Behind Social Business: A New Middle Class

Haydn
Haydn Shaughnessy Thought Leadership, Cogenuity

Posted on May 3rd 2012

Behind Social Business: A New Middle Class

So far we’ve heard the story of social business as the transfer of social media to the enterprise, and the story of social business as an extension of E2.0 tools. In both these cases you can see a logical narrative at work but no real passion play about people, change, the reinvention of work.  It’s a gap we have to fill, a story we need to tell.

In the first story, the logic is: people communicate really well and easily on Facebook, and we need that inside the company walls. In the second: we’ve been growing community-like platforms for over a decade now – it’s time we got them to function properly.

Forgive me for not finding either of these a compelling reason to transform an enterprise or begin a revolution in how we live and work. On the other hand, the transformation of the global middle class…. That strikes me as a phenomenon that is bound to play out in every company of every size.

So, some evidence, or rather informed projections. Here’s how the Wharton School summarised it back in 2008:

“Coca-Cola's newly appointed chief executive Muhtar Kent sees this market as critical to his company's future and describes the scale of the opportunity as equivalent to adding a city the size of New York to the world every three months. The World Bank estimates that the global middle class is likely to grow from 430 million in 2000 to 1.15 billion in 2030.”

Not just Coca Cola – it’s also why Unilever’s main innovations are happening in India. It’s also the reason for GE’s investment in $25 infant incubator maker, Embrace (incubators cost American hospitals $20,000). The Tata Nano, priced under $3,000 is a car for the new middle class of India. The Chinese can undercut it. The Chutakool fridge costs $70 and is extremely expensive in this context.

The interesting feature of these innovations is, naturally, their very low cost. But it is also their role in the formation of a middle class lifestyle with new aspirations for many millions of people. The World Bank’s estimates of a tripling of the global middle class by 2030 is almost certainly an underestimate.  But leave that aside. To date, as this Brooking’s Institute paper shows, the world economy has been driven by consumption within the American middle class. And the American middle class has been eagerly upframing its needs over the past forty years, happily buying into a more product-rich lifestyle. But that won’t continue.

This new middle class, from emerged countries, will define global consumption patterns and shape product  functionality and appearance in future. It is doing already though of course we are more aware of the iPhone and iPad rather than the widespread innovations taking place in feature phones globally.

The new middle class won’t exclusively define products but it will provide an alternative or diversity in product development and service expectations. This middle class does not need polish. It will make-do. It has a disposable income roughly equivalent to that in impoverished Greece and Ireland. It’s mission is to downsize, or to capture the major benefits of consumer products without unnecessary cost.

At the same time as this class rises, the American middle class is losing its secure place in the global workforce.  Many Europeans are already living with that decline, and perhaps there are more Americans out there in the same boat. By 2020, 70 million Americans will not be in a job. They will be part of a freelance workforce that will all but double in size between 2010 to 2020. We need to learn how to prospect in the midst of much more uncertainty – it is very do-able but it is also very different.

Social Media Today is of course a destination where we primarily discuss how to make use of social media resources. But the big story is really about a transformation in our work lives, brought about by a need to serve entirely different markets, which will cause heightened degrees of dislocation and uncertainty that we have got to adapt to. That uncertainty will transform work in general, rather just lead to something called social.

For example, it will be more team-like but team work will be different from what we know now – teams will be formed ad hoc, from people inside and outside the firm, at very short notice, with high degrees of reliability and with exceptional levels of productivity compared to today.

In my view the importance of social business is three fold:

  1. It will allow us to  connect with each other so that we are alive to opportunity and are connected to and aligned with teams that we have worked with before, meaning we are ready to turn up for companies that need to move a new project. LinkedIn is already a recruiting ground for these teams. It is the social business team room.
  2. Social business will allow companies and employees to redefine the working day and to uncover ways that employment can begin to reward people to the uncertainty they face, and the sacrifices they make in swapping family time for work.
  3. Companies will use social business to forge entirely new levels of productivity, initially spurred by the usual marginal gains in areas like supply chain, marketing and risk management. But very soon they will realize that the price reductions that the emerged economies are capable of, require new levels of creativity and commitment. At that point I expect social business to be a defining moment in enterprise productivity.

In a nutshell social media was important but social business is vital. We really need to talk about it.

Haydn

Haydn Shaughnessy

Thought Leadership, Cogenuity

I've been writing about business and digital culture for about ten years, wrote the Convergence Culture column in the Irish Times, was formerly editor of innovation management and a partner at The Conversation Group. I currently help a select few companies to develop their thought leadership strategies. You can contact me by using my full name before @gmail.com.

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Comments

LRosari
Posted on May 4th 2012 at 2:50PM

Thanks for bringing forward these insightful views. 

Social Media elevates the inherent democratization features of the internet to a new level. Information and knowledge is at the reach of many, multiple voices can be heard and interactive global discussions fuel multiple perspectives.

All good for business and societies.

mariasconsulting
Posted on May 10th 2012 at 4:37PM

Thank you Haydn for pulling this interesting topic together.  Social media is transforming just as the middle class and business evolves.  i look forward to your future posts.