“Try not to become a man of success, but rather try to become a man of value.” — Albert Einstein
Contents:
· Shareholder maximization is an outdated social norm.
· Value appropriation is not like value creation.
· The value-motive is the defining feature of contemporary leaders.
“What change are you trying to make,” he asks. “…it implies you are responsible. You are an actor with intent, an agent of change, a human being working hard to change other human beings.”
This admission is apparently too honest, but, convincingly Seth Godin introduces the fourth chapter of his book “This Is Marketing”. Elsewhere I mention this very idea as a requisite for Social CEOs. Social CEOs are engaged in changing norms. In their value proposition, business models, and market strategy the Social CEO is incentivizing change and creating opportunities for changing social norms.
That’s because the business culture of the 20th century injected an inverted proposition into popular imagination, which became the operating principle of business writ large. It was a culture and operating mandate of profit-seeking. Profit-seeking was about value appropriation rather than value creation.
The two are not the same. The former situates the organization around product creation absent a clear problem or target customer whom the product serves. The latter seeks to understand the customer first by identifying solvable problems, then organizes value creation directed to the customer needs. Customer and value first versus product and profit first — value design secondary.
The value-motive is the defining feature of contemporary leaders in the form of content creators and social media influencers.
This rescission of the sleight of hand is essential to understand and build upon for Social CEOs.
Three Models of Social CEOs
What’s significant about:
– Kickstarter (Crowdfunding)
– $100 Startup (Subsistence CEO’ing)
– Khan Academy (Mastery Pedagogy)
These ventures lead by CEOs exemplifying new models of leadership crossed the barrier from novel ideas to sizeable social movements. Indeed, they introduced social change. These social ventures presented the market with changes and solutions to systemic restraints aided by technology and timing.
Kickstarter, lead by Perry Chen, Yancey Strickler, and Charles Adler innovated a little-known legal business model — the public benefits corporation. They flipped the venture capital model creating a democratic model for funding startups and innovation.
They are helping entrepreneurship and business creation. Kickstarter sees themselves helping to build productive business as opposed to servicing high-end bank accounts that provide high yields in the form of stock investments. Redirecting productive value creation to the pockets of a few.
The $100 Startup, conceived of by Chris Guillebeau, innovated what we can call subsistence CEO’ing. It’s about creating a lifestyle business. Using this approach to build his own business Chris codified the model in books, blogs, and conferences to help build others not just himself.
He started a movement that is more in-line with the founding ideas of America. That most Americans would have small enterprises — that it would be the norm.
It’s a sufficiency model of profit-making. It’s about earning enough to live while building a lifestyle business doing something you love. If done in the broader way that Chris exemplifies, it overturns the notion of leadership placing the CEO into a service roll while building leadership skills.
Khan Academy achieved renown providing a pedagogically sound education platform for free. Designing a mastery-based approach to learning, students of Khan Academy take bite-sized lessons and only move forward once the skill or topic is mastered. It’s a massive change for education in general. But to innovate a business model so that it remains free to millions on-scale is a major achievement.
Changing Norms
These are examples of just-in-time solutions or tweaks that injected social change — changes in transacting and relationships. Other concepts can be born to change the decaying norms associated with the value appropriation model.
We should look for creative ways to get people to change their actions vis-à-vis value systems that are ultimately humanizing. Value systems that put people and society first.
The Social Enterprise was another business model innovation, but it got lost somewhere. It is a legal business charter. Although, it’s only available in a few states. The designation was expanding at one point but seems to have fizzled since it’s hype in the mid 2010s.
It’s a hybrid legal formation between for-profit/non-profit in one entity but bound by a social mission rather than the profit motive. The measure of success for a social enterprise is by achieving social change or public benefit. Not staunch prioritization of shareholder value and investment maximization.
New Incentives
It’s the idea and intention behind actions and the value system that are connected we should be keen to change. If more legal organizational models are created that go beyond putting profits over people and society, it provides a diversity of options. With legal diversity and new ways of creating value Social CEOs can compete on a larger scale.
In fact, my hope is that through social media and content creation new business ventures and a new breed to CEO leadership will emerge to challenge the old ways of doing business whose remnants remain.
By placing customers, value creation, and problems solving at the forefront of their brands, Social CEO can set a standard for a new type of leadership in the 21st century.
Designing novel value proposition and business models will be crucial because this exercise is in fact how the business will incentivize behaviors. Creating a virtuous cycle is what’s sought. Not a dysfunctional cycle. Social CEOs with the right orientation and skills have the advantage of carving a pathway of leadership based in new values systems.
Out With the Old
I want to emphasize the advantage Social CEOs have as leaders. Because of their audience focus, openness to collaboration, and commitment to learning, Social CEOs have the requisite ingredients for building businesses based in new value systems.
The new value systems are the characteristics of the kind of organization that will succeed going forward.
Raymond Hoffman enumerated entrenched outdated management models that are incompatible in the new business environment saying, “…the main goal of efficiency…hinders learning, entrepreneurial thinking, and collaboration.”
These features exist in many content creators. Especially, those who have been able to build businesses. However, without clarifying their values, operational principles and forging their roles as new leaders they may find it hard to shake the 20th century dogmas that are embedded in business culture and even commonsense.
They should take responsibility, as Godin directs us, and forge change. Change in humans. Change in social norms.