Management theory and employee ownership

So, today, 4 July, is Employee Ownership Day. It’s the UK’s first annual celebration of employee owned businesses, led by government with support from the mutual sector.

It’s aim is to raise awareness of the employee owned business model which is already quite sizable, turning over around £30 billion and accounting for around 3 % of GDP.

There are pros and cons to ‘days’ like this. But one thing is for certain, now is a time to highlight the benefits of employee owned businesses.

A quick overview of recent management and businesses thinking (from people like Gary Hamel, Linda Gratton, Michael Porter, Bo Burlingham and others) brings to light some key ideas that are coming to define the way we think about, and do, business:

  •  To be productive, a business doesn’t just need good processes – it needs engaged employees who care about the business and share its vision
  •  As employees’ expectations change, leaders need to be adopt a more collaborative and participative style
  •  Innovation and product development should be welcome not only from the management and R&D  teams, but also from the wider workforce who have ideas and experience others don’t
  •  Long-term sustainability comes from putting the interests of stakeholders with an interest in the future of the business at its heart – the employees are the most significant stakeholders any business has, in this respect

Although it’s not said often enough, it’s blindingly obvious: employee owned businesses put these and many other new management ideas into practice, and have been doing for years.

Otaku, purple cows, remarkable businesses

A review of Purple Cow: transform your business by being remarkable, by Seth Godin, 2003

I’ve just finished re-reading Purple Cow by Seth Godin. It’s a classic business book that has helped shift the way that business thinking and practice has developed over the last decade to focus on niches, entrepreneurialism, focusing on products, brand ambassadors and spreading ideas

He begins the book with the insight that marketing has fundamentally moved away from the ‘TV Industrial Complex’, where big companies made ‘average products for average people’ because they got economies of scale through mass production and mass advertising.

Marketing, he says, is no longer about spending lots of money on advertising, it’s about providing for a niche market and creating for them a remarkable product or service that stands out from the crowd – a purple cow in the midst of normal cows.

Like Seth’s blog and other books, Purple Cow brims with great stories, anecdotes, ideas and business advice that would cost a fortune.

There’s an element of repetition about it – Purple Cow is one big idea illustrated through various examples, and if you read Seth’s other work then the explanations about why the world of marketing has changed will seem familiar.

But that’s a minor criticism. Purple Cow is a remarkable book.

Here are the four big things to take away, I think:

1. There’s no point in selling a product or idea to everyone – most of them aren’t listening. You need to focus on getting early adopters and innovators to take it on, people who like new exciting different things. They – if they’re impressed – will pass it on to others who like new things and gradually it will catch on. It’s through early adopters and those he calls ‘sneezers’ – well networked and vocal early adopters – that you get ideas to spread.

So, start with people interested in your products who are well networked and collaborate with them, give them a sense of involvement and ownership of a great product; if you impress and engage them they will spread the idea.

2. Micro-enterprises and small businesses can flourish by developing a product for niche markets. Seth gives examples like the world’s loudest car speakers and sci – fi conventions. These products have devotees because people feel passionate, borderline obsessive, about them – what Seth says the Japanese call ‘otaku’.

It’s a point made earlier in Chris Anderson’s Long Tail, who talks about the technology that enables businesses to find niche markets; Seth focuses on people not technology and explains why people are motivated to find a niche product and what businesses must do if they want to tap into these niches or ‘tribes’.

3. A remarkable business is one that creates something that a niche or tribe of people want and then engages with them rather than sells to them.

It’s an obvious but very hard thing to do. Businesses get distracted – by saving money, by avoiding risk, by creating something of wider appeal. And once you’ve done that you’ve lost it.

The lesson is to engage, collaborate, talk, support and be part of the niche – and create something they want rather than something you want them to want.

4. And perhaps the biggest learning point is that remarkable businesses do not need to be large PLCs or big businesses. In fact, Seth implies quite the opposite. Successful businesses today come in all shapes – the key is that the business focuses on a niche, it gives the most vocal early adopters ownership and involvement, and that its employees are motivated by desire for a remarkable product.

This favours a variety of ownership structures – micro- enterprises made up of passionate geeks, employee owned businesses where everyone cares, consumers with an ownership stake in a business . . .

These and other engaged, responsive and collaborative ownership models are perfectly suited to creating remarkable products for otaku driven tribes.