Vanishing Point

The Importance of the Social Contract in a Time of Desynchronization

Posted by Dave Baber - Oct 25, 2017 11:30:00 AM

Social Contract Go back with me for a moment to the 15th Century. It’s the Age of Enlightenment, a time marked by unprecedented progress and disruption. Information reached the masses through Gutenberg’s breakthrough printing press. Philosophers like Hobbes, Locke, and Rousseau pondered the relationship between people and government. Leaders emerged from across society, asking questions of the religious, wealthy, and aristocratic ruling classes. Citizens questioned the idea of monarchies. Scientists debated the principles of the universe.

 

While this era took place almost 600 years ago, its story resonates with a modern familiarity. Then, issues surfaced as the First Wave (Agrarian) waned and brought the dawn of the Second Wave (Industrial).  Now, we grapple with the implications arising from the shift from the Second Wave to the Third Wave (Knowledge). Indeed, much distinguishes the 15th Century from the 21st but two stand out. The first is desynchronization in a time of massive change. The second is the Social Contract – the challenge for individuals to decide what they will give up and what they expect in return as they find their role in society.

 

The Desynchronized Pace of Change

We have discussed desynchronization as the challenge arising when the pace of change happens, gains adoption and gets managed at different rates. The situation can occur anywhere, from internal groups to across broad social constructs, where they produce their own major (secondary) shifts and desynchronizations. For example, change happens faster in technology than in economics, which in turn moves more quickly than government. For each, the willingness and pace of adoption prompt a questioning of the Social Contract.

 

Employment:  We’re experiencing an imbalance between job seekers and hiring managers, and between employment supply and demand. This shift in the balance of power highlights the importance of answering questions about an expectation of payment and non-monetary benefits.

 

Economy:  The fiat-based economy is rapidly being disrupted by a crypto-currency driven through blockchain, prompting questions about the value and security of money.

 

Technology: Constant changes to the technology landscape are driven by and shapes customer preferences, demands for real-time access, and security concerns. A quick perusal of Crunchbase offers evidence that most promising new technologies have a crowd-sourcing premise at their core. As we consider this landscape, questions arise around how technologies like AI and other cognitive machines will change how we communicate.

 

Social-cultural:  Emerging consumer generations and societies continue to increase demand for customized goods and services. Questions will arise around the tradeoff between data privacy and personalization.

 

Government and Regulations:  Decades of changes to compliance demands, particularly in finance, healthcare, and employment put relentless stress on traditional benefit delivery models. The Social Contract debates around vital issues like compliance, innovation, and social responsibility show little sign of resolution.

 

Education:  Customized and nontraditional academic models will force new approaches to learning and preconceived notions of benefit. While this sector has been notoriously slow to evolve, models like Khan Academy and Smartly have begun to impact the way the physical classroom operates.

 

How to Work Intelligently in Current and Future Change

Recently, a client asked us this question:

 

How do we better understand the changing nature of our Social Contract with customers and workforce, and what do we do about it? 

 

They wanted to understand their role and chances of success in fulfilling a future Social Contract in the face of these many highly fluid, desynchronized externalities. In the pursuit of an answer, we explored plausible scenarios that could help them grasp the changes they would encounter, measure the pace of change, and develop a roadmap to achieve growth objectives by building their customers’ successes. 

 

Our journey leveraged Toffler Associates ALTERNATE FUTURES® scenario-based planning. With it, we navigated the organization through the next decade. We explored possible and unforeseen developments to formulate viable business strategies. Specifically, we examined four scenarios that would address what evolving Social Contracts could mean to their organization:

 

  • Small Players: Throughout history, ‘small players’ like philanthropists, single industries, and communities have had a significant influence. When these entities possess wealth and resources, they often are willing to fulfill societal obligations. That role tends to correlate to steady growth in high-income economies and their support for philanthropic pursuits can fulfill expectations that government and industry are unable to support.
    • The impact: Large organizations should focus their investments on optimizing the connections and value that ‘small players’ can deliver. Create strategic partnerships with those that create the most impact within their communities.

 

  • Wealth Separates: Innovation and economic growth have created an environment in which suppliers can easily compete in a variety of industries, while access to capital and resources is unobstructed. The ability of new, small, and innovative companies to create, experiment and compete for results in very few major industry players but large numbers of market participants. Companies’ increased focus on consumers and their unique demands result in a proliferation of innovation. In turn, that development is a catalyst for individuals to act independently and share wealth only with those to whom they are immediately connected.
    • The impact: A lack of consistent application of the Social Contract creates a divide between the have’s and have not’s. Companies face pressure from their customers to close the gap, ultimately creating significant impacts on pricing structures and marketing initiatives.

 

  • Isolated Communities: In an unstable economy, profits decline and deficits rise. Volatility and scarcity of global food and water resources lead to increased economic instability. These deficiencies and externalities spark innovation to create new products within localized communities.
    • The impact: We see a significant increase in the federal government’s responsibility to provide for its citizens. Industry suffers from an economic downturn and low-interest rates as the Fed attempts to infuse cash into the economy. Companies will face a heavy burden of fixed costs causing widespread restructuring and ultimately an inability for most to meet their customer’s demand.

 

  • Global Migration: Globally connected communities share knowledge and connections, powering a worldwide migration to new places in search of stability and economic opportunity. Enabled by communications technology, individuals maintain vibrant relationships with families and communities across the globe, making the world seem ever smaller. As individuals are hyperconnected to special interest groups and communities, they have more ability to export knowledge and human capital. Though boundaries blur and the world ‘shrinks,’ the nodes of communities tighten. 
    • The impact: Organizations have a more difficult time entering new markets. Trust becomes significant because customers will only recommend the companies they believe are best. Although the quality of the goods offered is essential, the experience and interaction with the brand matter most. Companies need to account for every interaction and shape a positive experience.

 

Through these scenarios, the organization was able to explore various approaches they could employ as they develop a long-term strategy for the structure, technologies, workforce, and customers. While we have no way to predict what the future will bring, we do know that understanding the Social Contract is critical to a business’s success while navigating the expansive ecosystem seen in the Third Wave.

 

It’s time to consider the expansiveness of change, the pace at which it is happening around your organization, and your role in it. 

 

Creating a Substainable Culutre of Innovation

 

Dave Baber

Dave Baber

Dave Baber is trusted by senior leaders for his approach to leading organizations through transformational change. He brings expertise in strategic foresight, design, and risk management. A certified Project Manager Professional, he leads multifunctional teams focused on delivering the needs of his clients in government and commercial companies. Dave is a Veteran having served two combat tours in Iraq and Afghanistan, and continues his service in the Army National Guard, currently assigned as a Brigade Operations Officer.

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