Corporate Culture: Capitalism 2.0: Beyond ESG

In recent years we have seen how investors, communities and, increasingly, the C-suite have raised the bar on the expectations and standards by which businesses operate. Some thinkers believe that “Capitalism 2.0” doesn’t end there, however. According to two much buzzed-about books, business leaders need to reframe how they view the “game of business” and inspire corporate culture with a sense of decency.

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    Corporate Culture: Capitalism 2.0: Beyond ESG

    Corporate Culture: Capitalism 2.0: Beyond ESG

    Capitalism has many advantages, but it does have a reputation for having rough edges, especially as it relates to its historical treatment of labor, consumers and the communities in which companies have operated. Many of the worst excesses have been managed and eliminated over the years through government actions and more enlightened behavior by corporate culture and leadership.

    In recent years we have seen how investors, communities and, increasingly, the C-suite have raised the bar on the expectations and standards by which businesses operate. This is best illustrated by the growing implementation of Environmental, Social and Governance (ESG) criteria within the business and investment decision-making process.

    Some thinkers believe that “Capitalism 2.0” doesn’t end there, however. According to two much buzzed-about books, business leaders need to reframe how they view the “game of business” and inspire corporate culture with a sense of decency.

    Rethinking the Game

    In “The Infinite Game,” a book published in 2019, author Simon Sinek makes the case that corporate leaders need to rethink how they view business. Sinek argues that most executives see business as a finite game, in which the focus is on winning in the short term (e.g., gaining market share, increasing sales). Sinek believes that there is no such thing as winning in business because there is no agreed-upon metric and timeframe that define “winning.”

    In other words, IBM was a technology winner … until it wasn’t. No one sold more mainframes or PCs, but the focus on winning this finite game came at the cost of being less relevant in a new age of cloud computing.

    Sinek suggests that adopting an infinite mindset first requires a “just cause.” With a just cause, workers are more likely to be positive, contribute, be service-oriented, accept changes, and think in big, bold ways.

    This mindset also involves trust in teams, marking an organization against a worthy rival, a capacity and comfort with being flexible, and having the courage to lead—to stand up and say, “this is not right or good.”

    A Culture of Decency

    In another book published in 2020, “The Art of Fairness: The Power of Decency in a World Turned Mean,” author David Bodanis posits that treating employees with decency makes businesses more profitable because decency can attract better workers and motivate them to greater levels of production.

    Supporting the case for decency is Bill Boulding, the Dean of Duke’s Fuqua School of Business, who argues that more important than a leader’s IQ or EQ is his or her DQ, or decency quotient. By focusing on doing right by workers, the business will create a workforce that enjoys being there, working hard and doing the right thing.

    These concepts may be hard to apply when selecting companies to invest in, but they are certainly something that every financial advisor can bring to their practice.

    Please reference disclosures: https://blog.americanportfolios.com/disclosures/

    About The Author

     

    CEO, CIO & President of American Portfolios Financial Services, Inc. (APFS) 
    631.439.4600, ext. 106 

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