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.

Tuesday, July 15, 2014

The Profit Motive: An Understandable Distraction In The Wealth Creation Process. At Best A Misnomer, At Worst A Wealth Inhibitor, A Wealth Limiter.

(This post follows from our themes in previous posts. It might appear to be heresy, but worry not, my capitalism and democracy friends. We discuss here one important part of how we lift capitalism to its high and true potential. This post offers a perspective far too long missed).

What? Surely anyone with a scintilla of understanding of the business of business knows the assertion in this title amounts to blasphemy. Throughout commercial time, it has been an accepted axiom that a seller will sell her/his wares if and only if they receive payment for them greater than the cost they incur to produce and sell them. The amount by which the payment exceeds the cost is called profit. And, sale after sale, year after year, the accumulation of this difference can be called wealth creation, right?  Right!
So, where’s the beef? Well, a focus on profit as a motive does a critical disservice to the higher nature of people, to our better angels. In more practical and commercial terms, it causes the business to fall short of the wealth creation potential it really has.
Profit, as we note above and as has been acknowledged by many students of economics, finance and business over time, is an axiom, an axiomatic outcome of the commercial process – not a motive. To suggest that it motivates the seller (producer), is to; (1) do a disservice to the seller (producer) as a person whose special aptitudes are being used to produce something she/he has a passion to produce in order to please the buyer, the consumer and (2) cause a sub-optimization of the use of all the input resources required to create the product.
The real bell-ringing motive of the seller (the producer) in the commercial process, the one that creates maximum wealth over time, is to optimize the value provided to each primary stakeholder group (customer, employee, supplier, investor, community where the producer (seller) exists and the general public interest). It is this primal motive that causes the seller, the producer, to actualize her/his potential, to be thrilled to the max AND to create the highest near and long term profit possible as an outcome of this value-optimizing motive over time. Confusing motive and outcome (profit as an axiom) results at best in pretty good wealth creation over time, but not maximum wealth creation.
Well, so what? The answer to this provocative question is that a focus on profit rather than on optimizing value by definition causes the producer (seller), and those who watch her/him, to be continuously looking inward, to be enchanted with winning (relative to other sellers (producers)) and to slip into the seductive short termism behavior so prominent in the commercial world – especially the investment banking part of the commercial world. By contrast, the value-optimizing focus allows the seller (producer) to be consumed with and captivated by continuously innovating and creating the best possible product or service for the customer, while also; (1) providing employees the truly fairest compensation and the fullest possible self-actualization opportunities, (2) providing the suppliers with the most attractive long term fair compensation), (3) providing communities the best citizen behavior and (4) providing the general public the most able and willing co-creator of the best society over the long run.
It all sounds so delightful, but also implausible. A bit more explanation is in order, to connect with normal business and organizational practice.
Normal Business Practice. 
The normal blocking and tackling of a business lies in the important functions of effectiveness, efficiency, productivity, creativity and innovation. When a business (our seller (producer)) is focused on optimizing the value provided to its primary stakeholder groups, the likelihood (the probability) that these blocking and tackling functions will be performed at their highest level is itself maximized.
Without explaining every piece here all at once, other related realities about the market, local and global, such as universally held unalienable rights and ubiquitously treasured virtues will cause the products and services of our seller (producer) to attract buyers (consumers) above all other choices available to them. The marketing opportunity will have been elegantly achieved and exceeded, simply by focusing on serving others in this way. AND, the profit outcome, the accumulating wealth, will be maximized as a result - a necessary and natural result of doing what is right and actualizing one’s potential (individuals and groups of individuals (companies)) as a seller (producer).
What Does It all Mean?
The dominant focus of for profit business over the years has been inward, near term and win-lose. Profit has been all too often taught to be both the “business of business” and that which owners and managers should focus on. It is as though the motivation of producers (sellers) is to be achieved by a continuously ringing cash register. How silly that is, and how demeaning! Indeed, though, wealth has been produced over time, much wealth, but not enough for the very reasons we present. The primal motive has been misstated.

However, if business had been dominantly focused on value creation for its customers and its other primary stakeholders over the years, more wealth would have been produced. More importantly, in this beginning of the 21st century, with the globally disruptive communication and technology revolution as one significant catalyst for paradigm change by itself, we have the opportunity and obligation to reset our dominant focus toward primary stakeholder group value optimization. Companies will rock because; (1) customers will eagerly buy their product or service, (2) their employees will be able to fully actualize their individual and group value, (3) suppliers will receive optimal value through their relationship with the companies, (4) communities will receive optimal value from the company as a citizen member of the community, (5) the general public interest will have a willing participant in optimizing value in the public interest and (6) investors, including owner-investors, will have both optimal and maximized long term value – importantly and necessarily (axiomatically) including maximized wealth creation.
By the way, this same paradigm change in focus applies to non-profit organizations, governments – all organizations, local and global.


The case for a reset of the definition of motivation and focus for businesses (and all organizations) to the obvious - Optimization of value for primary stakeholder groups - is clear. More can be written about it, but the case is intuitive, and it is certainly more than a semantics game. It is the literal heart and soul of the highest behavior we can engage in as people and economic actors for local and global societies.

Tuesday, June 24, 2014

How To Make Capitalism Rock And Roll.

How To Make Capitalism Rock And Roll.

This post includes a previous post that was incorrectly formatted and posted. The introductory paragraphs are intended to make the total message clearer. We can only hope.

The heart and soul of the piece is that there is a self-evident best mindset paradigm for capitalism as a catalyst for long term value creation. It has remained mostly (and tragically) under-used over the decades.

There are many reasons. One fundamental and longstanding reason, though, is a misconstruction or misunderstanding of Adam Smith’s teaching. In more recent years the dogmatic teaching and assertions of Professor Milton Friedman, the main themes taught in business schools and, sadly, Wall Street’s short-termism affliction have had a pervasive and subtle negative effect on mindset choice. Negative in that even though much economic value has been created over time, we have sub-optimized economically, with the associated opportunity costs, precisely because the ultimate commercial, economic and societal value that this alternative paradigm can create has been largely missed.

Some work has been done to move toward this paradigm, including by academicians and practitioners, but virtually all that work has been either incremental or organization-specific and, in any event, has not embraced the ultimate fullness of the essential mindset change that is at the core of this new paradigm.

Choice of mindset precedes all other matters for corporations (all organizations), nations and the global, interactive societies and economies. The multi-year plans of organizations (strategic plans – with their goals and strategies), as well as the current year budgets (with their objectives and tactics) are all established in accordance with the dominant mindset of an organization. So, it is clear that we must get this mindset matter right. It is explained in the post below. However, much goes unsaid in the post, for the sake of brevity, and is only fully discussed in a longer explanation. For example, the idea of fiduciary obligation is commonly focused on owner-investors in an organization. This is an entirely too narrow construction of fiduciary. The robust, essential construction of the fiduciary obligation of every organization is that it exists for each one of the organization’s primary stakeholder groups. One fortuitous and natural by-product of this construction is, in fact, that the long term value for owner-investors will be maximized.

 Local and global value creation (use GDP or any other measure of value creation) would have been much greater over the last 100 + years, all other things equal, if our mindset presented here had been dominant, rather than the Wall Street, university business school-taught (implicitly or explicitly) old dominant mindset - short term, inward-focused and win-lose. And, this old dominant mindset was heavily influenced by that tragic misapplication and misunderstanding of Adam Smith’s teaching.

The piece below addresses this new paradigm, this new and essential 21st century learnable dominant mindset. This post uses a recent event to present this ultimate value-creating mindset.

One important note first: Michael Porter and Mark Kramer of Harvard have articulated the concept of creating shared value (CSV). They consider it the next big transformational idea for business (and perhaps economies and societies by inference). Professors Andrew Crane and Dirk Matten, business ethics, corporate citizenship and corporate social responsibility (CSR) professors take issue with the Porter-Kramer CSV concept. This post below, together with the notes here introducing it, acknowledge the good incremental value of both Porter-Kramer and Crane-Matten, but make it clear to the attentive reader that both sets of professors fall short of articulating a truly transformational big idea. Our idea is the big idea. Adam Smith, the Dalai Lama, Pope Francis and other thinking leaders and practitioners would sign up for our idea below in a New York minute.

The Dalai Lama, Adam Smith, AEI and Capitalism.
The 21st Century Essential, Dominant Mindset.

This post is prompted by a reminder for which we are grateful. The reminder is that we must stay with our nose to the grindstone on this matter of mindset, achieving excellence and living the full life. Again, serendipity plays a role, this time in the form of a channel-surfing bonanza.
The American Enterprise Institute (AEI) sponsored a panel discussion on Thursday, February 20, 2014. CSPAN televised it. I surfed right into it.
Here is the punch line, from my take on the panel’s discussion when connected to the essential mindset for ultimate excellence assertion I make, all in one brief paragraph – you will not need to read the entire post, unless you really want to :-):
Adam Smith, the free enterprise capitalist's capitalist, taught that a person's self-interest could best be served if he/she was allowed to do their thing without interference and if then a willing buyer wanted to buy it and he wanted to sell it, the transaction happened – fancier words have been used, but that's the deal. The other thing he insisted on, though, was that a person was not a good citizen if he was not also promoting the welfare of the whole society – he called it fellow feeling. Well, it turns out the Dalai Lama, the self-described Marxist, advocates the same thing – he reduces it to being “wise-selfish.” At Jack Haffey & Associates we call this very same thing the essential 21st century dominant mindset – our self-value is maximized only if we focus on and create optimal value for each of our primary stakeholder groups (those whose lives we significantly affect over time) over the long run.
My friends, this paragraph describes how to make capitalism rock and roll. The Dalai Lama will join right in if we all get it right. And, Adam Smith's teaching will finally be correctly applied. Read on for color commentary. Otherwise, just give me a note or a call and we will schedule our first meeting.
In addition, the essential 21st century dominant mindset, as we present it here, has related concepts which flesh it out, and they must be robustly understood and lived. Here they are, simply listed:
Mindset, excellence, happiness, fiduciary, stakeholders, optimization, blocking and tackling, universal and unalienable rights, ubiquitous virtues, traits and valued things, self-interest and other-interest, gold standard leadership characteristics, gold standard cultural characteristics, profit (npv of future cash flows, etc.), purpose, vision, mission, multi-year plans (playbooks), long term, ethics, full potential – seen and actualized, and opportunity costs, local and global.
Back To The AEI Panel.
The panel included, among others, Arthur Brooks, President of AEI, and the Dalai Lama. It was an unprecedented discussion. So much was said. This brief note zooms in on what we consider the heart of the matter.
Arthur Brooks, president of AEI describes himself as purpose-driven, not product-driven. He appears to be the one most responsible for bringing this panel together, and he also appears to be leading AEI in an enlightened 21st century way. He summarized his purpose in a few ways, and this quote captures it for me:
"I don't care about the Republican Party because here's what I really, really want. I mean, I care about the Republican Party -- I care about the Democratic Party -- because I care about America," he said. "To bring back the Republican Party? No, that's not the objective at all. I want, 15 years from now, to have the free enterprise movement be as apolitically accepted as the civil rights movement is today."
To do so, Brooks said, conservatism needs an attitude adjustment." To be a part of the conservative movement, you should be expected to love people," he said. "This is a movement that must answer anger with love."
I believe Arthur Brooks has done a truly great service to the global discussion on and the global vision of capitalism and society by bringing the Dalai Lama to engage in dialogue with AEI.
The AEI panel's moment in time is in harmony with other voices in recent years, including that of Joseph Stiglitz, Nobel Prize-winning economist from Columbia University.
The Dalai Lama's comments at the panel discussion, for me, are summarized as follows:

        I. The Dalai Lama said that people should be wise-selfish rather than foolish-selfish.
       II. He said that ultimately it’s in one's own self-interest to help the rest of humanity.
       III. “Today, I developed more respect about capitalism,” the great Buddhist monk said with a smile. “Otherwise, in my impression, capitalism only takes money, then exploitation.”

Here are a few thoughts from and about Adam Smith, and see whether and how they connect with the Dalai Lama and Arthur Brooks (AEI):

I. “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.”
II. “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages”
III. Adam Smith also said that “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.”
IV. Smith always believed that man's self-interest was not in conflict with his urge to help others and that this sympathy between fellows was a fundamental part of human nature.
V. Moreover, when he moved from a singular focus on transactions (butcher, baker, candlestick maker), Smith issued strong strictures: ‘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.’

Our thoughts on these subjects have been presented in our website and our blog site. Here they are in brief:

One of our fundamental beliefs, that we call the essential, dominant 21st century mindset, is: 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) major 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 in equation form:
IVM= f (S1VO, S2VO,..… SNVO), where “I” is “institution” (any organization), “f” is “function of,” “S” is “stakeholder,” “V” is “value,” “M” is “maximization” and “O” is “optimization.”
Unleashing the local and global potential of organizations (for profit companies, non-profits, governments, etc.) will create value. Fully unleashing this potential will create ultimate long term value – for each organization and the global population. There is a functional relationship between self-interest value and other (stakeholder)-interest value. This relationship is grounded in the highest characteristics of human nature. And properly understood and acted on, it will unleash this ultimate potential. It is philosophically sound, practically actionable and economically (commercially) optimal. Importantly, capitalism’s highest catalytic effects on value are also unleashed through this concept.

We call this idea the essential and dominant 21st century mindset. What do we mean? Companies have mindsets – ways of looking at the best way to conduct themselves as entities, in pursuit of their purposes. The primary mindsets are: a. the short-term, inward-focused and win-lose mindset; and b. the long-term, outward-focused and optimizing mindset.
Unfortunately, businesses and other organizations usually choose the former. It is sometimes called “short-termism.” They choose it or they are forced into it. This has been the norm over the years. It has been guided by the idea that the organization exists because of its owners and, therefore, primary focus should be on rewarding the owners. One example is the SEC quarterly report requirement for publicly held companies in the United States. Wall Street has used these reports , much of the time, as a hammer to pressure companies to behave in short term ways, and solely to reward the owners.
In stark contrast, our big idea is unambiguously dogmatic that the dominant organizational (and individual) mindset must be the long-term, outward-focused and optimizing mindset. One outcome, in fact the fortuitous and yet necessary and natural outcome of behaving in accordance with this mindset will be that the owners’ long term value will indeed be maximized.
How do these perspectives (Adam Smith’s, the Dalai Lama’s and ours) connect with each other, if at all?
It seems clear and without need for explanation, that:

1.      What the Dalai Lama calls “wise-selfish,” and what Adam Smith taught, using a few different ways to explain it including 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,” and what we call “the essential and dominant 21st century mindset - “the long-term, outward-focused and optimizing value for each stakeholder group” mindset are the same concept, and
2. What the Dalai Lama calls “foolish-selfish,” and what Adam Smith discusses as, 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, and what we describe as short termism, the dominant mindset that has organizations behave in a short-term, inward-focused and win-lose manner are the same concept.

This concept, happiness, of course was part of the whole panel discussion that was primarily centered on capitalism. The Dalai Lama's focus is on happiness. Arthur Brooks recognizes and shares that focus, it appears.
And, our focus is there as well. Mortimer Adler, a 20th century philosopher, was well known for teaching that the happy life can only be known as it approaches its end, and that the full life well lived is the way to determine if the life has been happy – has been good. The panel discussion includes some indication about achieving this state of happiness, as described here.
However, all people must share in this happiness. All people must have the opportunity to actualize their potential. A prescription for how to enable us to successfully pursue and achieve this goal is set forth in this paper.
A vivid and incentivizing reminder of the job ahead is the recent information published by Oxfam that the 87 wealthiest persons in the world have the same total wealth as the poorest 3.5 billion people. This inequality is criminal. It is absolutely unacceptable anytime and especially now, in the 21st century global economic village.
A Final Thought.
Congratulations to Arthur Brooks and his leadership at AEI. The Dalai Lama's message for the world really is harmonized with capitalism as long as the dominant capitalist mindset is long term, outward-focused (other-focused) and committed to optimizing value for stakeholders.
And, Adam Smith's message, properly understood and acted on, is also in harmony. For more than 200 years his teaching has been largely misapplied. Now is the time to robustly apply his guidance. Capitalism should and will rock if this paradigm is embraced.
And, Democracy, properly acted out, goes hand in glove with this understanding of capitalism. Life, liberty and the pursuit of happiness are unalienable rights of all people in the world. Democracy will rock, along with capitalism, if people continue to demand it – as is happening in the Ukraine now, in 2014, for example.
The Practical Connection Between This Article And Organizational Pursuit Of Excellence.
There is a clear connection, a nexus, between a. the essential 21st century dominant mindset, the Dalai Lama's wise-selfish and Adam Smith's sympathy between fellows that is a fundamental part of human nature and b. The guiding and ongoing foundation documents of every organization – purpose, vision, mission, multi-year plans (goals and strategies), budgets, gold standard leadership characteristics and gold standard cultural characteristics. In fact, these latter organizational elements will not lead to ultimate excellence unless they are based on the former concepts.
At Jack Haffey & Associates, LLC we teach and advise organizations about how to make this connection – how to make this ultimate excellence achievable – in practical, actionable ways. The Dalai Lama's happiness state is also achieved when all are behaving in this way. To be sure, it is not a walk down Main Street. It is, though, the fun and full-life-well-lived way to achieve global, inclusive excellence – with capitalism rocking and democracy rocking.
Jack Haffey & Associates, LLC. Contacts:, and 406-560-2128.