Social Innovation: Organizations and the Ongoing 21st-Century Transformation of Society

by Bernie Miller

In May of 1994, Peter Drucker wrote a broad-ranging article for the Atlantic Monthly which he called The Age of Social Transformation weaving together observations which, 26 years later, seem remarkably prescient. One passage is worthy of special note:

“The twenty-first century will surely be one of continuing social, economic and political turmoil and challenge, at least in its early decades. What I have called the age of social transformation is not over yet. And the challenges looming ahead may be more serious and more daunting than those posed by the social transformations that have already come about, the social transformations of the twentieth century.”

(p. 21-emphasis added)

Looking back from the present —2021— this observation is remarkable. Drucker was one of the first, and few, that regarded the organization — whether a for-profit corporation, nonprofit organization, a hospital, a university, or a government department — as an important social institution. More and more, we organize our lives as participants in organizations. Rather than regarding organizations such as corporations solely as economic institutions to create wealth for shareholders to trickle down to others, part of the solution to the social, economic, and political turmoil of the twenty-first century is to recognize the importance of organizations as the key intermediary between humans, the economy and well-being.

A common denominator of all organizations is the need for better and more pro-social leadership, board governance and management, and collaboration.

When we think of management, the first thought is often business management. Business management took its original form from military organizations and the command-and-control approach. Until the post-war period, there was no sociological study of management. The notion was very simple, the boss gave orders and subordinates carried out the assigned task.

In the postindustrial, knowledge economy where knowledge and information is the key factor of production, the command-and-control model rarely fits the circumstances. People are not merely machine operators but are now also the means of production.

Marx saw the separation of the worker from the ownership of the means of production as giving rise to inevitable class conflict. This has not happened and in a knowledge economy, it cannot. The greater risk is the conflict between knowledge workers and other workers and nonworkers, a scenario that is playing itself out in real-time, for example in the United States between Democrats and Republicans.

In the post-Covid-19 era, where changes to the nature and locus of work is dramatically changing, the role of organizations will also change. For good or for bad, between 1990 and 2020 the organization where people worked in many cases also became their main place in society, their community, and where they acquired a sense of class consciousness. But as the nature of work changes, this too will change.

The Revival of Community?

In the 1990s to recent times there has been a measurable decline in community participation, a phenomenon well documented in Robert Putnam’s book, Bowling Alone (2000). The rise of global competition, a sense of 24/7 work, urban and suburban sprawl and the dominance of business enterprises and other organizations as the chief organ for social connectedness, and therefore the main community for workers, contributed to this. To Putnam, the issue was a material decline in social capital which threatened social cohesion.

In the coming era, social capital may take on as much or more importance than financial capital. Social capital is a set of shared values and a sense of community that allows individuals to work together for a common purpose. Putnam attributed changes in the workplace of the 1990s as one of the causes of the decline in social capital.

Will the post-COVID-19 era, where the bonds of the physical workplace will likely be less, trigger change? Will people be able to spend less time commuting and more time connecting? How will organizations and workplaces adapt? Is there a new and enhanced role for the Community?

While there is yet no clear prescription, the diagnosis found in Drucker’s article from 1994 still holds:

“The old communities–family, village, parish, and so on–have all but disappeared in the knowledge society. Their place has largely been taken by the new unit of social integration, the organization. Where community was fate, organization is voluntary membership. Where community claimed the entire person, organization is a means to a person’s ends, a tool. For 200 years a hot debate has been raging, especially in the West: are communities “organic” or are they simply extensions of the people of which they are made? Nobody would claim that the new organization is “organic.” It is clearly an artifact, a creation of man, a social technology. But who, then, does the community tasks? Two hundred years ago whatever social tasks were being done were done in all societies by a local community. Very few if any of these tasks are being done by the old communities anymore. Nor would they be capable of doing them, considering that they no longer have control of their members or even a firm hold over them. People no longer stay where they were born, either in terms of geography or in terms of social position and status. By definition, a knowledge society is a society of mobility. And all the social functions of the old communities, whether performed well or poorly (and most were performed very poorly indeed), presupposed that the individual and the family would stay put. But the essence of a knowledge society is mobility in terms of where one lives, mobility in terms of what one does, mobility in terms of one’s affiliations. People no longer have roots. People no longer have a neighborhood that controls what their home is like, what they do, and, indeed, what their problems are allowed to be. The knowledge society is a society in which many more people than ever before can be successful. But it is therefore, by definition, also a society in which many more people than ever before can fail, or at least come in second. …

Who, then, takes care of the social tasks in the knowledge society? We cannot ignore them. But the traditional community is incapable of tackling them.”

Solving this will be an important step in answering the question, what causes improved social well-being?

With distributed workforces, the changing nature of work, the rise of the independent worker, the gig economy and the isolation and dislocation caused by COVID-19 the challenge takes on a new urgency. Community may matter, again.