“This book is more than a manifesto, it’s a blueprint for building the sort of twenty-first-century company that will be loved by its customers, envied by its peers, and admired by all those who care about the future of our planet,” says Gary Hamel in the introduction to this short tome by economist Umair Haque.
I agree wholeheartedly with Hamel that “The legacy model of economic production that has driven the ‘modern’ economy forward over the last hundred years is on its last legs. Like a piece of clapped-out equipment, it’s held together with bailing wire and duct tape, is grossly inefficient and spews out clouds of noxious fumes.” This is ground zero for the 21C project. The 21st century is a new ballgame and the old rules of engagement are obsolete.
Haque likens the 20th century to a limitless game reserve; corporations could hunt with abandon. The 21st century is more like an ark; resources are limited. “Prosperity on an ark depends first on minimizing economic harm, because every cost you shift and benefit you borrow result in permanent perhaps irreplaceable loss, with unpredictable chains of consequences.” The problem is “using rules built for hunting to manage an ark, but that approach to prosperity is past its sell-by date.”
Haque’s team contrasts fifteen “insurgent” companies that embrace at least one of his four 21st century cornerstones with fifteen “incumbent” companies that are running on yesterday’s rules. Insurgents are swingers like Apple, Google, Tata, Lego, Nike, and Whole Foods. Incumbents are strugglers like GM, Sony, Yahoo!, The Gap, Citigroup, and McDonald’s. The insurgents rely on one or more of Hague’s cornerstones of constructive capitalism:
- value cycles, not value chains
- value conversations, not value propositions
- philosophies, not strategies
- completion, not protection
- betters, not goods
Insurgents make more money than incumbents.
Haque’s constructive capitalism replaces chasing efficiency with seeking socio-efficiency. Socio-efficiency involves minimizing costs not just in the business but in the environment, communities, and society at large. Full-cost accounting takes on new meaning.
Hague thinks Google’s secret wasn’t more powerful technology; it’s more powerful evolution. I buy this. As time accelerates, the company that can generate new business models faster competes on innovation and will win in the longer term.
In the 21st century, the road to riches is not differentiation; it’s making a difference to people, communities, and society. “If we’re profiting, growing, or creating shareholder value, but the well-being of people, communities, society, or future generations isn’t consistently, accurately enhanced, what we’re doing isn’t economically meaningful.”
“Today, every company is in the same business: the outcomes business.”
“Constructive capitalists are discovering that twenty-first-century businesses don’t produce goods, they produce betters: bundles of products and services that make people, communities, society, the natural world, or future generations economically better by ensuring they achieve positive, tangible outcomes.”
This makes a lot of sense at the macro level. For the 21C Leader project, we’ll see how this philosophy impacts the individual manager or working professional who’s got a daily job to do.