The peo­ple’s cor­po­ra­tions

Financial Mirror (Cyprus) - - FRONT PAGE -

Two big power shifts are oc­cur­ring around the world to­day. First, cor­po­rate power is grow­ing rel­a­tive to that of gov­ern­ments. Sec­ond, or­di­nary peo­ple are also gain­ing greater in­flu­ence. What does it mean that th­ese seem­ingly con­tra­dic­tory shifts are hap­pen­ing simultaneously?

There is, no doubt, more power in the hands of com­pa­nies than ever be­fore. Peo­ple who have not been pop­u­larly elected con­trol more and more of our daily lives – from en­ter­tain­ment and en­ergy sup­plies to schools, rail­ways, and postal ser­vices. At the same time, the speed of tech­no­log­i­cal in­no­va­tion is out­pac­ing that of leg­is­la­tion, mean­ing that cor­po­rate ac­tiv­i­ties are rou­tinely en­ter­ing seem­ingly gray ar­eas de­void of reg­u­la­tion.

But, coun­ter­bal­anc­ing this trend, peo­ple now have the means and op­por­tu­ni­ties to en­sure that com­pa­nies’ be­hav­ior does not go unchecked. They are be­com­ing more ed­u­cated and aware of how com­pa­nies op­er­ate, and they are more proac­tive and out­spo­ken when they be­lieve a company has crossed the line. The pub­lic in­creas­ingly acts as the conscience of com­pa­nies and in­dus­tries, ask­ing hard ques­tions and hold­ing them to ac­count.

In the past sev­eral years, more ef­fec­tive means of col­lec­tive ac­tion – such as so­cial me­dia, open pub­lish­ing plat­forms, and on­line video shar­ing – have given peo­ple more levers to pull. As peo­ple pur­sue boy­cotts and dis­in­vest­ment, lobby for leg­is­la­tion, and ac­ti­vate so­cial-me­dia cam­paigns with grow­ing so­phis­ti­ca­tion, they are in­creas­ingly able to in­flu­ence com­pa­nies’ op­er­a­tional and strate­gic decision-mak­ing, thereby im­pos­ing checks and bal­ances on to­day’s enor­mous ac­cre­tions of pri­vate power.

For some com­pa­nies, this has come as a thun­der­bolt. Con­sider the Bri­tish Pe­tro­leum oil spill in the Gulf of Mex­ico in 2010. The BP spill was one of the first in­stances in which com­pa­nies were forced to con­tend with the power of so­cial me­dia – and in which peo­ple re­alised the po­ten­tial of the tools at their dis­posal. Like most com­pa­nies at the time, BP was ac­cus­tomed to com­mu­ni­cat­ing with tra­di­tional seats of power – the White House, the Krem­lin, and so on – and to do­ing so via tra­di­tional modes of com­mu­ni­ca­tion, such as brief­ing care­fully se­lected jour­nal­ists and dis­tribut­ing pre­cisely worded press re­leases.

The Gulf oil spill changed all of that. Com­mu­ni­ties united around an is­sue and found a voice on Face­book. There was a mas­sive con­ver­sa­tion go­ing on, and BP was nei­ther a part of it nor able to con­trol it via tra­di­tional com­mu­ni­ca­tion-man­age­ment meth­ods.

Since then, there has been a marked in­crease in this sort of di­rect ac­tion. So­cial me­dia spread ideas in an im­me­di­ate and un­fet­tered man­ner. A doc­u­ment, an im­age, or a video is shared, and sud­denly what was se­cret or shielded is glob­ally ex­posed. And, though wrong or false in­for­ma­tion spreads just as quickly as true in­for­ma­tion, cor­rec­tions are of­ten swift as well.

For younger peo­ple to­day, us­ing so­cial me­dia as a tool for ac­tivism is sec­ond na­ture. They are flu­ent in us­ing YouTube, Twit­ter, Face­book, and Red­dit to com­mu­ni­cate and cre­ate a com­mu­nity around an idea, is­sue, or ob­jec­tion – and to nur­ture the growth of a small group into a mass move­ment. And older peo­ple are not far be­hind.

As cor­po­rate power rises, hold­ing com­pa­nies to ac­count be­comes in­creas­ingly im­por­tant. The scope of ac­count­abil­ity must ex­pand as well, in or­der to af­fect the be­hav­iour of ex­ec­u­tives and non-ex­ec­u­tives alike. And com­pa­nies’ board mem­bers will be in­creas­ingly held to ac­count for how well they hold se­nior man­age­ment to ac­count.

With all of that comes a cul­ture of ques­tion­ing that which was pre­vi­ously un­ques­tioned – in­clud­ing how com­pa­nies are run and whether an or­gan­i­sa­tion’s ac­tions are eth­i­cal. Any ac­tion can be ques­tioned by any­one, and if oth­ers find it in­ter­est­ing or im­por­tant, the ques­tion will spread – and not just within a small com­mu­nity or a spe­cial­ist group, but more broadly and around the world.

This shift has changed the na­ture of ac­tivism and col­lec­tive ac­tion. It has also made for new kinds of al­lies, with ac­tivist in­vestors like Carl Ic­ahn tweet­ing their in­ten­tions and mar­kets re­spond­ing. Like­wise, those who in other cir­cum­stances might see ac­tivist in­vestors as nat­u­ral ad­ver­saries can agree with the po­si­tions that they take, such as con­cerns about ex­ec­u­tive com­pen­sa­tion or cor­po­rate so­cial re­spon­si­bil­ity.

Ac­tivist in­vestors can write open let­ters that may not be picked up by main­stream me­dia out­lets, but that can go vi­ral on Twit­ter or Red­dit. This is of­ten enough to make boards and ex­ec­u­tive com­mit­tees sit up and take no­tice.

Cor­po­rate lead­ers who embrace this new re­al­ity, view it as an op­por­tu­nity, and re­sist the in­cli­na­tion to “man­age” or avoid is­sues will have a com­pet­i­tive ad­van­tage. They will not re­gard meet­ing peo­ple where they are as a way to ma­nip­u­late them, but as an op­por­tu­nity to hear what they are say­ing. Their first im­pulse will not be to fig­ure out how to use mod­ern means of di­rect com­mu­ni­ca­tion to per­suade cus­tomers, em­ploy­ees, and other stake­hold­ers to think and do the things that they want them to think and do. In­stead, they will make real changes – and they will be bet­ter off for it.

Com­pa­nies make our cars, our phones, and our chil­dren’s text­books – and ex­er­cise in­creas­ing con­trol over the daily lives and des­tinies of peo­ple world­wide, not only those who use their prod­ucts, but also those who work for them and those who live in the com­mu­ni­ties where they are based. If com­pa­nies do not take se­ri­ously the re­spon­si­bil­ity that comes with their great and grow­ing power, peo­ple will be there to re­mind them.

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