Employee and Customer Ownership
Welcome back to Business Design School, a twice-monthly newsletter for the creative-business-curious. I call it a school because we’ll learn to master the art of business design, together.
In this issue: What if you shared company ownership with your employees? Or even your customers?
But first: Business Design School is made possible by generous sponsors like our friends at Aardvark. Aardvark is a financial strategy studio for the creative industry. Also known as “the fractional finance department for creative agencies,” they provide all-in-one CFO, bookkeeping, tax, cash management, payroll, invoicing, and other financial tasks needed to run a business. For more info visit: heyaardvark.com
Employee and Customer Ownership
About 18 months ago, I left Design Museum Everywhere in the capable hands of the fantastic team and dedicated Board of Directors. It was time for them to write the next chapter of the organization that Derek Cascio and I started in my living room. And so, while writing the book about our entrepreneurial journey, reminiscing about our path from my living room to a premier source for design thought leadership, I started on a new path: the job search.
I never expected to find a dream job after 13 years as Executive Director of a museum that I helped start. But somehow, I did. I landed at Edward Jones, the 100-year-old financial services firm with branches across North America. Four reasons I was inspired to join this unique company:
The story is now mythical: when the son of Edward Jones, Ted Jones, ran the firm, he had a motto: “Share the work, share the profits.” And he went to bat with his father over it. Edward Jones Sr. wanted to bring other family members in to co-own the firm; his son Ted said he’d quit if that happened. He believed those who do the work should share in the reward. They finally agreed. Edward Jones Sr. could have sold the firm in the public or private markets, and I’m sure he would have done very well at that moment. Instead, the partnership was born, employees became partners, and a new culture of volunteerism, partnership, and collaboration blossomed.
Like many partnerships, Edward Jones operates with a structure with two types of partners: general and limited. General Partners are the folks who run the show. They’re actively involved in making decisions and managing the company’s day-to-day operations. Think of them as the executives. They have more responsibility and share in the company’s profits and liabilities. Limited Partners are more like investors. They put money into the company but have little say in its day-to-day operations. They’re like shareholders in a way. Limited partners also get a cut of the profits, but their liability is usually limited to the amount they’ve invested. Even as non-partners, employees enjoy the benefits of shared ownership through several profit-sharing mechanisms.
Similarly, there’s The John Lewis Partnership (JLP), a well-respected retail company in the U.K. They operate two of the country’s most iconic brands: John Lewis, a high-end department store (50 locations), and Waitrose (350 locations), a premium supermarket chain — and they do it through an employee ownership and cooperative structure. Rather than being publicly traded or privately owned by a single individual or family, over 80,000 employees own the company as Partners. Every employee has a stake in the company and a share of its profits. Annual profits get distributed among the Partners as a bonus. The bonus is typically a percentage of each Partner’s yearly salary, and the amount can vary based on the company’s performance. This reward structure encourages a strong sense of shared responsibility and commitment to the business’s success.
JLP operates as a democratic partnership. Partners have a say in the company’s decision-making through forums and councils. They elect representatives to the Partnership Council, which influences major business decisions. This system ensures that the voices and interests of employees are heard at all levels of the organization — and provides a long-term perspective focused on sustainability and quality, as employees have a vested interest in preserving the company’s reputation and profitability.
King Arthur Baking Company — makers of King Arthur Flour — has a longstanding employee ownership structure, utilizing an Employee Stock Ownership Plan (ESOP). In this structure, a trust gets established on behalf of the employees, and the company contributes shares of stock to the trust on behalf of each eligible employee. Over time, employees accumulate ownership in the company as they work there. This ownership ties to an employee’s years of service and compensation. In this model, again, every employee has a stake in the company’s success. As the company performs well, the value of the shares held by employees can increase — a key financial incentive for employees to contribute to the company’s growth and success. There’s also a degree of employee participation in decision-making, where employees elect representatives to the ESOP’s board of directors, ensuring that employees can influence the direction of the business.
With clear benefits to employee engagement, morale, productivity, collaboration, and long-term sustainability, a shared capitalist model of employee ownership deserves real consideration. There’s another constituency in the business equation: what if your customers owned the business?
In a shared capitalism model, businesses may also offer customers the opportunity to invest in the company or become shareholders. Mechanisms like customer stock purchase plans, customer cooperatives, or loyalty programs provide customers with ownership shares or rights. By allowing customers to become owners, businesses create a stronger alignment of interests. Customers who have a stake in the company’s success are more likely to support its products or services, remain loyal, and advocate for the brand. Customer-owners are more likely to engage with the company on a truly meaningful level. They can provide feedback, suggestions, and ideas to help shape the business’s products, services, and strategies, leading to continuous improvement. Ultimately, companies utilizing a shared capitalism model may allocate a portion of their profits to customers through dividends, discounts, or other financial rewards. This approach reinforces the idea that customers are both consumers and stakeholders in the company’s prosperity.
If you’re a member at REI (Recreational Equipment, Inc.), the outdoor retailer and adventure cooperative, then you’re part-owner of the company. REI is structured as a consumer cooperative, meaning that customers who purchase a one-time $30 lifetime membership become co-owners/members of the cooperative. These member-owners have a say in the company’s governance and are entitled to various benefits. This shared ownership fosters a sense of community and belonging among outdoor enthusiasts who value the company’s products and mission. Member-owners receive an annual dividend based on their purchases, allowing them to share in the cooperative’s profits. They also have the right to vote for the board of directors, who then represent the membership’s interests. REI has a solid commitment to environmental stewardship and sustainability as well. The cooperative model allows members to influence and support sustainable practices and initiatives within the company in the long term.
Like REI’s approach, Platform Cooperatives are a unique business structure that combines the principles of the sharing economy with cooperative ownership. These businesses are collectively owned and governed by those who use and operate them, including workers, customers, or other stakeholders. Platform cooperatives aim to address some of the issues associated with traditional platform-based businesses, such as gig economy platforms (e.g., Uber, Instacart, etc.), by putting control and benefits back into the hands of the participants. A great example is Up & Go, a home cleaning service platform in New York City.
Up & Go is owned by the cleaning professionals who use the platform. These cleaning professionals are often independent workers or small cleaning businesses that have collectively come together to own and operate the platform. Clients who need cleaning services can use the Up & Go platform to book appointments with these local cleaning professionals. The platform allows clients to select a cleaner based on factors like location, availability, and reviews. Unlike many traditional gig economy platforms, Up & Go ensures that cleaning professionals receive fair wages and benefits. Workers are not subject to the precarious employment conditions associated with some other gig platforms. And as owners of the platform, the cleaning professionals also share in the platform’s profits. The success of the platform directly benefits those who provide the services. Beyond providing fair employment, Up & Go contributes to the city’s social fabric by promoting local entrepreneurship and supporting workers in the cleaning industry.
Platform cooperatives like Up & Go exemplify a new way of doing business in the digital age. They prioritize democratic ownership, shared benefits, fair labor practices, and community engagement, challenging the conventional model of platform-based businesses that often concentrate power and wealth in the hands of a few. Platform cooperatives provide a more equitable and socially responsible alternative for participants and users alike.
How To: Mindsets
Alignment and motivation can be tricky if you run a business with multiple people. When employees and/or customers own part or all of a company, there’s this magical alignment of interests — when the company does well, everyone does well — which can lead to increased motivation and commitment to achieving the company’s goals.
Employee ownership can be a powerful tool for retaining and motivating talented employees. Employees may be more committed and engaged because their efforts directly impact the company’s performance and, consequently, the value of their ownership stake. It may also be a smart succession planning strategy for business owners looking to exit their company while ensuring its continuity. It can provide a way for the business to remain in the hands of those with a vested interest in its success and drive long-term loyalty and mission focus.
Shared Capitalist models like Edward Jones’ partnership, King Arthur Baking Company’s Employee Stock Ownership Plan, REI’s membership model, and Up & Go’s platform cooperative require thinking differently about business, legal, and incentive structures — but more importantly, I believe entrepreneurs and business owners must first embrace several key mindsets to successfully implement shared ownership:
I enjoy experiencing a shared ownership culture — Edward Jones is unlike any company I’ve worked for before. And to be clear, I’m not a partner/owner at Edward Jones, but the culture and ways of working are infectious. Almost daily, as I collaborate with colleagues and achieve small or large successes, someone will say to me, “Thank you for your partnership.” And that always makes me feel so good. When my team succeeds, the company succeeds, and we all succeed together.
I’d love to hear from you: does your company operate this way? Would you consider moving to a shared ownership model with your employees and/or customers? You can simply reply to this email.
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Have a great week! Talk soon!
PS: The Kickstarter campaign to fund the launch of my new book is in full swing! Thank you to all who have backed the campaign. We’re approaching 50% funded with about 24 days to go. Kickstarter is all or nothing, so if you’re interested in reading the book and supporting independent design publishing, please consider backing the project today! These funds will pay my editor and support the first edition printing. You’ll receive your print, digital, or audio copy and be the first to read or listen to Adventures in Disruption. I appreciate you!
Sam Aquillano is a business designer and writer. In 2009 he founded Design Museum Everywhere, an online, nomadic museum with the mission to bring the transformative power of design everywhere. His upcoming book, Adventures in Disruption: How to Start, Survive, and Succeed as a Creative Entrepreneur, chronicles his team’s startup journey and is available for order via Kickstarter, launching in October 2023. He's now a Design Director leading business design at Edward Jones. Sam has earned numerous awards for his work, including the Red Dot Design Award, Graphic Design USA’s Responsible Designers to Watch, and Fatherly named him one of the Coolest Dads in America.