The Business Model of Democracy

Could Its Shelf-Life Be Getting Shorter? And, Then What?

At the Business Innovation Factory, our core reason for being is this:

The shelf-life of business models is getting shorter.

We are increasingly living in a volatile, uncertain, chaotic, and ambiguous (VUCA) world — which is also hyper connected. The mix of these conditions creates the perfect storm — requiring, driving, and accelerating the emergence of new business models. And when a new business model emerges, it is time for the old business model to adapt or die.

Image from Business Models Inc

Our job is to help leaders get better, faster, at exploring new business models — such that they don’t get caught unprepared by disruptions. In this work, it is the suspension of disbelief that I find most intriguing. Leaders seem to convince themselves to believe the unbelievable — that a dominant business model (1) can grow infinitely and (2) can’t be replaced. Further thought provoking is the fragility of this thinking; meaning, once a business model is threatened or disrupted, leaders — thinking it won’t happen again — focus on aligning to the new normal, versus creating an ongoing way to constantly explore new business models.

Looking at 2016 through this lens, and through the lens of the BIF’s newest lab — the Citizen Experience Lab — I have to wonder:

Is the shelf-life of democracy dwindling? And more importantly, how might we replace it with a wholly new business model?

Democracy’s Value Proposition on the Decline

Democracy rests on four pillars — governments chosen and replaced by free and fair elections, active participation of citizens in public and civic life, protection of human rights of citizens, and rule of law that applies to all citizens equally. One could argue that each of these pillars is astonishingly weak, as evidenced by a number of 2016 phenomena:

  • While Russian tinkering in the 2016 Election was disturbing enough — the lack of public outrage signals some level of acceptance.
  • The rise of Populism — from both Democrats and Republicans — demonstrates citizens’ sense of alienation and disenfranchisement.
  • Americans elected a Presidential candidate who, amongst many things, threatened to name the election illegitimate if he didn’t win and who threatened to imprison his opponent if he did win.

What do these phenomena point to? According to researchers Yascha Mounk and Roberto Stefan Foa, we could be looking at the collapse of the model. In a fascinating study, Mounk and Foa examined the conditions and factors which led to the collapse of democracies around the globe in the last several decades. They identified patterns — which they called “the low grade fever before the flu:”

The first factor was public support: How important do citizens think it is for their country to remain democratic? The second was public openness to nondemocratic forms of government, such as military rule. And the third factor was whether “anti-system parties and movements” — political parties and other major players whose core message is that the current system is illegitimate — were gaining support.

Of these factors, the first is the most significant in driving democratic decay. In the United States, they concluded:

…the percentage of people who say it is “essential” to live in a democracy has plummeted, and it is especially low among younger generations…

In short, the value proposition to citizens is not as alive and relevant as it once was.

From Tweaks to Transformation

To be honest, I’m not sure I’m too worried about the end of democracy. I love the values for which it stands, but I’m with those who don’t find that the entrenched model is able to deliver on that promise.

But I have to wonder:

Why not?

In America, democracy is described as the Great Experiment. I love that idea; but in reality, I wonder to what extent there was real experimentation at play. Meaning, to what extent did we iterate on the democratic model in real time versus locking in on an untested model and running with it? I suspect the latter.

For example, political participation continues to plummet year after year. 54 percent of eligible voters showed up to vote in 2016. Given participation is a pillar of the model, why is this (1) not more fully understood as a problem, and (2) not examined and addressed through a new lens? Year after year, institutions push “get out the vote campaigns” — an approach which hasn’t changed outcomes in a long while.

McKinsey & Company

Why? Because we continue to dig in and defend the current business model.

I will say this, as we have iteratively moved democracy through its Horizon 1 and Horizon 2 growth trajectories, there have been some incremental improvements to show for it. We expanded access and participation to the model — such that all citizens, regardless of religion, color, or agenda could participate. We improved how well it functions and how it is delivered with tweaks in open government and technology.

But to a large extent, we failed to strengthen and modernize the most important aspects of the operating model: (1) an educated citizenry that is capable and willing to participate, and (2) wealth creation across the citizenry. Instead, we live in an extremely bifurcated nation of haves and halves not — in both wealth, education, and now, personal power. Given these conditions, even Schumpeter had his doubts about the survival of capitalism and democracy.

The danger is that in our discontent, we continue to interrupt the model, and not disrupt it. As such, we only continue to produce mediocre outcomes, and we open the door for predators.

While citizens have the power to interrupt the system, do they hold themselves accountable for the outcomes? It is fabulous when a group of disengaged citizens show up to demonstrate their dissatisfaction — but if they are not willing or able to actively create the future model they want and hold themselves accountable for the outcome, then someone else will. And that person is likely to represent the existing business model — in effect, citizens passively give permission to create more of what they don’t want.

But what if they didn’t?

What if citizens proactively organized to iteratively design and test the next model for great government — one with the promise to deliver on participation, equity, freedom, and access?

What’s Next?

I have no clue what “next” might look like. As designers, we work in many worlds — worlds where we:

  • Know what we know
  • Know what we don’t know
  • Don’t know what we know
  • Don’t know what we don’t know

With the future of democracy, we’re working in the world of not knowing what we don’t know.

There are clues, of course. Daemon and Freedom, by author Daniel Saurez, are two of my favorite novels (though really, it is all one book divided into two parts). The books are set in the context of a social and economic disruption — catalyzed by a highly intelligent, highly resourceful innovator. The future painted by Saurez is based on trends that we’re already beginning to see — new forms of value creation and distribution (a la the maker movement), new forms of participation and access (decentralized identity and reputation systems), and new mental models and frameworks (positive sum design squares up against zero sum structures.)

These phenomena — in today’s reality — are definitely signs of times to come and what could be. They are the signs of the technological advancements (i.e. capabilities) that could aid the emergence of new models.

But what are the new models? How will we create value propositions that deeply engage citizens? How might we co-create those value propositions? What are the core elements of the new operating model? How will it be sustained?

I believe inspiration is to be found in the space between citizens themselves. These are the models that are the output of diverse — and I mean truly diverse — groups of citizenry exploring the common ground that exists when they explore the boundaries of their own existence.

At BIF, we call this the potential of random collisions of unusual suspects (or RCUS). It is an area I’m keen on exploring as core to the Citizen Experience Lab because I believe that “pull” models — models that deeply engage citizens, give all of us a sense of belonging and purpose, provide us opportunities to contribute — will be the output of this exploration.

But this exploration is astonishingly hard. I was trained as a debater, which makes me less than shy engaging in confrontational conversations with different thinking people. I kind of like them. But I’ve come to realize in my professional (and well… personal) life that fierce conversations are not the norm.

But how else can our opinions and mental models evolve? Evolution requires the introduction of something new and provocative that ultimately changes the course of trajectory. This is as true for biology as it is for our thinking.

Instead of the holiday meme being “avoid politics at all costs,” how can we make it exciting, not threatening, to engage in future facing conversations about governance such that we can begin to create something new together?

How might we make RCUS safer, and well, more fun for citizens? Is it small exercises that teach young people to critically debate with each other and adults? Is it “games” that encourage people to explore their boundaries and the realm of possibilities? Is it a “reeducation” of the citizenry, the way Japan is “reeducating” its “salaryman”?

Whatever the approach, the one thing that I do know is that RCUS dialogue is essential. We can not continue to build and operate in our individual thought and belief silos. No good ever came from talking into an echo chamber.

So… we get people talking. And, then what?

How might we more quickly move from ideation to experimentation? And what if the next American experiment truly is an experiment? With ongoing iteration based on what works and what doesn’t work? What if there never is a new normal, but a commitment to co-create our future each and everyday?

As with all things at BIF, the ethos is to start small and scale fast. Democracy is a big idea. But that doesn’t mean it’s too big to fail or to be reinvented.

BIF’s Citizen Experience Lab is a platform to explore and test new models that transform the citizen experience. This begins with deeply understanding the citizens’ experience by coming together to share, and even strive together for something new. It begins by recognizing that the old model won’t last forever, and that, if we collaborate, something even more powerfully good can emerge.

In the words of the great poet Mary Oliver:

“This is not a poem about a dream,
though it could be.
This is a poem about the world
that is ours, or could be.”
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