Recently, I’ve started thinking about something Bruce used to say back in the 1980s, because it seems so relevant to what we’re going through as a country, an economy, and as businesses today. During the height of the Born in the U.S.A. craze, when Ronald Reagan dominated American politics and Bruce was a chart-busting figure on the pop-culture landscape, he ended his live shows with a simple admonition that was easy to miss amidst the screams of tens of thousands of fans. “Remember,” he’d tell the crowd, “nobody wins unless everybody wins.”
I wish more of us could remember those words today. One of the most unsettling books I’ve read in a long time is the recently published Winner-Take-All Politics, by Jacob S. Hacker and Paul Pierson. The book is unsettling not because its arguments are so unexpected, but because it crystallizes what’s been obvious for years: The story of America since the 1980s has been one of huge gains flowing to a tiny segment of the population, with the vast majority barely holding its ground. Through good times and bad, boom and bust, the richest of the rich have been getting richer, while most everyone else has barely gotten by.
Over the last 30 years, according to Hacker and Pierson, 36% of all the gains in household income went to the top one percent of the population. In this decade, 53% of all the income gains went to the top one percent.
It gets worse the closer you look. Between 1979 and 2005, 20% of after-tax income gains went to the top 0.1%, while the bottom 60% got only 13.5% of the gains. “If the total income growth of these years were a pie,” Hacker and Pierson explain, “the slice enjoyed by the roughly 300,000 people in the top tenth of 1 % would be half again as large as the slice enjoyed by the roughly 180 million in the bottom 60%.”
Now this is a blog about leadership and innovation, not about economics and politics. But what I find so unsettling about the explosion of inequality in the nation is that it flies in the face of everything I’ve learned about what it takes to build a prosperous organization.
The most successful companies I’ve gotten to know understand that they create the most value when people at every level share in the value they help to create. That’s why Silicon Valley upstarts are so committed to granting stock options up and down the ranks. It’s also why great old-line companies such as Southwest Airlines, Publix Supermarkets, and W.L. Gore are built around an “ownership culture” that shares the wealth with rank-and-file employees–and shares all kinds of data to help employees run the business.
Corey Rosen, executive director of the National Center for Employee Ownership, has been championing the power of rank-and-file participation for nearly 30 years. Back in 1981, when Mr. Rosen helped to found his organization, perhaps four million Americans owned shares in the companies where they worked. Today, the number may be as high as 30 million. ”There are literally millions of people who are accumulating more assets through employee ownership than any other form of wealth outside the value of their home,” he told me.
Employees who own a big share of their company are more likely to innovate, stay focused on quality, and hold management accountable. As some companies struggle under slipshod governance, ineffective leadership and bloated costs, organizations that build an ”ownership culture” in the workplace develop a stronger position in the marketplace. ”Companies need more people to make more decisions about more things more quickly,” he argues. ”Employee ownership is a model for that kind of engagement. It’s better for the C.E.O., too. It’s more fun to be the boss when everyone cares about the company and knows what makes it tick.”
That’s why I find our politics and social policies so mystifying today. We know what works inside our best companies–giving as many people as possible a piece of the action, allowing everyone to “share the wealth” they help to create. And yet, as a nation, we have been unable for decades to address the causes and consequences of the “winner-take-all” ethos that is skewing our economy and tearing at our society.
That’s the unfinished business of our country–and a pressing challenge for thinkers, innovators, and leaders everywhere. Remember: nobody wins unless everybody wins.
Reprinted from Harvard Business Review