The traditional company is dying. Long live the New Capitalism!Adriano Silva - May 15, 2020
Here’s the classic vision of a company: it has an owner who invests capital and undertakes the risk of the enterprise alone. When business is good, he or she enjoys the return on investment alone. When things go poorly, he or she shoulders the burden alone.
In other words, it’s a model based on individualism, which isolates the owner from all the others in a me-against-the-world journey. Whether everything goes well or wrong, this equation involves solitude and the fierce defense of a private interest in opposition to everyone else’s sake.
As in most companies, it takes the work of other people to produce products or services. Profitability means not only covering the cost of production, including the value of the work produced by employees, but also maintaining a healthy margin by adding a markup that stays in the company’s coffers… or in the owner’s pocket.
One may say that profits reward the entrepreneur’s initiative, his or her ability to see something where others saw nothing, and his or her ability to transform that vision into reality. The idea is that the markup pays for the risk the entrepreneur took when he or she financed that venture, when it had no guarantee of return.
Others may differ and think that those rewards are unfair to those who produce the company’s results yet receive only part of the wealth they create with their work.
And, voilà, at the heart of the traditional business model, an indissoluble contradiction between capital and labour is established.
Company owners will say that employees receive their salaries and sleep peacefully at night, not having to worry about the survival of the business or where the money that drips into their accounts every payday will come from.
Employees will say that the fair value for their labour is equal to the price the company charges its clients for what they produce, and so there would not be room for a profit margin.
Is there a way out of this tension that underlies capitalism? Can we redesign this relationship to make it a little less stressful and a little more efficient for everyone?
One can say that not everyone has the stomach and resilience to open up new markets, create demand, find new clients, design processes, invent new products and services, and put their money and reputation on the line – knowing from the beginning that inertia and statistics will play against it. The great risk is that none of it will work out and that all the efforts and resources invested are likely to go down the drain.
One can even add that it makes sense that employees, who arrive later when the car is already running, receive a proportionally smaller share of the earnings. It is one thing to drive a car well, and good drivers are valuable; it’s quite another (and rarer) thing to assemble a functional car that can be driven by good drivers – chassis, engine, wheels, gearbox – from the first bolt.
Still, I think it’s possible to think of a new company model. Especially those of us who live and work in the New Economy.
The pandemic is a moment of rupture, one of those crises that accelerate changes and create opportunities for reinvention.
What if a company functioned as a marketplace of talents? As an association of complementary and relevant areas of expertise that unite to solve problems in the market? What if these relationships were liquid and ephemeral, defined by existing demands and ongoing projects?
What if a company were a canvas open to collaboration – and not a private, fenced property? What if it were an environment positioned for collective participation, with all its members contributing to its reputation and enjoying its results?
We frequently ask employees to have an “owner’s attitude.” How about we give them real owner prerogatives, including remuneration – and not only in the gains, but also in the losses of a business?
Imagine a company with an orbit of talents bringing into the mothership not only its capacity for work and delivery, but also leads and prospects, new customers and revenues, in an equation in which everyone involved could benefit proportionately from the new business generated?
What if a company were a flexible, malleable organization, a living body capable of reacting quickly to stimuli, a just-in-time and just-in-case platform that could expand and contract and transform itself according to the opportunities with which it deals throughout its trajectory?
What if companies were no longer designed for the dictatorship of scale, for growth at any cost, for the myth of exponentiality, but rather for being deeply relevant, profoundly essential in what they do – and their size were just a result of its virtues, and not a premise that often leads to sins?
What if we stopped measuring ourselves by revenues? What if we didn’t think about money as an end, an objective in itself, something one needs to grab and accumulate, operating by the logic of scarcity, but rather as a means to produce and distribute human happiness, operating at last by the logic of abundance?
What if the sustainability of all relationships with employees, suppliers, partners and customers, in a long-term perspective, were more important than the immediate results of the quarter?
In this scenario, the founder of a company would be the manager of a hub full of skilled professionals. The manager who takes care of the condominium. The editor-in-chief who signs the publication without having written a single line.
Think of the owner acting as the conductor of an orchestra.
As the composer who creates the scores that others will play beautifully. As the leader of a talented army of accomplished free agents.
What if everyone could be shareholders in the businesses they help build – with stakes defined by each person’s contribution, with temporary stakes, with stakes restricted to the portion of the company in which they operate?
Imagine employees leaving behind their conventional status, at the same time comfortable and stunted, and taking more risks. Actively participating in the company’s movements. Managing their careers less passively.
What if talents stopped being seen as pawns and become strategic partners, true co-entrepreneurs of the founder?
The case for “working with” vs “working for”
I worked for bosses for a long time. Today, and for over a decade now as an entrepreneur, I don’t want anyone working for me. I want people working with me. I’ve been on both sides of the boss/employee relationship and I can say, looking from both sides, that it sucks.
Watch: Adriano Silva wants to do what he does best
When things go well, employees feel betrayed because they don’t participate in the earnings. Being an employee is like investing in fixed income – you will never lose money, but you will always earn little with a low ceiling above your head. You will never truly take part in growth when it happens around you.
When things go wrong, it is the boss who feels betrayed because he or she needs to guarantee everyone’s salary, on time, even if he or she has to go into personal debt and sacrifice his or her own meal to feed the protégés. (Yes, it is an archaic and paternalistic relationship.) As if the employees had no responsibility for the poor results. As if the company’s health was not their business.
In contrast, imagine a company in which employees were not seen as a cost, but instead were accounted after the bottom line, participating in the results they generated. Think of the employees leaving their stalls energized for being able to take part in the party they are being asked to throw.
In such a scenario, when everything is good, it is good for everyone. And when things get tough, everyone tightens their belts together.
The idea of placing the owner and the employees on the same side of the table, holding the same paddle on the boat, breaking the fundamental opposition between them, is revolutionary.
Imagine the founder refusing to gain by flattening the earnings of his or her employees, and starting to win along with the talents. It could bring the relationship between capital and labor to a new ground.
In reviewing these classic and contradictory roles played historically by bosses and employees, we may be creating a new capitalism. More horizontal, more collaborative, more integrated, more transparent, more just, more dynamic, more prosperous.
A society with fewer billionaires is necessarily a society with more millionaires. And a society with more millionaires is necessarily better – even for those who are now sitting on billions.
You can take that same reasoning down a notch: a society with fewer millionaires is necessarily a society with more people with more money in their pockets. And a society with more people enjoying more purchasing power is necessarily better – even for those who today have a few million stockpiled.
We are trying to put this into practice at Draft Inc. and Draft Canada. Tell me what you think. Or ask me how.
Adriano Silva is co-Founder and Chief Creative Officer (CCO) of Draft Inc. and Draft Canada.
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