People Innovation Excellence

Putting the public back into political party ‘business models

This year’s presidential campaign was perhaps the most interesting and most dynamic ever seen in Indonesia.

Despite the brouhaha, there was one unique phenomenon: people’s eagerness to give individual donations to candidates to finance their campaigns.

According to the General Elections Commission (KPU) website, current president-elect Joko “Jokowi” Widodo and running mate Jusuf Kalla attracted individual donations of up to Rp 32.3 billion (US$2.76 million).

Rivals Prabowo Subianto and Hatta Rajasa managed to collect individual donations of Rp 1.9 billion. The number of individuals donating to Jokowi-Kalla’s presidential campaign was probably the highest since Indonesia held its first direct presidential election in 2004.

This phenomenon may be an opportunity to jump-start political party reform in Indonesia. With high public interest in donating to a political cause, there is an opportunity for political parties to invite their members and the public to directly take part in the process and collectively finance Indonesia’s democracy.

Yet, to take advantage of the growing participatory tendency, political parties need to significantly alter their existing “business models”.

All organizations — private or public — need a business model to design the ways in which they generate revenue streams, manage the relationships with their stakeholders and design the extent to which control is applied in the organization. Good and innovative business-model design is important for private organizations because it helps increase their competitiveness; it is also good for public organizations so they can effectively achieve their public missions.

In a private organization, shareholders control the organization, customers provide the revenue streams and the company manages the stakeholders to serve their interests. Public organizations have different business-model designs to private organization since the owners are the public; therefore, the control of the organization is not in the hands of a small group of shareholder elites.

In public organizations, the revenue streams are from the taxpayers or the organizations’ constituents and, thus, the stakeholders are often considered as the shareholders.

As an important institution in a democracy, a political party is a type of public organization. Unfortunately, their business-model designs are largely similar to those of private organizations.

Here is why: first, figure-based political parties often characterize their leaders as the party owners. They often have the final say as if they were the shareholders of the organization and get “political profit” from the party.

Second, major financial revenue of political parties is often sourced from large private “donations” since the government and the public have provided less and less financial support to them. The dominant private-organization logic makes these groups the implicit organization “shareholders”.

Despite organizational procedures, often the most influential factors are who is behind the party and who brings in the money.

Third, the way that political parties manage their stakeholders is also similar to private organizations.

Stakeholders, in this case constituents, are often treated as naive objects that can be “managed” in favor of the party elites’ interests. Rampant attempts to bribe voters is a clear example.

This is a threat to our democracy. A political party is a public organization and it serves a specific and important function in a democracy. The owner of a political party is the public and constituents.

Parties have to clearly identify and consistently be involved in outreach to their constituents. They need to always consult their constituents, who are the shareholders.

Further, instead of operating like for-profit companies and sourcing funding from a number of conglomerates or rich individuals — or even from corrupt and unethical activities — political parties should attempt to design and to diversify their revenue streams from the constituents and the public.

Finally, parties should not manage their constituents (e.g. via money politics), but should design proper mechanisms to accommodate the interests of their constituents in decision-making processes.

In principle, constituents should have a higher degree of control of the organization than their party’s (regional) elites.

Indonesian political party elites need to change their mind-set and keep the temptation of managing political parties using private-organization logic at bay. Elites are essentially party workers, there for the constituents and the public.

Designing an appropriate business model for a political party with a public mind-set is essential, to prevent the capture of the political parties by politico-entrepreneurs aiming for personal political profit.

Without transparent and functioning political parties, our democracy is meaningless.

Putting the public back into political parties’ business models is necessary and should be an important priority for the new government.

_____________________

A political party is a public organization and it serves a specific and important function in a democracy.

_____________________

The writer is a recipient of the Australia Award Scholarship for research into business models of social enterprises. He is a faculty member of the Binus Business School, Jakarta, and a PhD candidate at
the Queensland University of Technology, Australia.

 

Sourece : http://www.thejakartapost.com/news/2014/08/21/putting-public-back-political-party-business-models.html


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