The following thoughts may serve as a contribution to the discussion about the policy frameworks that may be needed for economies to thrive in an Entrepreneurial Society:

1. Downscale rules and regulations

Rules and regulations have been introduced over time to ensure quality, safety and consumer protection. However, bureaucratic red tape slows down businesses dramatically. The Sharing Economy demonstrates that a lot less regulation would suffice. A middle ground between laissez-faire and the current status seems advisable for public policy along with the creation of a level playing field for all market participants. If businesses and the economy are to thrive, bureaucratic red tape needs to be dramatically curtailed – the red tape created by legislation as well as self-inflicted red tape caused by information and controlling overload within companies. There is an essential need to move from a society of control to a society of trust – not just in management, but overall.

2. Rethinking taxation and social insurance for low income groups

For many the only option to find work will be to become freelancers. Economies that wish to maintain a living standard that will enable growth will need to rethink their taxation and social systems. Many countries still tax people on earnings below the poverty line or even push them below the poverty line through taxation.

Rather, small incomes would need to remain untouched and taxation would need to start at higher income levels. For societies this would present a far less expensive option and would ensure that people create jobs for themselves and continue working, earning their own dues without the need for government welfare programs. While insecure contingent jobs will increase further, a new social contract will be needed because existential fear will not enable economies to grow.

3. Don’t allow credit crunch to derail growth

Often SME owners and freelancers find it difficult to raise funds for their businesses or to purchase a residence: banks rate their income as too insecure. SMEs and startups may turn to crowdfunding. A recent study of crowdfunding platforms showed that their fees and conditions are costly (currently up to 14 percent for the funds received in addition to yearly dividends). Lawyers and auditing services add to these costs. Even for high risk investments this seems too expensive. If we pin our hopes on startups and SMEs to induce investment and growth, then public policies will need to address these issues.

4. Prevent tax leakage

Many countries have closed their doors to platforms like Uber and Airbnb because their  current legal framework is geared toward the stabilization of pricing or securing minimum standards in quality, security and income. Companies in the Sharing Economy charge an average of a 15 to 30% commission on the earnings that people make on their platform, which extracts value from the countries where the services are rendered. Should platform companies commit to setting up local branches so they can be taxed on their local profits and provide quality assurance to consumers locally? This would ensure all market participants and users of an infrastructure in a country contribute to the upkeep of those services.

5. Education and skills gap: We need to teach the adults!

The willingness to retrain and upskill will be necessary for future employability. Linear predictions of masses of unemployed people imply that people will resist learning how to do new jobs. Historic evidence demonstrates otherwise: Throughout the industrial era, people sought education whatever their role.

Graduate-level education for adults should be of similar significance as educating children, as well as be affordable if we seek to qualify an existing workforce and to make knowledge operational quickly.

6. The age of individual uncertainty: risk-taking and effort should be rewarded

For societies to prosper, conditions need to be rewarding for many, not just for a handful of people. In extractive societies the societal layers are impermeable; therefore, effort isn’t rewarding and so stops. Inclusive societies that reward risk-taking and hard work have enabled economies to thrive because people were able to move upward socially [3]. For engagement and entrepreneurship to be sustained in an economy, prospects need to be provided.

7. Disrupt Yourself – become a network, be part of networks

In today’s highly complex and fragmented world the network is the most successful organizational form. Therefore, governments and businesses are well advised to work with and in networks. In networks, changes can be created collaboratively and will be endorsed instead of imposed. “Cooperation creates prosperity, closed systems deteriorate” is the distilled analysis of Alexander Pentland [4]. In a networked economy it is no longer only about “competition is good for business”. Today, “cooperation is good for business“.

About the authors:

Isabella Mader is Director of the Excellence Institute and university lecturer at several universities mainly in the fields of Knowledge Management, Information Science and IT Strategy. 2013 she was awarded “Top CIO of the Year”. Her current research focus lies with Network Economy and Collaboration.

Wolfgang Müller is Deputy Chief Executive Director and Chief Operations Officer of the Vienna City Administration. He has a Masters degree in Law and a Master in Business Administration.

The opinions and views expressed in this article are those of the authors, and do not necessarily reflect those of the institutions to which they are affiliated.

[1] Pofelt, Elaine; Shocker: 40% of Workers Now Have ‘Contingent’ Jobs, Says U.S. Government. Forbes, 25 May 2015. [Online]: http://www.forbes.com/sites/elainepofeldt/2015/05/25/shocker-40-of-workers-now-have-contingent-jobs-says-u-s-government/

[2] Deaton, Angus; The Great Escape: Health, Wealth and the Origins of Inequality. Princeton University Press, 2015

[3] Acemoglu, Daron; Robinson, James A.; Why Nations Fail: The Origins of Power, Prosperity, and Poverty. Crown Publishers, New York, 2012.

[4] Pentland, Alexander; Social Physics. How Good Ideas Spread – The Lessons From A New Science. The Penguin Press, New York, 2014.

Some people don’t get the idea of the plural sector, perhaps because it has been so marginalized by the great debates over left versus right—private sector markets versus public sector governments. Where to put the plural sector, comprising all these community-based and other associations that are neither public nor private? NGOs, clubs, churches, unions, mass movements, social initiatives, and so on? Wolfgang Műller, Chief of Operations of the City of Vienna, who had read my book about Rebalancing Society, got the idea—in principle. Then he experienced it in action.

I met Wolfgang last Wednesday when he organized a workshop I did with his colleagues at the City of Vienna, before I attended the Global Drucker Forum in that city. He recounted a story about how this understanding in principle suddenly became an understanding in practice. I asked him to write his story down.

WM:  On Friday September 4, I was sitting in my office in Vienna City Hall when I learned on twitter that refugees from Syria and Afghanistan, some with children, had decided to walk the several hundred kilometers from Budapest to the border of Austria, determined to get to Germany, their land of hope.

Suddenly, within hours, Vienna’s train stations became organized as hubs for thousands of refugees—buses in, trains out. In such a situation medical care, food, and overnight shelter had to be organized, usually in association with NGOs such as the Red Cross.

While my staff was coordinating the crisis management network, I needed to get a hands-on impression of what was happening. I went to the new central station, where I saw all kinds of people helping with translation, providing medical aid, and distributing blankets, clothing, and food. Among them was a group wearing shirts emblazoned with “Sikh Help Austria”; they were dishing out warm meals from big pots that they had brought.

Something truly amazing had happened. Citizens young and old, some the children of immigrants or themselves earlier immigrants, decided to take action. They asked themselves what in Henry’s book is called “the Irene question”—“What can I do?”—and here they found an answer. Using social media, they organized themselves into a sort of citizens’ start up, dedicated to helping the refugees. They called it The Train of Hope (@trainofhope).

Here are some statistics: 180,000 meals were served in September alone, by 350 volunteers every day, including about 5,000 warm meals by Sikh Help Austria. (These statistics are from what could be called the management accounting “department” of that Train of Hope! Even that sprung up, as if from nowhere.)

Now, when The Train of Hope asks via social media for bread or bananas, the items usually appear within the hour: hundreds of kilos. Social media entries are updated regularly and the posts are now followed avidly by about 300,000 Austrians.

At first, we in the city administration were very surprised. But then we realized that this was not uncoordinated. It was a highly professional, high speed performance. That is when it dawned on us that here was the self-organizing plural sector in action. So we in the city administration decided to give The Train of Hope all the technical support it might need, including background support on call. We then invited The Train of Hope to join the city’s crisis management network, an offer that was accepted. I am delighted to report that this cooperation has continued to perform consistently well, with no end date yet clear.

This is a PPP of a different kind: a public-plural-partnership, agile and flexible—sharing the governing of a crisis. Why Not? Isn’t this smart government? Much has been written about the sharing economy. But this is not like sharing lodging, as in Airbnb. It is about sharing concern, and help, and hope.

I am passionate about my work for the city of Vienna, and I feel privileged to be part of these very special events. Thanks to The Train of Hope, and the contribution of plural sector as a whole, I am now even more positive and optimistic about our future. If you are near Vienna, just go and take a look.

HM: I went on to the conference the following two days. On Friday, Wolfgang sent me his email with the story. I read it late that evening. My alarm was to ring in time to get me to my plane the next morning, but I woke up earlier. What to do with the extra time? Of course: just go and take a look.

It was quiet in the station at 8 am. (Turns out that it is now cleared in the evenings so that every refugee has an overnight bed.) But I was able to walk through where several people were still there, some in family groups, many sleeping, while other young men were talking together, killing time. I asked one family if I could take a photo but a young man waved me off.

Outside, clothing and supplies were stacked up neatly in tents. I saw a rough sign that read “Refugees Welcome.”  Nearby was a plastic sheet meant to be a door. I went in: this turned out to be the volunteers’ area. A woman at a desk asked “Do you want to help?” “I’m sorry, I can’t”, I said, “I have a plane to catch.” But then I realized that I too had an answer to the Irene question: “We’re writing a blog about this.” About hope.

About the authors:

© Henry Mintzberg and Wolfgang Müller 2015. The opinions and views expressed in this article are those of the authors, and do not necessarily reflect those of the institutions to which they are affiliated.