Hierarchical Corporation's Offerings:
Advantages to the Customer | Natural Enterprise's Offerings:
Advantages to the Customer | - Recognized, popular brand (a salve for low self-esteem)
- Low price (possible because of massive government subsidies and favours like 'free' trade agreements)
- Efficiency (as long as your needs are standard)
| - Personal relationship (knowledge, trust, partnership, friendship, even love)
- Customization (really have it your way)
- Local just-in-time service (responsiveness)
- Superior innovation
- Low pressure (since supplier is not dependent on growth for survival)
- Reciprocality (mutuality, flexible pricing)
- No
corporatist costs to pass on (huge management salaries, huge margins to
achieve 20%+ ROI demanded by shareholders, massive advertising,
marketing, transportation and packaging costs)
- Resilience
(reliability in the face of economic or other crises, due to superior
improvisational capacity and focus on effectiveness rather than more
vulnerable efficiency)
- Quality and durability (no crap from indifferent Chinese factories)
- Appeal to altruism (supplier is good to its people, its community, its environment, and good for the local economy)
|
From
time to time I browse the IshCon discussion forums, whose members are
already sold on the need to create a bottom-up economy to replace our
unsustainable 'market' economy. I rarely post there, however, because
the format of discussion forums doesn't work for me: not enough context
for the ideas, a bit too much 'echo chamber', no good way to archive
what's really valuable in them, and (certainly not unique to forums) a
dearth of experience in real enterprise formation and a poverty of
imagination among many of the members.
Recently, however, IshCon (and How to Save the World) reader MatthewJ pointed me to a couple of threads (1) (2)
that were really earnest, action-oriented and thoughtful, and which
tied in closely with two of my recent posts. The quotes that follow are
(with one exception) made by Ghost (a Montrealer also named Matthew).
Two points here: I agree entirely with most of what Ghost says in these
threads, and I'm 'picking on him' in this article because I think he
has a few misunderstandings about how economies and societies work that
are making what he's trying to do unnecessarily more difficult. So
please IshCon'ers (I know several of them read this blog, and MatthewJ
may send some others this way), don't
construe this article as being critical of Ghost or what IshCon is
trying to do with New Tribal Ventures (very close to what I call
Natural Enterprises). And secondly, several others have contributed
importantly to this thread and to developing Ghost's ideas, and I hope
those I don't mention don't feel slighted that I'm focusing this
article on just one contributor's ideas. I do understand the power of
collaboration.
So here, unfairly out of context of all that
Ghost has said that is exactly right, are some excerpts [in red text]
from these two threads that I would take issue with, and why [my
response in black text]. They're important because, I think, they're
very common misconceptions about the workings of our economy, and of
modern complex societies,
misconceptions that are so subtly and relentlessly perpetrated that we
tend to accept them as conventional wisdom, when they are in fact
propaganda that advances the interests of a powerful and wealthy
corporatist elite. Where I have used, on this blog, different
terminology from that generally used on IshCon (terminology used by
Daniel Quinn, whose books Ishmael, Story of B and Beyond Civilization inspired the discussion group), I note my equivalent terminology after an equal sign in italics (=like this) for 'ease of translation'.
[Ghost said]: The entire point of an intertribal economy (=networked economy)
is about building one that works smack dab in the middle of claimed
niches. It's about becoming a parasite in an established host and
reclaiming parts of their already claimed niches. It's an opportunity
for the millions not able to flee to the countryside to survive
collapse. It's a solution for the here and now...Niche markets are
small markets and generally can't support any competition. They are
generally occupied by a single small business with 100% market
share...Until they become independently self-sufficient, they simply
need the [open market] client base to survive.
I
think this is far too negative a view of the situation and need for
struggle of Natural Enterprises. It's a very popular, traditional and
well-ingrained perception that entrepreneurship is an enormous amount
of hard work and constant struggle fending off threats from bigger,
established, well-bankrolled competitors. In my experience working with
hundreds of entrepreneurs, nothing could be further from the truth.
Large,
multinational, hierarchical corporations are not designed to provide
customer service. They are designed to maximize margin and profit for
senior executives and major corporate shareholders, by charging the
customer as much as possible and giving them as little as possible.
Under their charter (and under threat of dismissal or legal charges if
they defy it) they can do nothing else; they are tied to this model of
operation and decision-making. Worse, they have to grow each year or die. The model is inherently unsustainable, and Fortune 500 companies all, inevitably, crash and burn.
All Natural Enterprises need to do is focus on meeting customers' evolving unmet needs effectively.
Talk to anyone who is buying from a small business with no growth
aspirations, instead of from a 'competing' large hierarchical
corporation, and in so many words they will tell you that is why. The
chart at the top of this page summarizes the 10 enormous advantages a
Natural Enterprise has over a hierarchical corporation, when it ignores
all the absurd conventional wisdom (about growth, external financing,
advertising, huge risk, endless struggle, the need to do everything
yourself etc.) and just focuses on meeting customers' evolving unmet needs effectively.
As
my book explains, doing this takes a lot of work, but it is low-risk,
low-stress, low-cost, joyful work. It is the antithesis of what most
people do (even those who should know better) when they actually start
to establish their own business.
Today, customers place a high,
but declining, premium on brand, on low-price, and on efficiency of
purchase ("at your door in 30 minutes or it's free"). Because of the
Internet and the explosion of available information through it, those
three advantages of large, hierarchical corporations are waning in
importance. Fewer customers are buying into the nonsense that brand
equates with self-worth, that "you are what you own". Brand as a
surrogate for quality and integrity is shattering as more an more
corporations reveal their true stripes (lying to customers, suing
customers, shutting down local operations and attaching their name to
shoddy imported goods and services, and massive Enron-type frauds).
After a few trips to Wal-Mart to buy the same thing over and over
because everything bought there breaks in a day, customers are
realizing that "you get what you pay for" (if you're lucky) and, even
if it hurts, are starting to make price/quality trade-offs in buying
decisions. As the US government teeters over the edge into bankruptcy,
it will no longer be able to afford the massive subsidies to big
corporations that allow those corporations to sell stuff (with your tax dollars)
to you so cheaply. It will no longer have the clout to bully other
nations into 'free' trade agreements that distort and cripple those
nations' local economies for the benefit of the colonizers. And as we
move to a network-facilitated economy of 'mass customization', fewer
and fewer will opt to buy the 'standard vanilla one-size-fits-all'
product today. They will opt instead to wait until next week and get precisely what they want from a (Natural) enterprise that has the capacity to provide that.
So
Natural Enterprises, if they've done their homework, ignored the
conventional wisdom, set themselves up properly, and focused on meeting
customers' unmet evolving needs effectively, do not need for one moment
to be parasites on the existing economy. When the customers are
delighted, they will 'work around' the inhibitors and obstacles in the
existing economy with you. If what you're doing works for them, that's
all that matters.
[Ghost said:] Tribal businesses (=natural enterprises) can no more compete with Annihilator businesses (=hierarchical corporate oligopolies) than tribes (=networked societies) can compete with Annihilator societies (=hierarchical, imperialist societies)...[a]
biodiesel business is a great idea until Willie Nelson... or the oil
[oligopoly] figures out there's money in it... or that they can use the
product themselves.
I think the chart above addresses this concern. A reading of Clay Christensen's The Innovator's Solution
might alleviate some of these concerns, as it contains dozens of
examples of small, customer-focused, well-researched entrepreneurs who
made a very comfortable living off the many customers
that large corporations simply are incapable of serving effectively,
for the reasons I described above. What's interesting is that the large
corporations were aware of the 'loss' of these customers and made no
move whatever to respond to it -- it was a diversion from their
obsession with growth and high margins -- and eventually in many cases
they lost all of their customers to the renegade who just provided solutions to unmet customer needs better.
Suppose
you were to set up a local all-renewable energy co-op to serve your
community. Your initial customers might only be altruists willing to
pay a premium to you to 'be good'. But the grid providers, while
efficient, are horrifically vulnerable -- to The End of Oil, to
terrorist activities, to weather-related transmission problems, to
energy speculators, and many other factors, some of them inevitable.
They don't think ahead. They aren't rewarded for doing so. There is
insufficient short-term payback for their shareholders. They will
ignore your co-op, even when your price drops below theirs (as
renewable technology improves, and as their variable price soars, your
fixed price drops). Their price increases will give you an ability to
expand your capacity until the whole community is your customer. And
when the grid goes down, you party. Is the community worried about your
'monopoly'? No, because the whole community, all your customers, are your partners.
They share in your success. Many of them probably work with you in the
now-prosperous Natural Enterprise. And you never have to worry about
terrorists, about war, resource depletion, transportation costs and
disruptions, new pollution and global warming findings, or great
depressions. You're all in it together. You are resilient, immune to
the effects of the 'market' economy. You never have to grow.
I wrote recently about how many examples there are that work just as well as local energy co-ops, and cut across every sector of the economy.
[Ghost said:] Small hierarchical businesses (=enterprises
that use the traditional hierarchical corporate model to establish,
fund and grow themselves, instead of the Natural Enterprise model)
have the advantage in the open market in that they can expand...We're
better off starting businesses in the 'limited' sectors and the niche
markets because they have a much better survival in the open
market...If tribal businesses can become trendy, if it's chic to shop
at them, then that's good for us...
There is no
'open market' or 'free market'. We live in the most tightly-controlled
oligopolistic economy in history. These oligopolies buy politicians
(and hence subsidies and favours), corner supply, buy up competitors to
eliminate competition, and blanket the media with an unprecedented and
relentless flood of propaganda called 'advertising'. We don't want to
compete in that market, and we don't want to 'expand'. Growth is
unsustainable, period. What we do instead is outmaneuver.
We're better off starting businesses wherever there is a significant,
researched, evolved unmet customer need that we have the competencies,
knowledge and resources to fill. Every sector, every market has lots of
them.
And trendy business is not good for us. It's ephemeral, it's tying into people's wish for escape. You can't jam the culture; it will just co-opt you.
[Ghost said:] Allegedly, the Chinese government
condemns Falun Gong practitioners to death, executes them, and then
harvests their organs (which are generally in good shape because of
their health regimen), and sells them on the black market...for
$40k...The commodification of humans is the ultimate expression of the
free market, [which] is about unlimited competition...The free market
violates the Law of Limited Competition...Today,
small businesses are being swallowed whole by large multinational
corporations, from the local cinema to the family farm. In an economy
of Limited Competition, the small business would flourish.
The Law of Limited Competition is a principle arguing for a mixed
economy, where some competition is encouraged to promote 'efficiency'
but (now-defunct) anti-combines and anti-trust laws are used to prevent
too much 'efficiency' leading to oligopoly and monopoly, which many
view as the inevitable consequence of unregulated capitalism. But it
doesn't apply in today's world at all, where we have no real
competition left, and where politicians are bought to ensure, through
subsidies, intellectual property laws, corporate indemnification and
global 'free' trade agreements, that no significant competition is
allowed to emerge anywhere on the planet.
We
are way past the point of being able to reign in multinational
hierarchical corporations and 'force' them to allow new entrants to
compete with them through regulation. That doesn't work, and never has.
What's more, a lot of hierarchical, traditionally-structured small
businesses are specifically designed
to be swallowed up by large multinationals -- that's the whole point to
their existence ("buy me, Google!"). I've spoken to many 'small
farmers' who admit their goal in life is to wait until the city expands
to their doorstep so they can sell their farms to real estate
speculators and developers for fifty times what they're 'worth' in the
'open market' as farms, and retire forever.
The businesses that are swallowed reluctantly
by bigger corporations generally have not realized or been able to
capitalize on the ten advantages on the right side of the chart above,
advantages they could or should
have, but, (perhaps because they've bought too much of the conventional
entrepreneurial wisdom), have not. Generally, because they have few or
none of these ten advantages, they have no value, in any market, and usually get sold for a song, or just shut down, bankrupt. They're not Natural Enterprises, just failed corporate wannabees.
The
bottom line here is that entrepreneurs (and aspiring entrepreneurs)
should stop worrying about competing with hierarchical corporations,
and instead just focus on discovering and meeting customers' evolving
unmet needs effectively. Through millions of Natural Enterprises doing
just that, we could provide everything that we need that way. The collaboration together in a Networked Society
of Natural Enterprises supporting and helping each other would just be
a bonus, making us even stronger. Until that arrives, we would just
operate below the radar of the hierarchical economy, disruptively
innovating it from below, as Christensen explains. The only thing the
hierarchical economy corporations can do in response is what they
already do -- advertise like hell, squeeze their hapless suppliers (to
the point of bankruptcy) to keep "lowering prices every day", and
squeeze more money and favours from largely tapped-out governments.
That is their 'competitive advantage', and it can't hold a candle to
the ten advantages of Natural Enterprise.
[Ghost said:] [Ultimately],
the hierarchical economy...will begin to collapse, not because of any
kind of attack, but through simple abandonment.
Now you've got it.
[MatthewJ said:] The
only way I see this happening is if a fairly significant number of
people who share these ideas...intentionally, physically get together,
and start this from scratch. I don't see the intertribal economy
emerging from randomly forming tribal businesses (at least in the
beginning)...We all need to move to one place and start this damned
thing.
MatthewJ underestimates, I think, the power of
complex adaptive systems. Nature, which understands exactly how such
systems work, does not put all its eggs in one basket. Evolution is
trying a large number of small, independent and diverse
experiments, and seeing which ones 'work'. The ones that work propagate
in Darwinian fashion. I think it would improve our chances if "we
all...moved to a bunch of places and started a bunch
of different things", and visited and communicated with each other to
learn what's working and what isn't. As you probably know, I'm a
believer in Intentional Communities, and I think they could be great
incubators for whole sets of
Natural Enterprises that collectively meet most of the needs of those
communities. If they succeed, they would have great viral power and
spread, I think, quickly to other communities.
What I'm hoping
to establish, in concert with some sustainable entrepreneurial
associations like BALLE, is a centre and network where those wishing to
establish Natural Enterprises can invite, find and meet partners to go
into business with, get the tools, knowledge, resources and training
needed to establish such an enterprise (and ignore all the dangerous
conventional wisdom). This is not rocket science. Between us we have
everything we need to make it happen. No war with oligopolistic
hierarchical corporations and corporatist politicians. Just having fun
experimenting with a new model that delights customers, and slowly
weaning us all off dependence on the old, unsustainable, dysfunctional
economy, until it collapses, starved of customers.
Just gotta make sure this is a labour of love with the right people.
Even when you're saving the world, life's too short to not love getting
up in the morning to do the work you were meant to do with those you
were meant to do it with. |
MADE IN CANADA
trust your
instincts 
