This article was originally posted in the World Economic Forum blog.
No matter where you are on the political spectrum, for capitalists, free enterprise is sacred and an inherent good. But what if we looked at free enterprise another way, and asked What is the role of freedom in the corporate setting? And how do levels of freedom affect the bottom line?
Freedom is widely accepted as a basic human right in our societies. Yet while strategists and organizational experts have explored many forces that drive success, they have paid too little attention to the impacts and implications of freedom. As leaders converge here in Davos for the World Economic Forum Annual Meeting – in a year during which we have seen an unprecedented quest for freedom in all walks of life – it is hard to have a conversation about “The Reshaping of the World” without discussing freedom. The Forum has reported that income inequality and social unrest are the issues most likely to have impact on the world economy in the next ten years in its Global Risks 2014 report — demonstrating the need for business to get into the freedom business.
Research into how freedom affects business performance reveals that the right kind of freedom can indeed underpin competitive advantage, across different measures of financial performance, innovation and long-term success. This is not an abstract notion. There is a clearly defined structure – “freedom from” and “freedom to” – through which companies need to approach the quest for freedom.
“Freedom from” is a necessary condition for success in life, society and business. It speaks to the liberation of individuals from hierarchy, oppression and stultifying rules, whether from a tyrannical government or from a top-down corporate management style. Relationships created by “freedom from” have the potential to be open and two-way, because power is appropriately distributed, information is shared and decision-making is inclusive. “Freedom from” can shape the space for multiple actors to make broad contributions.
But “freedom from”, in and of itself, is not sufficient; while empowering to individuals, it doesn’t establish moral and ethical frameworks in which to operate. “Freedom from” needs to be followed by a meaningful journey towards “freedom to” – the shared condition where we are inspired to act in the common interest. “Freedom to” is alignment towards shared objectives and mutually positive outcomes.
The breakdown of traditional power structures is leading to a rise of “freedom from”, leaving behind a power vacuum as old controls wither. We see it in the Middle East – where the Arab Spring was a manifestation of the powerful drive for freedom – but also in the start-up culture, among millennials who want freedom from conventional corporate trappings.
But how do we contend with – and benefit from – this abundance of newfound freedom?
Companies need to fill that vacuum with “freedom to” if they are to create a competitive advantage. For example, organizations can increase employees’ choices about what projects to work on and reward high performers with additional responsibilities in their areas of interest. In so doing, leaders can relocate freedom from something conferred externally to a force that arises organically.
Organizations need to start viewing relations with all stakeholders – employees, customers, supply chain partners and even communities – through this lens of “freedom from/freedom to”. Business, after all, is about relationships – relationships with employees, customers, supply chain partners and other stakeholders. In the current economy, business interactions are no longer just transactional. They’ve become personal. Which is precisely why freedom can be a powerful guide to getting those relationships right and creating long-term economic value.
Today, freedom – particularly “freedom from” – is on the march. The interdependencies of today’s business, culture and communications expose us to the freedom of others, increasing our demand for the newfound freedoms we see others exercising. Technology is a great liberator, powering interactivity and commerce that support the rise of “freedom from” in our business and personal lives as never before.
No organization can ignore that change is underway, any more than a government could ignore the uprising sparked by a Tunisian fruit vendor in 2010. Companies that swim against the tide of history, that invest in more powerful controls and erect walls to keep freedom at bay, will find their smartest minds, most loyal customers and most valuable partners drift away to seek freedom with others.
On the other hand, those enterprises that devote themselves to fostering “freedom to” will be best suited to generate sustainable growth that is resilient over the long term. It won’t come easily. But the only option that can inspire behaviour that underpins organizational growth and resilience at the same time is unshackling superfluous controls to foster “freedom from” – then embedding and scaling the human values that animate “freedom to”.