Page 48 - Chapter One

16 The Management Shift

71
A Harvard Business Review report, “Competitiveness at the Crossroads”,
based on a survey of nearly 7,000 Harvard Business School alumni and
more than 1,000 members of the US general public, concluded that the
US was losing the ability to compete in the international marketplace.
The report identified the causes as: flaws in management practices that

focus on share price and short- term performance, resulting in a decline
in investment in shared resources; social problems, such as increased
unemployment and inequality; and public sector decline, reflected
in decline in the investment in research, education and information
72
infrastructure. The pattern is confirmed by Harvard Professor Clayton
73

Christensen, who explains how short- term pursuit of profits has been
detrimental for innovation and competitiveness of the US economy.
In his book Fixing the Game, Roger Martin also critiques the excessive
focus on the short term:

We must shift the focus of companies back to the customer and away
from shareholder value. The shift necessitates a fundamental change
in our prevailing theory of the firm…The current theory holds that
the singular goal of the corporation should be shareholder value
maximization. Instead, companies should place customers at the center
of the firm and focus on delighting them, while earning an acceptable
return for shareholders. 74

This view is echoed by John Mackey and Raj Sisodia, the authors of an
75
inspirational book, Conscious Capitalism. They argue that the myth
claiming that the ultimate purpose of business is to maximize profits
for investors originated from a narrow view of human nature and an
inadequate explanation of the causes of business success. A simplistic view

that humans are maximizers of economic self- interests and businesses are
pure profit maximizers helped neoclassical economists to create simplified
mathematical models to explain some of the economic phenomena. Whilst
profits have been important for the progress of the society, the truth is
that most entrepreneurs who start businesses are inspired to do something
that they believe needs doing; they use their passion to improve lives and
create value for customers, suppliers, community, employees, investors