What Amazon can teach us about fixing democracy
Let me start with a clarification: while I’m a tech startup founder, I am no tech utopian. Tech has long been oversold as a panacea and most big tech companies today clearly need stronger governance and regulation if they are to be a net good in the world — not least regarding their impact on democracy itself. Nor do I believe that all government’s problems would be solved if it simply worked exactly like the private sector. I’ve lost count of business executives I know who take roles in government promising sweeping change and soon emerge bruised by the difficulty of answering to myriad stakeholders in a sector that is disdained by the media and which boasts public trust levels that would make a car salesman blush.
That said, the last five years have seen the unstoppable growth of big tech, alongside what is beginning to seem the unstoppable decline of liberal democracy — with angry, precedent-busting elections in the UK, the US, Brazil, India and counting. The societal and economic body blow of 2020’s pandemic seems to have only further strengthened big tech, and further strained democracies. Clearly the waxing system has something to teach the waning one.
Democracies are overlooking big tech’s most useful lesson
That tech has lessons for government is, of course, news to no one: the halls of government departments around the world now ring with mantras like agile, user-centered, AB testing and the like. Cumbersome paper services are being digitised, albeit erratically. Chief Digital Officers and Chief Technical Officers are now the table stakes in city and national governments that lay any claim to being in touch with the future.
But so far the lessons have been sought at high magnification — by examining tech companies’ tools and tactics. And from this nose-against-the-window vantage point, the biggest lesson is overlooked. To see it, we need to zoom out and look at the wider system that has driven the spectacular success of many big tech companies, and perhaps none more so than Amazon.
Wheels transformed the past, flywheels are transforming the present
In Good to Great, Jim Collins christened this engine of growth the flywheel. The premise is simple and elegant: a flywheel is a self-reinforcing loop, a virtuous cycle comprising a few pivotal and interacting components. The wheel is heavy and slow to get started. But once moving the components drive each other, building an eventually near unstoppable momentum that turns companies from good to great, and crushes competitors. Collins described examples of flywheels in multiple organisations and sectors, but held up Amazon as a particularly striking example of harnessing their power.
In Amazon’s flywheel, cheap prices lead to more customers, and more customers increase sales and attract more third party sellers, which allow the company to get more out of fixed costs such as the website and fulfilment centres, and greater efficiency allowing Amazon to reduce prices further. Today one might add to the flywheel that more third party sellers give better data on consumer needs, which improves targeting and decreases the risk of creating own-brand products.
The superpower of flywheels is that you feed any one component and the whole system strengthens. Their kryptonite is that you starve one component and the whole system suffers. These two features of the flywheel framework can help explain the apparent u-turn in the fortunes of liberal democracy in the last five years: several post-war decades when liberal democracy seemed inevitable and unstoppable followed by a sudden prediction-defying, election-winning surge of populism and nationalism.
The Healthy Democracy Flywheel
To see what went wrong, we need to consider democracy in terms of its flywheel. The first element is principled and skilled politicians providing representation and keeping the promises they win campaigns on. The second is a knowledgeable and well-resourced civil service making and implementing policies that benefit society broadly. The third is informed voters who value and participate in the democratic process.
Each of these components strengthens the other. Good politicians promise good policies and empower civil services to implement them effectively. When governments deliver on the promise of good policies, ordinary people value democracy more, pay more attention to candidates, show up to vote, and put their hats in the ring to run for office or work in government. And so on.
With a few exceptions, in mid 20th century liberal democracies each component of the flywheel grew stronger. Political office was seen as a way to make a difference. Civil services competed easily with businesses for graduates from top universities and delivered policies that brought about the conditions for widespread economic opportunities, backed by social support nets. Which in turn brought huge and widely distributed gains in educational and living standards. These democracies also taught people about democracy: in many countries, notably America, civics was considered a core part of a public school education. So people understood the value of democracy and knew how to participate in it.
The flywheel effect goes both ways
Flywheels are slow to start. They are also slow to stop. Decades before the populists surged, the seeds of decline had been planted when in the 1980s the world began to sanctify business and business leaders. As capitalism defeated communism, money was transformed from a means to an end, with Russia and China ultimately signing up to the same philosophy as their former foes. Business was sold as the place for the brightest and the most innovative to make the greatest difference.
20th and 21st century business has, of course, done enormous good, commercialising innovations that have brought extraordinary benefits to the world (albeit often rooted in expensive R&D commissioned by the state and paid for by taxpayers, to which the economist Mariana Mazzucato has compellingly called attention). But the business as a silver bullet narrative both overstated business’ benefits, and came at a huge cost to governments.
The state was cast as a necessary evil, at best, and at worst as an impediment to an innovative and dynamic private sector. Politics was for the slippery and self-serving. The civil service was a backwater for those who couldn’t keep up with the pace of innovation. Civic education was much less important than an education in business and economics. And so the public increasingly lost interest in government, with more top talent drifting to the private sector, or joining government only often to be under-resourced and demoralised. And government delivered less well, which fed the narrative that government was intrinsically incompetent and not to be trusted, which further eviscerated the state and further dismayed voters. As Harvard’s Danielle Allen says, democracy can be seen as a game. Sometimes you get the representatives and the policies you want. Sometimes you don’t. But if you never get representation, and never see policies that improve your life, you’re not going to vote, or you’re going to vote for someone promising to break the system. The game of democracy has to be worth playing.
But key political, civil service, and civic institutions were strong, buoyed by post war social cohesion. So the toll of their neglect took time to show. The democracy flywheel decelerated slowly and, like frogs in hot water, most didn’t notice the price we were paying. In 1997, the Business Roundtable officially embraced Milton Friedman’s 1970s argument that maximising shareholder value should be a company’s sole purpose. It was only in 2019 — when the existential risk of climate change and racial and social inequality were inescapable — that the powerful group of companies reconsidered its position, albeit it with a toothless commitment. But by this time, the democracy flywheel was grinding to a halt, the price of which Covid-19 has laid bare: long neglected, derided, and under-resourced public institutions inevitably struggling to deliver in a crisis.
It takes a village to (re)build a democracy
The good news, for those despairing, is that the urgency and stratospheric stakes of fixing democracy is no longer a hard argument to make. Voters have been forced by the pandemic, or the West Coast fires in America, to make the connection between the people you elect, and the taxes you pay, and the kind of world you live in — or die in. Misinformation, fuelled by giant and barely regulated tech companies, is costing people their lives. Critically, there is also now a clear business case for fixing democracy as Rebecca Henderson explains in Reimagining Capitalism in a World on Fire. Businesses, especially smaller businesses, thrive because of education paid for by good governments, infrastructure built by good governments, anti-monopoly laws enforced by good governments.
The problem is that too often the remedies proposed treat democracy as if it is a wheel, not a flywheel: simple, self-contained, and powered by an engine which just needs to be restarted. Different voices diagnose different atomistic failings — a poorly educated manipulated electorate, amoral politicians, antiquated civil services — and prescribe sound-bite friendly ways to fix them. But to really fix democracy — to upgrade for the 21st century what is still the best system we know of for governing fair and thriving societies — we need to treat all of these ideas in the same way a healthy democracy treats all its people: as equals, parts of a complex system, to be invested in according to their different needs. We need to stand back and look at the democracy flywheel, and work on all its parts, in a multitude of creative and courageous ways.
I am cautiously optimistic. Five years ago, Lisa Witter and I co-founded Apolitical, a government learning network that equips public servants with 21st century skills and knowledge. Apolitical is now used by nearly 100,000 public servants in 170 countries seeking to better serve their cities and countries. Our members are often frustrated. But, defying the popular narrative, we see countless people in government who also are brilliant, resilient, and deeply principled. The Apolitical Academy — the signature initiative of the non-profit foundation created by our company, and a partnership with the Daniel Sachs Foundation — runs non-partisan training programs for people who want to run for political office. The calibre of those who apply is extraordinary. In 2020, we have seen skyrocketing interest in and support for our work on both fronts.
And we are not alone. We are constantly coming across new — or newly invigorated — initiatives addressing this generational challenge in different ways. If you want to work on the problem from the outside, there is a great variety of inspiring organisations tackling issues that range from civic education and voter mobilisation to disinformation, information bubbles, and platform governance (just as Amazon’s flywheel works best in a robust economy, democracy’s flywheel needs a robust information economy — in which there is a broadly agreed understanding of truth, and media sources trusted to be faithful to it). If you want to run for office or work in government there are often organisations that will help you get there. If you want to give money to the problem, it will be one of the highest leverage investments you will make: the value of solving the problem speaks for itself, and those working in this until recently unfashionable space have learned to be frugal, focused, and bold.
Of course, those of us working on the democracy flywheel do not exist within the well-organised and coordinated bubble of a company like Amazon. And this has obvious downsides. But it also allows for more diversity, creativity, and risk-taking. And we are bound by a powerful shared purpose, for this is the ultimate positive sum game: a win for democracy is a win for everyone who’s lucky enough to be part of one, and a beacon of hope for those yet to be.
The caution in my optimism is because there are still not enough of us. If we need any draft, it is a democracy draft: we should all — in some way, at some point in our careers — be fighting for democracy and its priceless freedoms which dwarf those procured by war. Your country — and your planet — needs you!
I’m grateful to Lisa Witter, Pooja Warier, Adam Parr, and Diego Piacentini for their review and contributions.
