Capitalism has gotten a bad rap, bearing the blame for corporate greed and income inequality. However, no other market system has the ability to create opportunities and benefit society. The real culprit is how capitalism has been corrupted, associated with crushing competitors and world dominance. Learn how business leaders can move away from competitive advantage and instead pursue their calling as capitalists — and realize their organizational and human potential.
Capitalism or a market-based system is the most significant man-made tool in history. Go back through history and look at how little human life advanced prior to the introduction of a market-based system around 200 years ago.
Since the market system took hold, we have seen:
- A reduction in the percentage of the world’s population living in extreme poverty from 85% to 36%
- Average income per capita globally increase by nearly 1,000%
- Infant mortality rate worldwide (deaths by the first year per 1,000 births) drop from 216.8 in 1850 to 28.9 in 2018
- Average life expectancy worldwide double from 35 to about 80 years
While capitalism has been criticized by some recently, you cannot argue with its impact on the society and the world. There is no other system that creates opportunities, individual freedom, and a corresponding, widespread positive impact. Of course, there are unintended consequences related to capitalism, but the negative impacts come from an abuse of the system. As many have observed, it is not capitalism that is bad, it is capitalists that are bad (some of them). There are people who misuse capitalism, but that happens in any system. Power tends to corrupt people. Fortunately, markets can sniff out corruption and many times hold corrupt companies accountable. There are obviously examples, many well publicized, of corruption in business. However, the stories of millions of businesses and leaders that are doing tremendous work in helping their employees, customers, and communities grow and excel are not typically shared.
To be fair, pure socialism and communism can be considered altruistic systems since every citizen is theoretically tasked with helping everyone else equally. However, in these systems, the government becomes the “gatekeeper” or “clearing house” responsible for making major decisions that impact the masses. The problem with the execution of socialism and communism is that the decision-making is concentrated in the hands of the few, lacking market-based forces to provide accountability and guardrails. Essentially, when decision-making and power become concentrated, there is a greater risk of corruption compared to spreading out the power through market-based forces. Once again, as long as people (including me) are flawed, we need to have something that keeps us from abusing the power. That, of course, is a market-based system–until something better is created.
Unfortunately, the desire to win at all costs and an obsession with beating the competition has tarnished the reputation of capitalism. At the core of capitalism is the desire to help others and create a better world. Basically, the capitalistic system uses a free market to engage people in developing solutions to problems that consumers and the world are facing, benefiting society and communities. The motivation or purpose of capitalism is not to maximize profit (although profit is necessary to create a long-term sustainable impact) or beat competitors, but to improve society.
Why do some business leaders pursue competitive advantage and world dominance at all costs? Here are reasons why some businesses focus on crushing their competition and everything in their path:
- Business strategy evolved from military strategy, which historically has focused on annihilating competition. In war, that is good; in business, it is not good.
- Universities and business schools adopted a focus on competitive advantage and have been teaching this since the 80s with little advancement and innovation.
- Global consulting companies have built significant practices conducting competitive analysis, delivering qualitative and quantitative reports on competition to their clients.
- Focusing on competition is easy, since there is always a villain in every story. Business leaders incorporate this thinking by aligning employee focus on beating competitors and making them out to be the villain in the story of business.
As capitalists and human beings, we can do much better. Capitalism exists for the purpose of building a better society, and business is a microcosm of the market system. Your business plays a significant role in providing for your employees, customers, and communities.
At the core of human beings is a desire to connect, belong, contribute, and make a difference. Companies become the avenue for individuals and groups to fulfill all these core desires. Today, workplace organizations are the platform for people to learn, grow, and pursue their human potential.
As work and life become blended (this was accelerated with the COVID-19 outbreak), it is critical that businesses take responsibility for their role in creating better communities and shift their obsession away from annihilating the competition. While focusing on competition creates alignment, it does not fulfill the human need to make a difference and leaves us falling short of our potential in life. Focusing on competition leads to incremental growth as companies become preoccupied with winning a game between a few players and lose sight of the many opportunities that are presented. Leaders should look at competitors for inspiration rather than seek to annihilate them.
Here are some steps to help your organization move away from focusing on competitive advantage to fulfilling your potential:
- Define what really excites you and your team about the impact your company and product are having on the world. What is your organizational potential?
- Translate that into a tangible cause that creates your cultural foundation.
- Develop a strategic platform that connects to your culture and provides tangible business-related outcomes that tie to your cause.
- Integrate a comprehensive model for execution that enables your employees to pursue their potential through the work they do.
By following these steps, your organization will effectively blend culture, strategy, and execution (as demonstrated in The Blendification® System), thereby putting you and your team on the path to realizing their potential. By doing this, focus will shift away from annihilating competition to pursuing a common cause. Employees will be engaged in growth and development and have a passion to help their fellow employees and customers succeed, resulting in a positive impact on their communities. This is the business model that enables your company to play its part in fulfilling the purpose of capitalism.