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What Business Can Learn from the Revolutions What Business Can Learn from the Revolutions

What Business Can Learn from the Revolutions

by kyle westaway

March 25, 2011

The speed with which regime-toppling revolutions have spread throughout the Arab world has left many observers stunned. How did 18 days of protest in Egypt topple a government that ruled with an iron grip for more than thirty years?

Well, some institutions aren't as stable as they look.

Right now, many businesses are fragile for the same reasons that Mubarak's government was: They're closed, autocratic, and focused on short-term survival. BP would do well to study the example of Egypt, though, because new expectations of openness and equity extend beyond the political realm and the business world might be the next locus of rapid revolution.

Let's compare how Mubarak behaved to how a business behaves and see what we can learn.

Harness the Values of Your Customers or Constituents

The Mubarak regime excelled at one thing: short term gains. Many established businesses share this mistake. They can be so focused on maintaining market share that they miss a fundamental shift that is taking place among their consumers. The shift at hand is based on a deep-seated dissatisfaction with the current version of the capitalist system; one focused purely on maximizing short-term profits at the expense of long-term financial stability, social and environmental prosperity.

As Michael Porter and Mark Kramer state in their Harvard Business Review article The Big Idea: Creating Shared Value, “Companies continue to view value creation narrowly, optimizing short-term financial performance in a bubble while missing the most important customer needs” that have to do with values of consumers, not quarterly earnings value. If businesses don't recognize shifting values here at home, cravings for a more equitable market system, they may find themselves losing market share in a big way.

Conversely, some businesses get it. Nestle aligned their business with the values of their consumers and reaped the benefits. By investing in their coffee-growers’ well being, they increase productivity, efficiency and profitability of their N’espreso brand.

Embrace Radical Transparency

In business parlance, Mubarak focused his efforts on reputation management—the attempt to dominate the conversation from the top down without making any substantive change in actual behavior. He wanted the appearance of sharing values with the people but not actually doing so.

BP’s botched response to the gulf oil spill is a classic example of this in recent years. But it's not the only way.  A new generation of managers and executives have decided to embrace radical transparency rather than engage in reputation management. Radical transparency is a commitment by a company to share openly and honestly how it conducts business. It’s a commitment to be open about the service or product they are creating as well as the story behind it. Profitable companies such as Apolis– a clothing company that openly pulls back the curtain to reveal its production processes—can attest to the power of a business that aligns with the values of their customers and is radically transparent. GOOD recently reported on Seventh Generation's efforts in this regard.

And The Benefit Corporation is an ideal legal structure for companies like Apolis. The Benefit Corporation (not to be confused with B-Corps covered earlier by GOOD) is a new class of corporation under the law, not just a certification by a third party. The Benefit Corporation status ensures that a company operates in line with the emerging values increasingly demanded by consumers: environmental and social responsibility. Any Benefit Corporation must be radically transparent by submitting itself to an annual review of its environmental and social responsibility and publishing those results to the public.

As people, our similarities are far greater than our differences. Whether we are acting in our role as citizens or consumers, we typically want the same things. We want to be understood and valued, not treated like meaningless masses for the existing power structures to exploit.

Political systems as well as companies that leverage their constituents’ values, harness the power of social media, and embrace radical transparency will find an authentic connection with citizens and consumers. That will create a durable competitive advantage over their competition. Businesses need to shed their Mubarak-like tendencies to succeed in a new world.

Kyle Westaway is a founding partner at Westaway Law, an innovative law firm that counsels social entrepreneurs. He's on twitter at @kylewestaway.

Image: (cc) by Flickr user Floris Van Cauwelaert.

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