Toward the Next Model of Capitalism
By many measures, today's version of capitalism has served developed nations well, continuously ratcheting up average living standards and generating technological advances that would have awed previous generations. But some business thinkers are convinced that the current system is becoming dysfunctional and will ultimately be replaced by a new model of capitalism, a trend that would have a profound impact on how organizations are structured and managed.
The more modest predictions focus primarily on corporations rather than on capitalism itself. A recent article in BusinessWeek, for example, envisions the emergence of "ideal corporations" that are much less likely to wind up embroiled in Enron-like fiascos. These corporations will be much more transparent, with their financial underpinnings clearly visible not only to investors but to employees, customers and suppliers. There will be increased ethics training and improved corporate governance. Companies will also become less single-minded in their pursuit of shareholder value, putting greater emphasis on employees, customers and communities.
Top leadership is due for a change, too. During the 1990s, many companies looked only at corporate performance - especially in terms of stock price - as a way of evaluating leaders, according to Larry Johnston, CEO of food retailer Albertson's Inc. This can't last. He states, "There have to be two dimensions to leadership: performance and values. You can't have one without the other."
But some observers believe that today's business problems - both ethical and otherwise - go much deeper and require more radical solutions. Marjorie Kelly, cofounder of Business Ethics magazine, thinks that the "whips of firing, stock options, and hostile takeovers" force top leaders to focus solely on stock gains. She believes that reformers haven't focused enough on the structures of power in today's model of capitalism. She writes, "It's not about separating good corporations from bad, but about shaping the system forces that act on all corporations." She advocates the creation of more democratic structures that share power and wealth more equitably in organizations.
She isn't alone in her view that the entire system needs revamping. Harvard Business School professor Shoshana Zuboff and her husband, James Maxmin, a former CEO of various firms, are the coauthors of The Support Economy. They contend, "The current model of managerial capitalism is dying. We are at the threshold of a new era of capitalism."
Zuboff and Maxmin argue that "managerial capitalism" is starting to break down, while "distributed capitalism" is beginning to emerge. By managerial capitalism, they're referring to the model that evolved to accommodate the process of mass production, a process too complex and difficult for a single owner to oversee. Managerial hierarchies were created to make the system work more efficiently. Although ownership was dispersed, control was concentrated in the management group and remains that way today.
But the economy itself is changing to one based less on mass production and more on what Zuboff and Maxmin call the "individuation of consumption." Increasingly, people want to be treated like individuals and want corporations to bend to their specific needs. People don't want only better customer service, they want "deep support" to help them accomplish their goals and satisfy their needs. This dynamic, which is made possible by new technologies and changing social values, requires an enterprise logic that connects employees, technologies and markets in new ways that are just beginning to develop. Employees who provide such deep support would probably be organized in ways very different from what they are today.
Indeed, whether we're considering the characteristics of "ideal corporations," systems of economic democracy, or other versions of capitalism, we should keep in mind that such changes would probably require bold new ways of thinking about workforce management.
To read more about "The Ideal Corporation," please see
http://www.businessweek.com/magazine/content/02_34/b3796603.htm
To read Marjorie Kelly's ideas about economic democracy, see
http://www.business-ethics.com/thenext.htm To read about her notions of "the divine right of capital," see
http://www.divinerightofcapital.com/
To read more about the ideas of Zuboff and Maxmin, see
http://www.fastcompany.com/online/62/size.html To read more about their new book, see
http://thesupporteconomy.com/questions.html
The more modest predictions focus primarily on corporations rather than on capitalism itself. A recent article in BusinessWeek, for example, envisions the emergence of "ideal corporations" that are much less likely to wind up embroiled in Enron-like fiascos. These corporations will be much more transparent, with their financial underpinnings clearly visible not only to investors but to employees, customers and suppliers. There will be increased ethics training and improved corporate governance. Companies will also become less single-minded in their pursuit of shareholder value, putting greater emphasis on employees, customers and communities.
Top leadership is due for a change, too. During the 1990s, many companies looked only at corporate performance - especially in terms of stock price - as a way of evaluating leaders, according to Larry Johnston, CEO of food retailer Albertson's Inc. This can't last. He states, "There have to be two dimensions to leadership: performance and values. You can't have one without the other."
But some observers believe that today's business problems - both ethical and otherwise - go much deeper and require more radical solutions. Marjorie Kelly, cofounder of Business Ethics magazine, thinks that the "whips of firing, stock options, and hostile takeovers" force top leaders to focus solely on stock gains. She believes that reformers haven't focused enough on the structures of power in today's model of capitalism. She writes, "It's not about separating good corporations from bad, but about shaping the system forces that act on all corporations." She advocates the creation of more democratic structures that share power and wealth more equitably in organizations.
She isn't alone in her view that the entire system needs revamping. Harvard Business School professor Shoshana Zuboff and her husband, James Maxmin, a former CEO of various firms, are the coauthors of The Support Economy. They contend, "The current model of managerial capitalism is dying. We are at the threshold of a new era of capitalism."
Zuboff and Maxmin argue that "managerial capitalism" is starting to break down, while "distributed capitalism" is beginning to emerge. By managerial capitalism, they're referring to the model that evolved to accommodate the process of mass production, a process too complex and difficult for a single owner to oversee. Managerial hierarchies were created to make the system work more efficiently. Although ownership was dispersed, control was concentrated in the management group and remains that way today.
But the economy itself is changing to one based less on mass production and more on what Zuboff and Maxmin call the "individuation of consumption." Increasingly, people want to be treated like individuals and want corporations to bend to their specific needs. People don't want only better customer service, they want "deep support" to help them accomplish their goals and satisfy their needs. This dynamic, which is made possible by new technologies and changing social values, requires an enterprise logic that connects employees, technologies and markets in new ways that are just beginning to develop. Employees who provide such deep support would probably be organized in ways very different from what they are today.
Indeed, whether we're considering the characteristics of "ideal corporations," systems of economic democracy, or other versions of capitalism, we should keep in mind that such changes would probably require bold new ways of thinking about workforce management.
To read more about "The Ideal Corporation," please see
http://www.businessweek.com/magazine/content/02_34/b3796603.htm
To read Marjorie Kelly's ideas about economic democracy, see
http://www.business-ethics.com/thenext.htm To read about her notions of "the divine right of capital," see
http://www.divinerightofcapital.com/
To read more about the ideas of Zuboff and Maxmin, see
http://www.fastcompany.com/online/62/size.html To read more about their new book, see
http://thesupporteconomy.com/questions.html