3 Ways to Harness the 'New Power' That Let Airbnb, Kickstarter and Other Companies Climb to the Top
Grow Your Business, Not Your Inbox
Although the literary definition of power hasn’t changed, recent years have seen a shift in its cultural meaning. That’s what authors Henry Timms and Jeremy Heimans aim to explore in the book New Power, a window into how “new power” structures influence society, business and politics in the 21st century.
What is “new power”?
There’s a reason why the likes of Airbnb have overtaken Hilton in revenue, argue Timms and Heimans. Simple investing apps with a focus on accessibility continue to grow in popularity, even as large investment management companies seem to rest on their laurels. And movements born online -- #BlackLivesMatter, #MeToo and even the A.L.S. Ice Bucket Challenge -- have induced change on a global front. (The latter of the movements resulted in $115 million donated to the A.L.S. Association and helped in the discovery of a new gene tied to the disease.) The idea of new power is what these events have in common.
“Think about who’s coming out on top in the world right now,” Timms says. “Whoever comes to mind … chances are, they’re going to understand new power.”
New power can be thought of as the ability to channel the energy of a collective crowd, and some companies -- especially ones on the rise -- are doing this better than others. As for when this cultural shift began? Change accelerated over the past 15 years as the internet became social and enabled hyperconnectivity.
On the flip side, today’s companies are also affected by the sentiments of large groups of consumers in a way they haven’t been in the past. Exhibit A: Following the Feb. 14 high school shooting in Parkland, Fla., and the subsequent movements around it, retailer Dick’s Sporting Goods pulled assault-style firearms and high-capacity magazines from its shelves and now plans to destroy them. Exhibit B: Following the arrest of two African-American men waiting to meet a friend at one Starbucks location, the company will close its stores on May 29 to offer anti-bias training to about 175,000 employees. Widespread commentary via the internet and social media played a significant role in these decisions -- and demonstrates the sheer capacity of new power.
Here are three way to tap into new power for your business.
1. Build an authentic relationship with consumers.
In today’s new power landscape, building a meaningful relationship with the crowd is a key ingredient for business success. That’s because this type of brand loyalty often directly translates into a company’s ability to mobilize its community. Traditional power used to be largely restricted to companies with extensive funding or scale. Now it’s possible to harness the same power collectively through a distributed network of consumers, says Arun Sundararajan, professor of business at New York University and author of The Sharing Economy.
On the flip side, it’s important for businesses to recognize that the consumers they rely on now have the ability to be a powerful collective in their own right. To that end, companies should funnel energy into shaping a positive “platform culture” -- and establish the right kind of direct relationship with consumers -- in the same way that an organization with full-time employees thinks about corporate culture. “Anticipating the potential emergence of new power … should be one determining factor of how you design your business,” Sundararajan says.
2. Link a product or service to a higher purpose.
Another component of this kind of success is connecting a high-quality product or service to a sense of higher purpose. This can take forms including charitable donations, social movements or supporting small businesses.
One example? Flat reusable water bottle Memobottle was created to combat the environmental impact of single-use bottles, and each bottle sold provides one person with two months of clean drinking water via nonprofit Water.org. Memobottle was funded on Kickstarter after upwards of 6,000 backers pledged more than a $250,000. In this way, the company created a product that was seen as high-quality (a new kind of water bottle designed to easily fit into bags), linked it to a higher purpose (saving the environment and bringing clean drinking water to those in need) and -- see the next point -- mobilized its community (asked for launch help via a crowdfunding platform).
Using new power helped Memobottle rise to success -- and the product even made its way into the official gift bag at the 2016 Oscars.
3. Mobilize the community you’ve built.
There’s a final ingredient for business success in the realm of new power, Timms says, and it multiplies the returns of the other factors. This ingredient is the “participation premium” -- or the way a business encourages people to participate directly. It’s about building a “brand that people will really want to take part in,” Heimans says.
Crowdfunding platforms such as Kickstarter are a prime tool for this. If people are engaged in a product or service and feel they’re helping to get it off the ground, they have a higher stake in its success -- and they’ll also pay more for it. The problem, Timms says, is that many old-power executives don’t trust customers enough to do anything except purchase the product.
Companies such as BrewDog, an offbeat Scottish beer brand, have embraced the new approach. Community votes help the company decide which types of craft beer will be produced next, and a festival doubles as the company’s annual meeting. BrewDog launched through crowdfunding, and anti-establishment company turned customers into shareholders by offering an equity program billed as “Equity for Punks,” which further upped community involvement.
Other companies that have built meaningful user relationships include Airbnb, which encourages hosts to get together and build community, and Lyft, which offers 24/7 driver phone assistance and discounted education courses for drivers.
New power case studies from recent headlines:
Uber has a checkered history on the user relationship front, Sundararajan says. A few years ago, Uber had a much more positive platform culture, and the company was able to harness the collective power of its consumers to pressure the mayor of New York City into stepping back on regulations that could negatively impact the rideshare app. Since then, widespread controversy -- public lawsuits, executive missteps and some drivers and users feeling like cogs in a machine -- has negatively impacted both its platform culture and its bottom line.
Another interesting case study is Facebook, which was skilled at building its crowd but unable to translate that into the type of meaningful consumer relationships characterized by Heimans’s and Timms’s book. Facebook’s lack of connection with its users meant that when the Cambridge Analytica data-mining news broke, the company was hit with community backlash and the #DeleteFacebook movement.
"New power values prize transparency above all else," Heimans says in his TED Talk. "It's almost a religious belief in transparency, a belief that if you shine a light on something, it will be better." That’s one of the areas in which Facebook likely fell behind.
Most businesses runs into trouble eventually, but the question is: When those moments come, will consumers feel connected enough to defend them?