Katrina Scotto di Carlo - How Is the Gig Economy Changing the Nature of the Corporation’s Relationship with its Stakeholders and its Role in Society?




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Jun 19, 2019
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Katrina Scotto di Carlo - How Is the Gig Economy Changing the Nature of the Corporation’s Relationship with its Stakeholders and its Role in Society?

Creative leader in business strategy takes an innovative approach and uses storytelling to answer this month's Salzburg Question for Corporate Governance

This article is part of the series, the Salzburg Questions for Corporate Governance by the Salzburg Global Corporate Governance Forum

In this month’s Salzburg Global Question, creative leader and Salzburg Global Fellow, Katrina Scotto di Carlo presents a short story inspired by Socratic Dialogue. While the characters and dialogue are fictional, references to news stories and businesses are real.

They were meeting in the Chinese Room of Schloss Leopoldskron. The moderator, Ed Finnery, had arrived a few minutes early as was his custom. Ed lowered the shades on the Untersberg mountain, which was standing at attention just beyond the windows, and adjusted the overhead projector. While the others were still getting settled, Ed looked at the faces and screens gathering in the dim light. At 78, Ed realized with some tenderness that he was nearing the last years of his leadership. To his right was Brian, a 37-year-old CEO. The computer to his left wasn’t even a year old. But Ed was still in charge for a reason. That’s the thought that rescued him from overwrought feelings and brought him back to his clever idea to start the meeting.

Normally, Ed would start the meeting with a hypothetical. He used it like a lasso to wrangle diverse ideas. But this time, he came bearing a scrap of dialogue from Kurt Vonnegut’s debut novel, Player Piano.

Ed popped the cap on the dry erase marker and moved his hand into the light of the overhead projector, writing silently on the clear plastic film, “If it weren't for the people, the god-damn people…always getting tangled up in the machinery. If it weren't for them, the world would be an engineer's paradise.”

Ed sat back and gave the members time to absorb the line. “This is dialogue from a fictitious character in Kurt Vonnegut’s 1952 novel, ,” Ed said before lifting his eyes, “And it struck me because…I’ve felt this way about my employees over the years.”

The computer barely let the statement land before admonishing Ed, “You better be having those thoughts or else you stop automating and become irrelevant.”

Ed immediately hoped that the more moderate voices at the table would still feel welcome to speak despite the computer’s arrogance on full volume. “Well, yes,” Ed slowly began, “sometimes I get jealous of those gig economy schemes. No salaries or pensions or liability.”

When Brian leaned forward to respond, Ed knew the discussion had caught air. “I was just talking to the CEO at Airbnb and, sure, they get considerable benefits from the gig economy, but there’s headaches, too,” Brain said cooly, “He spent all September petitioning the SEC for rule changes so he could give equity to the Airbnb hosts. When your business model is uncharted, you have to innovate on product and model until the world catches up.”

This was the opening Ann needed. “While I applaud Airbnb’s benevolence in this case, there are other corporations hoping the world doesn’t catch up,” Ann said in her measured academic tone. “Walmart, for example, does one worse than the gig economy. They don’t just outsource worker benefits and retirement to the tax payers, they’ve historically called the local police precinct instead of fully staffing store security,” she said with minimal emotion, “They outsourced everything, including the hourly wage.”

“But, I’m sure Walmart shareholders appreciate the shrewdness of leadership,” Ed rebutted. (Ed knew his role was to represent the traditional capitalist at the table.)

Ann smiled at Ed knowingly, “Yes, maybe this quarter, but there’s liability in not investing in employees. Uber has 96% driver churn. Also, the gig economy as a whole could be a reputational liability when you hear stories like Walmart or see drivers protesting Uber.”

“But this quote is talking about people getting tangled in the machinery,” Brian paused to let everyone re-read the quote hanging in the sky portion of a wall-sized painting. Ed wanted to tell everyone that the small tear in the canvas was caused by shrapnel from WWII, but held his tongue while Brian continued, “If people are getting tangled in the machine, then the machinery is poorly designed. The people are always the customer.”

Ed felt the floor with his feet. This was the machine that he had built a life upon. In his younger years, he would’ve snarled back something about personal responsibility, but he had earned perspective and knew both things could be true. In fact, he may have had to work harder because the machine was poorly designed.

“Yes, the people are always the customer,” Ed graciously repeated aloud. 

“Well, the customer needs healthcare and retirement and a universal income,” Ann responded. Her command reassured Ed, like looking at a compass even when you know which way is north. 

“But are healthcare and retirement the responsibility of the firm? In 2019?” Ed asked to the whole group, his eyes settling on the moody teenager, sitting on their legs at the end of the couch. 

Alex looked up from their phone as the same time Ed’s gaze landed. “You’re talking about engineer’s paradise? That’s sure as shit not going to have any hierarchical structures. Self-maintaining distributed systems will replace all of…this,” Alex said matter-of-factly while waving their hand carelessly towards everyone else in the room.

Ed exhaled and allowed his rising indignation to fall with a small wish that Alex be more of a team player, “Alex, do you mean blockchain?”

As soon as he said it, Ed knew he was a caricature of himself.

Thankfully, the computer stepped in, “Affirmative. Software is eating the world.”

Just then the bulb died on the overhead projector. Nobody could see Ed grinning from ear-to-ear.

What do you think? 

How is the gig economy impacting the nature of the corporation’s relationship with its stakeholders and its role in society? Have an opinion? We encourage our readers to share your comments by joining in the discussion on LinkedIn.

Katrina Scotto di Carlo is currently consulting while researching her next opportunity. In 2007, she co-founded a decentralized technology platform to help independent merchants collaborate at scale. She was also a member of the City of Portland’s Socially Responsible Investment Committee and was instrumental in forming the landmark decision of the Portland City Council to divest from all corporate securities in April 2017. She has spent the last decade advocating for dialogue and deep collaboration through policy, public speaking, and as a social entrepreneur. She holds a B.A. from the University of California, Berkeley. Katrina is a Fellow of Salzburg Global Seminar.

The Salzburg Questions for Corporate Governance is an online discussion series introduced and led by Fellows of the Salzburg Global Corporate Governance Forum. The articles and comments represent opinions of the authors and commenters, and do not necessarily represent the views of their corporations or institutions, nor of Salzburg Global Seminar. Readers are welcome to address any questions about this series to Forum Director, Charles E. Ehrlich: cehrlich@salzburgglobal.org To receive a notification of when the next article is published, follow Salzburg Global Seminar on LinkedIn or sign up for email notifications here: www.salzburgglobal.org/go/corpgov/newsletter

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