The Visible Hand: Using Human-Centered Design to Increase Corporate Connectedness

What is a business? More specifically, what is a modern, publicly traded, multinational corporation? Despite being in…well, business school…this is a question that I don’t often hear bandied about. But, given the ever-growing size and influence of multinational corporations (MNCs), it’s time to talk about it.

First, a little groundwork. One foundational theory of the MNC comes from Adam Smith’s 1776 book The Wealth of Nations, in which he argues that (1) business create positive externalities for their own gain, not social interest, but (2) all business owners are guided by an “invisible hand” to promote socially-positive ends1. No disrespect to Mr. Smith, but his argument breaks down for me in two places: first, the companies that he described The Wealth of Nations look nothing like today’s MNCs, and second, the “invisible hand” of which he speaks is an unrealistic assumption in today’s business climate.

In Smith’s initial argument, he states: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” The butcher, brewer, and baker of Smith’s time look nothing like the MNCs of today. His “companies” were local businesses with few employees, limited geographic and political influence, and strong connections to their communities.

It’s like comparing Starbucks to a small coffee shop, or H&M to a local tailor. They just aren’t the same.

Today’s MNCs are:

• Beholden to shareholders. Evidence: 40% of US managers say their fellow citizens think a company’s only goal is profit.
• Huge. Evidence: 25 companies are more powerful than most countries, and yield huge economic and political influence, as well as employing hundreds of thousands of people. In 2016, the largest 10 global companies employed nearly 10 million people.
• Disconnected. Evidence: As MNCs grow, their leaders often grow further—geographically, socially, and emotionally—from their employee base and the communities they touch. Resultingly, 35% of Americans view corporations unfavorably.

Smith’s “invisible hand” argument doesn’t hold water today because there is a very visible hand that guides managers at MNCs: stock prices and shareholder returns. However, there is a modern way to make the invisible hand visible. Human-centered design (HCD) puts users at the center of product strategy, forces all employees and leaders to think about how the products their making will be most useful—and least harmful—to users and communities. HCD solves the disconnection problem by forcing employees to engage with and listen to the people they serve in a meaningful way; in essence, it introduces empathy into formerly sanitized business processes. It won’t solve all tensions between MNCs and social goals, but it is a helpful and attainable start.

In short, you can boil today’s debate over the definition of MNCs into two camps: the shareholder theorists who say the only goal of business is profit, and the stakeholder theorists who believe business leaders must balance profit with the interest of other stakeholders, including employees and communities. My bets are on the stakeholder theorists, and I believe that businesses can—and should—use human-centered design to boost profits and look at social problems as business opportunities.

This post was written as an assignment for the Berkeley-Haas Class "Strategic & Sustainable Business Solutions.” #StudentVoices @BerkeleyHaas #MBA292C1 @respbus @robertgstrand.

1. Poor Adam Smith. People smarter than I conclude that many of his words were taken out of context and/or written ironically, but taken seriously. You can read one such critique here and decide for yourself. For the purposes of this article, I consider his arguments relevant due to their influence on modern economic theory.