Power of the people: how they can transform countries and companies.
Written November 2009, by Professor Bettina Buechel and Darren Willman
Published in IMD’s Tomorrow’s Challenges, Management Issues, Financial Express (India) and The Jakarta Post (Indonesia).
The fall of the Berlin Wall began with the Peaceful Revolution in September 1989. As the size of the demonstrations grew, it proved that the majority of the population was against the regime. The main chant of the non-violent protestors was, “We are the people.” Although the state wanted to suppress this counter-revolution, the power of the people, united against the government, ultimately led to the fall of the Berlin Wall in November 1989. Without the power of the people, the Berlin Wall might still be standing today.
The fundamental trend – people have the power – continues to prevail in today’s business environment. People have the power to shape organizations, lead transformation and create the demand for products and services. Therefore, in order to remain competitive, it is critical that companies harness this power. One way they can do this is by keeping abreast of global trends.
In 2007, IMD’s Tom Malnight and Tracey Keys began tracking major global trends. Since then, IMD has been dedicated to understanding current trends and the impact they have on business, presenting them in many IMD programs, including Orchestrating Winning Performance (OWP).
One trend is the war for talent. Consider the synergies that exist between individuals being trapped behind the Berlin Wall in 1989 and businesses war for talent today. During its existence, from 1961 to 1989, the Berlin Wall became a physical symbol of both the Cold War and the Iron Curtain. Before it was built, the East German economy was being undermined by the flight of mostly young, educated talent – the intelligentsia – to West Germany. In order to stabilize the economy, communist leaders realized that they had to stop the defections to the capitalist west. They felt they had no choice but to build the wall. According to the Soviet leader, Nikita Khrushchev, “The East German economy would have collapsed if we hadn’t done something soon against the mass flight … So the wall was the only remaining option.” (John Lewis Gaddis, The Cold War, 2005, p. 115).
The Berlin Wall successfully stabilized East Germany and stopped the talent drain to West Germany. But, by the 1980s, détente was blossoming in Europe. The Stasi, East Germany’s secret police, held tight control. And many people in both East and West Germany feared that the anachronistic, hard-line East German hierarchy would be in place for a long time.
From today’s business point of view, forecasts for 2010 see the jobs crisis worsening. Preference will continue to be given to local candidates and work permit regulations will get in the way of recruiting international talent. However, with talent needs becoming so specific, it might be impossible to find the right profile within a specific country. In essence, “walls” have propped up that are affecting organizations’ recruiting procedures.
This is especially challenging in developed countries where the aging talent is heading into retirement. How will companies cope when the 200 million now unemployed come knocking? With so many jobseekers, the short-listing task alone will be monumental. Not to mention, the difficult and time-consuming process that will likely be required to hire international talent. And, perhaps it’s time to give youth a chance. They’re cheaper, more energetic, and by investing in them now, you won’t be stuck when the baby boomers move into retirement. Muster up enough courage to recruit international talent even if it is time consuming. Don’t allow talent that could be impacting your company to remain trapped behind an invisible iron curtain.
In addition, companies have to realize the new ways in which people lead revolutions. For example, consider the way companies harness Web 2.0. The web is no longer just a resource for information and transactions. Interactivity, content creation and collaboration are all part of this new world. And like the East German government, corporations are bending to the will of the people. This cheap and easy-to use technology has shifted power to consumers. They create content and speak their minds. There is now a two-way dialogue where information, opinions, ideas and reviews are exchanged. And this phenomenon is only likely to grow even more rapidly with the spread of internet use in developing markets. As a consequence, smart organizations are developing social media strategies to take full advantage of these tools. For example, Starbucks responds to all Twitter messages mentioning its name, ultimately in an attempt to reverse any negative customer experiences. One recent example was of a confused customer who had presented her thermos cup to save paper cups. But the staff wrote the order on a paper cup and then threw the cup away – defeating the purpose of the thermos cup. Starbucks replied with “You’re right” and followed up with the store, all within the hour.
According to McKinsey (“How companies are benefiting from Web 2.0: McKinsey Global Survey Results, September 2009), 69 percent of respondents to its June 2009 survey reported that their companies had gained measurable business benefits from using Web 2.0, including “more innovative products and services, more effective marketing, better access to knowledge, lower cost of doing business and higher revenues.” Most certainly, this is the wave of the future. But, there is a caveat – companies must carefully think through their Web 2.0 strategies. Otherwise, they may wind up in a situation like Chevrolet when it asked internet users to create a video to promote their new Tahoe SUV. What they got instead were videos about how disastrous SUVs are to the environment.
The fall of the Berlin Wall marked a seismic shift that was led by the people. Today’s technology makes it easier than ever for people to unite and shape their worlds. And companies are increasingly developing ways to capture and use this power to their advantage. Those companies that don’t may be at risk of developing strategies that aren’t reflecting consumer preferences and thus are dooming themselves to fail, similar to how the East German state tumbled 20 years ago.