The many versus the few: Empowered individuals and dominant institutions in a time of disruptive change
Traditionally, power has been held by “the few” — dominant institutions such as governments and large companies. In the era of digital disruption, that power is shifting to “the many” — billions of individuals across the planet who are starting to exert their collective clout. In fact, this shift was the overarching theme at C2 Montreal 2016.
Empowerment is a phased journey
The psychology literature portrays personal empowerment as a journey — the movement from a state of powerlessness to having influence over all aspects of one’s life. In the early stages of personal empowerment, awareness and learning take place; people become cognizant of new information and tools to make decisions. They next enter a phase of mobilization or taking action, moving in new directions using their newly acquired knowledge and skill sets. The final stage of personal empowerment is one of active contribution across multiple environments — increasing the influence one has over one’s entire life.
The empowerment of people as consumers and citizens has followed a similar trajectory, fueled by the diffusion of digital technology. The Internet democratized access to knowledge, reducing the information asymmetry that once existed between individuals and providers, be they private or public sector. With more informed decision-making, people are no longer passive recipients of the strategies and offerings set by companies. Transparency becomes an individual “right.” Benefiting from transparency, more aware individuals gain greater choice and leverage relative to their providers.
Clear benefits are accruing to the many
We are in the early days of the third stage of digitally-driven empowerment, that of active contribution. And this is the stage where radical shifts are taking place in the way the many are engaging with the few. Ericsson predicts that by 2020, 90% of the world’s population over the age of six will own a mobile phone. From that mobile platform, in combination with other revolutionary technologies and market forces, a new age of distributed influence and creativity is being launched.
There is plenty of evidence to illustrate this shift:
— Companies no longer design products in a black box behind their own four walls. In a recent study of large U.S. and European companies, 78% were practicing open innovation, involving customers in R&D processes from ideation through commercialization.
— The notion of lifetime employment has given way to the reality of the so-called gig economy. By 2020, 40% of U.S. workers will be freelance, while 95% of businesses now consider this workforce to be integral to their human capital strategies.
— We live in an era of burgeoning individual creativity, powered by the democratization of tools and machines once owned exclusively by manufacturing companies. 57% of Americans employ their creative skills as “makers” of crafts and other products, while 26% of cities now offer dedicated maker spaces.
— Diagnostic wearables, fitness apps, home genetic testing kits, and more have individuals taking greater charge over their own healthcare — with improved health outcomes.
— The distributed energy revolution powered by renewables shows potential for individuals and communities to generate most of their own electricity in liberation from dependence on a few centralized generation sources.
— With each of these examples, clear benefits accrue to the individual — ranging from greater personal freedom to more creative self-expression to financial gain to longer, more productive lives.
The few can also benefit, but must think and engage differently
The empowerment of individuals also accrues clear benefits to providers. For example, involving customers in innovation creates loyal brand evangelists. Over 25 years, wearable technology and remote patient monitoring technologies could trim hospital costs, saving more than $200 billion. A recent J.D. Power study found almost 30% of customers are considering going solar in the next two years, and those that do convert to solar generation are more satisfied with their utility.
But achieving win-wins requires that organizations meet individuals on a far different playing field than in the past. Working with empowered consumers requires a different and deeper level of engagement, transformed business processes, and novel ways of thinking. In fact, traditional corporate attributes and practices may be less important today than they were in the past. At the C2 Montreal event, speaker Harley Finkelstein, the COO of Shopify, said: “Resourcefulness matters more than resources. Creativity matters more than capital.” This sentiment gives great expression to the directional shift that large organizations must embrace to remain relevant. A startup with 50 employees and a great idea can dethrone an incumbent with millions in hard assets. In this environment, business as usual is a recipe for being left behind.
The story of the many and the few is far from over
The future is, of course, not knowable. And from where we stand today, there are competing narratives as to how this will all play out. If routine work, and increasingly non-routine work, are replaced by robots, could massive labor displacement take place, shifting the balance of power back to the few? Or could once long-lived companies be replaced by federations of workers that come together temporarily to accomplish a task, then disband? Could the future see just a handful of large platform companies emerge, supported by a networking infrastructure, upon which many small and hyper-specialized enterprises could be built and thrive? Will developments like personal 3D printing and liberation from the 40-hour work week help the power of the many to be increasingly focused on individual labors of love, with the potential to spawn a second Renaissance? Whatever the outcome, one thing seems clear. The nature of the relationship between the few and the many is likely to remain in play.
The way the story turns out depends greatly on how the few respond
Realizing the vision of a more personally fulfilling human future depends on not leaving people behind. Another way to look at the shifting balance between the many and the few is in terms of the individual’s detachment from society’s supportive institutions. Throughout much of the modern era (at least in mature economies), employees, employers and public institutions existed within a harmonious and mutually beneficial framework. But the twin forces of globalization and technology have worked in tandem to redistribute income and wealth in an inequitable fashion, while wage growth has failed to keep pace with productivity gains.
Granted, the rise of platforms such as Uber and Airbnb has allowed people to generate income from formerly idle assets and changes in worker preferences now favor much shorter stints at companies than in the past. But it’s also fair to suggest that greater short-term and informal employment is derived, in part, from the ongoing breakdown of the social compact between companies and their employees. Tax credits and relatively inexpensive goods alone have not been able to stave off the hollowing out of the middle class. As the private sector continues to sever obligations (e.g., pensions and healthcare benefits) to employees, will governments need to do much more? And what might that look like? Will we see our government adopt a framework more in alignment with the social democracies of Scandinavia or will altogether unique models, such as a universal basic income, emerge to replace the old social compact?
In the end, the power of the many will have to refer not just to the collective clout of empowered individuals, but to the many innovative options that organizations — both private and public — will need to explore to make this revolution a happy and productive one.
For more, see the upside of disruption.
The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.