Reinventing Capitalism in the Digital Age

✍ Scribed by Stephen Denning

• Publisher: Cambridge University Press
• Year: 2022
• Tongue: English
• Leaves: 108
• Series: Elements in Reinventing Capitalism
• Category: Library

✦ Synopsis

This Element examines the current crisis of capitalism's legitimacy and concludes that it derives principally from business pursuing an aberration of capitalism known as shareholder capitalism, in which firms sought to maximize shareholder value as reflected in the current share price, at the expense of all other stakeholders and society. Shareholder capitalism began in the 1970s and was renounced by the Business Roundtable in 2019, but continues behind a façade of stakeholder capitalism. Stakeholder capitalism is the most widely cited form of capitalism today, but it is incoherent as a practical guide to action for an entire firm. This Element concludes that a recent evolution of capitalism--customer capitalism--which gives primacy to co-creating value for customers and users, enables firms to master the challenges of the digital age, shower benefits on society, and meet the needs of all the stakeholders.

✦ Table of Contents

Cover
Title page
Copyright page
Reinventing Capitalism in the Digital Age
Contents
1 Introduction
1.1 Capitalism Is at a Tipping Point
1.2 The Competing Narratives of Capitalism
1.3 The Trajectory of Capitalism
1.4 The Last Half Century Was an Aberration of Capitalism
1.5 Capitalism’s Aberration: An American Phenomenon with Global Impact
1.6 Capitalism and Creative Destruction
1.7 The Advent of Customer Capitalism
1.8 Customer Capitalism: A Different Kind of Management Thinking
1.9 How the New Kind of Management Thinking Emerged
1.10 Customer Capitalism: A Different Kind of Leadership
1.11 Capitalism and the Digital Age
1.12 The Emergence of Deep Purpose
1.13 Fixing the Flaws of the Digital Winners
1.14 The End of Shareholder Capitalism
1.15 Why Stakeholder Capitalism Leads to Indecision
1.16 What You Will Learn in This Element
1.17 The Financial Landscape as of June 2022
2 The Overall Shape of Capitalism
2.1 Why the World Is Better and Why Almost No One Knows It
2.1.1 Poverty
2.1.2 Education and Literacy
2.1.3 Health
2.1.4 Freedom
2.1.5 Population
2.1.6 Why Don’t We Know the World Is Getting Better?
2.1.7 The Challenges Ahead
2.2 From a Casino Economy to a New Golden Age
2.2.1 Five Technological Revolutions
2.2.2 The Pattern of Change in a Technological Revolution
2.2.3 The Sequence of Changes: The Role of the Turning Point
2.2.4 The Current Turning Point
2.2.5 A New Positive-Sum Game: Green Growth?
2.2.6 The Need for New Mindsets
3 Customer Capitalism
3.1 The Hidden Heart of Managing Customer-Capitalism
3.1.1 Why Management Baulked at Drucker’s Insight
3.1.2 An Idea Whose Time Has Come
3.2 The Triumph of Customer Capitalism
3.2.1 We Live in an Age of Customer Capitalism
3.2.2 The Copernican Revolution in Astronomy
3.2.3 The Copernican Revolution in Management
3.2.4 The Results of Customer Capitalism
3.2.5 The Necessary Transformation of Management
3.2.6 A Journey into the World of the Customer
3.2.7 A Shift from Complicated to Complex
4 The Digital Age
4.1 What Is the Digital Age and What Does It Mean?
4.1.1 The Birth of the Industrial Era
4.1.2 Adam Smith and Wealth of Nations (1776)
4.1.3 Explaining the Digital Age
4.1.4 The Transition to the Digital Age
4.2 A Powerful Diagnostic Tool for Digital Era Enterprises
4.2.1 A Diagnostic Tool: The Principles and Processes Worksheet
4.2.2 Using the Diagnostic Tool
5 The Emergence of Deep Purpose
5.1 What Firms Must Learn about Deep Purpose
5.1.1 The Concept of “Deep Purpose”
5.1.2 Distinguishing Deep Purpose from Convenient Purpose
5.1.3 Clarifying the Concept of Deep Purpose
5.1.4 When Purpose Is Unclear, Decision-Making Becomes Confused
5.1.5 Missing in Action: Co-creating Value for Customers
5.1.6 The Ethics of Customer Capitalism
5.2 How Corporate Purpose Can Signal Virtue but Distract Management
5.2.1 Calls for Breakup
5.2.2 Virtue Signaling ahead of Performance
5.2.3 Digital-Age Management of Mayonnaise
5.2.4 Unilever’s Brand versus 400 Product Brands
6 Fixing the Flaws of the Digital Winners
6.1 Six Lessons That Society Must Learn about Agile
6.1.1 Lessons That the Marketplace Itself Will Reinforce
6.1.2 Lessons That the Public Sector May Need to Enforce
6.2 Why Big Tech Should Regulate Itself
6.2.1 A Wake-Up Call for the Big Four
6.2.2 Diverging Preparedness
6.2.3 The Failure to Make an Antitrust Case
6.2.4 A Change in Antitrust Law
6.2.5 The Problem with Big Tech
6.2.6 The Options for Big Tech
7 Shareholder Capitalism
7.1 The Origin of the World’s Dumbest Idea: Milton Friedman
7.1.1 An Organization Is a Mere Legal Fiction
7.1.2 People Just Wanted to Believe
7.1.3 The Money Took Over
7.1.4 Paying Bureaucrats like Entrepreneurs
7.1.5 Business Roundtable 1997
7.1.6 Jack Welch: “The Dumbest Idea in The World”
7.1.7 Share Buybacks
7.1.8 The Disastrous Consequences
7.1.9 The Disease of Which It Purported to Be the Cure
7.2 Is Maximizing Shareholder Value Finally Dying?
7.2.1 Maximizing Shareholder Value
7.2.2 Ditching “the World’s Dumbest Idea”
7.2.3 Loss of Clarity
8 The Mirage of Stakeholder Capitalism
8.1 Why Stakeholder Capitalism Will Fail
8.1.1 Stakeholder Capitalism
8.1.2 Stakeholder Capitalism as a PR Front
8.1.3 The True North of a Corporation: Value for Customers
8.1.4 The Origin – and Return – of Stakeholder Capitalism
8.1.5 The Emergence of Dilbert-Style Managers
8.2 The Second Dumbest Idea in The World: Firms with Preachy Social Purposes
8.2.1 Why Preachy Social Purposes Don’t Cut It
8.2.2 The Case of Mars Inc.
8.3 Why the Pandemic of Maximizing Shareholder Value Is Still Raging
8.3.1 Prior Missteps on Corporate Purpose
8.3.2 Why the Shareholder Value Virus Still Lives On
8.3.3 Yet Another Misstep: “Profit and Purpose”
9 Conclusions and Reflections
9.1 Capitalism Should Not Be Scrapped
9.2 Recognize and Accept the Birth of a New Age
9.3 Firms Should Commit to Customer Capitalism
9.4 Include the “Why,” the “How,” and the “What” of Customer Capitalism
9.4.1 Start with Getting the “Why” Right
9.4.2 Don’t Forget the “How”
9.4.3 Don’t Get Lost In the “What”
9.5 Firms Should Terminate Shareholder Capitalism
9.6 Don’t Get Lost in Stakeholder Capitalism
9.7 Governments Must Play a More Active Role
9.8 Recognize the Length of the Journey to Customer Capitalism
Select Bibliography