Future Here Now - SPECIAL EVERYONE EDITION!
Welcome back to Future Here Now, where we discover how the world around us is changing, how that’s affecting our communities, and what we can do right now to help the places we care about thrive into the future.
Welcome also to a Super Special Once-in-a-Blue-Moon Unlocked Edition! Every once in a while I like to give you all a better taste of what FHN includes. If you’d like to get this level of insight every week, then Subscribe! It’s probably cheaper than your coffee habit!
Subscribers also get access to other benefits, including coaching sessions. (Subscribers, I’m working on a revision to the Subscriber Benefits to make them more useful for you. More on that soon!)
In this edition:
Where’s that Stakeholder Economy we heard about? Did you forget?
Wow, Co-ops Make Sense to Economists! Surprise!
How can Bicycles Make a Meaningful Impact? You mean we’re not??
Coming Soon
Making the move from Shareholder to Stakeholder Capitalism: think harder.
The real value in this article for me is introducing (or re-introducing) you to the concept of stakeholder capitalism, and noting the way in which at least some business leadership is starting to grapple with the externalities and unintended consequences of a high Industrial Era assumption. But it’s also an object lesson in the challenges we face living into the paradigm change, even when we’ve committed to it.
Stakeholder capitalism is a new concept, but not a new new concept. It basically means that a business should work for the benefit of everyone who has a stake in its business, not just for the maximization of shareholder value, which has been the mantra of business management since at least the 1980s (an era’s peak expression often comes as it is beginning its death spiral). Stakeholders, in this context, include the owners of its stock, but it also includes employees, consumers, the communities in which businesses operate, others impacted by the natural resources that they use, etc. It’s a recognition that businesses cannot actually operate in the classical two-party transaction way that we’ve often idealized, and that every choice a business makes comes with impacts that go well beyond the transaction. Like I said in the Local Economy Revolution and The First Principles of the Local Economy Revolution, we all know this in everyday life, but the economic concept of an “externality” was invented to try to avoid that responsibility. But in a network-dependent era, all of those chickens…you know.
Some of us heard of this first through media coverage of the World Economic Forum’s Measuring Stakeholder Capitalism report in 2020 (I know you didn’t read it… neither did I). The big news on that came out of Davos that same year, when a bunch of major business leaders signed a manifesto committing to pursue Stakeholder capitalism. And influential people like Larry Fink, the chairman and CEO of BlackRock, have been pushing the companies they work with to commit to that direction.
But committing and doing it aren’t the same thing. And that’s not necessarily a slam at Big Business (which wouldn’t be unwarranted), but I bring it up to call us all to account.
Here’s what shocked the author:
Recently, I attended a presentation sponsored by a major academic institution. The purpose was to provide guidance to alumni and others interested in joining corporate boards. Repeatedly, board readiness was noted as experience in increasing shareholder value and corporate ROI, traits consistent with a shareholder capitalism mindset. There was no mention of the effects stakeholder capitalism might have on assessing and choosing effective board candidates.
I was both dumbstruck and disappointed. Isn’t stakeholder capitalism being touted by academics, the Business Roundtable, and business leaders as the future of business?
And doesn’t stakeholder capitalism, by definition, call for businesses to serve all stakeholders: the societal community, employees, suppliers, customers, and yes, shareholders?
To make this shift, companies must populate their boards with people who understand the urgent importance of stakeholder capitalism in all its nuances and who are steadfastly dedicated to nurturing companies whose purpose is to achieve long-term profitability and economic prosperity through the betterment of society overall.
So why were these emerging criteria not included as crucial ones for consideration when evaluating people’s readiness for the rarified community of corporate board membership?
When I shared with the presenters my dilemma with their content, they replied that it was in fact “a very astute observation” and that they would need to give it some thought. [emphasis mine]
If business academics haven’t internalized shareholder capitalism to the level of remembering to mention it in a seminar on recruiting board members, then the paradigm shift that shareholder capitalism represents has barely crossed the dermis. People increasingly believe in it and accept its importance, but it hasn’t entered the metaphorical business world bloodstream, let alone embedded in the muscles.
No wonder your typical business hasn’t seen or accepted their externalities, their responsibility to those around them. Even though we all know, from WEF to our local auto body shop, that we can’t escape those responsibilities anymore.
The local Fusion Economy demands new approaches and new ideas, because we have come up against the limits of what our Industrial-era solutions can do. Check out The Fusion Era Will Impact Your Community: Here’s How to Survive and The Local Economy Revolution Has Arrived: What’s Changed and How You Can Help for more on these impacts. For guidance on doing meaningful public participation that engages people of all ages in a way that doesn’t make them cynical or angry, check out Online Public Engagement 3.0 and Crowdsourcing Wisdom: A Guide To Doing Public Meetings that Actually Make Your Community Better (and won't make people wish they hadn't come).
Local Learnings
Creating a Co Op Economy?
The primary article here is a decent introduction to the scope of modern cooperative businesses, but I thought that the commentary from Yves Smith was particularly noteworthy.
First, it’s the first time I’ve seen a relatively conventional mainstream economist point out inherent benefits in a cooperative business model — and they’re substantial benefits, especially given the friction between old systems and new imperatives that we looked at in the last article. Yves notes that
Aside from the high odds of greater worker commitment due to more say in how things are run, another huge advantage cooperatives have is the lack of the need to reward equity investors and comparatively modest executive and managerial pay. These factors confer huge cost advantages which allow for more generous treatment of workers and more community-friendly practices.
So a co op might actually be better set up to thrive in a world that demands stakeholder capitalism. Sometimes the best way to get rid of a barrier is to design something that avoids the barrier.
Second, as she points out more critically, a lot of alternative economy advocates have gottene good at telling the surface stories of cooperatives, but the nuts and bolts of this profoundly different business model are often obscured — and that can make cooperative businesses look suspicious, like they must have a secret sugar daddy or are somehow practicing some internal witchcraft to make it all happen. And because cooperative businesses are hard to run (and often started for reasons other than just making a profit), there’s been a lot of high profile failures, like the struggles that almost killed Evergreen Cooperative in Cleveland.
I’ve seen several cooperatives fail myself, but I’ve also seen many thrive. And the difference isn’t witchcraft or slush funds — it’s financially sound, non-fuzzy business operation within the context of very transparent business practices and super-network-level communication.
If you want a much richer picture of how cooperatives successfully work, and the “nuts and bolts” that Yves wanted to see, I encourage you to check out Ownership Matters. OM is an extremely well-written, in-depth and rich while also accessible dive into the inner world of cooperatives, with detailed profiles that show you how real-world cooperatives nationwide are holding it together. It’s excellent, it’s free, and its worth much more than that.
Do Now
The solution to bicycle infrastructure resistance: build an Anti-Poverty Machine (the whole thing, please)
This article focuses on Africa and South America, but like a lot of initiatives developed in the Global South, a strategy like this could have a significant impact on poor Americans — and it implies a much more pragmatic, more conscious strategy for dealing with the political pushback on non-motorized vehicle infrastructure assessment.
The article’s opening theme sounds familiar if you pay attention to international development: child can’t get to school safely, forcing parent to choose between his child and getting the work he needs to survive, and the simple tool of a bicycle solves the problem. But creating that happy outcome requires more than just throwing leftover bikes at poor countries, which might be the standard Elite Savior approach. Instead, the initiative’s founders learned from impoverished uses globally, designed a bike that fits their needs and their environment, and creates an ecosystem to support the bike’s intended impact, from trained repair shops and parts supply networks to community accountability structures that don’t leave good intentions to chance. The impact depends on creating the whole system, not building a few things and assuming the rest of everything needed will just happen by magic. (In the Local Economy Revolution and the First Principles, we talk a lot about the fallacy of magic bullets and how to avoid it).
I think this is a crucial element for urban planners who obsess over bike infrastructure. Bike lane advocates often mention that their pet project will make it easier for poor residents to save gas and all, but that’s too often an afterthought, an appendix to the idea stuck on after abstracts like “Walkability!!!!” and “Multi modal!!!” Decent bike infrastructure could have a profound impact on disadvantaged people in a lot of places — safe bike riding could mean less day to day private vehicle dependency, and having to own and use a car is a huge drain on a poor person. Not only does it demand a huge amount of money — 25% to 40% of low income household incomes, by some measures, but having an older vehicle means that you’re much more likely to face major disruption because something breaks and you have no alternatives.
Focusing advocacy for bike infrastructure on economic opportunity could make for a very compelling way to get budget, but this is definitely not a build it and they will come situation. Don’t make that mistake. Hand-me-down bikes may not be able to do what people need, repairs and spare parts can be hard to come by, and the expectation of biking as a reasonable and safe alternative may take some effort to grow in the community. That’s a part of the “infrastructure,” ever bit as much as a protected lane or bike share station. Without it, you probably won’t get the impacts you’re looking for.
From the Wise Economy Network
Trep House is sponsoring a special seminar on the Essentials of Marketing Planning, available online and/or in person! It’s led by Mark Cardwell of Cardwell Communications and the Ohio Marketing Association, and hosted by Dayton co-working community Genuine Work. Students get a 10- class seminar series, all of the materials and one-on-one coaching sessions with the instructor. You get the same experience whether you’re in a chair in Dayton or anywhere in the world.
Click here to learn more about the class and read testimonials from past students — and then share it with your favorite small business owners, small nonprofit managers and in-over-their-heads jacks of all trades!
This news section is a little quiet right now because so much of my time is going to the nuts and bolts of building Trep House (gotta put your big ideas to work!) As part of our organizational development as we prepare to bring on more staff, we have been working with a coach who looked at me the first day and said “You’re an Integrator.” And he’s right.
We have this mythos about startups and founders, that their groundbreaking solutions spring fully-formed from the mind of a Visionary, but I can tell you, having worked with a string of visionaries, it takes Something Else to get from those ideas to a functioning reality. I’m told that Integrators are rare.
This book gives a pretty clear and digestible overview of how these two leadership roles create scaleable growth. Perhaps an important emerging role for economic development and startup ecosystem folks might be helping our local Visionaries find the Integrators they need, instead of leaving it to chance or luck.
Thanks for reading. You’re nice.
If you’re not a subscriber and you read all the way down to here, you should seriously consider subscribing. Really. I think you’ll like it.
Hugs,
Della