Moving On From The Great Recession: How To Succeed In Today’s Global Economy

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In recent decades the world changed radically. But capitalism didn’t.

Well, that is until September 15, 2008.

Capitalism was forever changed on that day when Lehman Brothers, a 158-year American institution, collapsed. For what collapsed on that day was not just a bank or a financial industry. What fell apart that day was an entire philosophical economic system.

Don’t agree? Look no further than 18-year Federal Reserve Chairman, Alan Greenspan’s testimony before Congress on October 23, 2008.

Most people are severely underestimating the EPIC disruption that occurred in the months following Lehman Brothers collapse. In fact, I believe history will prove it to be far more significant than the Great Depression.

As we speak, I think the world is resetting itself economically, socially and spiritually. While the 30’s may have been the Great Depression, I believe right now we are in the Great Reset, but this reset isn’t just happening in America. We’re in a global economy now. (See the rise of China and India, the complete country collapse of Greece and Ireland, the uprising in Middle East, then look at the record number of unemployed and poverty stricken Americans.)

A Crisis or Catalyst

Now let me be clear, capitalism was not destroyed by the most recent crisis, it was just irrevocably changed. Capitalism by its very definition is an adaptive social system that mutates and evolves in response to a changing environment. We know the traumatic events of 2008-09 will neither destroy nor diminish the fundamental human urges that have always powered the capitalist system—ambition, initiative, the competitive spirit. These natural human qualities will instead be redirected and re-energized to create a new version of capitalism that will ultimately be even more successful and sustainable than the system it is replacing.

So rather than looking at the events of 2008-09 as a crisis, maybe we should consider those very events as a catalyst. A catalyst for the next generation of capitalism. Now, more than ever, it’s time to redirect, re-energize, and creatively adapt to current conditions. The extraordinary opportunities created by technology, globalization, and social change makes for an exciting dawn of the new age of capitalism. And the United States of America can continue to be the leader if (and this is a big IF) its businesses, governments, and educational institutions embrace these changes.

Like any major transformation, it will be messy, but we must recognize the immense necessity to adapt.

“In times of change, the learners will inherit the earth, while the learned find themselves beautifully equipped to succeed in a world that no longer exists.” ~ Eric Hoffer

We are a changing world and true change is often a hard and painful process—a dirty job. People get hurt, jobs are lost, and entire industries disappear. Yet, I believe the global economic upheaval in recent years has afforded us an unprecedented opportunity to rebuild and re-envision an economic model and a future that is based on what is right for people, the environment, and business. This is the true emergence of the new era.

Why is this so important? Because what powered prosperity in the twentieth century won’t and can’t power prosperity in the twenty-first. We are shifting into an era where more meaningful measurements of a country’s and company’s prosperity is being defined because prosperity itself has reached sharply diminishing returns.

Transition of an Era

The challenge with industrial era organizations is they were built on profit by producing and selling as much stuff as possible. But what we know is more stuff doesn’t create better lives or a happy, healthier society. A better society doesn’t depend on more stuff, but on better well-being. So twentieth century companies find themselves in a position of determining how to shift to a meaningful focus that creates a happier, healthier society through well-being.

Throughout the world, there is a palpable hunger for a new capitalistic model. One that understands the difference between excess consumption and sustainable quality of life, one that doesn’t sacrifice the future for the present, one that recognizes we don’t merely need to protect the environment, we are the environment, and one that narrows rather than exploits the inequalities in the world.

It  Starts With A Philosophy

Most companies have a competitive strategy, but few have a business philosophy. What’s the difference? Everything. Most businesses are obsessed with monetizing and business models: what can we sell, and how much can we sell? A philosophy, in contrast, is concerned with why we’re in business in the first place. I don’t mean mission statements or even company values, but a belief system on how you create meaning for the world and how you intend to express it. At the foundation of any philosophy are core tenants. I submit to you three that may just be the foundation of twenty-first century capitalism:

Meaning: + Co-Creation + Worldcentric = Twenty-First Century Capitalism

Meaning

In the new economy businesses can no longer simply make a profit. They must make a meaningful profit or soon the business won’t matter. In the twenty-first century, the most profitable and valuable path to advantage isn’t differentiating stuff, but making a difference to people, communities, and society. For example, TOMS Shoes has a tagline “One-for-One,” but it’s more than a tagline it’s a business philosophy. One that says, for every pair of shoes you purchase TOMS will give a pair of new shoes to a child in need. Or, look at Nintendo who was all but extinct before the release of the Wii. With the Wii, Nintendo made meaningless games meaningful again. Just visit your local retirement community or family living room and you’ll know exactly what I’m talking about.

Consider Nike, which has made an incredible transformation over recent years. One part of that transformation is Nike Plus- an online community dedicated, not just to selling shoes, but creating a more meaningful running experience that creates a fit person connected to other fit people. Nike realizes that in the past the product (shoe) was the end point of the consumer experience. Now they know it’s just the beginning. The end result: A more profitable business AND a more fit athletic community.

And meaning can’t only be external it must be internal. Deeper meaning at work must replace the classic case of the Mondays that so many wake up with Monday morning. The workplace must become one of shared principles by all employees rather than simply a place to exchange hours for dollars and benefits. For this you can look no further than Zappos whose sole focus is creating a company culture of happiness. By focusing on creating a company culture of happiness, Zappos was able to deliver happiness to its customers. The result, $1 billion in annual revenue.

Or, Digital Royalty, who when you communicate with their employees you can’t even tell if they are working or playing they enjoy their job so much. It’s no coincidence this company has grown their team by over 1000 percent since they began in 2009.

When pursuing meaning in business a company must also consider its environmental impact. The hidden history of a business’s product or service is no longer hidden. It’s now either a major asset or major liability. The new era consists of businesses built on renewable resources that can be replenished at a faster rate than they are consumed. Sustainability can no longer be a marketing exercise. It must be built into the business model. Ultimately, companies must be designing processes and products that not only return the biological and technical nutrients they use, but pay back with interest the energy they consume. Consumers are becoming more conscious of these details and are paying closer attention to the “Back Story”- where things come from, what’s inside them, and how they got to a point of use.

Co-Creation

Our society is witnessing a structural change in the relationship between institutions and individuals. Properly harnessed, we can usher in a new era of wealth creation through new economics of interactions and human experiences that goes beyond the conventional paradigm of goods and services exchange. Enabling customers to collaborate with you—in creating, distributing, marketing and supporting products—is what creates a premium in today’s market.

Threadless has nearly perfected this. The ability for consumers to vote on T-shirt designs BEFORE they are produced creates a democratic atmosphere where the customer is in charge of their own experience and end product. This not only translates into a better customer experience, it’s more profitable and sustainable for Threadless.

Or consider Netflix. 99 times out of 100 Netflix puts a movie suggestion in front of me that I will enjoy. How? By leveraging technology to get me to create my own user experience.

Starbucks has made the effort to bring co-creation into the board room. Let’s face it, in a world where change happens faster than most companies can respond being able to get real-time ideas from your stakeholders is far more valuable than ideas from your stockholders. Enter mystarbucksidea.com. A website where customers submit ideas for enhancing and improving products and services offered by Starbucks.

Co-creation goes a step further into the workplace as well. CEOs need to assume the role of a coworker and adopt more effective collaborative techniques. And managers must manage from the outside in and the bottom up.

Worldcentric

Twenty-first century companies are worldcentric. They understand that everything they do has a global impact (economic, environmental, and social). It’s always been that way, now it’s noticeable and documented.

We’re now in an era where wealthy nations must utilize business to invest in the poorer nations rather than use them to merely produce goods and services to be consumed in excess. Ultimately, only when everyone is sustainably better off does greater consumption and more growth become sustainable.

In the new era, companies must also realize customers, not just vendors come from everywhere around the globe. The mark of a twenty-first century company is diversity—delivering products and services where, when, and to whom they can sell globally.

Consider Zoka Coffee, after opening its first location in Seattle, Washington it opened its second location in Tokyo, Japan. It now has several more locations in both the U.S. and Japan.

Look at the example of Headway Themes, a father who partnered with his 17-year-old son to launch an international business from their basement in a small town of 4,000 people. Within 30 seconds of launching their business they had 89 people at their website. Not one was from the U.S.

Whether you’re a multi-national corporation or a coffee shop on the corner of small town U.S.A. you must consider your global impact. At a minimum you must think globally while acting locally.

Today’s Challenge

Ultimately, today’s challenge, as noted by author Umair Haque in his book “The New Capitalist Manifesto“, is not merely in creating book value, business value, or shareholder value, but in creating authentic economic value. In order to determine authentic economic value we must begin to look at the true cost. The cost of value isn’t merely immediate or just financial. It also includes the natural, social, and human costs.

It requires you to ensure you are making a real economic difference. Are people smarter, fitter, healthier, or more connected as a result of interacting with your business? That is the truest and hardest test of authentic value creation. Outcomes that make a difference to well-being are what make our work meaningful and our societies stable and thriving.

After all, consider the questions that Haque proposed toward the end of his book:

• What good is an energy industry that destroys the atmosphere?
• What good are banks that catastrophically deplete the financial sphere?
• What good is a food industry that sparks an epidemic of obesity?
• What good is an apparel industry that produces insipid clothes in joyless, dreary working conditions?
• What good are athletic shoes that don’t make people fitter?

Are you seeing a pattern here?

Questions For All Of Us

Twenty-first century capitalism is about building organizations that are living networks creating a meaningful profit through co-creation of ideas, products, and services that make the world smarter, fitter, healthier, happier, and more connected.

So maybe it’s time to reflect on your business and ask yourself are you making a real economic difference? Are you factoring in the true cost of what your business does? Are you helping make the least well off, better off? What other questions should we be asking?

(photo: Crystl)