Wednesday, October 12, 2011

Shared Values: Corporations Adapting To Demand for a Sharing Economy

I am fascinated by the sudden momentum that the Occupy Wall Street movement is gaining in the last few weeks. It confirms the notion for me that technological and cultural shifts have irreversibly altered our global economy and we are currently in a tumultuous in-between state where things have yet to settle into a new economic model that is working for most of the world's citizens. That new model will likely be dramatically different than any form of capitalism that has existed since the Great Depression, and it will likely be a painful transition for many.

The people who are occupying financial districts across the country are angry because the corporations, and too often the wealthy who have profited from corporate success, no longer share the same values as the people who work for and purchase from the institutions that drive our economy. Our governments have stood by and allowed this to happen. There have always been imbalances in the values between companies, their employees and their consumers, but the gap between corporate profitability, particularly in the financial sector, is too wide to be acceptable to the society they depend on for employees and customers.

What lies ahead appears to be one of two choices. Either Wall Street will prove that they have a real sense of worth to the other 99%, or the 99% will create an emergent economy that sidesteps corporations to find common value. The latter scenario will be far from a pleasant experience for either the corporations or those who want to see change.

When thinking about examples of corporations already embracing the shared value they hold with customers/employees, I'm reminded of an article from earlier this year written by Michael Porter and Mark Kramer in the Harvard Business Review in which they point to an emerging desire for the larger players in the capitalist system to focus on the greater good in addition to focusing on their profits and shareholders.

As we think about how this relates to sharing economies in the city, what is so striking about the piece, is that until now I was mostly left with small local anecdotes that would support the trend towards a shared value between entities that would yield a greater good, and yet Porter and Kramer have amassed dozens of examples of how large corporations are inching towards this new shift in values. It would be easy to imagine a future where corporations were increasingly obsolete as we moved towards a communal economy of more local peer-to-peer forms of commerce, but the reality is, there are some bright spots that prove that corporations are beginning to except these necessary transitions.

Most relevant to the shared value transformation of cities is Porter and Kramer's "Enabling Local Cluster Development" section of the article where they define clusters as "geographic concentrations of firms, related businesses, suppliers, service providers, and logistical infrastructure in a particular field—such as IT in Silicon Valley, cut flowers in Kenya, and diamond cutting in Surat, India." If you read further it is not hard to imagine a more formalized version of the sharing economy of Black Rock City, the best examples of a thriving downtown commercial district, or on a more micro scale some the emerging "clusters" that we see among entrepreneurs in co-working/incubator third places:

A key aspect of cluster building in developing and developed countries alike is the formation of open and transparent markets. In inefficient or monopolized markets where workers are exploited, where suppliers do not receive fair prices, and where price transparency is lacking, productivity suffers. Enabling fair and open markets, which is often best done in conjunction with partners, can allow a company to secure reliable supplies and give suppliers better incentives for quality and efficiency while also substantially improving the incomes and purchasing power of local citizens. A positive cycle of economic and social development results.

When a firm builds clusters in its key locations, it also amplifies the connection between its success and its communities’ success. A firm’s growth has multiplier effects, as jobs are created in supporting industries, new companies are seeded, and demand for ancillary services rises. A company’s efforts to improve framework conditions for the cluster spill over to other participants and the local economy. Workforce development initiatives, for example, increase the supply of skilled employees for many other firms as well.

Much of the conversation on NewPublicDomain is focused on emergent communal behaviors I've observed in urban environments. These new forms of sharing and communalism may seem more like a neo-Communism to some, but in my experience in San Francisco and New York where some of these behaviors are becoming commonplace, they seem to be bellwether for a prevailing communal nature that will become the predominate force in our society in the near future. A force that will carve a new direction in the design of the most communal terrain we have, the city.