14 October 2013

San Francisco, Autonomy, and the Transformation of Business: Nathan Heller in the New Yorker

In The Fourth Economy I argue that a new economy is emerging, one as disruptive and transformational as the emergence of the Industrial and Information Economies.  The rise of the individual that transformed religion, politics, and finance will now change business. The corporation early in the 20th century will be transformed as much as was the church during the Protestant Revolution or the State was during the time of Democratic Revolution. 

Changing business to accommodate the individual - giving people more autonomy - is something that Nathan Heller reports on a piece about San Francisco in the New Yorker, Bay Watched: How San Francisco's New Entrepreneurial Culture is Changing the Country

People ... tend to regard success in terms of autonomy—designing your life as you want—rather than Napoleonic domination.“The ecosystem used to funnel lots of talented people into a few clear winners,” he told me that morning. “Now it’s funnelling lots of talented people into lots of experiments.” Why be Gordon Gekko when you could make enough to have a nice place and go paleo on local greens—and then take a day or two off to cycle out to Stinson Beach? Isn’t that freedom more distinguishing than cash or a C.E.O. title, which everybody in your field has access to? San Francisco’s young entrepreneurs appear less concerned about flaunting their earnings than about showing that they can act imaginatively, with conspicuously noble ethics.“The word ‘entrepreneur’ has undergone a redefinition,” Ben Casnocha told me over lunch one day at LinkedIn’s Mountain View campus, down the road from Google. “For a while, it was like you’re either running the laundromat or the coffee shop, or you’re trying to create the next Apple. But there’s been a whole flourishing of people who are starting different kinds of businesses—who are having pride in a small business that gives them autonomy.”

Heller looks at a variety of people who are creating businesses as a means to create a lifestyle, the sort of thing Timothy Ferriss explores in the 4-Hour Workweek.

Philosophers talk about three kinds of goods: goods to have, goods to do, and goods to be. When economists talk about economic goods the assumption is that they're only talking about economic goods to have: products. But as people become more interested in deeper happiness, as they move from a focus on goods to have to goods to do, then corporations too will need to evolve. 
The corporation has rather brilliantly learned how to make economic goods to have and make us want them. But as we have more goods, additional goods (to have) have less power to make us happy. The prosperity that corporations has helped us to attain is beginning to make the focus on goods (to have) obsolete. If so, corporations will have to change work as much as they changed products, shifting their expertise from just goods to have to goods to do. Corporations will be designed to created engaging, meaningful work. 
Curiously, corporations are becoming a more common option for entrepreneurs looking for startup funding. Heller touches on this, 
In recent years, the Bay Area has grown into a hunting ground for “strategic” venture capital: firms under the aegis of big corporations. That’s because funding a startup—maybe with an eye to acquiring its technology and users—has become more efficient than traditional R. & D.

But if corporations want to succeed with these acquisitions, they have to understand this fundamental impulse towards autonomy that has fueled progress and change since the Dark Ages. People want to choose the products they buy when they can afford them. They also want to choose the work they do - and how they do it - when they have the chance. Autonomy does not mean a lack of accountability or license to be irresponsible. It does mean a shift in control, though, and that is something corporations are as reluctant to give up as was the medieval Church.

The West defined itself by a series of institutional transformations. First it was freedom of worship, then political freedom, then freedom to pursue the American Dream through whatever mix of credit and investment a family could obtain from financial markets. Power over religion, politics, and finance has been taken from popes, monarchs, and bankers and given to the individual. The Fourth, Entrepreneurial Economy will do the same thing for business, giving autonomy to the individual as employee.The fact that employees will become increasingly entrepreneurial, as likely to focus on equity creation as product creation, will come to be seen as merely an enabler of this process, not the focus.

For a glimmer of what that future might look like, you would do well to read Heller's article about what's going on in San Francisco.

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