“What is the leading resource in the world? It is not money,” says Mike Milken founder of the Milken Institute, a global think tank. Cash has never been cheaper or more plentiful. By late 2015 global corporations held over $15 trillion in cash and cash equivalents, four times as much as a decade earlier. The S&P 500 companies as a group gave almost all their profits back to shareholders, rather than bet on new projects and ideas. And many parts of the world no have zero or even negative interest rates for those who wish to borrow more.
The major asset in the world is not cash, it is the productivity of individuals. But the billion-dollar question is: how do organisations achieve more productivity from individuals? Mr. Milken provides another insightful and perhaps unexpected answer: “One of the great challenges of the twenty-first century is, does a person feel they have a fulfilling life?”
A key task of leaders in the 21st century is to create organisations that help people find this sense of purpose and fulfilment. This is an important development in the field of strategic management and leadership because globally productivity is struggling ““ see Capital in the Twenty-First Century by Thomas Piketty and The Rise and Fall of American Growth by Robert Gordon. Perplexingly the promised gains from computing and recent technological advances are not being translated into worker productivity increases.
Productivity is besieged because it now relates not only to being efficient and effective but also to fulfilment. As industries moved into the knowledge economy, companies did not make the big shift to meeting fulfilment needs of individuals. The productivity gains companies commanded during the industrial age have not been carried forward into the information and digital age.
Productivity is now more dependent on people but people cannot be commanded and controlled in the same way that machines can. Here’s the thing. Companies are good at managing the nuts and bolts. Its called being efficient and effective. But companies are not so good at appealing to peoples’ emotions and inspiring them because it’s not easy. As Mr Milken points out, this is the great challenge of the 21st century.
The CEOs of leading companies have recognised the big competitive shift and they are kicking butt and disrupting industries because of it. Think GE, GSK, NestlÃ©, Nike, MasterCard, Unilever, Tesla, Airbnb, Facebook, and Alphabet – al these companies have propositions that inspire and fulfil peoples’ lives. People, be they employees, customers or shareholders, who are inspired by and believe in what you do will “˜sweat blood’ to make your dream a reality. Take old stalwart and industrialised giant GE, whose ex-CEO Jeff Immelt said in Fast Company Magazine: “Ten or twenty years ago, what differentiated companies was how well managed they were. Today if you are well managed you can still be a good company, but you’re not going to be a dominant company.” GE is a master at being efficiently managed but its leadership have risen to the new challenge that Mr. Milken alludes to and GE is now on a quest to “improve the world by 1% every year.” Achieving this bold and inspirational quest will deliver trillions of dollars of savings and added value not only to GE’s customers but to the broader global society.
Fulfilment comes from finding and delivering meaningfulness, things that benefit those other than ourselves, and GE’s quest has become the reason for thousands of its workers to get out of bed and care about why and what they are doing. Competitive advantage no longer comes solely from efficient management of resources and capital, a reality most business leaders grapple with as they continue single-mindedly to seek out incremental gains in cost savings and efficiencies from already lean and strained systems.
To gain strategic advantage, companies are going to have to effectively engage and deploy the major asset of the twenty-first century: productive people.