love cooperatives in general… it feels like it is owned by all… but even in the case of a cooperative you have strong and less strong personalities… people who need it more than others etc. What I mean to say is… that in the process of organization… there are situations where a cooperative is the better means and sometimes an enterprise with shareholders might be more interesting… I will think further on your point of liability =)
i do agree with all you say
but i did not say that management is shifting to a network style. perhaps management could, but i don’t see it. i do see that lot of organizations (including the more loosely coupled entertainment sites called social networks) are more and more organized in a networked way.
what do you think about responsibility of the individual in corporations vs cooperatives? and do you think this influences creativity, for example? or is it all the same?
I will post today some thoughts on responsibility (too much for a comment) partially based on the lecture of last night about SuperCapitalism =)
And sorry for the nitty gritty but I don’t even see a lot of network style of organization. YouTube, Facebook, gaming portals are tightly run environments with a central top-down organizational style. What is new, is that they open-up their network for others the re-purpose or to contribute widgets, plug-ins or whatever. So in between the people using those applicatiosn there might indeed be a network (to communicate, you might call it a network of contacts/ people… but I doubt if it is much uses as an organization method. I do agree that network thinking has great potential, but we are in the 0.1 version of it I guess…
What do you think w network organizational method looks like? What are its attributes?
(ok, here we go
…)
i think in principle every organization can be called a network. a hierarchical network is just a network where the communication patterns are rigid, directive and top down. when i talk about a shift from hierarchy to network i actually mean a network that utilizes its existing connections in different ways, not only top down but also bottom up. and adds new connections left to right and right to left.
in a network with more (possible) connections the method of creation can be different. instead of top down directed it can be bottom up suggested. but utilizing the new connections must be learned. it is a skill that everyone needs to master in order to reach the greatest potential.
i also think that a potential network is just as valuable as collection of random individuals. a network needs to be instantiated. for that it needs direction (goals and leadership.) and it needs some activity (process.) this requires structure and perhaps (explicit) hierarchy. but hierarchy does not have to be the exclusive way of making connections.
(writing this i realize it is weird that ‘we’ condemn (and try to destroy) centrally organized political systems like communism and despise dictatorships while most corporations are run along these same lines…)
Isn’t any form of government top down by defenition? Thus hierarchical?
Democracies have a president, that’s one leader to lead millions.
I don’t think “we” condemn centrally organized political systems, but instead condemn abuse of such power, which democracy solves by asking the people to choose a new leader once in a while.
i agree. but the difference is the way the leader is chosen. actually the biggest difference is that the leader is chosen by the people she is to lead.
in holland we have a representative democracy. i like to think of that as delegating responsibility. we delegate the responsibility of taking care of some of our affairs. and if we don’t like it we have the tools to remove you, or at least try to. and if it fails we will be given a new vote in time, as you said.
in a way the ‘running of the country’ is centrally (topdown) organized but the democratic process itself is entirely flat. and the representatives of the people check the government in it’s policy making.
(interesting to note is that the current dutch government went ‘into the country’ to ‘talk to the people’ to make a plan. that might show their quest for more bottom up initiative?!)
Sorry but the last sentence is ridiculous. Communism is a system that promotes the establishment of a classless, stateless society based on common ownership of the means of production. And let’s not forget that under these so called ‘classless’ societies… corruption, secret police and hundred of thousands of killings have taken place. Capitalism or communism is no guarantee to prevent such acts… it is about the abuse of power and ideology which can happen in a family, a state, an enterprise anywhere. It is about the means the suppressed has to put a stop to this, the way the segregation of powers are arranged and even than it is just a system. To work in an enterprise is of free will and nowhere comparable to communism or dictatorship. Central leadership is not the same as communism.
I’m afraid these power-words are used as metaphors in a discussion which I find mis-leading…
sorry…
Where do you stand? Where lies the problem you are trying to solve and is the scale (socio-economic systems) the right angle?
i see (and feel) this is mis-leading for you, i am sorry if with this comparison i offended you.
without the power words this time. centrally controlled societies (as the former soviet union) were based on the principle of total control, top down organized. this is not so very different from (some) large corporations. other societies are ‘organized’ as a dictatorship. this total control in one person is not abnormal in corporations, i think.
my stance has nothing to do with the parallel i saw in structure and organization of systems of people. some are small (companies) others are large. perhaps it is unfair to draw parallels. but i think it is interesting to compare these systems, for me without (moral) judgement. i am not advocating something, i am researching (or trying to, at least) interesting ideas and phenomena.
is that an answer to your question? where do you stand?
hahaha… no offense but it makes it impossible to argue (that’s my opinion) when we take such short-cuts =) It is one thing to be critical about certain aspects in our society and economy, but it is of a total different order when you start comparing the director of a company to Saddam Hussein and others..? I guess you do no longer wonder why you have been nicknamed an ‘anarchist’ =))
I get your point but do not agree. To repeat myself, first of all it is never total control since working for a company is out of free will. So i don’t think you can think of a corporation as if it is a stand-alone economy. Ofcourse most of the means are owned by the company (capital, building, your desk), but not labour etc. Secondly the board is often controlled by shareholder and others, legislation which arranges the “Ondernemingsraad’ etc. Central planned economies are about total control and the same is for dictatorships…
Ofcourse it is interesting to say ‘hey let’s compare several way of running a company with running a state!” I find that a brilliant thought. Especially (as quoted yesterday during our Macro-meeting) we know exactly what we would do as company when X,Y or Z happens… but how would your react if you need to lead a country? So comparing the dynamces of these systems is vary valueable… als comparing them with emerging (buzz)systems like ‘the swarm’ or ‘the network’ or ‘bottom-up’ or ’self-control’ is fascinating, but I want to research the drivers, the hurdles, the chain… and when we take such shortcuts I find it difficult to see what the purpose is… Ofcourse we do this more often, like saying we will enter an age of Entanglement in a Quantum economy… yes also bullshit… but the reasoning is where it is all about. That reasoning might reveal certain understudied dynamics for us… so I’m not reacting with such ‘energy’ because I hate you using the word communism or whatever… I have troubles because it is tapping in an ‘existing’ debate without (at least to my understanding) a clear reasoning.
So I certainly appraise your initiative (as always) but I fear that the lack of clear reasoning in combination with the usage of heavily-loaded power-words prevent this discussion from becoming an investigative inspiring look-forward it more turns into a theme which is so glued to the past we can’t get it moving forward?
i know, but i keep forgetting to take your imagination into account (haha.) i do agree a word as ‘communism’, or ‘dictatorship’, is heavily laden. and in this case misused. but to jump to the conclusion that the ceo of mcdonalds has anything to do with some or other dictator is totally on your account.
and, as far as i know, the ‘ondernemingsraad’ is a local phenomenon, quite well protected by law. this is exactly an aspect of our corporate institutions that have an importance, somewhere but in a society where individuals are not seen as stakeholders in the corporation the institute ‘ondernemingsraad’ is often lacking. my view of a cooperative is that there is always an ‘ondernemingsraad’, namely all the employees. (nice example
)
and to talk about free will to join or stay is true. i don’t think free will is perceived as such, by the majority of the people. wether it is their own doing, or their own responsibility is something else. it is different, but not too different to forsake a comparison, i think. though the perception of freedom of choice to leave/stay is definitely determining for a lot of properties of a community.
what exactly do you mean with ‘tapping into an existing debate’?
Virtual Artists, Inc: an example of cooperation style organization?!
True… organizations are networks of people per definition and has always been the case… nothing new about that… and now online we see also networks of people… nothing new about that but my challenge is how do you ORGANIZE or MANAGE that? Networks are usually quite flat (peer-to-peer) while hierarchies are used for organizing the organization… my guess is that we will need a hybrid approach of top-down AND bottom-up… so what can we learn from how a network inherently works to see if we can implement those attributes in management or organization-styles… eg… the informal-communication in a company is seldomly part of management theories… while those informal contact form the network… so that’s why I say that I hardly see a big shift to a network based style or management/ organization, especially at the top.
(a bit of a wrap up)
the phenomena i witnessed were 2
- cooperatives as a way of organizing groups of people for a (commercial) purpose
- individuals are looking for self determination, freedom (individuality)
because of the second individuals want to be free, but not only as a consumer, or as a citizen, also as an employee. this search for freedom comes with responsibility. i think cooperatives are interesting to study to see if this freedom and responsibility can be found in some of it’s principles. we might conclude a hybrid form will arise, but do we need to find the other extreme first?
i am also struggling with systems dynamics. in this discussion i tried to draw parallels between the way the ‘big systems’ (societies) are/were organized and smaller systems (corporations/cooperatives.) this has proven to be ‘a bit’ problematic if the terms used are not clearly defined and/or carefully chosen. from this aspect of the discussion i wonder if it is at all possible to compare system dynamics if the scale is so different.
a couple of words about the use of the words ‘management’ and ‘organization’. they appear to be very deterministic and exude control. their are aspects of the systems we study that are not organizable or manageable but emerge. but on this later more, perhaps.
just for fun one last note is about schumpeter. he believed, at least according to wikipedia, that capitalism would be replaced by socialism. would shumpeter also believe the corporation would be replaced by a cooperation?
Phenomena 1 is indeed interesting. Question i would raise are:
- Hasn’t that always been the case (I don’t know?) and what is the impact of new technologies on that? I guess more power (due to transparancy), more spread of the group due to less physical constraints and maybe broader groups due to the characteristics of online communication… all just a wild guess
- Secondly I wonder when to use a cooperative, for which purpose or dilemma?
I do no feel the need on comparing them with bigger systems untough I agree that scale is an issue here because you cannot escape a system but can choose to join a corporation or cooperative out of free will…. and exactly that dynamic makes it hard to draw any comparisons since the devil is in choice-aspect (which might reveal certain drivers) and no-choice-at-all (is the same for all systems)
The second phenomena I find more difficult. Do individuals really want self-determination? Hoe much freedom can they handle. My point is that people do look for freedom but hate responsibility in general so it s a trade off. So responsibility is indeed a big thing for politics, economics and households. If you could choose between cheap hamburger or tuna or trousers and similar products that are ‘responsible’ for a higher price… wouldn’t you go for the best deal? That is what I mean that consumers perform a schizophrenic balancing act between your concerns as a citizen and your ‘need’ as a consumer.
Politics and economics have always been like Yin and Yang. Socialism has always sounded like the sweetspot in the middle. But the problem is mostly who determines the direction, who and how to stimulate growth. Fear or Bonus? Bottom-up or top-down? Many varieties are at hand here. The fact that a form of socialism is the end-game is logic because that means we have come to a state where we are satisfied and people live happily ever after… the problem is how to get to that state of being. Competition & cooperation have often been the two drivers for progress. But when no threat is available it is hard to find common ground for such progress and therefor other models are used. People want to be acknowledged for their succes… and here is the tricky part… what is succes? Individual or collective? Hoe to acknowledge etc.
For these kind of reasons many economist favour a sociolist model… but the key questions is: Which flavour?
“Since the 19th century, socialists have not agreed on a common doctrine or program. Various adherents of socialist movements are split into differing and sometimes opposing branches, particularly between reformists and revolutionaries. Some socialists have championed the complete nationalization of the means of production, while social democrats have proposed selective nationalization of key industries within the framework of mixed economies. Some Marxists, including those inspired by the Soviet model of economic development, have advocated the creation of centrally planned economies directed by a state that owns all the means of production. Others, including self-titled Communists in Yugoslavia and Hungary in the 1970s and 1980s, Chinese Communists since the reform era, and some Western economists, have proposed various forms of market socialism, attempting to reconcile the presumed advantages of cooperative or state ownership of the means of production with letting market forces, rather than central planners, guide production and exchange.[2] Anarcho-syndicalists, Luxemburgists (such as those in the Socialist Party USA) and some elements of the United States New Left favor decentralized collective ownership in the form of cooperatives or workers’ councils.” [WIKIPEDIA]
Like always the truth lies in the middle… so hybrid-model-thinking is crucial. Especially WHEN to organize like a cooperative and when like an corporation. and HOW could the work together? For me that is more interesting than a fictive debate whether cooperatives could replace a corporation (on the short to mid-term).
(Let’s not mistake communism and socialism here!)