Next Generation Enterprise Design

Despite increasingly urgent signs that the twenty-first century will be one of ongoing planetary-scale crisis, the world of business – incongruously, blindly – continues following a paradigm of enterprise design little changed since the nineteenth century. Extractive capitalism centers the large, publicly traded corporation and its overarching goal of profit- and share-price maximization for shareholders, regardless of the consequences. Since the vast majority of stock-market value is held by the wealthiest, this norm might be phrased differently: corporations are in the business of creating more wealth for the wealthy[KK1] , no matter the impact on workers, society, and the planet.

This outdated paradigm continues to hold companies in its iron grip, despite the systemic crises threatening humanity and the natural world. Yet what we term Deep Enterprise Design remains largely undeveloped territory as the deep level of transformation required to create Next Generation Enterprises. This design process is about transforming the underlying structures of who holds power and toward what end. It’s about transforming ownership – a fundamental yet invisible issue that lies behind the workings of our economy, on which too few focus. 

For a democratic economy to thrive, we need a new paradigm of enterprise design, where serving life – not enriching the elite – is at the center. It’s time to make the profit-maximizing, capital-controlled corporation obsolete – and to support the growth of enterprises designed to support widespread well-being and sustainable ecosystems. At The Democracy Collaborative, we call this field of research and development Next Generation Enterprise Design. 

Our project is to develop the field of Next Generation Enterprise Design more broadly. To articulate the need for and emergence of a new paradigm of enterprise; outline the basic essence and building blocks of this paradigm in the five elements of Deep Enterprise Design (purpose, ownership, governance, finance, networks); develop a  typology of next generation enterprise models; generate new approaches to solving the challenge of exit; and share the best models through analysis and case studies.

Deep Enterprise Design

Next Generation Enterprises take many forms; what they share are underlying structures that have been democratized – designed to serve the many, not just the few. AT TDC, this work is led by Distinguished Senior Fellow Marjorie Kelly, who brings to this work more than twenty years of experience in Deep Enterprise Design, beginning with her 2001 book The Divine Right of Capital (read introduction here) and her work as cofounder of Corporation 20/20 at Tellus Institute, which brought together 100 experts to explore corporate design for a new era. She traveled the world to find existing new models of ownership – enterprises as well as land and housing models – which she profiled in Owning Our Future, where she first identified the five core elements of deep enterprise design. These have since been taken up in economist Kate Raworth’s Doughnut Design for Business tool, used by hundreds of businesses and business schools internationally. 

Next generation enterprises reimagine these core design elements.

Redesigning Economic Power

By reimagining these design elements, thousands of forward-looking businesses are already becoming next generation enterprises that make serving life – not enriching a financial elite – their mission. Among these are Patagonia, whose founder Yvon Chouinard donated $3 billion in shares to trust and nonprofit ownership; the enterprise is now a dedicated engine for advancing sustainability, where “Earth is now our only shareholder.” There’s 100 percent worker-owned Recology, a billion-dollar waste-hauling and recycling business whose mission is “a world without waste.” Tony Chocolonely, a Belgium chocolate maker, created shares with special rights to ensure the company holds true to its purpose of making the chocolate industry slavery-free. 

At TDC, we identified some of the best Next Generation Enterprises – those that are mission-driven as well as employee-owned. In the United States, we found and convened over 50 of these enterprises (including King Arthur Flour, Eileen Fisher, EA Engineering, Amicus Solar Co-op, many others) delivering life-enhancing products and services, while sharing power and wealth creation broadly among workers or a larger community of stakeholders.

Democratic Ownership

If we are to shift to a truly democratic economy, two great processes are needed. One is a great ownership transition. The other is building a Next System of Capital. These structural and cultural processes can move us away from an economy designed primarily to benefit wealth holders to an economy for all of us. (Who Is an Economy For? - Instagram)

The challenge is to move away from capital ownership toward democratic ownership of core economic institutions, including business enterprises and financial institutions, public utilities and health care, land and housing, and the digital platforms and infrastructures that are central to twenty-first century life. The seeds of these institutions exist all around us. Our work explores four critical transformations for the next system:

Employee Ownership

The Democracy Collaborative pioneered work here with our leadership in developing the Evergreen Cooperatives of Cleveland, Ohio, a group of worker-owned cooperatives supported by anchor institution purchasing, and networked together for long-term collective success. We also led the design of the Fund for Employee Ownership, housed at Evergreen, which purchases firms and converts them to worker ownership; it is a demonstration project to show the power of capital in more rapidly advancing worker ownership. Our five-year project Fifty by Fifty gathered many players in the employee ownership space to together envision and advocate for expansion of worker ownership. Worker ownership – along with other approaches like anchor purchasing and local finance – is central to our work on Community Wealth Building, a local, inclusive approach to economic development that we pioneered, now gaining traction around the world.

For more on employee ownership, visit Fifty by Fifty, an archive featuring reports, case studies, and news stories about employee ownership.

Democratic Public Ownership

One of the institutional forms experiencing a resurgence and rebirth is public ownership, which we define as assets, services, and enterprises that are owned collectively by all people in a specific geographic area, and governed/managed either directly (i.e. commons based approaches) or through representative structures (i.e. government at various scales). This includes renewed energy and activism around rejecting and defeating privatization and corporatization; efforts to reverse privatization and bring services back under public control – a process commonly known as remunicipalization; advocacy around the use and disposal of assets and enterprises that are nationalized during times of economic crisis, including demands around “buyouts, not bailouts” when government interventions are being considered; and proposals to expand public ownership into new sectors and industries to deal with pressing social, economic, and ecological challenges – such as equitable internet access and fighting/mitigating climate change. Through our research, policy, and communications functions, we support and advance these efforts in the United States and around the world.  

However, there is little appetite amongst many advocates to simply recreate traditional forms of public ownership, or to go further down the road of corporatizing public enterprises. Rather, in recent years a new alternative known as “Democratic Public Ownership” (DPO) has emerged. It is rooted not only in a critique of privatization and neoliberalism, but also of traditional forms of public ownership and statism. In particular, DPO rejects the State-Owned Enterprise (SOE) model prevalent around the world and throughout the twentieth century for being overly top-down, bureaucratic, managerial, centralized, and alienating. It also opposes neoliberal inspired efforts to “reform” publicly owned enterprises by enshrining private sector aims and structures (such as profit maximization), as well as “pragmatic” approaches to (re)municipalizing private enterprises that focus on corporatization (e.g. organizing publicly owned companies like private sector corporations and removing them from public control and accountability) and market liberalization.

As an alternative, DPO seeks to design and implement new governance and management structures that embed genuine forms of worker and community participation and control, accountability and transparency, and democratic planning. Having helped coin the term – along with our national and international allies – in the mid-2010s, we now play a leading role in the movement by advancing, refining, and promoting DPO both conceptually and in practice. 

Dana Brown at TDC is a national leader in envisioning and working for democratic, public ownership of pharmaceutical production – as well as bringing the concept of public ownership to the healthcare sector more broadly.

Learn more about DPO our reconceptualization of public ownership in the areas of healthcare, remunicipalization of water and utilities and community control of land and housing. 

Community Ownership of Digital Infrastructure

A small group of large platform companies – sitting at the heart of the transactions and engagements of the digital, and increasingly, the physical economy – have become the robber barons and rentier giants of our age. Their main focus has become the collection of rent (financial extraction) while fending off potential competitors and defeating regulations and public policies aimed at curtailing their power. They are also linked to numerous negative social, economic, and political outcomes, both independently and in conjunction with the collection and use of data.

The challenge is to liberate the democratic and enlivening potential of the digital platform from the logic of concentrated corporate ownership and profit maximization. Crucially, while platforms have encouraged a sense of technological inevitability, the way that our digital economy is run is neither fixed nor certain. Platforms are legal structures as well as digital communities; we can recode and democratize both, changing how they operate and in whose interests. We can disperse and democratize economic coordination rights currently monopolized by today’s platforms, ensuring private power is not beyond democratic regulation. Central to this will be a new architecture of ownership and control. Learn more about our work in this area. 

Next System of Capital

For a democratic economy to take shape, it requires a Next System of Capital. A system that puts maximum wealth for the few at its center is no longer viable. We need a finance system designed for the purpose of human and planetary well-being. To explore this concept, The Democracy Collaborative gathered 15 experts in a July 22, 2022, convening at Boston University’s Global Development Policy Center. 

We began with a simple premise:  We cannot continue to operate our economy based on maximum growth of capital. 

We began to sketch a set of pathways that could help us move toward a Next System of Capital. Our meeting took inspiration from the Stabilization Wedges of carbon reduction, which has become a paradigm for its field – showing how seven existing approaches and technologies could each serve as wedges, which together could dramatically reduce carbon emissions. 

We aimed to do something comparable: to show how growing use of existing democratic finance approaches could reduce wealth concentration and create broadly shared wealth and protect the public good. We identified seven pathways (see figure), which, working together, would move us toward a system where capital would no longer be in control but in service to life. 

We have advanced finance work in other ways, exploring public banking and the need for a new ecosystem of banking, articulating the broad role of capital in advancing worker ownership, working with the Soros family office to show how worker ownership transitions can be optimal for workers: