• Konrad Fernandez

The New Capitalist Manifesto - A Business Book For Responsible Leadership


At the core of this book is a powerful message about responsibility. As Capitalism breaks every known boundary for the sake of ‘growth’ and ‘profit’, this book offers hard-hitting, but practical, advice for healthy, long-term growth. 


Umair calls this ‘Enlightened Capitalism’. Traditional capitalism is past its prime; with its old mentality of profit at all costs, money being the sole goal of business, and the limited accountability of corporations. The flaw is as clear as it is fundamental. Such an approach shifts costs to, and borrows benefit, from people, communities, society, the natural world, and future generations. 


Flawed capitalism is based on ‘thin value’ and is unsustainable - like the Hummers which boosted GM’s sales very briefly but didn’t add much value to customers. Or like “Big Mac” fast food, which isn’t good for anyone on a regular basis. Umair calls this ‘socially useless’ and insists that such business is always short term. He proposes five new cornerstones of responsible Capitalism.


Loss advantage

With pure cost advantage as its goal, by using power to crush suppliers, and by neglecting the environment, Walmart grew to the “size of a planet”. Now, the company has realized that it must fundamentally reinvent its approach for long term success. Its three new goals are - use 100 percent renewable energy, ensure zero waste, and sell products which benefit the environment. Cost is never reduced in business just like that. Someone always pays the price. A Loss


Advantage means not just minimum business costs but also minimum social, human, and environmental losses. Long term, this is a winning approach. Walmart now saves more by producing less waste because it spends little on waste disposal and management. 


The New capitalism must move from Value chains to Value Cycles. Value chains are assembly lines which don’t worry about what happens once the product cycle is through. For example - oil dies when it is turned into carbon emitted by engines. The new approach turns value chains into value cycles. Responsible organizations like Nike are beginning to study how their shoe production depletes resources and affects the environment at each stage. And the questions they are now asking are - how can we create a value cycle? How can we reuse, recycle, re-purpose an input or an output? 


Responsiveness

How fast is the organization responding to the market, and to change? Threadless is the extreme example of a company where perhaps hundreds of decisions are made by stakeholders in minutes. The concept is simple: designer t-shirts. Designers (anyone) can put up their designs for votes. Anyone can vote. The top 10 designs are picked for limited edition production and sold. Money flows back to the designers. It’s a living, breathing marketplace – controlled by customers. Creating such a connect within business and customer community in a seamless market can and will ensure long term success and profitability.


Resilience

Resilience is the ability to constantly evolve faster. Here resilience means applied evolution. Google took the world by storm not because of better technology, but better evolution. Unlike Microsoft, Google does not lock its customers in. If you want to switch a document from MS Word to Google docs…you can’t. Microsoft locks you in. But if you want to switch from a Google Doc to MS Word, Google not only allows it, but makes it easy. The principle is based on their philosophy of never locking customers in. Google says - if what we offer is better than Microsoft, people will use Google docs. If someone is unhappy and wants to move to MS Word, give them the freedom. This freedom of the customer constantly puts pressure on us to become better, to thrive by innovation, and to create value. This is called creating ‘thick value’. Unlike Yahoo, Google’s stated goal is to have people leave its website faster. That’s not just impressive, it’s revolutionary!


Creativity

Instead of protecting my market from rivals, I see myself as making the market complete for the community. To do this, as a business I must use creativity to achieve the economically impossible. Creative companies ask questions like – how can I make a car which is cheaper than a mountain bike, or a video game for grandmothers (like Nintendo’s Wii), by pushing the boundaries of creativity and  addressing high-need markets? Tata Nano did exactly this when they saw the high-need market for a low cost car. Car makers in Detroit haven’t woken up to this yet. In the US, when car transport is still not affordable to the poorest of America who spend 31% on of their incomes on transport, car companies still ‘protect’ their SUV market. Tata on the other hand saw the market, used creativity to address the need, and made history.


Difference

Traditional Capitalism is about differentiating. New Capitalism is a call to ‘make a difference’. Earlier, Nike spent millions on ad campaigns, promos, and hyper marketing initiatives. Today, they are helping people gain the discipline to run better, rather than just persuading them to wear their shoes. The difference, they have realized, is that happiness is not about having more stuff, but about better well-being. The thickest value is one that makes people healthier and happier. It helps companies move from doing things right to doing the right things. 


A Closing word

Some kinds of growth are better than others. In the 16th century, Spain discovered a mountain of silver in its countryside, but instead of investing it, they chipped it into coins and it was all gone in no time. After a short growth spurt, they receded into two centuries of stagnation. Saudi Arabia has an ocean of oil, but not one world-class university, financial institution, or high skills industry. Economies with short term approaches like these, based on pure industrial growth, can never outlive their temporary resources. Constructive Capitalism focuses on thick value, social well being, and sustainable, meaningful growth. 


This book is extremely well written, thought-provoking, and radical in its ideas, and is a wake-up call for modern businesses. And anyone paying heed will

certainly reap the rewards of this radical new Capitalist Manifesto. 

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© 2018 by Konrad Fernandez.