The skyrocketing cost of evil in a hyperconnected world


Today’s organizations are subject to a new range of forces that amplify the costs of evil and the benefits of good. Think of this set of forces as a ladder that people, communities, and society across the global economy are building. It’s this ladder that next-generation organizations must climb.


According to a forthcoming analysis from CSR Magazine, “being a good guy pays. The best corporate citizens list, which includes Hewlett-Packard, Intel, General Mills, I.B.M. and Kimberly-Clark, had a total return on shareholder value of 2.37 percent over three years. But the 30 worst had a negative 7.38 percent return”.

Excerpted from the always brilliant Umair Haque:

“Haque’s Law”: “In a hyperconnected world, the costs of evil explode.” Why is that the case?

What’s different, immediately, about a hyperconnected world is that information flows much faster and more freely. So it’s less costly to ascertain who’s really evil — and who’s really good. So the first force is information.

Cheap information lays the foundations for more collective action. It’s less costly to punish those who are evil. Equally important, it’s less costly to reward those who are good. Discipline is the second force.

With better collective action comes an enhanced incentive for competitors to provide what incumbents can’t; to do good where there’s evil. After all, both punishments and rewards are magnified. The third force is competition: competitive pressure by rivals to do more good, and less bad.

With greater competition comes greater probability of high-level innovation — new business models, strategies, and institutions that reinvent the deep economics of an industry, market, or sector. And so, thanks to the fourth force, disruption, the threat of fatality for incumbents grows.

With more innovation comes a greater emphasis on rule-making: the fifth force. As new disruptive innovations proliferate, regulators take a more active interest in assessing the social costs and benefits of each, and selecting for the most productive ones. Conversely, visionary organizations make new rules in their own ecosystems that alter the incentives for their buyers and suppliers to do more good, and less evil.

Ultimately, after a given threshold of connectivity, good is self-correcting, a dynamic equilibrium. Think about it this way. Wall Street banks sold the next guy toxic junk. But the next guy was selling their toxic junk right back to them. It’s the golden rule of network strategy: what goes around, comes around. When an industry or market’s connected tightly enough, doing good becomes the only game in town — unless, of course, you want to melt down catastrophically, like Wall Street did. Self-correction is the final force.”

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