Principle of Participation
Peter Block captured the timeless truth that “people will be accountable and committed to what they have a hand in creating.” This principle applies to both customers and employees. Advocacy increases when people are not just “consuming” or “working” but are directly participating in a worthwhile endeavor. In a connected world, business models that are participatory are more likely to succeed in the long term.
More and more, customers and partners are contributing to design, strategy, and marketing for organizations they care about. When granted ownership for making key decisions, the network becomes more invested. This is much more than just soliciting “buy in.” It requires creating space to be impacted by those you are impacting. We are just starting to understand how these social processes can work. The tools already exist to expand participation at scale rather than just through customer advisory councils, focus groups, and influencer programs.
Employees, too, become more engaged when they are more fully participating in the direction of the company. General Electric is in the midst of a big structural transition to empower its 333,000 employees to take the company into the future. Beth Comstock, the Vice Chair of GE, outlines a vision of distributed management and culture of openness in her article The Rise of Emergent Organizations.
Some companies have succeeded through granting full ownership to its workers. There are now nearly 7,000 organizations with employee stock ownership plans in the United States, with a total of 13.5 million participants and $1.1 trillion in assets. This number does not include the many companies that offer stock options, or companies that offer profit sharing. Within an ESOP workers receive the power of ownership through company stock. Studies demonstrate that ESOP’s have greater worker satisfaction, better performance, higher wages, and more job security than publicly traded companies. Two of the five largest ESOP’s in the US are supermarkets, low margin businesses with historically high turnover rates. A recent study in the UK asked employees, what impact does ownership have on your organization?
Author Douglas Rushkoff writes, “A genuinely distributed economy requires those on the ground to develop strategies for economic and social viability from the bottom up.” The cooperative model may be the best within capitalism for developing these strategies. More than 250 million people around the world work in or within the scope of cooperatives, associations of people united voluntarily to jointly own and democratically control their enterprise. Cooperatives have flourished in almost every sector from healthcare, to banking, to manufacturing.
For example, half of Germany’s renewable energy is citizen-owned. In May of 2016, renewables in Germany supplied nearly all of the domestic electricity demand. The flagship example of the cooperative model is the Mondragon Corporation in the Basque region of Spain, with over $16 Billion in revenue, spanning 257 separate cooperatives that include over 74,000 workers. Over more than sixty years, only a few Mondragon companies have failed and no jobs have been eliminated. If an organization of this size can effectively govern itself democratically, we can’t claim that expanding ownership is too complex.
The core of these practices and models involve creating “structures of belonging,” to borrow Block’s phrase. People deeply desire to be included, listened to, and valued for their contributions. They want to be invited into membership, feeling more useful and connected to each other and the outcomes they generate. Capitalism detached from a universal drive for belonging – severed from human connection – creates schisms and isolation. It doesn’t have to be this way. The option of sharing ownership, whether through company stock or decision-making, leads to stronger networks, more sustainability, and a more balanced economy.
This article originally was originally posted at LinkedIn Pulse