Smart Mobs Versus Smart Globalization
How do we account for the rapid rise—and even more precipitous fall—of a major corporation such as Monsanto, which had done nothing wrong according to society's legal and regulatory institutions and had, in fact, transformed its business model to add value to its customers while reducing environmental impact?28 Certainly, the emergent nature of biotechnology had something to do with the problems that Monsanto experienced. Indeed, an accelerating pace of technological change appears to be generating ever-faster cycles of creative destruction.29
Yet there is even something more fundamental at work here. The power of governments has eroded in the wake of globalization and the growth of transnational corporations with global supply chains that span several continents. NGOs and civil society groups have stepped into the breach, assuming the role of monitor and, in some cases, enforcer of social and environmental standards.30 Today, for example, there are more than 50,000 international NGOs, compared to fewer than 20,000 only a decade ago.31
At the same time, the spread of the Internet and other information technologies has enabled not only these groups, but also millions of individuals, to communicate with each other in ways that were unimaginable even a decade ago.32 Indeed, Internet-connected coalitions of NGOs and individuals—smart mobs—are now making it impossible for governments, corporations, or any large institution to operate in secrecy.33 The varied claims of these smart mobs have created a dynamically complex business environment in which organizations find it difficult to determine what knowledge is relevant for managing strategic change; just ask senior managers at Shell, Nike, the World Trade Organization, or the World Economic Forum.
As might be expected, the past decade has been a combination of good news and bad news for Monsanto. In 2000, it merged with Pharmacia and Upjohn and was incorporated as a subsidiary called "Monsanto Ag Company." Later that year, its name was changed to "Monsanto Company" when a Separation Agreement transferred the operations, assets, and liabilities from Pharmacia to the subsidiary. But name and legal changes haven't deterred the company's critics. Abroad, the company has been under fire in India (where a number of farmer suicides have been linked to Monsanto's high Bt cotton seed price), in South Africa (where farmers have experienced reduced maize yields due to variations in pollination), and in Europe (where labeling laws were passed in 2004 to appease anxiety over the possible risks of GM foods).
At home, legal battles haven't helped the company's image: Since the late 1990's, Monsanto has filed some 140 lawsuits against U.S. farmers for claims of seed patent infringement.34 However, despite this continued public scrutiny, the company has created economic value with its GMOs. In 2009, it sold $7.3 billion in GMO products (versus competitor DuPont's $4 billion) and has seen sales increase at an annualized 18% rate over the past five years. And as a testament to its economic success, Monsanto was named Forbes' Company of the Year for 2009.35 The question is: Has Monsanto really found its groove, or is it just a matter of time until the next stakeholder swarm takes the company down again?
As the Monsanto case illustrates, most companies still tend to focus management attention only on known, powerful, or "salient" stakeholders—those who can directly impact the firm.36 Even recent efforts at "radical transparency," the complete and truthful disclosure of an organization's plans and activities, appear inadequate because they entail reporting only what has already been decided or, in fact, accomplished. Yet in a world of smart mobs, firms cannot manage stakeholders. Instead, swarms of stakeholders self-organize on the Internet in chaotic and unpredictable ways.
Groups at the "fringe" of a firm's stakeholder network can acquire an important voice in such swarms. To avoid the wrath of the smart mob, it has now become essential to proactively seek out the voices from the fringe that had previously been ignored. To survive and compete for the future, firms must harness these voices to identify creative new business models and opportunities. The tyranny of the smart mob can yield to a new form of what might be called "smart globalization:" growth via disruptive business models that address the social and environmental concerns of fringe stakeholders.37