Posts Tagged ‘socially-embedded corporation’

Evolving Forms of Governance

May 20, 2009

As I type these words I am enjoying the view of Kowloon across the Hong Kong harbour. Beyond Kowloon I can see the distant mountains in the New Territories. Somewhat to my left are the mountains of Hong Kong Island. I can see the moon-shaped Peak Tower on Victoria Peak over the high-rise buildings in Causeway Bay.

Panoramic views from a high place always bring me to a quiet space within me. Very early this morning, in the twilight zone between sleeping and waking, I again experienced an in-flow of new ideas — a process that happens to me countless times before. I am not sure exactly how the process takes place. After I receive them, my mind then shapes and clothes them into words, paragraphs and figures. Today the ideas came at the right time so that they can find their way into this blog. The middle three diagrams below are explicit rendering of the ideas that came to me this morning.

Following the long-term evolutionary framework in the last blog (see “Q27- Combining Megatrends #1 and #2: the Next Societal Innovations?”), we can see that forms of governance have been evolving also according to the two megatrends (the 3×3 diagram below was first presented to the Futuristics in Education course for Malaysian senior education officers last August 23, 2005 at SEAMEO INNOTECH). Glocality and counter-glocality were discussed in the previous blog on “More Power to Glocals!”

governance 1

The great American democratic experiment can be viewed as a steady movement towards the lower left or indigo quadrant, the direction of the two megatrends (see previous blog). It remains to be seen how it will further evolve in the next centuries.

governance 2

Tibetan Buddhism was never a centralized and doctrinaire religion from the beginning; it has been an independent experiential and learning-oriented practice among generations after generations of lamas or monks across Tibet, Mongolia and elsewhere.

Potala Palace (photo credits to Wikimedia Commons)

Potala Palace (photo credits to Wikimedia Commons)

The political loss of Tibet to the Peoples Republic of China led to the farther spread of Tibetan Buddhism as a personal practice across the globe; from our framework, this is movement towards the indigo quadrant. What has happened is consistent with what Padma Sambhava, the founder of Tibetan Buddhism, prophesied 1200 years ago that the Tibetan people “will be scattered like ants across the face of the Earth.”

governance 3

However, we see from our framework that the evolution of Christianity was regressive from Pentecost up to the Middle Ages, and then it reversed back towards the indigo quadrant starting with the Protestant Reformation and continuing with Vatican II reforms.

governance 4

The modern corporation is also evolving (see my blog on “From corporate disregard to corporate embrace of stakeholder capital to socially-embedded corporations”). The advent of knowledge management, organizational learning/presencing, corporate social responsibility or CSR practices, the power shift (see Alvin Toffler and Daniel Bell) to knowledge workers/enterprises and a “flatter world” according to Thomas Friedman, are forces that tend to push the modern corporate practice towards the indigo quadrant.

governance 5

What do you think?

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Value-Creating and Value-Destroying Social Innovations

April 27, 2009

The term “social invention” was first proposed by Stuart Conger in his 1974 book “Saskatchewan Newstart”. It covers new organizations, laws and procedures that satisfy personal, social or market demand. His examples are:

  1. Organizational social inventions: schools, law courts, House of Commons, labour union, jails, YMCA, Children’s Aid Society, Red Cross, he Boy Scouts, etc.
  2. Social inventions in the form of laws: Poor Law of 1388 in UK, Indenture of Children Act of 1601 in UK, English Bill of Rights (1689), Compulsory School Attendance Act in Russia in 1717, Swiss Unemployment Insurance Act of 1789, and an 1875 US law against child abuse.
  3. Procedural social inventions: language, writing, charity, democracy, labor strikes, professional licensing, training, courtroom oath, probation, testing, psychoanalysis, etc.

I have a reservation with Conger’s use of the word “invention.” According to WIPO (World Intellectual Property Organization), an “invention” has only the element of novelty while “innovation” has both elements of novelty and utility. Evidence of utility is market demand or social acceptance (see my blog on D14- Innovation versus Invention). Conger’s examples fit the term “innovation” and therefore I will use the term “social innovation” instead.

Let us apply the Value Creation Scale from the previous blog post to various social innovations. Below are examples of largely value-destroying or simply resource transferring social innovations:


Boxing as a spectator sport is a strange way to create value. When two people fight to hurt each other and no one is watching, this is just 3 in our Value Creation Scale. However, there are many people who will pay to watch people hurt each other — the value proposition of the boxing industry which is 3 and 6 in the Scale. Gladiatorial “fight to the death” in old Rome, Japanese sumo wrestling (an institutionalized, stylized, protocol-bound and milder form of fighting), fee-based hunting/fishing and cockfighting belong to the same category.

Cartels such as OPEC do three things: (a) extract non-renewable natural resources making them no longer available to countless future generations, (b) appropriate proceeds solely to its elite members, and (c) collect rentier profits through oligopolistic supply-fixing or price-fixing. From the perspective of the Scale, burglary, robbery and thievery are better than OPEC! Why? They do not irreversibly deplete natural resources. We tolerate OPEC more than we do burglars, robbers and thieves. Why? Don’t forget “free riders” of OPEC such as the big oil multinationals who earned billions of dollars during the last oil price spike. We grudgingly shell out more of our money for a pricey tankful of gasoline but do we feel the same with bag-snatchers? Why is institutionalized global robbery more acceptable than personalized local robbery? Strange.

Next, examine below various examples of value-creating social innovations. I inserted motherhood for illustrative purposes only although it is not a social innovation:


The corporation is indeed a successful and widely adopted social innovation (creating value for the few or 6 in the Value Creation Scale). It has several variants. Oligarchic capitalism is where a national economy is dominated by a few business elites. “Regulatory capture” is where powerful businessmen (or “crony capitalists”) tilt the rules of the game in their favor through bribery, collusion (“cronyism”) or outright control of government regulatory agencies. An enclave corporation is one that is isolated and has zero interaction with the local communities in or around which it operates.

I sense new social innovations emerging towards 7 and 8 in the Scale. I wrote earlier about corporate social responsibility and new variants towards the “socially-embedded corporation.” I also wrote on the growing practice of “Triple Bottom Line” — introduced by John Elkington in 1994 — which is 6, 7 and 8 in our Value Creation Scale. A Working Group of the Organisation Internationale de Normalisation (ISO) is currently developing a new voluntary standard on Social Responsibility for corporations; it will be released next year as ISO 26000. The Cartagena Agreement and Costa Rica’s Biodiversity Law combine biodiversity conservation with local rights and community development — harbingers of social innovations combining 7 and 8.

Perhaps we are not hopeless; we are still learning and evolving. There are institutions facilitating innovations towards 7 and 8. Peter Spence from Australia alerted me to Mary Parker Follett Foundation whose program areas are: learning democracy, participatory design of social systems and dialogue as community reflection. Thanks Peter!

(PS to my loyal readers: if my recent blogs seem too “Cloud 9” for you, I promise to write something “Ground 0” or very practical for KM in my next two blogs before going to “Cloud 11” in Q26 and Q27 according to my set schedule. Cheers!)

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From Corporate Disregard to Corporate Embrace of Stakeholder Capital to Socially-Embedded Corporations

April 11, 2009

I flew to Singapore to read an invited paper on Monday April 13, 2009 for the Fifth International Research Workshop on Asian Business sponsored by the Singapore Management University. My paper is entitled “Corporate Social Responsibility and Emergent Models in Management of Stakeholder Capital in Philippine Conglomerates.” That’s a mouthful, so let me share with you the gist in bullet points:

  • The 10 richest Filipinos are mostly Chinese-Filipinos with their own conglomerates and corporate social responsibility (CSR) programs.
  • They are politically and economically influential; and the paper examines indications whether and how they are developmentally influential.
  • Philippine corporations’ attitudes to stakeholder capital (the external component of relationship capital) have been evolving, from disregard in the 1970s to being committed in 2000s.
  • Corporate attention to their stakeholders was basically government-driven in the earlier periods, but the growing CSR practice in the Philippines has been internally-driven; now, corporations better recognize stakeholder capital and its contribution to their value creation.
  • One of the Chinese-Filipino patriarchs, John Gokongwei Jr. recently announced he will donate half of his personal wealth to various charities.
  • CSR is a “retrofit” which leaves the fundamental corporate structure untouched.
  • New models seem to be emerging which may be harbingers of new corporate models driven by socially-responsible goals.
  • The new corporate characteristics are: more networking and partnerships with civil society, bridging leaderships, more innovative and socially-responsible investment (SRI), greater community engagement and reinvention of global supply chains towards “triple bottom line.” Corporations are less and less the enclaves they were.
  • I call this emergent model the socially-embedded corporation.

I end my paper with a teaser question.

If, as many observe, (a) the global economic crisis is a “wake up call” to flaws in the US economic model, and (b) the global economic center of gravity has been moving towards East Asia, then the question is: what, if any, are the emergent economic models in East Asia, and in China in particular?

Click here to get: a copy of my paper (pre-publication draft) and a copy of my PowerPoint presentation.


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