The John Lewis of tech

A twitter conversation yesterday reminded me of a crazy idea that had been bouncing around in my head for a couple of months.

Imagine, if you will, that on his departure from Microsoft, in a last defiant act to show how much he “loves this company”, Steve Ballmer were to put all of his shares into a trust to create the beginnings of a workers’ co-operative.

Outlandish, and it will never happen. But imagine if it did…

In the UK there is a retail phenomenon known as John Lewis. They operate the department stores, supermarkets and online shopping experience of the middle classes. They’ve been remarkably successful particularly in the last decade or so, and much of their success is speculated to be linked to their unusual ownership. Their early owners put their shareholdings into trust, and still to this day all of the staff are partners and have joint reward for the overall success of the company. No ownership leaves when a partner leaves. And it seems to work well for them, and also for their customers: John Lewis will often be cited as a benchmark for good customer service, UK-style.

Whilst the main players on today’s US tech market might have quite different business models (Apple: premium devices and integrated retail experiences; Google: “free” at the point of use services monetised through the exploitation of usage data; Amazon: frictionless retailing; Microsoft: devices and services) they all have the same ownership structure- publicly listed and traded stocks.

Being public is a problem for a tech company. For as long as you are making a profit, it’s very difficult to make dramatic, cannibalistic changes in business strategies. Introduce new product lines by all means, but don’t kill the old otherwise you risk the wrath of the shareholders (whose priorities are often in the short term).

This leads to an amplification of the Innovator’s Dilemma and it seems that a firm needs to be near death’s door before it can do anything (see: BlackBerry) or take itself private to make significant change (see: Dell). Both existing customers and shareholders are holding you to your existing technologies, making it easier for new entrants to steal a march on the next waves of innovation.

Imagine the flexibility a partnership in trust model would give to a tech firm: shared reward on an equitable basis leading to greater motivation and performance combined with private ownership giving much greater agility to take new tech directions when they were needed, not when they were too late.

But it will never happen.