I read Professor Rebecca Henderson’s Reimagining Capitalism: In A World On Fire in preparation for a discussion with a few fellow non-executive board directors.
The book starts with a good discussion of when markets work well and why markets are failing, continuing with offering five building blocks for reimagining capitalism. These are: creating shared value, building a purpose-driven organisation, rewiring finance, building cooperation, and rebuilding our institutions and fixing our governments.
Each of those five building blocks is expanded into a chapter replete with stories of organisations and leaders whose experiences demonstrate how those things can be achieved. The stories included are interesting and not all were known to me e.g. the PG Tips story of re-educating the customer and gaining market share.
The book does explore some interesting ideas e.g. risk reduction as an economic case for pursuing shared value, architectural innovation (as contrasted from incremental innovation), buyers and stakeholders are drivers and levers of change.
Other weaknesses however let the book down.
Most of the stories feature male CEOs (and a few male non-CEOs). The section on common values dwells upon how personal experience of pain led the CEO of a health insurance company to drive change in his business. As I have written before, I am not a fan of leadership which requires a leader to have personal experience of an issue for him or her to recognise its value or urgency. The idea of collaborating with competitors to lift the environmental and social game for all of society is mentioned but stops short of exploring “pro-social anti-trust” – an idea which would really be reimagining how business leaders traditionally think and how the frameworks of competition need a radical relook. The chapter on rewiring finance drew me in with eagerness but left me — and many of my fellow board directors, as it emerged in our conversation — unimpressed. For instance, the idea of cooperation among investors mentions shareholder resolutions as a tool but leaves unexplored the influence of voting agencies or indeed the new permanent universal owners whose influence on governance can be outsized should they choose to pursue it. The need to build inclusive political systems is mentioned in the book but the stories in the book are fairly monochrome (despite the book earlier having made a business case for doing the right thing). Despite the overall implicit need for stewardship to drive change in how businesses are run, corporate governance is not really discussed much in the book. The role of the State as a potentially powerful actor is also under-developed.
The last chapter addresses the question “what can I do?” and offers what felt like homilies.
The bold title of the book appears to offer aspiration, a sense of urgency, and a game-plan, on which alas the book does not really deliver.
In the conversation amongst board directors, we considered whether we were being overly harsh, seeing as many of us had far more advanced dialogue on our boards and we came at the book with very different expectations. I also thought of a conversation where a director of an American listed company said, “I work with a CEO who does not believe in climate change”. What would this book offer that CEO to make him rethink, I wondered.
We did expect more. The title indeed promised more.
The audience for the book seems to be a layperson, who is just getting started on the idea that capitalism in its current form is serving some but not the broader society, and needs reform. For them, the book would make a good read. The references at the back are robust and will enable further exploration.
Star rating: 3.5 out of 5
Usefulness note: The book is good as a primer for someone who has just begun to think about the broader idea that capitalism, as it stands, needs reform.