1000 days to re-invent capitalism?

If Kindles could groan under the weight of books on a certain subject, capsule mine would be starting to grumble about the bytes consumed with the subject of re-inventing capitalism. And the flow of words is not likely to abate in the coming months, as articles on the need for a more holistic model of capitalism (including those contributed by Roger Martin, Michael Porter and McKinsey’s Dominic Barton in HBR pieces)-are expanded into books.

My innate enthusiasm for a change to a capitalism that is longer term in perspective and less shareholder-centric is tempered by the fear that these ideas will not survive the economic upturn.  Calls for reform thrive on a mood of dissatisfaction.  In business the fertile period for such thinking to flourish is during a recession or immediately afterwards while the shadow cast by memories of the downturn encourages sober reflection.  Once we return to the sunlit uplands of buoyant economic growth, probably in 2-3 years’ time, the need for change will seem far less important if history is anything to go by. But such a recovery will be short-lived, unbalanced and below potential at best unless a broader and less short-term perspective is taken.  (At worst, some commentators argue the world economy will remain stuck in a cycle of boom and bust.)

1990 saw a sharp economic slowdown with major economies going into recession in the following year.  Those with long memories will also remember that at that time there was much talk about how the 90s would be a less selfish, more caring decade than the nasty, “greed is good” 1980s.  But that was all soon forgotten in a few years as the internet opened up opportunities for short-order wealth creation on a scale that eclipsed anything seen in the preceding decade.  In boom times it becomes a case of “make money today and change the world tomorrow.”

If that is the case, the window for creating lasting change is probably shorter than has generally been considered.  It may even be that there are only 1000 days to re-invent capitalism before the siren-call of short term financial opportunism becomes too attractive to resist.  Given it is short termism (allied to greed) that is  the major problem to be overcome, the need for change before it takes root again is critical.  And it is something with which even those who believe shareholder capitalism is the right model if properly implemented would agree. They recognize the damage caused by short termism, arguing that shareholder capitalism promotes a long term view and that the prevailing, failed model is managerial capitalism designed to maximize the rewards to those who manage businesses within the timescales of their leadership tenure, but wrapped in tropes about shareholder value.

Either way, supporters of shareholder capitalism and stakeholder capitalism need to recognize their common cause rather than squabble over differences because change is needed and quickly.  If we only have 1,000 days to reinvent capitalism, it will not be books or articles focused on winning hearts and minds that will change capitalism, but the practices of business leaders.  The challenge therefore is twofold: firstly convincing the skeptical of the need for change; secondly moving from theoretical constructs to delivering the tools, approaches and frameworks that management teams can use in their businesses every day to make change real.  Unless we succeed with the second, the chances of achieving change in this limited window are very slim.

Also available at hbr.org

Jack Springman is the author of Elusive Growth: why prevailing practices in strategy, marketing and management education are the problem, not the solution (Old Broad Street Press, 2011)

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About Jack Springman

I am a consultant with experience in business strategy and customer strategy development, customer management and customer service transformation.

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