The Rise of the Human Economy

by Dov Seidman

Technology isn’t just changing our world. It’s reshaping it faster than individuals and institutions are able to respond. We see drones delivering packages, computers recognizing faces, cars driving themselves. All around us, we see and experience technology doing the things that historically we believed that only humans could do.

Machines, once thought of as a fixture of the industrial economy, are now rapidly overtaking large portions of today’s knowledge economy, with implications hitting home for much of the modern workforce. According to researchers at the University of Oxford, some 47 percent of jobs in the United States are susceptible to automation within the next twenty years as computing and machine learning grow exponentially more powerful and consumers grow increasingly comfortable with new technology.

For the first time, humans must grapple with the harsh realization that they no longer have a monopoly on thinking. Machines are threatening us in a fundamental and existential way. And people are trying to make sense of the wide-ranging consequences of these profound shifts. But rather than focusing on how we can compete with artificial intelligence, we must focus on how we as humans can complement increasingly capable machines and thrive as a result. There are unique qualities that only people possess, such as the ability to collaborate or display kindness, determination, and grit. Companies need to infuse heart and soul into their daily transactions, leveraging humanity at their core.

In the industrial revolution, employers hired for physical strength and dexterity. They hired hands. In the knowledge economy, employees were selected for their intelligence and command of specialized information. They were hired heads. Today, we are living in the human economy. We hire for hearts, for the deepest, most human qualities that no machine can replicate; capacities like empathy and creativity, and traits like honesty, trust, and responsibility, traits that come from the heart. These are the elements that build deep, sustainable relationships.

Embracing Human Economy Values

As LRN research shows, more CEOs are increasingly aware that their competitive advantage now hinges on inspiring elevated behaviors from their employees. Leaders now recognize the importance of creating organizational cultures in which people can collaborate, communicate, create, and remain flexible rather than simply calculate, conform, direct, and comply. Although only 8 percent of corporate cultures have fully integrated sustainable human values at their core, according to our research, it’s a growing phenomenon.

This was not always the case. For a long time, we kept our humanity confined to our personal and religious lives, separate from our public and professional selves. We lived in two separate spheres. In the former, we pursued meaning and sought to live our values. In the latter, we focused on a seemingly amoral pursuit of profit. But now, the reshaped world we live in requires an integration of our respective identities. We must embrace the notion that our success no longer simply hinges on what we do but also on how we do what we do.

People are beginning to feel and think differently about the role of business in our lives and, in response, companies are starting to change how they behave. According to Cone Communications, 90 percent of consumers worldwide expect businesses to stand for more than profits, while Nielsen reports that 55 percent are willing to pay more for so-called responsible brands. Surveys from TBWA/Worldwide and Net Impact show that seven in ten young adults identify as social activists, while half say they would take a 15 percent pay cut to work for a company that embodies their moral beliefs (see Figure 1 ).

As more people tie their choices to the impact those decisions have on others, they expect humanity to be reflected in the priorities of the organizations they associate with. Today, the brands that resonate most with employees and consumers put sustainable human values at the center of their activities. How can more business leaders follow that path? They can start by embracing and nurturing the following values at work.

Facing the truth. In the human economy, advocating for what is right is far more important than being right. And what is legally permissible is not necessarily morally right, as we have seen in countless business scandals and exposures in recent years. Humanistic leaders and organizations willing to deliver and face the hard truth—rather than deal in sugar-coated niceties, falsities, or excuses— will engender more trust from their stakeholders, prompting others to stand by their side.

Extending trust. Humanistic leaders know that trust is a behavior, not just an outcome. They realize that the first step to engendering trust is to extend it, not to inspect for it. Trust inspires others to take the risks that are essential to igniting innovation (see Figure 2 ). Not only that, trust is contagious; when you extend trust, you can set off a wave of reciprocity, collaboration, and value creation. Today’s expanding sharing economy is powered by such an extension of trust. Without this vital behavior, platforms like Uber, Airbnb, and Kickstarter would falter.

Promoting sustainable, not situational, values. Companies are starting to wake up to the fact that they need to be more human, and marketing departments are following suit. Chevron is now the “human energy” company, Cisco is the “human network,” Dow is the “human element,” Samsung is “designed for humans,” and John Deere is about “human flourishing.” Though these efforts are likely earnest attempts to embody human values, companies get into trouble when they don’t fully and completely instill these values in their organizations. When such words are not backed by behavior, they are merely situational values, aspirations that may sound nice but are only put into practice when it’s convenient. Sustainable values, however, are the kind that are turned into everyday practices; they become ingrained in an organization’s culture.

Fostering “freedom to.” In cofounding the peer-to-peer lending platform Prosper, Chris Larsen sought to “liberate borrowers and small-time investors” from big bank interest rates. In founding Airbnb, co-founder Brian Chesky strived to promote a “democracy of access” to affordable lodging. Beyond simply freeing people from old models of business, these companies created something new: the freedom to pursue happiness, to innovate, to collaborate, and to live and work in more fulfilling ways. At a time when we have so much to lose, “freedom to” is exactly what leaders need to focus on.

Leading with moral authority. In the human economy, humility counts. Leaders who put themselves second increasingly come in first. They lead like Nelson Mandela did as president of South Africa. Mandela refused to make the new chapter of South Africa’s history about himself. Instead of focusing on his imprisonment and liberation, he made himself small, letting the South African people know that their collective struggle had not yet come to a close. Mandela had moral authority, the type of power that doesn’t demand recognition. Unlike formal authority, which is the exertion of power over people, moral authority functions as power through people. When you demonstrate moral authority, people follow you not because they have to, but because they want to.

Igniting passion. Employees will demonstrate the qualities that we most desire from them only if they consider the company’s mission and values as worthy of their dedication. And that can happen only when employees have a sense that their work has meaning. Although many people may have a strong desire to feel passion for what they do in life, this ingredient has gone missing in most workplaces today. Two-thirds of all U.S. employees spend the majority of their waking hours doing work they do not love for companies they do not admire. This is a jobs crisis brought on by leadership malpractice. But some companies have managed to instill passion throughout their cultures, and they have thrived as a result. Take a stroll through Patagonia’s Ventura, California-based headquarters and you will understand why the company’s passion for the environment, and its practice of hiring on the basis of passion, has led to business success. Employee turnover at Patagonia is astonishingly low, at just 7 percent, compared to a retail industry average of 43.8 percent. When people find work they love and a corporate mission they can believe in, work becomes more than a job. It becomes a journey worth taking.

Embracing the journey. Human economy leaders don’t race to the quarterly finish line. They do not focus on short-term results and they do not expect constant linear progress at every step of the way. Instead, they adopt an ethic of journeying. They follow a lengthier path, one that embraces the zigs and the zags that ultimately ensue when we are pursuing our goals, and one that leaves plenty of room to explore new initiatives and consider previously unexpected routes. When the late entrepreneur Ray Anderson decided to shift the business model of his carpet company Interface, he likened the process to climbing a mountain. When Aetna CEO Mark Bertolini worked to reshape his company’s culture over the past few years, he used the principles of mindfulness and journeying to describe his approach. And when Unilever CEO Paul Polman called on Wall Street to end the “three-month rat-races” in 2012, he was emphasizing the need to think about the long term. As more leaders get better at journeying, they can start to chart a course toward achieving far more ambitious goals.

Each one of the values is unique. But when companies and their people adopt these values in a sequence, something spectacular begins to take shape. The old command-and-control style of leadership starts to break down. And the relentless pursuit of short-term profits is replaced by a pursuit of significance, helping people perform at a higher level and find fulfillment in their work. Such systemic change often takes hold from the bottom up. This, I believe, is where we are moving right now. People not only want to live and work in a human economy, they are taking the necessary steps to make it a reality.

Building a Human Organization

How can big companies successfully adapt to the conditions of the human economy? Historically, leaders have relied on traditional change management strategies and governance-based operating systems to make such transitions. Such an approach rests on the adherence to formal policies and processes and the achievement of specific financial targets and goals. In such systems, a company’s employees are given rewards, like salary bumps or bonuses, when they check the right boxes and hit their targets. And when they fail to meet their goals, they are punished.

But this kind of approach is often based on misguided beliefs about motivation and engagement. More than perks or pay, employee inspiration stems from deeper connections: shared values, a sense of deep purpose, and a foundation of trust. For your company to perform at its best in the human economy, it must go beyond engagement—a short-term, measurable indicator of an employee’s commitment to his or her job—and strive for employee inspiration, a sign that employees feel a profound sense of ownership of their work and their company’s mission. According to LRN research, inspiration is a much stronger indicator of job performance than engagement (see Figure 3 ).

To create the conditions for such inspiration, organizations ought to limit their dependence on traditional governance models and instead adopt a human operating system that encourages employees to develop their uniquely human skills, including their sense of empathy, creativity, and compassion (see Figure 4 ).

To survive and grow in the human economy, we need employees to perform new tasks and master new skills. They will need to listen empathetically and thoughtfully respond to their colleagues. We want them to go beyond merely serving customers and instead cultivate unique, delightful, and genuine experiences. We need them to represent their company and nurture its brand not only when they’re on the job but whenever they publicly express themselves in tweets, blog posts, e-mails, and other interactions. People who work at successful human economy companies are missionaries, genuine ambassadors of their employers both on and off the job.

Making this kind of change at your company will require significant effort. And it can only begin when leaders inspire the people they work with and help them see that such changes are worth the effort. As we’ve seen in numerous studies, including my own company’s research on the matter, employees are infinitely more engaged and more willing to innovate, collaborate, and commit to the organization’s mission when they are supported by a human operating system.

More companies and innovative leaders are beginning to understand the need for a human operating system, and they are experiencing the corresponding business rewards that come as a result. Starbucks’ human operating system has been key to facilitating employee engagement, economic efficiency, and the kinds of meaningful customer experiences that keep people coming back. Referring to its baristas as “partners,” Starbucks celebrates the innovations of its employees, giving them room to share, listen, innovate, and synthesize. Take the example of Joe Young, who worked as a manager at a Starbucks in Hutchinson, Kansas. According to a March 2014 article in Human Resource Executive, Young had come up with a novel way to reduce whipped-cream waste by placing the canisters on their sides. Starbucks adopted Young’s method, and it yielded considerable cost savings for the coffee giant.

In August 2015, as the Asian markets lost some $1 trillion, putting the Dow into a tailspin, Starbucks CEO Howard Schultz sent a personal e-mail to all 190,000 of the company’s employees, asking them to remain as empathetic as possible. “Our customers are likely to experience an increased level of anxiety and concern. Please recognize this and—as you always have—remember that our success is not an entitlement, but something we need to earn, every day. Let’s be very sensitive to the pressures our customers may be feeling, and do everything we can to individually and collectively exceed their expectations,” he said. This message was more than a reflection of Schultz’s management philosophy; it put his humanity on full display.

Conclusion

Human economy companies and leaders can make a profoundly positive difference on the people they immediately interact with and in the world altogether. To compete and thrive in today’s reshaped business world, more leaders need to embrace a human approach, answering to the needs of millions of people who are crying out for leadership that can inspire them and elevate their behavior. To successfully encounter the challenges we face and pursue the opportunities before us, we need to look within ourselves and rediscover our deepest values. When we do that, we can fundamentally change our world and our markets for the better.


This article was originally published in Wiley Online.

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