Sunday, October 23, 2016

The Answers on Democracy (Clinton vs Trump) and Capitalism - Adam Smith Capitalism: Capitalism Done Right!




First, Democracy and The 2016 Presidential Election in the United States

Two Harvard professors, John Kotter and James Heskett, ended their 1992 book Corporate Culture and Performance with this strongly worded guidance on leadership: “….if leaders do not have the hearts of servants, there is only the potential for tyranny.” While the context and primary focus in their book was corporate leadership, the guidance applies across all sectors of society.

Donald Trump personifies leadership that does not “have the hearts of servants.” He clearly does not have the heart of a servant. Therefore his potential, as is clear through his own self-descriptions and his behavior, is to be a tyrant. Of course, this tyrannical characteristic fits well with misogyny and narcissism. His essence is made of this stuff. He might be able to “act” presidential for a moment or two, but his essence is tyrannical.

Hillary Clinton has her own flaws. But, she has also demonstrated thoughtful and decisive leadership in her experience as a public servant. This experience will let her be up to the job from the very first day on. She has the mind, soul and heart of a servant. For this reason and so many others on display during this 2016 campaign, the decision makes itself – Hillary Clinton is the only choice.

 She is head and shoulders above Donald Trump as the best person for the job.

Segue - Second, Getting Capitalism Right: Through Adam Smith’s Teaching, Properly Applied

The narrative on this second subject (Capitalism done right – Adam Smith Capitalism) is in clear contrast to the Trump essence. Adam Smith gave us a model for local and global value creation that is other-focused, with self-interest value creation as a dependent function of being truly other-focused. He really described and endorsed the essence of servant leadership before these words were ever used to name it.

So much has been written and discussed about capitalism over the last 35 years that one might think we have come to the place where it has been addressed enough – that there is no more to say. Many ideas for improving it have been offered – some in response to instances of companies that have seriously misused it and some in reaction to the 2007-’08 great recession. Nevertheless there seems to be general agreement that it remains the single best economic system ever created.

The ideas that have been offered for improving it include a. Conscious capitalism, b. Creative capitalism, c. Triple bottom line capitalism, d. Creating shared value capitalism, e. Sustainability capitalism, and more. While there are surely several reasons why improvements have been offered, a theme running through most is that free enterprise capitalism is subject to manipulation, as in the characterization of capitalism in the United States as ‘crony capitalism.’ Milton Friedman said that the purpose of a company is profit, self-interest value maximization – greed.

What did Adam Smith intend (in The Wealth of Nations and The Theory of Moral Sentiments)? What might he think about the ways that his teachings are being variously applied? And, did he have it right? And if he had it right, what if anything does that mean for local and global economic (capitalist) systems of the 21st century? Remember, after all, that Adam Smith is universally recognized as the father of modern economics and of capitalism. Here are four quotes that summarize his teaching for us:

n   “The property which every man has is his own labour; as it is the original foundation of all other property, so it is the most sacred and inviolable…To hinder him from employing this strength and dexterity in what manner he thinks proper without injury to his neighbor is a plain violation of this most sacred property.”

n  “How selfish soever man may be supposed, there are evidently some principles in his nature which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.”

n   “Man was made for action, and to promote by the exertion of his faculties such changes in the external circumstances both of himself and others, as may seem most favourable to the happiness of all.”

n   ‘He is certainly not a good citizen who does not wish to promote, by every means of his power, the welfare of the whole society of his fellow citizens.’



It is as clear as can be that he connected focus on others with focus on self. He gave us an axiom that connects self-interest and other-interest.

Our Translation of the Adam Smith Axiom

The Smith axiom connects self-interest and other-interest as a theory of everything for economic and societal behavior. Here it is:

a. Self-interest value maximization is a direct function of optimization of the value provided by an organization (and a person) to each of that organization's (and person’s) primary stakeholder groups – each relative to the others.

b. Here is the same idea expressed as a formula:  IVM= f (S1VO, S2VO, …SNVO). 

c. That is, a business will maximize its own long-term value when it devotes its time, talent and treasure to optimizing the value it provides to each of its primary stakeholder groups, each relative to the others.

d. The primary stakeholder groups for virtually all companies and all persons are: 1. Customers, 2. Employees, 3. Investors, 4. Suppliers, 5. Communities where it has a presence and 6. The general public interest. Sometimes the names are different but these are the primary groups whose lives every company (organization) significantly affects.

 Certain complementary concepts are integrally related to this paradigm. They help get capitalism done right – including income inequity minimization, poverty minimization and solutions to job/employee dislocations locally and globally. The complementary concepts are only listed here. The detailed presentation that explains their essential connection to the paradigm is available but can wait. The key is that the outcome will be commercial and societal long term value maximization – in all local economies and the global economy.

These concepts are: 1. Universally treasured unalienable rights, 2. Ubiquitously held core virtues precious to all peoples, 3. Finite sets of valued things for each primary stakeholder group, 4. Gold standard leadership and cultural characteristics for all organizations, including governments, 5. Robust understanding and action on fiduciary responsibilities and 6. Ethical behavior always.

All of this is of course accompanied by an adaptive and actionable strategic planning process. The SEC quarterly reports by corporations in the United States are primarily focused on the financial condition of a company (the investor primary stakeholder group).The SEC reports and all regular reviews of company financial health must be complemented by quarterly reports on progress toward goals for each of the other primary stakeholder groups as well. That is how optimal value improvement can be obtained for each primary stakeholder group – and long term value maximized for the organization.

There is more. When we enlighten current leaders and students (upcoming leaders) about how to get economies and societal institutions (like governments) right, they will rejoice at the value creation results that will flow from adopting Adam Smith Capitalism. It gets capitalism right.


Wednesday, June 24, 2015

Capitalism and the New Paradigm: A Presentation and an Invitation.

Almost all posts at this blog site address the concept of organizational excellence - how to get there and how to stay there. Previous posts have approached the subject from different perspectives, from different parts of the room. This post summarizes the concept, presents the key elements and connects them, resulting in a harmonized integrated paradigm - one that is actionable.
Others have tried and are trying. The last 45 - 50 years have been grounded in the "profit, the more the better "paradigm and the World is the worse for it.
This new paradigm requires only courageous leaders and all people to have the hearts of servants to take it, own it and put it into action.
My bet is that there is at least one corporate leader out there, perhaps more, who will rise to the opportunity. We shall see. Even top academicians, when addressing this subject and knowing that the paradigm offered here is the way to move forward are still held hostage by the profit paradigm. It is almost a viral condition that in a nutshell rests on this old saying: "we have always done it this way," or this one, "changing cultures takes years, let's take baby steps first." Oh the tragedy, the local and global opportunity costs that are caused by this timidity.
This long post addresses the metaphysical and philosophical aspects of the concept as well as the practical and wrap-around existential aspects. We cover the waterfront.
So, please read, think and respond. You will be glad you did.                      
A Note: This article presents a concept and approach to pursuit of long term value creation and organizational excellence. The concept presented here is original; that is the dots are all connected in this way for the first time here – as an integrated paradigm. Some ideas and research results in the article are taken from the work of others, though, as presented in books, articles and the like. The sources are available upon request.
 Why Is An Idea Like This Relevant? 
1. Every person and every organization should do their very best to provide maximum value to others over their lifetime. Why? A. Because it is the right thing to do and B. Because it is in their own self-interest.
2.    How and why to do it are ultimate questions. Answers over the centuries have been many. For corporations, especially publicly held for profit corporations, the answers to the “how” and “why” questions have been to earn a profit, the more the better, with capitalism as the economic system of highest choice. That is, provide value to others in order to make a profit for me.
3.    This profit answer has caused a falling short, a sub-optimization, a lower than A+ grade – even an F grade in some cases – in local and global economies and the global aggregate economy.
4.    The idea offered here provides the description of the paradigm that can bring each and all to that A+ grade over the long term….and national sovereignties will be helped not harmed under this 21st century (and beyond) new paradigm. And, profit (value) will be maximized as an outcome, not as a purpose.This article uses the word “paradigm” so much that a definition or description of what we mean by paradigm might be helpful:
 Paradigm – A theory or a group of ideas about how something should be done, made or thought about….a model or pattern for something that may be copied….SYNONYMS – mold, standard, ideal, paragon, touchstone.
The following idea about capitalism qualifies as a new theory or an ideal that is revolutionary. Many proposals have been offered, especially over the last 20+ years, about how to improve capitalism.  Bad leadership of some companies that was on display in the 1990s and into the turn of the century and the near meltdown of the U.S. and even global economies in 2007-'08 helped stimulate these new ideas about improving capitalism, but some were offered even earlier.
We suggest our idea as another and even the best paradigm change for how to raise capitalism to its highest level, how to employ capitalism as the best catalyst for both wealth creation and total societal well-being over the long run. And, we believe capitalism flourishes most when connected to a legitimate democratic political system (more on that at another time).
We only summarize our idea here. Making it work takes detailed knowledge of and enthusiastic behavior about acting this description out. It will be easier done than said, though, which is the elegant blessing – it fits the best of human nature.

First, The Existing Paradigm:
 It can fairly be said that the existing dominant concept (paradigm) in capitalist economies is that it is about profit, the more the better.
In this way, this argument goes, corporations will make their best contribution to society. This concept can be said to have been most forcefully and successfully articulated by Professor Milton Friedman of the University of Chicago. It has been followed for more than 40 years. Wall Street is enchanted with it.
 The value created over these 40+ years and even over the last two centuries has unfortunately masked the fact that capitalist economies – even though they trump all other economic systems - have been chronically underachieving compared to their highest potential.
Let’s be perfectly clear: The U.S. economy and all economies for that matter are and have been underachievers when compared to the potential this new paradigm unveils, no matter how good they have done over the years. Sad but true, the following paradigm or mindfulness and behavior guide should not be new – but it is.

Second, The Proposed New Paradigm – the essential mindset for capitalism going forward:
 Self-interest value maximization is a direct function of optimization of the value provided by an organization (and a person) to each of that organization's (and person’s) primary stakeholder groups – each relative to the others.
Here is the same idea expressed as a formula:
IVM= f (S1VO, S2VO, …SNVO).

That is, a business will maximize its own long-term value when it devotes its time, talent and treasure to optimizing the value it provides to each of its primary stakeholder groups.

What is meant by primary stakeholder groups?
A primary stakeholder group is a person or group affected by an organization or person. Taken to an irrational or illogical extreme, every action of every organization or person affects every other person and organization. This description always strikes me as one used by those who might want to avoid the real meaning and implications of the stakeholder concept.
I prefer thinking about primary stakeholder groups as those affected by a person or organization in a way that is significant, one that really matters. So, groups and persons are primary stakeholders of any other group or person if they are significantly affected by them over their lives.
 Most companies (organizations) and persons have a truly finite number of primary stakeholder groups -about six for almost every organization and person:
      1. The Primary Stakeholder Groups of Any Organization (or Person) are:
a. Customers, b. Employees, c. Investors, d. Suppliers, e. Communities in which it has a presence and f. Society at large (the general public interest).
      2. Each of these groups has four or five things they value most, and the following listings are solidly representative, though improvable (have at it :-)):
           a. Customers – 1. High quality, 2. Reasonable prices, 3. Kindness, 4. Companies that treat their employees well and 5. Companies that are good citizens.
           b. Employees -1. Opportunity, 2. Fair compensation, 3. Security, 4. Challenge to achieve as individuals and teams/groups and 5. Company conducts itself as a good neighbor, a good citizen.
           c. Investors 1. Best value creation from their funds over the long term, 2. Positive company participation in communities, 3. Great company treatment of employees, 4. Great company standing in society (loved), 5. Gold standard leadership in the company and 6. Full participation in society.
           d. Communities in which it has a presence – 1. Good citizen in local communities, 2. Long term participative partner in community well-being, 3. Great company treatment of its employees, 4. Full company involvement in environmental and societal stewardship for the long term and 5. Openness.
            e. Suppliers – 1. Fair dealing, 2. Long term partnership opportunity mutually earned, 3. Great treatment of employees, 4. Positive citizenship conduct of company and 5. Enjoyable to work with.
             f. Society (The Public Interest) – 1. Great local and global citizen, participative and engaged, 2. Great social and environmental steward, long term, 3. Willing partner and participant with others (including governments) in serving the public interest and 4. Excellent treatment of its employees, suppliers and neighbors.
An outcome of this paradigm, in fact a necessary outcome, will be the maximization of profit – value creation over the long term - measured in appropriate financial terms as well as the other value measures a company holds dear.This is truly the breakthrough "big idea."

Is that all there is to it?

No. There are a few additional things that are an essential part of this mindset. Here is the additional group of ideas that are each part of this new mindset – this new paradigm. They are:
1. The basic unalienable rights of people around the world are treasured:  Life, Liberty, the Pursuit of Happiness and Property (one’s own aptitudes about which one is proud and excellent at – loves to act out),
 2. Those virtues that are shared as precious by all peoples around the world:
(a). Wisdom and Knowledge – Curiosity, Love of Learning, Judgment, Ingenuity, Social Intelligence and Perspective
 (b).Courage – Valor, Perseverance and Integrity.
 (c).Humanity and Love – Kindness and Loving.
(d).Justice – Citizenship, Fairness and Leadership.
(e).Temperance – Self-control, Prudence and Humility.
(f).Transcendence – Appreciation of Beauty, Gratitude, Hope, Spirituality, Forgiveness, Humor, and Zest.
  
3. Gold standard leadership characteristics are employed  and lived:
(a). Establish Direction – Vision.
(b). Humility and Professional Will – Modest and Fearless.
(c.). Inclusive, Enabling, Inspirational, a Listener.
(d). Stakeholder Focused – in a Maniacally Profound Way.
(e). Heart of a Servant.
(d). Ethical, Courageous and Just, and
(f). Fun.

 4. Gold standard cultural characteristics are in place and second nature:
(a). Adaptive, with a Core Ideology (Purpose & Values).
(b). Risk taking, trusting, proactive.
(c). One in which all are heard and the truth is heard.
(d). Reflective, humble, anticipatory & involved.
(e). Rational & respectful, a conscientious mindset.
(f). Quietly confident, unassuming while maniacally pursuing the organization’s vision & mission with prudence, perseverance, humor and zest.
(g). Disciplined People, Thoughts and Actions in a Fun and Dynamic Environment.
(h). Open, Supportive and Enthusiastic.
(i). Happy, in a Stakeholder-Centered (H3) Way, and
(j). Fun.
          5. The normal blocking and tackling of organizations will be robustly carried out because all will be in their correct ‘seats on the bus’ - Effectiveness, Efficiency, Productivity, Creativity and Innovation, AND
6. Ethical behavior always.

Multi-Year Planning And Doing: The Main Action Vehicle For Our Paradigm.
Strategic plans are often spoken of in a negative way. The criticisms include being too slow, irrelevant before the ink is dry on the document, esoteric and a waste of time. They are characterized as being (and often are) placed on a shelf collecting dust. It has also been said that “plans are worthless but planning is essential.”
The truth is quite the contrary. Plans and adaptive planning go hand in glove. In fact, actionable multi-year adaptive, adaptable plans, or playbooks, are the essential vehicle through which this new mindset-based paradigm happens. The actionable plan is the dynamic vehicle through which it all springs to life – and continues to be vibrant. Again, let’s be clear: An adaptable, adaptive plan is the very definition of planning, which in turn keeps us on the maximum value creation trajectory over time, and it fulfills, it is fun.

A Final Thought.
All too often over the years, the easy way out is to do pretty good - to beat the competition. Excellence is therefore too often not pursued. Of course breakthrough innovations have been made and do happen, but mostly they precede organizational behavior and flow from the passion of true innovators before the fact.  The blissfully good news is that the full life well-lived – the happy life - and the highest value creation for each and all organizations flows from, and only from, adopting and acting out this paradigm, the 21st century essential dominant mindset presented here. Innovation keeps happening because it is fulfilling, it is fun and it is servant-based. And, this applies to life at work, at home and at leisure – to all aspects of life.

Embracing and adopting this paradigm will take a little courage and a true long term picture of the possible for the future. Only a handful of companies appear to understand this concept now, as seen through their behavior.
Well intentioned and respected academics and corporate leaders have come along with ideas that purport to offer something like this new paradigm, but they all fall short. Most of them appear to be unable to let go of the profit-centered (and short term, inward-focused and win-lose) old paradigm. Adam Smith would be absolutely disgusted with this profit-centrism, this old mindset. Conversely, he would be absolutely enthused with this new paradigm. The Dalai Lama would too.
Such labels as disruptive, transformational, seminal, revolutionary and paradigm shift/change will be most completely satisfied when our idea here becomes the organic and universal way of behaving by all corporations – all organizations.
And, Adam Smith would rejoice.

And, the world will be a better place – for all.

Wednesday, February 25, 2015

How Businesses and All Organizations Can Best Create Maximum Value In The Future.


Sometimes it is worthwhile to step back, look at how business has been conducted over the years, look at the far future horizon and think about how to change the conduct of business now so that the value being created for all in that future time is as great as possible.
This article suggests a wide-angle lense approach to creating that future. It also says narrow-minded, short term and inward-focused business conduct should be abandoned - even though some good value has been created over the years. It is yesterday's best paradigm, and we offer the best future way of thinking and behaving - the new paradigm.
This article also offers a comment about how some leading thinkers are currently addressing value creation. The way they are advising the local and global business world, while indeed understandable, is prolonging this "yesterday's paradigm" problem.
The paradigm problem is that profit - the more the better - has been taught and accepted by most for years as the primary or only purpose of business.
 The late Professor Milton Friedman of the University of Chicago, and others, presented this idea in the 1960s. Professor Friedman himself presented it famously in the New York Times in September, 1970 and continued to preach it up to the turn of the century. This profit fixation has been taught in business schools and, even though some companies and some globally known CEOs say that profit as a purpose is dumb, their behavior says just the opposite. 
And, the investment banking and Wall Street community largely still clings to this profit-focused paradigm flaw.
Profit-Focused Paradigm Flaw?
Precisely. Even in these times of concepts like sustainability, conscious capitalism, creating shared value and other proposals, bringing value to other primary stakeholders (customers of course, and employees, suppliers, communities where the business is and the general public interest) is still used as means to an end – the end of creating value only for shareholders.
As long as boards and leaders use outward and long term focus as instrumental, they will fail the shareholders (and the organization’s other primary stakeholder groups) over the long run, by fostering creation of less value than the companies have the potential to create.
What Is The Answer?
The answer is to adopt a mindset (a new paradigm) that is: a. Dominantly long term, (board room to boiler room), b. Primary stakeholder-focused (customers, employees, investors, suppliers, communities in which the companies have a presence and the general public interest), and c. Value-optimizing for each primary stakeholder group, relative to each of the others.
More detail about this essential 21st century dominant mindset can be found in previous posts at this site . Importantly here though, we can summarize:
The highest nature of people, applied to their role as markets, is such that where and when they see companies conducting themselves in accordance with this new paradigm, embracing the six or seven globally ubiquitous virtues people share (peoples from all around the world), treasuring the three or four universally possessed unalienable rights of people and fully acting out their fiduciary responsibilities toward each of their primary stakeholder groups (not just their shareholders), people (markets) will virtually always vote with their hearts, minds and feet and move toward, lean into and buy from such companies.
Transformative Concepts, Seminal Concepts and Disruptive Concepts or Technologies.
For a concept to be transformative or seminal - or disruptive - on any subject or area of life in which an existing paradigm has been dominant, and in this case almost idolized, for so long, it must break away from the core of the old paradigm – in this case profit-centrism and short-termism – and present an actionable and entirely new paradigm. 
We do that here. To understand it fully, to flesh out the summary above please go to the two previous posts at this site - October 20, 2014 and July 15, 2014.
 All companies and organizations, including governments, that do change, embrace and make this new paradigm their own will no longer fall short (sub-optimize) but rather will optimize. And, the long term result will include, as an outcome, creation of the highest level of wealth over the long run – for society and themselves. This is what Adam Smith was trying to teach 250 years ago. Very few have made him proud since, but this new paradigm in action would make him proud.
This note has not discussed the string of “my bads” of the last 20 plus years, like the 2007-’08 great recession, the Enron behavior, etc., because we need not. Rather, we offer the going forward mindset (paradigm) that will make the likelihood of such “my bads” go toward zero in the future.
Agree or disagree? Call us and we can wrestle it to the ground :-).

Monday, October 20, 2014

Capitalism And The Golden Rule: The Perfect Match Maximizing Local And Global Value And Wealth Creation


                For Companies And Individuals: Capitalism’s Ultimate Promise
       Let's Use Kitchen Table Wisdom And Street Corner Logic, So We All Get It

It is time to cut through all the research, studies, speeches and similar ways to give attention to this critically important subject. Let’s consider the playbook, the new actionable paradigm for the 21st century and beyond that will elegantly do the job. It is almost embarrassing that we even need to explain it. If it was a snake it would bite us. We will address this important subject in some detail in this article.

This post is written, with great respect to other recent efforts (mentioned below), to get to the heart and essence of the question of how to repair or rehabilitate Capitalism. Several other efforts in recent years, while they do offer ways to create value, really only nibble around the edges of this larger matter. The proposal here addresses Capitalism’s ultimate promise – its highest value potential for local and global societies. We are confident Adam Smith would endorse this concept.

 It should help to provide two prefatory exclamation points on this matter right at the start:

Doing Well By Doing Good.
There have been many efforts recently to study and propose ways to make capitalism rise to its highest level. Some of them have been described in short-hand as “doing well by doing good.” This is an understandable description. It means of course that a company can do better for itself, have more profit if it does good for others. While understandable it is so obviously second best, partly because it is still self-focused. It uses doing good for others as an instrumental means to an end – more profit for self.
On the other hand and ironically, the new paradigm we advocate in this article can be called “the golden rule as the ultimate commercially effective paradigm” – the way to create ultimate wealth as an outcome of a total focus on service to others. The difference is one of focus and reason for existence. In this approach, our focus is on others – our primary stakeholders. And, this focus is or will become part of any company’s DNA. The additional value to us (our company) is an outcome, not our driving purpose.
So, we present the 21st century essential dominant mindset and it is grounded in the true meaning that underlies the golden rule. How serendipitously elegant that a complete focus on serving others results also in achieving our own maximum level of wealth creation or value over the long run as an outcome.
People As Markets, In Kitchen Table Language.
In this article we discuss ubiquitous virtues, unalienable rights and fiduciary obligations, among other concepts.  We use “markets” as a synonym for “people.” The plain meaning of it all can be expressed as follows:
1.     Markets like companies that have and live the ubiquitous virtues.
2.     Markets like companies that treasure and honor the unalienable rights.
3.     Markets like companies that fully understand they have fiduciary obligations to all their primary stakeholders.
4.     Markets like companies that are ethical and fair.
5.     Markets like companies that are effective, efficient, productive, creative and innovative.
6.     Markets like companies that produce high quality products and services at reasonable prices.
7.     Markets like companies that are good citizens, pitching in and helping out in their communities.
8.     Markets like companies that treasure the environment and are good stewards for future generations, attending to the public interest.
9.     Markets like companies that compensate their employees fairly and create great, stimulating work environments for them – helping them be creative and innovative.
So, because one of our principal messages is that there is a mindset that is clearly the best mindset for capitalism to be grounded in (long term, primary stakeholder-focused and value-optimizing) and that this mindset itself is grounded in a solid understanding of the golden rule, these two prefatory explanations should help the reader make sense of the entire article.
Now, we can get on with explaining how to achieve capitalism’s ultimate promise – locally, globally and for all people.


Now, Actionable Paradigm – What The Heck Does That Mean?
Actionable paradigm, while sounding a bit too-too, simply means something that is or can be the model for conducting business that changes everything – that sets a new standard. The model we present here, when put into action by companies, by all organizations, will result in maximum value and wealth creation, local and global, over the long run. The real beauty of this paradigm is that it will reach to and raise the well-being of all people around the globe once it becomes viral – once it becomes universally embraced. At the same time and as an essential outcome it will enable companies to get on their long term trajectory of maximum wealth creation and stay on it over the long term.
A bunch of study and research has been done over the last 20 or 30 years on whether and how for profit publicly held companies can do better – or even their best – as they make and sell their products and services to customers. The reasons studies are done are many. The primary one, though, is that while much value has been created over the last 150 years or so (including through such recent and disruptive innovations as the communications and internet revolutions), such moments and events as the great recession of 2007-’08, the behavior of companies like Enron, WorldCom and others and the gap between the rich and poor as driven by the economy over time cause us to scratch our heads and look for approaches to improve the way that capitalism is acted out. Even more basically, we scratch our heads to determine whether a new way (a new paradigm) might be needed to allow capitalism to reach its highest potential as the best wealth creation catalyst for local and global economies.

It can fairly be said that the existing dominant concept (paradigm) in capitalist economies is that it is about profit, the more the better. In this way, that argument goes, corporations will make their best contribution to society. This concept can be said to have been most forcefully and successfully articulated by Professor Milton Friedman of the University of Chicago – extremely crisply in a New York Times article in September, 1970. It has been largely applied and taught as the intrinsic purpose and motivation of business since about that time.
Bad things have happened under this old paradigm, though, including one (the 2007-’08 recession) that nearly ended free market capitalism’s life.

Here are some examples of efforts to address this very important matter:
1.   . Triple bottom line capitalism, 2. Creative capitalism, 3. Conscious capitalism, 4. Authentic capitalism, 5. Creating shared value capitalism and 6. Solution-creating (problem solving) capitalism. This sixth one has democracy necessarily accompany it because democracy helps create prosperity by resolving conflicts fairly – according to the people who studied and produced this approach. In fact, we believe legitimate democracy is the best partner for each of these approaches.
Each and all of these studies, research efforts and concepts have their own merit. They all fall short, though, of presenting a concept that is integrally consistent, one that reflects the highest expectations of local and global markets (populations) and that offers and ensures that companies – all organizations – and societies can get on their respective highest wealth creation trajectory and stay on them over the long term.
This matter of wealth creation, then, is that what it’s all about? The answer is yes and no.
Wealth creation is one way to describe the necessary outcome of a business that creates a product or service and sells it in the marketplace. Profit is another way, as is value creation. The main point is that when a business receives more for its product or service than it costs to produce and sell it, a profit must be an outcome. It can be called wealth creation. But, and this is the key, while this outcome is essential for the long term existence of the business, it is not its purpose.
Every business has, as its own purpose, its own reason for existence, the creation of something it has the passion for and aptitudes to produce. It must be something that buyers will buy because it creates value for them (it provides a solution for them), enough that they value it more than the money they pay for it.
For non-profit organizations a positive margin must be produced, enough to enable the non-profit to continue to provide optimal value to its primary stakeholder groups over the long run.

So Far, Kind of Staying Simple, But Let’s Spit It Out – What Concept Will Do This Job?

The Golden Rule Does The Job. Period.
We think it would be good to express the golden rule in business lexicon words, although an argument can be made that these words are not part of business lexicon. We hope they will be – soon. We lay claim to the “21st century essential, dominant mindset” as the name that applies to the following definition of the golden rule when used in describing it in the business (organizational) context. It also qualifies as the truly “big idea” for capitalism, a moniker claimed by some other efforts on this subject:
 The real breakthrough "big idea" is that self-interest value maximization is a direct function of optimization of the value provided by an organization (and a person) to each of that organization's (and person’s)  primary stakeholder groups – each relative to the others. That is, when a business devotes its time, talent and treasure to doing its best to optimize the value it provides to its major stakeholder groups (customers, employees, [and investors as a stakeholder group], suppliers, communities in which it has a presence and society [the general public interest]), it will maximize its own long-term value as an outcome (a by-product) - measured in appropriate financial terms as well as the other value measures it holds dear. This is not a belief; it is a self-evident axiom.
It can be expressed as a formula or an equation:

IVM= f (S1VO, S2VO,..… SNVO), where “I” is “institution” (any organization), “f” is “function of,” “S” is “stakeholder,” “V” is “value” (valued things) and “O” is “optimization.”
A.    It is important to note here that just as the number of primary stakeholder groups is finite – really about six for every organization, so also is the number of “primary valued things” for each of these groups – about three or four for each group. That is, it is not a monumental task to identify them. In fact, this makes the marketing dimension so focusable and so achievable.
B.     Again, the primary stakeholder groups, almost without exception, are: customers, employees, investors, suppliers, communities in which the company has a presence and the general public interest. Depending on the sector, different names are used – for example in health care the customer is the patient.
Every business, in fact every organization (every group with a unifying purpose) will maximize its own long term value or wealth creation as a direct function of optimally serving its primary stakeholder groups.
That is, it is simple and doable.

At the kitchen table and on the street corner these groups would be and are discussed as the key groups. People look with great interest at how these groups are treated by any company. If it is good, people like it and bring their business to that company. If not, people do not.
Anything Else?
Of course. This new paradigm, this “big idea” conceptual foundation must intersect with and be integrally connected to an adaptive multi-year planning-and-doing process that makes it all happen (be actionable) – day in, day out, year in, year out. Often called a strategic plan, it can also be called a multi-year playbook.    How simple is that?

Other Important Aspects Of This Paradigm.
There are just a few other very important aspects of this new paradigm. These aspects are integral to and breathe robust life into it. They are listed here without much elaboration, to allow the reader to see the dots and, almost certainly, connect them:

1.   Ubiquitous virtues: Research by Professor Martin Seligman of the University of Pennsylvania, with others, indicates that there are about six virtues that are treasured by virtually all peoples around the globe. It turns out that these virtues are literally the same as the cardinal virtues – together with the theological virtues from Christian teaching. This new paradigm is areligious, but the ubiquitous virtues are strikingly similar. They are wisdom and knowledge, courage, humanity, justice, temperance and transcendence. Of course each virtue presents itself through a number of tangible traits, like creativity and curiosity as traits indicative of wisdom and knowledge, and kindness as indicative of humanity. They all make sense and sell at the kitchen table.
2.   Universally Possessed Unalienable Rights: The rights to life, liberty, the pursuit of happiness and property (where property means one’s own skills and aptitudes – the abilities of each person to actualize her/his own potential) are almost universally agreed upon to be unalienable.
3.   Fiduciary Responsibilities: The robust understanding must be that every organization, certainly every company, has a fiduciary obligation to each of its primary stakeholder groups – not just to its investors, its owners.
4.   The Normal Blocking and Tackling of a Business: These will blossom most fully with our new paradigm. They are the functions of effectiveness, efficiency, productivity, creativity and innovation. In fact, with each employee doing that which fits her aptitudes and about which she is most energized and passionate (Jim Collins’ “seats on the bus) these functions will be artistically acted out.
5.   Gold Standard Leadership Characteristics: Enough mistakes have been made and attention given to the characteristics that work and those that don’t work that these seem obvious: Establish direction (vision, personal humility and professional will), modest and fearless, inclusive, enabling, inspirational, a listener, stakeholder-focused – in a maniacally profound way, heart of a servant, ethical courageous and just, and fun.
6.   Gold Standard Cultural Characteristics:  These are also clear, after many years of wandering: Adaptive, with a core ideology (purpose and values), risk taking, trusting, proactive, one in which all are heard and the truth is heard, reflective, humble, anticipatory and involved, rational and respectful, a conscious mindset, quietly confident, unassuming while maniacally pursuing the organization’s vision and mission with prudence, perseverance, humor and zest, disciplined people, thoughts and actions in a fun and dynamic environment, open, supportive and enthusiastic, happy, in a stakeholder-centered (H3) way, and fun.
7.   Happiness: This aspect, once dismissed as unnecessary to have a productive work force, is essential – and it is at the heart of our 21st century mindset. It applies to the entity itself and to its work force. Briefly, Aristotle’s four kinds or levels of happiness, H1 through H4 are so obviously explaining that a dominant H3 life, the happiness that flows from contributing to the happiness of and creating value for others, is ultimately the best way for one to fully actualize one’s own potential in life. It is servant existence and servant leadership in action. Our big idea is grounded in this reality – we just breathe commercial life into the idea. It fits. And, it has as one essential outcome the maximization of the organization’s H2 (achievement – wealth creation) level of happiness.
8.   Multi-Year Adaptive Planning and Doing Process: the plain vanilla strategic planning processes are fine. However our 21st century mindset’s intersection (harmonization) with this planning and doing process puts the company on that highest wealth creation trajectory and helps us stay there over the long term. Going from charter statements of purpose, values and beliefs, which are or should be timeless, through vision, mission, the successive and adaptive multi-year plans (with their goals and strategies) to annual budgets (with their objectives and tactics). What once and forever has seemed perhaps mundane to many (collectors of dust on the shelves) takes on a vibrant life with this harmonization, this nexus plus.
9.   Ethical Behavior Always: This imperative was once thought to be optional for companies. They are legal persons, not real personsAs long as they did nothing illegal, as long as they followed the law in their conduct, ethical behavior was considered optional. Can you believe it?
10.       Opportunity Cost Awareness and Minimization: This will be another and welcomed outcome of the new paradigm, local and global, micro and macro.
11.       Full Potential – Seen and Actualized: This state of being is of course the ultimate outcome for an organization, and our 21st century essential dominant mindset produces it. Reached through our actionable paradigm, it is the equivalent of the happy life for a real person – the good and full life, well lived.

Now, how is that for keeping it simple? This is the golden rule applied to organizations – and individuals for that matter. It applies to all groups of people who are gathered together with a unifying purpose, a common cause.

The 21st Century Essential Dominant Mindset: A Summary.
This article has presented the organic new paradigm that will allow companies and, really, all organizations to get on their highest wealth creation trajectory and stay on it for the long term. It will do it because it invites and enables companies to appeal to the highest shared characteristics of people (markets), both locally and globally. It also invites all people to find work that allows them to fully use that most precious and unalienable property of theirs – their aptitudes and skills that they are passionate about.
While staying simple, there is more to this actionable paradigm, but the heart and soul of it has been presented here.

Next Steps?
Some might or will consider this proposal to be a bridge too far. That is, to ask leaders of companies to have a long term, primary stakeholder-focused and value-optimizing mindset, rather than the largely short term-dominant, inward-focused and win-lose mindset that they have been accustomed to simply asks too much.

We think that view underestimates the ability of companies (all organizations) and their leaders to see and conduct themselves in accordance with their better angels. If for no other reason, this mindset is and for companies and leaders everywhere will increasingly become the best commercial choice available. That is, get on board or go out of existence!

We believe companies and their leaders, once introduced to this paradigm and enabled to understand its merit, will enthusiastically embrace and adopt it.


This, then, represents a new paradigm for capitalism that can enable all, at the local and global levels, to fully realize the benefits of capitalism’s ultimate promise.