February 23, 2011Doug Hadden
Doug Hadden, VP Products
Umair Haque, a next-generation economic thinker, has published a mind-provoking “New Capitalist Manifesto: Building a Better Business.” The debate around the role of business in society has been subject to some very parochial thinking especially around the concept of Corporate Social Responsibility (CSR). It’s welcoming to find someone who can articulate sustainable future for business rather than be anchored to the past, or in Haque’s words: “firmly ensconced in the industrial age.” This is a wake-up call for those who think that the “business of business is business”.
Haque uses some techniques that are familiar to business book readers. There are anecdotal examples, a technique that dates back to In Search of Excellence. It’s not my favourite technique, but, in all fairness, it is difficult to describing an emerging trend using the kind of long-term data analysis used in Built to Last. Haque writes in a direct manner – there’s no passive tone here – no boring stuff to skim over. At a touch over 200 pages of text, it’s not like most business books: magazine articles stuffed into 400 pages.
Haque’s argument that a new mode of sustainable capitalism or “constructive capitalism” is necessary is compelling, current and well-articulated. Sprinkled with effective touches of hyperbole. He explores the cornerstones for industrial-era and constructive capitalism and provides assessment tools. One of the most effective moments of compelling cognitive dissonance in this post-cold war period is Haque’s point that “if companies were countries, we’d say they had centrally planned, dictatorial economies.”
The notion of “thick value” that does no harm – doesn’t extract value from “people, communities, society, the natural world and future generations” is particular interesting and useful for FreeBalance, as a For Profit Social Enterprise (FOPSE). Haque also delves into the concept of customer innovation, something that we strive for here. The of “deliberation” in customer relationships is particularly valuable because it uncovers the reasons for preferences.
If I have any particular criticism of the examples used in the book, it’s mostly big company examples. It seems to me that there is more constructive capitalism afoot among smaller companies.
Lessons for the Global Software Industry
FreeBalance sometimes competes against larger companies whose techniques are often to hold customers “hostage”. As Haque points out “if we’re locking users in, chances are there’s no sense of urgency to innovate and make product better.” Ironically, many software firms seem to use this industrial-age technique in the digital world. There is very thin value when customers have to ramp up data centres to support bloatware and are forced into expensive upgrades with limited incremental benefits. Or, constantly employ high-priced consultants to keep systems operational.
Haque also points out the value of simplicity and asks how business can provide solutions to “chronically and consistently underserved, ignored, or marginalized” customers. This is an area where FreeBalance has innovated by adapting processes to better serve developing nation governments.
Many software companies do not explore Haque’s recommendation to “go deeper” to determine real impact. These companies seem to follow passing fads of “compliance,” CSR or “public private partnerships.” They provide software to evaluate company carbon footprints yet propagate big applications that suck energy while sponsoring sporting events.
Accounting for Sustainability
The concept of “sustainability” is most often associated with environmental sustainability. Haque provides more food for thought about accounting for real sustainable value. This is a step beyond “triple bottom line reporting“. Haque points out that accounting really hasn’t changed since the invention of double-entry bookkeeping. Accrual accounting provides the “true value” of a business. Perhaps the next generation accrual will measure the full impact of a business, or a real “true value”.