Capitalism 2.0 Grapples With Youth Unemployment
by Elizabeth Haas Edersheim

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The Drucker Global Forum, held this month in Vienna, engaged more than three hundred people in envisioning Capitalism 2.0, redefining roles, responsibilities, and management to better address the 21st century. By the end, I felt more optimistic about business and social enterprises than I ever have.


We pondered the basic question that Peter Ducker often asked when he worked with managers: “What is needed?” And we took on the tougher question that Drucker used to close every conversation: “What are we going to do about it?”


What is needed?


No matter what their ages or backgrounds, participants agreed that the foremost challenge around the globe is youth unemployment.


Lynda Gratton  of the London School of Economics  arrived in Vienna from the World Economic Forum in Dubai, where experts  warned of daunting jobless numbers. “If you have youthful unemployment in Spain or Greece  rapidly coming north of 40 or 50 percent,” Gratton said, “there is unrest.”


We can prattle on about the spread of democracy in the world, but if we don’t address youth unemployment, democracy will retrench.   Indeed, we risk more autocracies and extremist governments to deal with the rising tide of disaffected teens and 20-somethings.


Paul Polman, CEO of Unilever, described witnessing a haunting scene upon returning to Newcastle, a city built on steel and coal:  “For the first time in my life, I saw second-generation unemployment.” He explained that this generation of young people had never seen their parents work. In fact, the only path out of misery they could see was having a baby – because that, at least, seemed a tangible possession.  Yet as young, jobless parents, they found themselves further mired in poverty.


“That galvanized me to do something more than have a brilliant career and make a lot of money,” Polman said. The challenge, he conceded, is enormous.


The angst of  young people was evident in the forum’s annual  student essay competition.   Of the 101 essays submitted, more than 90 focused on the lack of jobs.  Most also called on the youth themselves to invent jobs and start businesses, yet  lamented that such skills aren’t valued by their parents or taught in school.


All across the conference center, in a babble of English, German, Mandarin, Korean and other languages, participants grappled with the implications of youth unemployment.  The biggest issue the world faces now is not sustainable growth, the troubles with the euro, or indebted countries with no reserves. It is the rift between the youth and the rest of society, which stands to tear apart the social fabric.  And we have no solutions, not even realistic hypotheses for ending the unemployment of the next generation.


Ironically, this is the same issue Peter Drucker wrote about in his first book, The End of Economic Man –  the issue he credited with enabling Hitler’s  rise to power.



What are we going to do about it?


Creative thinkers and doers—from chief executive officers of multinationals to unknown masters of start-ups, from students to social enterprise champions—proposed solutions in Vienna. There was a resolute sense of “we” in every conversation. Again and again, they called for abandoning  tired traditions and charting new ways.


The large corporate CEO:  On his first day as Unilever’s CEO, Paul Polman stopped quarterly reporting to analysts.   That may sound counter-intuitive for one of the world’s leading publicly-held companies – one that is beholden to shareholders – but Polman  wanted to send a strong signal about priorities.


“I have better things to do with my time than report every 76 days about the weather impact, et cetera,” he said. Unilever has set as its goal doubling revenue and halving its carbon footprint over the next five years. The two are working together. Unilever has been able to modify its outdated, bulky pension system to invest money in youth training and cross-internships with not-for profits including Oxfam and  Forum for the Future, and so on.  Unilever also started an apprenticeship program based on the German model, offering a combination of jobs and training.


The result? Young people are learning from internships, apprenticeships, and training programs, positioning themselves to participate in the business world. Stockholders are having conversations about the long-term, for the company and for society. And consumers like what Unilever is doing and are buying more products.


Martin Curley, director of Intel Labs Europe, described the impact of opening Intel’s  innovation process to universities and other companies:  “When we let youth participate, they not only gain experience interacting with a corporate organization but also have an impact on results.” This more open innovation process with student input drove growth at what had been a flat company for years.


Social entrepreneurs. Bill Liao was one of many social entrepreneurs who spoke passionately about how people around the world are using well-crafted business practices as a force for good. For example, there’s a need for talented computer coders. One of Liao’s firm’s projects, named CoderDojo, is a movement that enlists volunteers to teach children to understand computers and code.


Since coding is a language skill, children who learn early become what Liao dubs “coder poets,”  who can get more impact from fewer lines of code. Society gains adept, top-notch coders, and the children gain a foundation for marketable skills. “Everything is free on every level,” Liao marveled.  “We don’t work for money, we work for impact, and it works!”  He’s not kidding.  Because CoderDojo is a movement without administrative fees, salaries, or costs of any kind, it doesn’t even have a bank account.


Academics. Nobel Laureate Dan Schectman of Technion Israel Institute called for sophisticated training to start early. He teaches kindergarten students physics:“This is the age they can learn. This is a language they understand and will grow with them.” He also teaches engineering students entrepreneurship—a class that is continually over-enrolled.  He talked about the need for entrepreneurs to recognize that ideas are not enough—they need to be managed.  He is helping kids be entrepreneurs and job creators.


Startups. Speakers talked of startups building businesses, all on the new model of cross-organization resources seeking high impact.   For example, Etventures is a place for large corporations to take their ideas to be nurtured and built up as innovations.  Qwalify is a site for individuals to find their strengths and be matched with organizations that need those skills – a matchmaker for employees and employers. Young thinkers are powering these developments, and every success grows the economy and the employment base.


Engaged citizens. Citizens, led by the young, are playing vital roles in creating   social change, such as fighting corruption.  They’re harnessing the transparency offered by the web and social media. John Quelch described a video of a man destroying his defective refrigerator, which has been seen 170 million times in China. He spoke of a fatal train derailment that could not be obfuscated by the authorities because images went viral on YouTube. Efforts like this motivate young people to participate in organizational life and sharpen practical skills.


Consultant Tammy Ericson described how, in these times, everything is visible to everyone, which brings to mind another Drucker quote:  “I just look out the window and see what is visible—but not yet seen.”


What is visible but not yet seen is the power of ordinary Chinese college students to thwart corruption. . . of young entrepreneurs crossing organizational boundaries and building bridges to what used to be unimaginable. . .  In short, organizations and citizens, young and old, are creating a new social contract, which will form the basis of Capitalism 2.0.



Elizabeth Haas Edersheim , author and consultant, is founder of NYCP – a management lab –  and architect of The Elements of Management Effectiveness, ThEME, available as an iPad app and in a customized version reflecting quotes and ideas from the Forum .  She worked with Peter Drucker in the last years of his life and authored The Definitive Drucker

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