by Reason Wilken
In Barry Carter’s recent book entitled “Infinite Wealth”, a unique model for wealth creation is presented. Carter challenges current capitalistic ideals and offers up a more positive system of corporate conduct. In the new age, success will not be about “climbing the corporate ladder” or getting the gold watch after a set number of years. Instead, Carter says that what sits upon a person’s shoulders is far more important than what is in his pocket. Wealth will no longer be measured in terms of dollars and cents, but in I.Q. points. Brainpower, creativity and collaboration will become more important in the quest for success than hard-nosed determination and conformity to the company mold of the “ideal” employee. In fact, in Carter’s paradigm, “employees” no longer even exist. The idea of the subordinate employee has gone the way of the coal engine, and in its place is the notion of “holding partners”. Each of these holding partners functions like an independent contractor, and the more they contribute the more they gain. Knowledge is the currency of the future, and the value of an employee is determined not by their corporate rank but by the value that they add to the company as individuals.
The core concept presented throughout the book is that of “mass privatization”. Carter defines mass privatization as “a wealth-creation organization or community in which individual workers, or a small team of workers, own the specific work that they perform.” By owning the work, partners are also entitled to a substantial share of the profits garnered by the work. This system creates a symbiotic relationship between the company and its partners: the partners are driven to work harder to increase their own wealth while the company as a whole also profits.
Mass privatization may sound at first like a commission-based system, but is actually quite the opposite. An employee on a commission basis does not own any part of the product he or she is selling for the company, and only receives a percentage of the revenue he or she generates. A traditional company that pays on commission still owns the products that it sells as well as the work of its employees. When John Smith from Company X makes a large sale to Company Y, he receives a small fraction of the profit, but Company X is said to have made the sale. In this current system, John Smith is getting a comparably small reward for the work he put in to make the sale. The company itself was not involved in the actual sale of its products, yet takes home most of the revenue. Carter refers to this hierarchical system as the Vertical method of wealth creation, because compensation is directly related to the position of a person in the company. Company X gets the biggest share of revenue, followed by its CEO, Vice President, Managers, etc. all the way down to the level of John Smith. Commissions allow a company to pay an employee much less than they are actually worth, while creating the illusion that employee compensation is based directly on performance.
In mass privatization, partners own their work and are compensated in direct proportion to their contribution. In this system John Smith would be his own corporation that specializes in sales and he could choose to contract out his services to Company X. When John Smith made a sale on behalf of Company X, his own corporation (Smith Inc.) would get credit for making the sale and receive the majority of the profits earned. Because Company X does not own Smith’s work and is paying him on a fee basis as opposed to salary, they do not lose in this type of system. Without Smith’s services, Company X is not able to sell their product and has a zero sales profit. Company X is only paying John Smith a certain percent of the revenue he generates for them, so even after Smith receives the majority of the sale profit the company has made more money than they would have if they had not hired Smith. Carter characterizes this as the Horizontal method of wealth creation because it does not depend on hierarchies. All of the partners affiliated with Company X are independent contractors, and Company X is considered to be on the level of its partners. Without all of the independent partners, Company X would not exist because it would have no means of performing any services. Therefore, the partners are the true owners of work and are paid as such.
According to Carter, many of the problems with bureaucracy can be solved using a variety of extensions of the mass privatization concept. We can all recognize—and may have even been at one point—employees who have no real interest or passion for their position but must continue for financial reasons. Day after day, some people must carry along doing work that holds no meaning or joy for them. They may have to produce revenue for a boss whom they neither like nor respect, mislead customers in order to make sales, or sell products for a company that they do not believe in. Such rote, “passionless” work forms the backbone of our current economy and may also be its undoing. This system is not only miserable for the employees, but for the customers as well. Many of us can identify with this problem, as we have experienced it firsthand: standing in a two-hour long line at the DMV before a gruff employee tells us that we are in the wrong line and that he or she cannot help us; or attempting to solve a service problem over the phone and being transferred to various departments that all say “No Mr. Smith, that is not my department but let me transfer you…”. The majority of people choose to accept these annoyances as just being part of bureaucracy and live with them, but the goal of Infinite Wealth is to provide an argument for doing just the opposite.
In the early portion of the book, Carter draws on his vast experience working for a variety of corporations to illustrate just why a new organization plan is needed. With stints in a large aircraft company, printing company and at the U.S. Department of Defense, Carter describes the vast amount of wasted potential and resources occurring at these bureaucratic organizations. Because the departments are separate, Carter describes how waste (higher production costs for lower-quality product) would just be passed on to the next department in line and never dealt with. In a bureaucratic system, “one hand doesn’t know what the other is doing”, so such negligence is easily ignored.
What is the driving force that causes employees to blatantly neglect such large problems in the bureaucratic system? When these employees were being interviewed, was “ignorance” their answer to that inevitable question “How do you troubleshoot problems at work?”
Carter doesn’t think so, and instead postulates that the current turmoil is a result of “the misalignment of fragmented public work”. Essentially, “alignment is the degree to which an individual’s interests directly coincide and are in harmony with those of other individuals in an organization as well as those of the whole organization…the more narrowly the work is divided, the more controlling glue is required, and the less alignment is possible. The more holistic the work, the better the alignment.”
Apparently in a bureaucracy, not only does one hand not know what the other is doing, but it doesn’t care. A company may have a specific goal or mission statement that it strives towards, such as providing the best customer service of any airline or producing the most widely-used computers. The best way for a company to attain their goal is to hire people who share the vision and are willing to work hard to actualize it. In turn, the best way to attract such motivated individuals is to provide them with a work environment and compensation plan that reflects the value they add to the company. An interconnected horizontal network of independent contractors allows ideas to flow freely between partners and be implemented effectively, ensuring that partners can communicate effectively and work towards a common goal. A vertical, separated system such as bureaucracy only encourages knowledge flow in one direction: top to bottom. In such a system, the original vision of the company can become so distorted that it is no longer clear to the company or the employees. As a result, employees lose interest in upholding the original goal because of the difficulty in getting ideas to the upper levels of the company where they can have some effect. In this system it becomes clear that there is no longer an alignment of interest between the company and employees. This disparity results in the casualties of public employment that can be seen every day: poor communication, long lines and so-called “zombie employees”.
Carter’s ideas are well laid out and explained in Infinite Wealth, with a multitude of real-life examples. This book is an excellent beginning, and a good prelude for a sequel in which ways to implement the “knowledge-based system of work” might be described.