What personal business model in the new economy

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Summary : Beyond enterprise 2.0 and social business, there’s a major change in value creation models. Unfortunately, in  these models that are still in preparation, it’s hard to determine causal relationships between participation in value creation and getting the fruits from one’s participation. Participating in these new channels is now an option for people looking for qualitative rewards. But if, tomorrow, such activities become central in our lives and incomes there are new remuneration models to be found for people who will mainly rely in their participation in this new economy. The will to help others and participate will be replaced by personal business models logics as well as new recognition and remuneration systems in a world where value creation will involve less and less formal contributors and more and more informal ones.

People talk a lot about social business, enterprise 2.0 or similar concepts to refer to new ways to organize work, new relationships between people and between people and their work. But that’s only the smallest part of a global transformation that impacts the whole economy, a transformation that need to be taken into account if we don’t want all the efforts made at a micro level to change the way people work to be irrelevant with the economic structures that exist at a macro level.

Taking into account the deep change of the nature of economy and the relationships between players (not only economic ones) does only not mean  stating that the world is changing and urging people and organizations to change. That’s what has been done for years and we have not admit that was not enough. It’s about aligning the macro context with the new nature of economy, to make efforts that are undertaken at a micro level bear fruits.

We’re heading towards new value creation models that don’t adapt very well to manufacturing and taylorian ones that have been set up to help things in the past. I already mentioned the accounting side of the problem…and that’s only a part of the issue.

Today, value is created through information sharing, connecting people and knowledge, in a networked and decentralized way. In fact…not exactly. To be more precise, this decentralized and connected world works in the background of the economy we know, making it work faster, better, even in a more balanced and responsible way for those for make the most of its new potential. This background activity works both inside and outside enterprises, bridging both worlds. On the other hand, this background world need to make sense for people involved in to work well. They need to know in which way it could be beneficial to them. It’s very well explained in this McKinsey post, titled  “the second economy“.

If the “first” economy, the one we know and see in our everyday lives, works according to well known logics and rules for what’s about people’s contribution to value creation and and what they get from it (even if the balance of the system is more and more questioned), there’s no such thing for the second economy. It relies on the invisible, voluntary and often unsolicited work of lots of people, in either their personal or business lives. The problem is that it creates value and improves competitiveness for the visible economy while there is no remuneration model for participants who created value for others.

For instance, inside organizations, it’s about all the “over the flow” dynamics that are peculiar to enterprise 2.0 or social business. Participation into communities, open innovation, knowledge sharing to help others. Globally speaking, a whole part of the digital economy now relies on these invisible anonymous players (you and I….) : sharing, “like”, “+1”, communities, crowdsourcing are the most visible parts of the system. Who’s making the most of it ? Other anonymous, businesses…

Everything seems to be working fine so why should be talk about it ? First because it does not work that well, or nor as well as it should or could. Second because it may stop working and collapse if no one pays attention to the players of this second economy, their contribution to a system that does not pays off for them.

Of course, we can say that, in this system, people’s motivations are of a new kind. The pleasure of giving and learning. Recognition. Reputation. That’s right. But it does not work on a very large scale, on a macro level, and even less in the current changing economic context.

As it’s written in the McKinsey post, the first economy creates less and less jobs and relies more and more on the second one that relies itself on voluntary activities that cost nothing. They day when both will be well articulated well reach the following situation : more and more value created on the one side with no repercussion for those who helped to create it on the other side. If contributors, in the meanwhile, lose their job, see their incomes decreasing, suffer from more pressure, there are chances they question the way the system works and stop participating.

Today, one of the major barrier to involving people in such dynamics in the workplace is that they don’t get anything from it (either qualitative or quantitative) or the fact managers have no interest in letting “their” resources contributing to other’s value. If we want intrapreneurs employees we’ll need to understand all the consequences of the system and reward people with more than just fine feelings (should I add lots of employees are  in the red at the end of the month). In the same way, the day when internauts will become mature enough to understand that by “liking” a page they contribute to marketing actions for free, they help Facebook making money, they even destroy some job…they’ll question the “value” of a “like” and claim their piece of the cake. They’ll remind that, in 2012, some said that this economy was generating lot of value but few jobs…and understand why.

In short, when value creation needs less and less formally identified people that bear fruits from it and more and more informal contributors that are not involved in any formal processes, it’s time to create the mechanisms that will balance the system if we don’t want it to collapse.

But things are not that gloomy. We “just” need to focus on how contribution to value creation and rewards works together in an economy that’s is becoming more and more intrapreneurship and value networks both inside and outside the enterprise. It raises the question of “personal business models” for people involved in the system. Making such models possible and define how they work, the balance between people and groups. Lots of challenges in the pipeline for HR…but not only : it’s more than an business issue, it’s a society one.

If no one pays attention to this, one day will come that in the version 2.0 of Maslow Pyramid, everyone is not at the top and that most of those who are asked to participate are not looking for self-fulfilment but meeting very basic needs. What is, today, a nice to have will become a way of living, so it will be able to pass remuneration issues over silence anymore.

NB : this second or background economy does not only connect people but also machines. The role of machine will increase as they become smarter, forcing people to become more relevant, find other ways to bring more added value if they don’t want to be pushed out of the system. To learn more about this point, please read Race Against The Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy. More to come soon on this blog.