In an earlier blog I spoke about the “perversions of the proper workings of capitalism”. In my mind Capitalism is inherently good.
The Capitalist seeks to find and address a need. They innovate, take risks and work out how to use capital to make a profit. The Industrialist on the other hand surveys the competitive landscape they observe Capitalists and once the capitalist has figured out how to make a profit they typically purchase the entity or start a competing brand. Once in they take the system polish the system and drive down costs. Industrialists don’t like to innovate (don’t fix what’s not broken is their mantra) they certainly don’t like change or taking risks. Industrialists take a short-term approach to returns. They’d rather chain their workers to a desk and control them or lock their customers into dead-end deals. Capitalists create value, Industrialists extract value. Of course the Industrial system has been immensely successful, because it’s given us a lot of cheap stuff. Our grandparents, parents and even ourselves have bought into this model. But the costs to society as a whole are mounting and there are a group of vanguard leaders taking the proper principles of Capitalism and creating businesses that not only deliver value to shareholders but also to customers and society. We’ve identified three standout case studies: IBM: Building a smarter planet; Tom Shoes: One for One and John Lewis Partnership: The proper workings of capitalism. These case studies reveals insight into how doing good for society is also very good for business.
IBM: Building a Smarter Planet.
IBM have recognised that by using their core competencies as a systems, consulting and IT company they can help solve some of the worlds most pressing and biggest problems. Things like congestion, pollution and overcrowding. BY partnering with other forward thinking leaders in business, government and civil society around the world, IBM are capturing the potential of smarter systems to achieve economic growth, deliver sustainable development and eliminate some of the perversions of the proper workings of Capitalims. Not only does this approach to business attract some of the best talent, it gives teams at IBM a real sense of purpose. The result is a committed, motivated workforces that delivers results for shareholders societal progress.
Toms Shoes: One for One
Blake Mycoskie founder of Toms Shoes is representative of this new type of leader. Blake started a shoe company with a unique value proposition – for every pair of shoes he sold, he would give a second pair to a child in need. He also made a conscious decision to make it a for-profit business. It requires new leadership mindsets, new business models, standing up to shareholders in the short-term but the results are speaking for themselves. Companies that take societal as well as shareholder returns seriously are reaping the reward of loyal customers, higher sales and greater profits.
John Lewis Partnership: Eliminating the perversions of Capitalism
The John Lewis Partnership was started by Spedan Lewis as an experiment in democratic capitalism. Spedan Lewis wanted a business that contributed to the wealth and welfare of his workers and he wanted them all to have a say in the running of the business. The business model has proven to be immensely successful and is popular not only with the Partners who work their but also with the Partnership’s customers. JLP is a fantastic example of business that not only delivers but also shares value. Spedan Lewis’s experiment was indeed a huge success. Other businesses should take not here is a business model “that makes work something to live for as well as something to live by.