Razan Khatib's commentary on life on/off the web

Can capitalism be re-invented?

Funny how my first and longest post in months is about capitalism of all topics! I promise it’s worth it.

I was forced to be made a defendant of capitalism in more than one occasion, where in a social gathering some  business/capitalism-hating individual or the other had to make remarks, like

What value do you bring by opening a business? You help those big corporations turn this planet into ruins and turn us into consuming junkies? oh so you help employ people…mmm…what do they really get out of it but end up being consumers for your existing or wish list of clients? How can someone be creative in a 9-6 job?….

If you take the ignorance out of these accusations and see them at face value, you might see a point somewhere or the other. I kept my defense at calling what I do “Human-based capitalism” as my partner Ahmad Humeid calls it. The act of eventually creating value that makes the human at the center of the creation process rather than profit alone.

I’ve always been weary of public corporations rather than private corporations or limited liability companies. Public corporations in my view eventually loose the human value and focus on the profit they are generating for their shareholders. Regardless of what their must-have CSR activities are about or all the money they donate to charities on the side. “On the side” being the problem here, that doing good by it self is not always at the heart of their operation.

Some see the ugly face of capitalism in the notion that a separate legal entity is a person though unnatural. And the bigger that person becomes the more people hide behind it to do all sorts of deeds.

Until I read “The New Capitalist Manifesto” the above is where my thoughts usually ended without any resolution in mind other than sticking in the small/medium sized human-based-capitalism world.

It’s one of those rare books that offer a paradigm shift, you will never think of business, marketing and competition like you used to before. It helps you make a better case for opening a business in this new century as it provides a set of practical principles into what thick value is, how to create and sustain creating one as well as how to keep evolving this value to create more with less.

The book talks about how 20th century capitalism which was born on the back of the industrial revolution doesn’t work any more. Evidence in point are the financial crisis of 2008 and climate change amongst others.

Umair Haque the author describes it as follows:

The twenty-first century capitalist’s agenda, in a nutshell, is to rethink the “capital”—to build organizations that are less machines, and more living networks of the many different kinds of capital, whether natural, human, social, or creative. And, second, to rethink the “ism”: how, when, and where the many different kinds of capital can be most productively seeded, nurtured, allocated, utilized—and renewed. What we need, then, is a new generation of renegades, laying deeper, stronger institutional cornerstones.

Haque sites examples of what he calls “Constructive Capitalists” from companies that exist today and per his assessment are already leaping into being 21st Century capitalists. He asserts that none of them is perfect or have it all but state they are on the right track. The book details 6 steps to guide you into what it takes to be a constructive capitalist, I’ve summarized them below:

1. Creating value cycles rather than value chains, by actively renewing resources, instead of depleting them whether human, natural, social or creative. Example here are Walmart.

2. Creating value conversations instead of value propositions, by creating a direct link [Responsiveness, participation, association] between the supply of your product or service to its demand. Example here is Threadless.

3. Focusing on deriving an overall business philosophy rather than set a strategy every few years, example here of course is Google’s philosophy.

4. See where you can complete a market rather than keep protecting it through 2oth century competitive tactics. Example here is Tata with its revolutionary car Nano. This is similar to creating a blue ocean instead of swimming in a red one.

5. Create difference rather than differentiation, see where your you can help people, communities and society. Example here is Nike, look at their recent Nike Better World website to see what their new business philosophy is  are all about.

6. Grow smartly, locally or globally by focusing on creating thick value that brings really lasting benefits for people, communities and society, nature, and the next generations. Examples here are Whole Foods, Apple’s iTunes, Nintando’s Wii.

Its fast addictive read, and it will help you to know how to build/rebuild your business to be constructive from the ground up on all aspects and not only focus on compliance when it comes to CSR, or having it as a separate department. It should be instilled in everything you do from what you sell, to how you sell it to what you produce and how you produce it and what happens to it after the sale? Are people gaining real benefits from your product or service? Is it making them happier or just blind consumption? …

Obviously, i highly recommend this book to those who lost their faith in the ugly, fat, greedy capitalism, those who always hated it  and most importantly those who -like me- want to make the world a better place and neither want to be called naive anymore or have to be part of an NGO to do so.

2 Comments so far

  1. Ahmad Humeid on January 12th, 2011

    Great review.. still haven’t read the book.

    Thanks for the mention too :-)

    These days I am flip-flopping between the opinions of the likes of Haque and others on one hand, and a “neo-Communist” thinker like Zizek. A lot of smart people agree that things simply can’t go one like this in the world and the the system we have is utterly broken. The question is: do you reinvent capitalist or imagine a totally different system.

    Then of course you have the people who simply want to go back to “good old days” of 20th century socialism or state-led economies (in Jordan there are people who are calling for un-privatizing telecoms and other formerly state owned industries).

    It will be an “interesting” decade..

    But the Wallmart example is a bit shocking. Why was Walmart mentioned?

  2. Kamal Hassan on January 14th, 2011

    In principle, I agree with Umair Haque and Michael Porter (Rethinking Capitalism, Harvard Business Review recent blog.) Both argue the same issue, almost carbon copy.

    But both are great sales people for their “NEW” consulting practice (interestingly they started a JV)

    I have few problems with their examples and timing.
    • We should have rethought capitalism back during the great depression in the 30s and every other failures of the system since.
    • Their examples of companies like Walmart, Nike and TATA, etc who they claim are applying “constructive capitalism” are profoundly wrong. These companies have been looking at humans as profit and never incorporated the human value concepts, these two are promoting.
    • Porter and Haque failed to address the role of the federal banks (and their very few owners) in this disaster for capitalism. These Feds see the current crisis as true practice of capitalism.
    • The last I checked, Porter and Haque daily rates have went up. They are charging 6 digits to speak for an hour, including first class tickets. Hoping to teach Walmart Corporation how to rethink capitalism!!! 

    Great; but old sales technique; when there is a disaster, come up with few buzz words, write a book, design few nice powerpoint slides, and run around charging $100s of thousands teaching it. Few years later, do it again. One example is Porter five forces. He completely neglected the human (social) force in business.

    Unfortunately, we are suckers for these theoreticians. We love to chase them around and pay them big bucks without questioning their concepts.

    I think Porter is coming to one of the rich ME government to speak for an hour about this topic and charging around $50,000 a trip. Great way to rethink capitalism!

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