Business: Of, By, And For The People?

KEXP CSA

I was so excited at the response to the Local Green Stimulus Package event last week, and it’s had my mind buzzing about the endless possibilities for so many businesses vis-a-vis community engagement. Indeed, it’s gotten me thinking about what could be a larger point: could the future of business be business of, by and for the people? It’s interesting thinking about the extent to which some businesses are already engaged in community-building, cultivation, and realization. Likewise, it’s fascinating to think about those completely missing the plot.

Some get it…

I grew up in central Wisconsin, in an area with almost no access to what I now consider “good” radio. On occasion, I had the good fortune of going to Madison, and tuning into WORT – community supported radio. I’ve since, of course, stumbled onto others of that ilk – KEXP being the best local example.

Both of these stations rely on the listener directly to fund them, rather than pursue marketing dollars from companies that hope the radio’s target demographic perfectly matches their own – and that the listeners actually engage with their ads. WORT, KEXP, and other such stations provide a service and then ask their listeners to pay for the service. The result? Direct market evaluation of the value of their service. (NB: In 2007, WORT reported $658,608 in assets; in 2006, KEXP reported assets of $1,640,295. Needless to say, neither challenge a behemoth like Clear Channel,with a market capitalization of ~$18B).

Another great example is community-supported agriculture from farmers such as Helsing Junction, Local Roots, and Boistfort Valley Farm (to name just a few locally – there are countless others all across the country). In short, these farms sell shares of their season’s production in advance to people interested in 1) getting great local produce direct from the farmer, and 2) perhaps more altruistically, supporting local agriculture. The result? The farm has both operating capital and a guaranteed market for their produce, the customers have good food and a deep investment in their community, and the market has spoken in the most direct of terms: customer and producer are inextricably linked.

Some don’t…

By contrast, take the average car manufacturer. They forecast demand, based on sales data from previous years, and then they make the cars. The cars ship, and…. the market doesn’t demand. Why? Economic conditions have changed, styles have changed, the one I bought last year is still running, or whatever.

The result is a fundamental market disconnect. Rather than real-time capture of consumer demand, the auto manufacturer has relied on antiquated data, which has resulted in billions of dollars of cars sitting on docks, awaiting their fate.

The future of business?

This morning I was listening to KUOW, Seattle’s local NPR affiliate, currently in the midst of their pledge drive. One of the announcers commented that the amount for which they were pitching at that moment was less than most of us spend on our cable bills annually. While one could argue endlessly the merits of public radio versus cable television, what I found fascinating was the fact that they were using community organizing to accomplish the same thing that Comcast does with a bill: establish a revenue stream.

KUOW, KEXP, WORT – all of them can use a better understanding of their market and their communities. From that understanding, they might devise fundraising strategies that are far more effective than Comcast’s bills will ever be. Could they at some point surpass the Clear Channels of the world? By leveraging the power of their communities, could business indeed be reinvented as a vehicle of, by, and for the people? What do you think?

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Published 25th March 2009 at 4:10 pm in Collaborative Technologies, Global Development, Written by Gabriel with Comments
Tagged with CSA, economic stimulus, Farm, KEXP, KUOW, Seattle, WORT

Gabriel

Thanks for the great feedback, gentlemen.

Japhet: interesting points about Coase. I remember studying his theories in grad school, and thinking even then that, exactly as you point out, transaction costs are going down so significantly that the corporate structure, as we know it, may significantly change in coming years. Interestingly, the technological advances cited in the wikipedia article about Coase point to telephones as key to the expansion of the firm; I'd suggest that the same technology, and the other technologies it's enabled, will lead to dramatic restructuring of the idea of corporations.

Frank - totally agree with you about media; I'm fascinated by where that's heading. Government, too: as we increasingly buy things online, sales tax revenues are doubtless decreasing. Likewise, if we're less tethered to place, it's conceivable that many of us would move to somewhere with a lower tax burden. If government can't figure out how to adapt revenue streams, could that lead to bigger deficits than ever before?

Toby - nice set of synergies; thanks for sharing!

Toby

interesting points, mr. scheer.

interesting i read this while listening to my other online radio station, KMTT, which is seattle based and uses advertising to support themselves. i listen to KEXP on occasion because of their community foundation, but it when it comes to the 5 senses, you have to go with what you like, right?

interesting i read this the same day that the obama adminstration is forcing the ceo of gm to resign and asking for major shake-ups in how the big 3 operate going forward.

interesting that i read this, and the imbedded u.k. car link you had, from japan where they took the big 3's production of cars and made it better, as well as adapted faster and more quickly to the needs of the automobile consumer. their buyback plans are amazing, as well as their "recycling" of cars to other countries. at the same time, the auto industry is hurting here, as well, and more and more of the masses are buying used cars instead of getting a new car ever 3~4 years.

all in all, an interesting post and an enjoyable read. cheers, mate! ;)

Frank

Hey G,

Yes. Well... maybe. It depends. Most good businesses, for-profit or not, take cues from their community. Shareholders, after all, are basically community stakeholders, right? Go to the annual shareholders meeting at a large company, and you'll hear from all sorts of shareholders trying to pressure the company to adopt better labor standards, environmental policies, etc.

Obviously, nonprofits have a slightly different connection to their community, since they don't sell a product or service at the cost it takes to create that product or service. So they have to go to their community and ask for support.

I do think we're going to see a lot more hybrids in the future. Especially in the media. Look at a site like Talking Points Memo, that's ostensibly a for-profit news operation, but still holds the occasional pledge drive to garner community support.

Also -- and I think this relates to japhet's point about Coase -- for smaller, new media organizations that can reach a community far larger and more diverse than they could in the past, the particular tax structure doesn't really matter. They're going to pursue healthy community support _and_ the sale of profitable products.

The question, IMO, is how big does that scale? When the CEO can respond directly to thousands of customers (via email, twitter, etc.), how does that change the company's responsiveness to its community?

japhet

"Could business be reinvented as a vehicle of, by, and for the people?"
I'm not exactly sure what you're trying to say, but if you look into the economic theories of Coase, http://en.wikipedia.org/wiki/Ronald_Coase
you'll find some stuff about the transaction costs of organizing. I expect that the decrease in organizational costs via new media platforms will change the equilibrium between loosely organized or single purpose organizations and permanent corporations and the amount of relative economic might each of these arbitrarily separated groups controls.

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