Reinventing Capitalism in the Digital Age
Author: Stephen Denning
Recommended by: Stephanie Nagy, Software Developer & High-Tech Anthropologist®
Stephen Denning’s new book, Reinventing Capitalism in the Digital Age, begins with a historic tour of capitalism over the past 250 years. Capitalism has cycled through times of incredible innovation followed by periods of regulation and stabilization. We are currently at one of the tipping points where regulation could influence the direction of capitalism. Since the 1980’s, the United States has been practicing shareholder capitalism which is focused on maximizing shareholder profits. The Business Roundtable recently reversed their recommendation to focus on shareholder value and is now encouraging businesses to focus on stakeholder value. Wharton School finance professor, Raghuram G. Rajan cautions that “if all stakeholders are essential, then none are.”
By trying to serve all stakeholders equally, businesses run the risk of losing clarity in their corporate purpose. Denning suggests that trends in software development are pointing the way to a new form of capitalism inspired by a focus on the customer. The four largest tech companies today have mission statements centered on their customers and this business model is paying off for them. Like Apple, Amazon, Google, and Microsoft, the majority of companies at the top of the tech industry have realized that serving their customers is not only ethical, but financially lucrative. Combining products that address customer needs with new areas such as green growth holds great promise for the remainder of the digital age.
The companies coming out on top today are using agile workflows and considering the needs of their customers. Denning says, “When firms embrace the new, more agile ways of creating value for customers, they can shift direction more nimbly, create great workplaces, get better talent and use it more effectively, win over customers more quickly, attract more finance, do their share in meeting social and environmental goals more readily, and generate more long-term shareholder value.” By paying attention to the “why”, the “how”, and the “what” of customer capitalism, businesses can serve their customers, communicate effectively within their organizations, and create products or experiences that generate long-term shareholder value.
Reinventing Capitalism in the Digital Age was densely packed with historical perspective and insight for the future. I took away hope from this book. Menlo Innovations has been producing value through an agile customer centric process for over 20 years. We stand as proof that ethical businesses can succeed financially. Denning leaves us with the advice to “love your customer as yourself. This is not only ethical. It is also very effective. People do best when what they do is in the service of delighting others.” I look forward to the future of capitalism if we can begin to look beyond value only to shareholders and provide true value for our customers.
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