In Business Reconstructing Capitalism

Reconstructing Capitalism (18/01/2011)

I recently ran into John Naisbitt in Beijing. He's the man who became very well-known for a series of best-selling books in the 1980s under the Megatrends umbrella, an interesting way of looking at the future. He was one of the first people to predict clearly and emphatically the rise of China.

He and his Austrian wife Doris now live there when they aren't in Austria. And the encounter set me thinking about the technique John used in the Megatrends books.

Megatrends uses an interesting technique to peer at the future, borrowed from the remote spying process originated (I think) in the Second World War.

Western intelligence agencies would scan dozens of newspapers bought in neutral countries. Using curiosity and the correct tangential perspective, joined up trends would emerge. For example a succession of funeral reports in scattered papers might indicate a disaster at sea that that censors would never allow national news outlets to report.

Or a distant unreported epidemic might emerge using this sort of close analysis of undertakers notices in a region. John Naisbitt heads a team doing this work on China at the Naisbitt China Institute based in the soaraway city of Tianjin, half an hour by high speed train east of Beijing.


It is something you can do for yourself, of course, if you have (like me) an inexhaustible appetite for print. Accumulated cuttings on the same subject can eventually add up to a trend. So can repeated mentions of (say) a topic such as biofuels in the pages of that blissfully thin newspaper the International Herald Tribune, the global edition of the New York Times. If the IHT goes on about it, then Something Is Up.

One or two things scanned in this way recently have started me thinking about attitudes to business and attitudes in business.

Item one: The American magazine Foreign Policy carried a piece in the November issue arguing that the rapturous optimism of American technology is a bit misleading. Moore's Law is flawed, it says.

The 45-year-old road map produced by the cofounder of the chip makers Intel, Gordon Moore, observes that computer power on a chip doubles every two years.

It has certainly worked as a roadmap for the semiconductor industry for more than 40 years, and provided a heartbeat for the expansion of the industries that rely on chips: computers, the internet, maybe almost every business everywhere.

But Foreign Policy argues that Moore's Law strikes a particularly American chord with its prospect of a virtually unlimited future; the trouble is (says FP) it does not apply to everything. Bill Gates of Microsoft said "We've been spoilt and confused by the Information Technology model", speaking about the (non) relevance of Moore's Law to (for example) the energy industries.

That applies to a lot of other businesses that have been backing the assumption that onwards and upwards is where we're all going. In other words, in the future, progress will be difficult, not as inevitable as it seemed to be in the 1990s.

One straw in the wind.

Item two is a recent edition of Fortune with an endpiece by the canny and amusing observer of corporate life who calls himself Stanley Bing. He devoted his column While You Were Out to what he called The Big Yawn: things we will be tired of in 20 minutes.

This is a very serious idea disguised as a light-hearted stream of consciousness, written in a notably exasperated heartfelt way.

Stanley Bing (a businessman in real life) decries the cult of marketing: it's the death of the new, he says. It finds the things we like to dream of and shovels them into the maw of collective desire, and spoils them.

His list of over-marketed products heading for the Big Yawn includes Twitter, Facebook, smart phones, and email. He is tired of the things that make most corporate people tick. When Fortune gets tired of corporate life and the ideas that are supposed to inspire it, then clearly Something Is Up. Another straw.

Item three is a big one, and what this In Business is all about. The hugely influential Harvard Business School Professor Michael Porter thinks it is time for no less than a new corporate purpose that will reinvigorate the very idea of Capitalism itself.

Michael Porter calls for business genuinely to embrace the wider world in which a company operates, not just the nominal acknowledgement afforded by the now familiar practice of corporate social responsibility, CSR.

In the Harvard Business Review, Professor Porter and his co-author Mark Kramer write: "Too many companies have lost sight of the most basic question: Is our product good for our customers".

It is time (says the article) to redefine nothing less than the purpose of the corporation ... around the idea of "shared value", an honest embrace of the wholeness of the world in which companies, employees work and live.

This from one of the prime architects of the hugely influential idea of business strategy ... and the way countries can compete, which has been taken up by business thinkers all over the world.


These are three magazine article I have bumped into expressing a certain disillusionment with business practices hitherto regarded as absolutely normal: techno optimism as a general business principle, marketing's magic dust impact on good but underexposed stuff, and (from Michael Porter) a company only in pursuit of growth, financial profits and "shareholder value".

These mantras are now being challenged.

While we were preparing this last In Business of the current series, I was sent a New Year email from the MLab at the London Business School, a link between academe and corporate life.

In the latest MLab newsletter the American management guru and London Business School visiting professor Gary Hamel has an article with the headline: Capitalism is Dead: Long Live Capitalism.

He writes: "Millions of consumers and citizens are already convinced of a fact that many corporate chieftains are still reluctant to admit: the legacy model of economic production that has driven the 'modern' economy over the last hundred years is on its last legs. Like a piece of clapped-out engine, it's held together with bailing wire and duct tape, frequently breaks down and befouls the air with noxious fumes."

And having put the currently fashionable case against capitalism (a system he still profoundly backs and believes in, Professor Hamel continues : " In the years to come, a company will be able to preserve its freedoms only if it embraces a new and more enlightened view of its responsibilities". I hope we will hear from him soon about this "enlightenment".

So: Something Is Up in what we expect from business. I think these are just advance warning signs of trends we will be hearing a lot more about soon. Maybe it is what always happens after a crisis. As the world's most successful investor Warren Buffet says, it is only when the water goes out that you see who is swimming naked.

Or - just maybe - this search for some kind of new realism is really going to change the way that business people behave.

Reconstructing Capitalism (18/01/2011)

Previous Programmes

Watch Your Language - Peter Day joins a group of enthusiasts determined to improve the language of business.

Keep it Local - As pubs struggle to survive, Peter Day travels through villages in Yorkshire and Cumbria to talk to local activists.

Space - Peter Day asks what happens next on the USA's journey into space.

German Pencils - Peter Day asks Faber-Castell and Staedtler how they both stay sharp ...

Building BRICS - Peter Day finds out about the BRICS - Brazil, Russia, Indonesia and China

Over A Barrel - Peter Day contemplates the turmoil in the Middle East and fears it will affect the price of oil

Reconstructing Capitalism - Peter Day hears all about the challenges to the way capitalism works.

All at Sea - Peter Day hears all about sea transport.

China Dispossessed - Peter Day hears about some of the problems caused by China's rush for prosperity.

Back on the Road - Alan Mulally tells Peter Day how he changed the way Ford works and how it is now back in the business of selling cars.

Asia Bling! - Peter Day ponders how the rise of the Asian comsumer will change business.

Euro on the Rocks - Peter Day asks what is the future for the Euro?

Bitter Pills - Peter Day looks at changing face of drug development.

Operation Robot - would you allow a robot to operate on you? Peter Day looks at robot-assisted surgery.

Growing Pains - Peter Day asks, what is the main component of growth?

After the Crunch - Government funding and regional development: the view from Newcastle.

Chips off the Old Block - Computing in the UK, past, present and future.

Hidden Depths - Graham Hawkes, DeepFlight and exploring the oceans.

Sociability - How social technology makes new business models possible.

Are CEOs Up to the Job? - Two thirds aren't according to Xinfu's Steve Tappin. Peter Day investigates.

In at the Start - Saeed Amidi and Silicon Valley

Power Play - Is the 'smart grid' the start of something big?

Now Wash Your Hands Please - How a simple idea can transform lives in the developing world

Coming Soon - What can the experience of previous financial crises tell us about the current one?

Ticking Over - Can the Isle of Man rejuvenate the business of watchmaking?

Not Just Silicon - what can Silicon Valley teach us about innovation?

Press under Pressure - what lies ahead for the world of newspaper publishing?

Remembering CK Prahalad - in a world of change and multiple opportunities, how does a company keep up?

Rwanda Rising - building a clean safe state where business can flourish.

Life Cycles - building businesses around the idea of new kinds of bikes.

Who Sets Our Standards - the business and social benefits of standardisation.

Ready to wear - the ethical issues of the international clothing industry.

Doing It Wrong - what's wrong with the way business works?

New Age - the business of aging.

Project Alcatraz - rehabilitating offenders in Venezuela.

Selling Salvation - Peter Drucker and the Salvation Army.

Let Me Entertain You - office parties and away days.

Brazil's Sugar Rush - Brazil.

Small Wonder - microfinance.

Unlimited Company - organizational models.

Credit Crunch - cash and credit.

Student Startups - student entrepreneurs.

Media Mayhem - changes in the newspaper industry.

Squeaky Clean - branding.

Battery Power - Bolivia.

Women's Work - women in the city.

Hell For Leather - John Timpson and Timpson's Shoes.

Learning Curve - organisational culture.

Let's Start a Bank - banking.

Goodbye to Intel - Craig Barrett and Intel.

Location Location - So?

Iceland feels the Heat - the credit crunch in Iceland.

The Cisco Kid - Mike Lynch and John Chambers.

Grand Design - business schools.

Power Drive - the car industry.

All New - innovation.

Europe on the edge - What is this thing called "Europe"?

For more programmes visit the In Business programme archive.

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