December 2010
23 posts
Want to Disrupt It? Democratize It.
Here’s a staggering number. In Kenya, M-Pesa’s expected to shift 20% of the country’s nominal GDP.
Lesson? It’s the Democracy chapter of the Manifesto, plus a little bit of the Creativity chapter: pick an industrial age market or industry, and democratize it; liberate it from the strictures of plodding, ponderous, autocratic command-and-control organization. Better yet,...
From Cost Advantage to Loss Advantage
“Amazon is working on a solution that could revolutionize digital gift buying. The online retailer has quietly patented a way for people to return gifts before they receive them, and the patent documents even mention poor Aunt Mildred. Amazon’s innovation, not ready for this Christmas season, includes an option to “Convert all gifts from Aunt Mildred,” the patent says....
The Art of Constructive Advantage
Thick value: it’s the foundation of 21st century economics. To create it, you’ve got to do stuff that, at a minimum, is what the economist Jack Hirshleifer once famously called socially useful. Better yet, you’ve got to do meaningful stuff that matters the most, to people, society, and the future.
Here, then, is an example of stuff that’s not:
“Cantor Fitzgerald is...
Purpose First. Then Profit.
One of the most striking findings in the research that led up to the Manifesto was this: 90% of boardrooms tend to think profit is the fundamental animating purpose of commerce, companies, and trade.
It’s not. Profit is an effect, not a cause; a reward, not the accomplishment (unless your goal is an economy that’s nothing more than a herd of drooling zombies lumbering their way...
Netflix's Big Mistake
In a very interesting—and telling—recent exchange, investor Whitney Tilson explained why he’s shorting Netflix—and Netflix CEO Reed Hastings publicly replied, defending his decisions, promising returns.
What’s interesting about the exchange isn’t the fact that two giants went head-to-head publicly. Rather, it’s that two giants went head-to-head publicly...
Leapfrogging into the 21st Century
“Every week, Ms. Ruto walked two miles to hire a motorcycle taxi for the three-hour ride to Mogotio, the nearest town with electricity. There, she dropped off her cellphone at a store that recharges phones for 30 cents. Yet the service was in such demand that she had to leave it behind for three full days before returning.
That wearying routine ended in February when the family sold some...
America's Addiction to Dumb Growth
“ Americans are less economically mobile than people in other developed countries. There is a 42 percent chance that the son of an American man in the bottom fifth of the income distribution will be stuck in the same economic slot. The equivalent odds for a British man are 30 percent, and 25 percent for a Swede.”
Smart growth is what, at the end of the day, constructive capitalists...
“THE LAWS OF CONSTRUCTIVE CAPITALISM”
– The New Capitalist Manifesto
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“1. AN ORGANIZATION CANNOT ALLOW ECONOMIC HARM”
– “Through the act of exchange, AN ORGANIZATION CANNOT, by action or inaction, ALLOW people, communities, society, the natural world, or future generations to come to ECONOMIC HARM.”
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“2. THICK VALUE IS AUTHENTIC, MEANINGFUL, AND SUSTAINABLE”
– “the fundamental challenge of 21st century economics is creating more value of higher QUALITY, NOT just low quality value in greater QUANTITY.”
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“3. Next-level advantage is constructive (not just competitive)”
– “Creating 21st century advantage demands a quantum leap: NEXT-LEVEL ADVANTAGE IS CONSTRUCTIVE, NOT JUST COMPETITIVE. Competitive advantage means: to the creator of the most value go the spoils of competition. But that value might be vanishingly thin – as it was for Wall St, Detroit, the Gap,...
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“4. Constructive is disruptive”
–
“CONSTRUCTIVE advantage IS deeply, sharply, lethally DISRUPTIVE. When the two go head-to-head, industrial age sources of competitive advantage—cost advantage, brand, market share, scale and scope, and differentiation—are almost always pulverized by the new sources of constructive...
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“5. TOMORROW IS TODAY”
– “20th century capitalists built value chains. 21st century capitalists are building value cycles instead – because value cycles let them renew resources for TOMORROW, instead of merely exploiting them for TODAY. By utilizing value cycles, Constructive Capitalists are learning to achieve not...
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“6. PEOPLE, NOT PRODUCT”
– “20th century capitalists build value propositions. 21st century capitalists hold value conversations instead. Conversations are had with, by, and for PEOPLE, NOT inert, mass-made “PRODUCT”. Conversations are had with people, communities, and society – and they are the key to...
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“7. PRINCIPLES, NOT PLANS”
– “20th century capitalists build strategies. 21st century capitalists begin, instead, with philosophies. Philosophies express the “first PRINCIPLES” of authentic, enduring value creation, NOT just near-term PLANS to capture or extract value. They are the key to shifting past...
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“8. Impossible, not possible”
– “Constructive Capitalists focus on achieving the IMPOSSIBLE—NOT just settling for the humdrum, workaday POSSIBLE. Instead of competing for market share, they are masters of economic creativity: the art of popping new markets, segments, and industries into existence that rivals have long...
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“9. OUTCOMES, NOT INCOME”
– “20th century capitalists seek income first, last, and always. 21st century capitalist know that the work they do, the stuff they sell, and the words they say are all economically meaningless unless it has resulted in tangible, positive OUTCOMES that enhance the will-being of people,...
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“10. SMART BEATS DUMB”
– “20th century capitalism results in dumb growth: growth that is locally, globally, and economically self-destructive. It’s built on consumption instead of investment, the poor subsidizing the rich, and the rusting iron law of diminishing returns. It’s a growth model left over from the...
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“11. Better is better”
– “In the 20th century, worse was often better. What was better for the bottom line was usually worse for people, communities, and society. In the 21st century, the tables are turning. BETTER IS BETTER. Constructive capitalists earn higher quality profits by creating value that accrues to...
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“12. Better than isn’t good enough”
– “Most businesses still conceive of superiority as being “better than” a cohort of immediate, familiar competitors. Prepare for disruption: the bar of success has just been knocked into the next galaxy. Constructive Capitalist aren’t merely seeking to be just a tiny, incremental bit “BETTER...
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“13. REVOLUTIONIZE”
– “Here’s the competitive logic of the next decade: revolutionize—or get revolutionized. So the only question left is this: where’s your revolution?”