I first encountered Prof Rebecca Henderson when I took her Harvard Business School Online’s course entitled Sustainable Business Strategy. By the end of the cohort, she had become my favourite teacher of all time – and still remains at the time of writing this which is why I am convinced that everyone looking for hope, every business leader trying to make a massive difference should read her book entitled, ‘Reimagining Capitalism in a World on Fire’ which you can buy here. It may interest you to know that it was Prof Henderson that inspired me to specialise my blog to Sustainability and start a dedicated blog on Climate Change.
In today’s world, the business landscape is changing. And, so is everything else. Lately, globally successful companies have shown a shift and are using a new approach that is based on ethics. The new approach challenges the current crisis and addresses social and economic issues.
It discourages inequality and focuses on sustainable growth. The new approach doesn’t just benefit the company, but also promotes the well being of society. Therefore, this new approach is important on various levels. It is not just the requirement of the modern times of environmental crisis. But, it is imperative for the growth of the company.
Fortunately, many companies are ‘re-imagining’ capitalism and showing a positive shift in forming a new perception and presenting a better solution. According to Prof Henderson, re-imagining capitalism is also important for bringing a long-term balance in the market and its vital forces. Also, it helps in solving the most predominant problems of society.
For decades, the business world has based its ideologies on a profit-centric approach. But according to Rebecca, even our market is not ‘free and fair.’ When the market itself is not fair, we cannot expect the old-school principals of capitalism to work.
Rebecca believes that the predominant issues in our society are ‘global.’ And, therefore, the government/ governments cannot address or intervene in these issues. Therefore, more than the government, ‘businesses’ are more equipped to address these issues. Especially the ‘purpose-driven’ firms.
A purpose-driven firm realises that a systematic issue is a crucial issue, therefore it would be attentive to the issues and play its part in solving it. ‘Capitalism’ itself is a robust source of growth, and it brings opportunities. But in a market that is not really ‘free and fair’, capitalism cannot fulfil its potential. As a result, it fails to deliver prosperity to the market.
So, in this changing landscape, profit-centric approaches are no longer relevant. The issues that are in the global market are the fault as well as the responsibility of these businesses. Therefore, whenever there is an environmental crisis, businesses shouldn’t just wait for the government to take action. They should respond to it and play their part in solving the issues.
It is true that free-market capitalism is a prominent source of prosperity in the world. But it is becoming incompetent to solve the issues of the modern world. Therefore, it is more destructive than constructive. And, instead of working towards the well being of society, it is destabilising it.
Professor Henderson is the John and Natty McArthur University Professor at Harvard University. The book is the result of her laborious research in Psychology, Economics, and Organisational Behaviour. She has worked with numerous businesses across the globe and has first-hand insight into the changing business panorama. With years of knowledge and experience, she demystifies the old concepts that stress on profit as the sole goal of a business.
In fact, by believing that the purpose of a business is to maximise its profits and increase its shareholder values, we have failed to re-imagine capitalism. Re-imaging capitalism doesn’t just focus on profits and prosperity. It also takes into account the true picture of the environment, its issues, and realities.
Re-imaging capitalism is a system that strives to provide social justice against the (global) environmental issues of inequality and oppression. It also tries to provide freedom to those whom the system has failed. Moreover, it focuses on bringing a balance. A balance between everything ranging from environmental realities and the struggles for social justice.
Rebecca then shares her profound knowledge and understanding of how ‘change’ happens. She combines these concepts as she tells the detailed stories of various businesses that are actually trying to re-imagine capitalism. The book tells you what to expect from this new approach to capitalism.
In an ever-evolving, ever-changing world, it is only understandable that the world of business, finance, and leadership should evolve. And, most importantly, governance should evolve. The challenges are new and unprecedented. And, to face these challenges our world needs to revisit and revise its old concepts of capitalism.
‘Re-imagining Capitalism’ shows the leaders of the world a pragmatic solution and foundation for addressing these changes. By re-imaging capitalism, we can save ‘capitalism’ from self-destruction. And, businesses across the world should re-imagine capitalism and embrace it. They should use the pragmatic foundation and build a road map based on it. This will help them in addressing environmental issues effectively.
I highly recommend the book. It is readable and it wouldn’t confuse you with technical details or terminologies. ‘Re-imagining Capitalism’ is a treat to read. Throughout the book, you cannot miss the optimistic approach of Prof Rebecca Henderson. I find it very unique. Her positive depiction of how the businesses are focusing on the new solution will uplift and revive a new sense of hope in you. And, to be honest, we all need to cling to it.
Serving since 28th December 2008.