Surviving and Thriving in the Human Economy
Dov Seidman Founder and CEO of LRN
This article was originally published in Forbes.
15 years ago, when 40 companies formed the Global Compact at the United Nations, they laid out the principles for a more inclusive and sustainable world. UN Secretary General Kofi Annan called for a “global compact of shared values and principles, which will give a human face to the global market.”
Today, as I address the assembled members of the UN Global Compact, I urge business leaders to consider how that “human face” of the global market is needed more urgently today than ever.
The 21st century has been a marked period of personalization and humanization. Our ever expanding technology has made it possible to reach out and touch more people than ever before. It also requires us to stop and think about how we affect all of those we come into contact with.
Today, a fruit vendor and a few friends with camera phones can spark a revolution that topples dictatorships throughout an entire region. A Twitter hoax can now cause the market to lose and regain $135 billion in minutes. It’s clear we need to rethink how this world is operating. Our old, solid, familiar frameworks are in a state of flux. The biggest social outlets are now the platforms of multi-billion dollar companies. Business and society have fused, and we cannot separate them. The same technology that connects us has bound us together. The world has been reshaped and is now entirely and irreversibly interdependent.
Today, when so few can affect so many so far away, we rise and fall together. The position of leaders–especially those who rely on their titles and old ways of thinking–is more volatile than it’s ever been. It’s our responsibility to recognize that the world has changed. It operates in different ways.
In economic terms, we’ve gone from an Industrial Economy – where we hired hands — to a Knowledge Economy – where we hired heads — to what is now a Global Human Economy – where we hire hearts.
In a new economic era where business is personal, how do we create a new narrative and shared world view that will allow us not just to adapt, but thrive?
How can we shape a new face of leadership for a more Human Economy?
Recognize The New Sources of Strength
In the industrial revolution, employers hired for physical strength and dexterity. In the knowledge economy, we selected employees for their intelligence and command of specialized information. Today, as experts predict that technology threatens more than 47% of all American jobs, soft skills are becoming the most desirable. There is no war between man and machine coming. The machines have already won. Instead of competing with them or trying to maintain supremacy in skills like quantitative analysis, we have to complement them. There are unique, human qualities that only people possess, like the ability to engage in collaboration and communication or to display grit.
Today, your people and their behavior are your strategies. It’s not enough to just provide business with a human face, business needs to infuse humanity down to its core.
Scale The Right Kind of Freedom
The Knowledge economy was good at creating “Freedom From”. Companies like Alibaba and Amazon created Freedom From the local store. Services like Lyft and Uber created Freedom From the taxi industry. The problem is, just like the vacuum left by a deposed dictator, this sort of disruption does not build anything in the space it opens. Worse, it risks becoming the system it sought to overthrow in the first place. When all you have is Freedom From, you don’t change your underlying thinking. When you don’t change your thinking, you can and end up reconstructing the only thing that you know. The challenge of the Human Economy is to develop the right mindsets to create the right sort of freedom. Freedom, done right, is the foundation upon which we build and scale everything else.
The United Nations has always understood this concept. The passage in Article “1” of the United Nations Charter supports “foundational freedoms,” like the right to self-determination. Business is also about freedom. That’s why they’re called “Free Markets” and “Free Enterprise”. That’s what makes the UN Global Compact, the merging of business and global governance, so interesting and so important. The UN Global Compact’s principles protect human rights, support an end to corruption and demand the freedom for workers to bargain collectively. This isn’t just Freedom From. It’s more. By encouraging the “Freedom To” pursue fairness, meaning and happiness, the UN Global Compact has put humanity back at the center of business.
To thrive in the Human Economy, businesses need to provide employees with the Freedom To Be Human. This means allowing them to be their fullest and most complete selves and to contribute toward an organizational effort that provides them with a sense of purpose. These are big asks, and they need big considerations. To draw out the most desirable, elevated human behaviors, business needs to do what business does best: scale a system worthy of employees’ elevation.
Rely on Values and Trust, Not Rules
This environment, or Human Operating System as I call it, is rooted in values and principles, not rules. Rules form ceilings and impede themselves. As the saying goes, “Rules were made to be broken.” Values do more. They don’t threaten punishment when they aren’t followed. They don’t offer rewards when they’re obeyed. They operate at a deeper level. Values-based systems are self-regulating. Each individual operates from their own internal compass, guided by shared principles. The key to this is trust and an environment that spreads and supports it. Trust is a legal performance enhancing drug. When I offer you my trust, it releases oxytocin in your brain. This forms a feedback loop where you are chemically inclined to trust me back. Applied at scale, trust is the glue that holds a company together, helping employees feel comfortable enough to take necessary risks. Without risk, there can be no innovation, and without innovation there can be no progress. Without risk, there can be no reward.
Cultivate Moral Authority
To create an environment of trust, you need leadership that creates and shapes context. This means more than just leading by example. It means taking a step back, like Nelson Mandela did as president of South Africa. What made Mandela great was his refusal to make the new chapter of South Africa’s history about himself. Instead of focusing on his imprisonment and his liberation, he made himself small and trusted his people with the truth. Their struggle was not over. A new, integrated South Africa was a vision each citizen would have to work toward together. What Mandela had was Moral Authority, the type of power that doesn’t demand or impose its own recognition. Unlike formal authority, power over people, moral authority is power through people. Moral authority means people lift you up and follow you, not because they have to, but because they want to. They connect with you and your goals on a deeper level and want to take part in your success.
Learn from Millennial Leaders
This shift is part of a global trend. At age 15, Sarah Kavanagh, convinced Pepsi and Coca-Cola to stop using carcinogenic Brominated Vegetable Oil in their sports drinks. Julia Bluhm, at the same age, got Seventeen Magazine to ban photoshopped images of young girls. They didn’t buy large shares of stock or threaten boycotts. They organized petitions and made it clear to those companies where their customers stood. Those consumers didn’t band together because Julia or Sarah was particularly eloquent or wealthy or threatening them with force. They were animated to action by a deep connection to the underlying mission: improving the world by demanding best business practices.
The rising generation of millennials understands the way this new world works. Young people are not waiting for the rest of us to catch up. They are already asserting themselves using this new style of leadership. Leaders of established companies should be looking at their examples with both hope and trepidation. The next generation–who will make up 70% of the workforce in 5 years–believe that a fairer, more human world is possible. More than that, they are willing to try and bring it about on their own. Unless we want them to leave us behind, we must rise to the challenge and learn from their lessons. Only by harnessing their passion will we have the power to bring about the changes necessary to protect the future.
Journey Toward a Higher Purpose
Of course, there will be ups and downs. Like all transitions to a new model, this human journey will have a few bumps along the road. But that’s ok. All great things are non-linear. For too long, many in business have tried to separate themselves from reality–focusing on profit and shareholder value as the sole objective–something the UN Global Compact was founded to help rectify. While everything else and life goes up and down, for most of the 20th century, business was only allowed to go up. Because the “business of business [was] business”, their only goal was to chase bigger profits and to grow bigger. Adapting to the Human Economy and our reshaped world means facing the truth. This old way of thinking is unsustainable. Today, it’s nearly impossible to pursue success directly. You need to pursue significance instead.
By keeping an eye on your higher purpose instead of quarter-to-quarter returns, you create a movement a single slip up can’t derail. That is the Ethic of Journeying. It provides growth and resilience by never taking its eye off the goal and continuing forward even when the path takes a sharp turn. Real leaders understand this, because real leaders are not afraid to lean into those curves. They keep going, enlisting and inspiring others to journey with them.
Fifteen years ago, when 40 companies laid out the principles for a more inclusive and sustainable world, they didn’t just look at what was. They looked at what could be. They dared to dream and begin making strides to make their vision of a better, more humane version of capitalism a reality. They chose to pursue the greatest type of significance, to protect and preserve and improve the world for future generations, providing hope for a better future. This willingness to frame the journey for others is what allows leaders to bring others along on for the ride, engaging and enlisting them in the vision they all share.
It is my great pleasure to stand committed to the UN Global Compact’s vision of the future. It may have seemed unrealistic to some, but leaders know better. From 40 companies to over 12,000 in 15 years is an incredible start, but for all our sakes more must be done. As the wave of corporate responsibility and sustainability spreads, both inside and outside of organizations, I feel a great deal of hope. I wholeheartedly believe that together, with our combined hope and energy, we can reshape the realities of our lives and enterprises to match the demands of our reshaped world.