The Changing Nature of Business in the 21st Century
In my most recent article, I discussed today’s changing business environment for small businesses and de-evolution of the concept of business as property. There is little room for businesspeople that don’t care about customer satisfaction, ignore and disrespect their employees, or blur the lines of ethical behavior in the name of plausible deniability. The 21st century is seeing the birth of business as a membership; a membership in the local business community and the world market.
The idea of business as a membership in the community is not something new and was formalized in the 1960’s by Kenneth Arrow. The “Contract Theory” tries to address the idea that business is performed by individuals, and often times, their agents. Transactions are completed with multiple levels of players, all with their own individual goals, biases and agendas. These stakeholders all have an interest in the individuals business and in one way or another directly influence the running of that business.
Economic theories are fine for the classroom but they do little to guide real life. In day-to-day business transactions, every business touches dozens, maybe hundreds of other businesses and individuals every day. A vendor’s ability to deliver as promised or to meet price quotes is critical to the profitability your business. If vendors slow down, or produce a faulty product, your business will be directly impacted. If a primary vendor wants a price break or you will loose their business, you will in all likelihood grant that price break. So, who is in control of your business?
The key to success is to listen to the drum beats of business. In this diverse community of profit seekers, individual business people see the world from their own unique perspectives. If you are going to do business with other companies and individuals it may be important to determine what, if any, business philosophy they practice.
Business as property: This dying concept of business hangs on tough. People who believe that their business is their property and can to with their property as they please often have difficulty maintaining networks and relationships with people who think otherwise. This traditionally American method of doing business tends to be hard core with distinct lines of right and wrong; ‘I am right when I make money, you are wrong if you prevent it’. This attitude doesn’t work well with social entrepreneurships that see their business ventures as something to help the community as a whole. Nor will it work well with people who do not see competition as a cut throat business but try to make sure everyone makes a living. The idea that business is a game, with winners and losers, is something that a business as property owner would support. People who see business as a way to strengthen the whole community view the business as property philosophy as essentially the practice of greed in the name of the “American Way”.
Business as a membership in the community: This “contract theory” idea directly contradicts the business as property concepts. Membership in the community requires stronger networking and ties with your neighbors. Membership requires that you look out for the other guy and, at the same time, not be taken advantage of by unethical business practices. A membership oriented businessperson may very well see the business as property owner as focused more on making short term profits than they are at building stable relationships for the long term. Business as property owners see the community minded as weak and non-competitive, easy marks for more assertive business practices (i.e. ruthlessness).
Business from a laborers point of view: The truth is that business is not conducted solely by the business owner’s themselves, but by their staff and employees. Individual employees, whether they are salaried or hourly, are there to earn a paycheck. Do they have the same motivations as the owner of the business? While owners do set the character of the business, are the motivations of an individual working to pay rent the same as an owner is trying to adjust their depreciation schedules?
No, from a laborers point of view, business is about self respect, camaraderie with fellow employees, and “doing what needs to be done.” Regardless of the business philosophy of an owner, real business is conducted in the streets, not in the board rooms. Failing to recognize that each person comes with their own personal motivations that are fundamentally different from a business owner is huge hindrance in business. I learned early on that if you are going to get anywhere in business, make friends with the clerks and secretaries because that is where the actual work takes place. Treating people like wage slaves is a death sentence for any business.
In the 21st century we are going to have to conduct business is a different way. The old American dream of working at one job your entire life, saving money, buying a house with a white picket fence and having sufficient retirement funds to travel the world is dead, dead, dead. The new dream will be based on what is best for the community we live in and the people, around the world, that depend on our individual integrity. Success may even evolve from a word synonymous with wealth to one that sounds more like happiness. Well, I can dream, can’t I?