I’ve spent the past 2 years at business school – and I believe that business is broken.
I doubt this is news to anyone who wasn’t under a rock during the Occupy movement. According to a 2006 McKinsey survey, only 8% of Americans trust large, global companies to act in the best interests of society. Yikes. Why is that?
Public companies as they’re structured today have a legal obligation to their shareholders: and therefore a legal obligation to continual growth. (Until we change shareholder behavior in general, this will continue to be true.) It’s a problem for a company’s ultimate purpose to be growth. It forces businesses to do unnatural things. (How can we get people to eat ice cream for breakfast now?) In nature, things that grow too fast are called cancers: and they destroy their hosts. And, in nature, everything has an ending: those that don’t expire, well, they’re like Twinkies. (Yuck!)
Business as we know it was developed and structured with the advent of the industrial age. The first concepts of operations were developed by Ford to make the Model T. Peter Drucker, strategy and management guru, first started writing in the 1940’s and 1950’s. This was the industrial age: an age of machines, economies of scale, and tough competition between firms making similar things.
Today, how many of us actually are involved in manufacturing products? The world is revolving around ideas, information, and services: it’s a knowledge economy. The way a knowledge economy works is different. We can’t use assembly-line operations techniques to make people come up with an innovative idea. Economies of scale matter less when things are moving and changing so quickly. And direct competition, well, that’s becoming a thing of the past too, with infinite opportunities for differentiation.
We need a new type of business. We need one that recognizes:
- Our world is interconnected. We can no longer realistically believe our impact ends where our company does.
- Business are run by people, and we are humans, not machines.
- The speed of change is accelerating. It’s impossible to predict and control things now: it’s just like trying to hold a balloon underwater
- Growing GDP or productivity is no longer a noble good in and of itself, like it once was. It’s time for business to ask the question, “Why do we exist?”
- In a world where information flows instantaneously: authenticity and transparency are a price of admission to the game.
- So many paths in our world, from the environment to obesity to the growing middle class, are spiraling out of control. Things are no longer linear.
So what does this “new business” look like? I’ve been collecting ideas over the past few months: ideas from health and nutrition, mindfulness, innovation, psychology, business strategy, finance, and more. The answers are there: this change is happening now. As I share these ideas, I’d love to hear what you think. Let’s debate, ideate and create.
This is such an exciting time: we get to create a new future, a new type of business. Let’s do it together!