Scrolling through the stories on any news site these days one could be forgiven for thinking that we are living in an increasingly divided and unequal world. It is heartening to hear of millionaires, such as Warren Buffett and the Gateses and Canadian CEO Jim Estill, who want to share their wealth to improve the lives of others. But while a millionaire who thinks tax evasion is ‘smart’ is in control of the largest economy on Earth it still seems to many that a fairer world is more out of reach than it has ever been.
The irony is that, while the President of the USA (as well as Brexiteers, Marine Le Pen, et al.) believes that the solution to his country’s perceived financial and social woes is to keep out immigrants – either by building a wall or by stopping them at immigration control – a policy of inclusion could generate greater wealth for all.
In their book Nine visions of capitalism, Charles Hampden-Turner and Fons Trompenaars explore the secrets of wealth creation and conclude that cultural inclusiveness is the key to success. Interestingly both diversity and inclusion are required – diversity on its own can lead to the problems we see in America and Europe today as well as many conflicts of the past (such as those between Protestants and Catholics in seventeenth Century Europe or between Hutus and Tutsis in Rwanda). The authors say:
Contrasting values must be joined and reconciled to make them virtuous. Polarized values are vicious in their mutual hatred. Yet our discredited politicians aid this polarization with their sterile jousting between ideologies. The irony is that those we reject could potentially make us whole, providing the missing pieces of the puzzles.
They go on to explain why immigrants are often more successful than those born in a particular country. In America, they note, those immigrants who find themselves more included, such as Jews, Chinese, Japanese and Indians, do better than those who are excluded such as blacks and Latinos. A study from 2000 found that one third of Silicon Valley’s wealth was created by Chinese and Indian immigrants entering the US after 1970. The success, say Hampden-Turner and Trompenaars may even be due to difference: ‘they are different perforce, a condition they cannot change. They therefore decide to make a difference.’
The book also proposes that the current Anglo-American model of capitalism is failing and needs to learn from models in other cultures if Western economies want to continue to grow. Part of the problem is our perception of wealth:
A community is only better off when it creates wealth, that is, when it generates more money among its members than they began with. If money has simply moved from one pocket to another then X may have outsmarted Y but no wealth has been created by that relationship. Competition is important but if this leads to a zero-sum game – wherein gains and losses total zero – then there is no gain for the society or the economy.
What creates wealth, say the authors, is ‘an inclusive relationship between diverse parties’, employees and owners, producers and consumers, lenders from borrowers, and so on. The book explores nine very different forms of capitalism, including analyses of China’s spectacular growth, Singapore’s hybridisation of East and West, and the Conscious Capitalism movement, and examines how our economies can benefit from their example. The authors see a positive future if we can learn to appreciate and incorporate difference. ‘Reconcile values,’ they say, ‘and you help to create wealth for everyone involved.’
Nine visions of capitalism, by Charles Hampden-Turner and Fons Trompenaars is available in the Infinite Ideas store for £10 (rrp £25), with free postage in the UK (shipping rates to other parts of the world vary).
Last week celebrated cross-cultural management guru Fons Trompenaars rose in the influential Thinkers50 global ranking of business thinkers. Trompenaars climbed to 33rd place partly due to his recent book, written with Charles Hampden-Turner, Nine Visions of Capitalism but mainly, according to Stuart Crainer who created Thinkers50 with Des Dearlove in 2001, due to a significant increase in citations of his work during the last two years.
The Thinkers50 ranking, often described as the Oscars of management thinking, is a celebration of the very best new management thinking as well as those ideas which stand the test of time. Crainer says he is looking for “ideas with a potential impact that extends beyond the business world to address issues ranging from reducing poverty to building a sustainable model of capitalism.”
Trompenaars’ success shows the value to consultants of publishing paradigm-shifting content in an accessible, peer-reviewed context. Self-publishing seems not to have the credibility of commercially published works. Barry Gibbons, former Global CEO of Burger King and author of ten acclaimed business books says: “A published book (accent on ‘published’) can bring a string of powerful indirect benefits. It can boost a CV. It can take the place of a business card, with 1000 times the impact. It can open up lucrative speaking or consulting opportunities. It can enhance an author’s reputation in a defined target market.”
Trompenaars’ ideas on cross-cultural development have been published widely in reviews such as Harvard Business Review and Intercultural Management Quarterly but he has also had a major impact with books like 100+ Management Models: How To Understand And Apply The World’s Most Powerful Business Tools, Servant Leadership across cultures and The global M&A tango: How To Reconcile Cultural Differences In Mergers, Acquisitions And Strategic Partnerships. Most of Trompenaars’ books are jointly published by Infinite Ideas in the UK and McGraw-Hill in the US.
Trompenaars and his team have developed a unique resource in the cross-cultural and other databases they have developed over thirty years. He adopts a measurement and data-driven approach to benchmark, inform, advise and diagnose client problems and provide practical solutions. He maintains that organizations need stability and growth, long-term and short-term decisions, tradition and innovation, planning and laissez-faire. The challenge is to integrate these opposites, not to select one at the expense of the other. You have to inspire as well as listen, to make decisions yourself but also delegate and you need to centralize your organization around local responsibilities. Trompenaars’ work is unique in that his focus has been to use his research on culture to find reconciliation of differences rather than simply identifying them.
John Naisbitt, author of Megatrends, described Nine Visions of Capitalism as “an important and brilliant book. With deep insights on China, it helps us understand a world undergoing extraordinary change.” Trompenaars recently sold his business, Trompenaars Hampden-Turner, to KPMG for an undisclosed sum. It is impossible to calculate the effect of these deep insights in the books and articles on the sale price but it’s fair to say that Trompenaars’ global Thinkers50 ranking which itself depends so heavily on publishing gave it a significant push in the right direction.
Unless you’ve been hiding under a rock for the past few months, then you may have heard about a new film coming out this Christmas about the late Apple CEO, Steve Jobs, entitled, Steve Jobs. With the star Michael Fassbender already tipped for Oscar success, the film has been plagued with scandal since before it was even put into production. Though Fassbender may have done a good job, after the Sony hack, it was revealed that writer Aaron Sorkin didn’t even know who he was. How opinions can change.
Two trailers have been released so far for the film and, if they’re anything to go by, it doesn’t look like Jobs was the type of person you’d want to invite round for a cup of tea. So focused on his job was he, that he neglected his daughter in pursuit of building up his company into an empire. That he did. There are Apple products all around you, all you have to do is step out of your door and you’ll see someone on an iPhone, chatting, texting or instagramming their lives. Apple is more than a technology company, it is a lifestyle for millions of people. Every time a new model of iPhone is released, there are people who are selling their grandmother to be the first in line to get their hands on the new model. We all remember that rather odd woman who had queued in New York for a new iPhone, just because she thought she should, and had no idea why she really wanted it. Apple has saturated the market so much that, though Microsoft and Bill Gates’ empire is still incredibly successful, even those who own a PC are aware of how good Apple is. To collect them all, as Pokemon fans would say, is to shell out thousands of pounds, and then more to update your collection. When does it end? And should I be ashamed of my 2009 iPod nano that is hiding in a drawer at my parents’ house?
That iconic combination of jeans and polo neck has cemented Jobs as an easily-recognisable figure and the face of Apple. There’s no doubt that Jobs achieved extraordinary things with Apple, but is the company promoting conscious capitalism? Charles Hampden-Turner and Fons Trompenaars, authors of Nine visions of capitalism, suggest that Jobs and the Apple corporation were winners with their very first product:
The computers produced by Acorn and the BBC Micro ‘failed’ to match the appeal of the Apple I. In reality there were a number of contributing factors: the USA has a much larger and more demanding market; California legislators approved a free Apple for every public school, provided that school purchased a second; a new mass market was created that shut imports out; and Apple was pitched in terms of personal liberation from IBM, the rebellion of a defiant citizenry against a corporatist ethos.
So Apple asserted that it was a cool company from the start. We all remember those really fun Apple Macs that were brightly coloured, they were not designed to appeal to Wall Street stockists, they were for the young, hip students and start-ups. They epitomise the rise of Silicon Valley: exciting, fresh and completely different to the stuffy companies that make you work ridiculous hours and resent your job. Yet Apple too makes you work ridiculous hours, by providing free food, gyms and making the office a welcoming environment, employees don’t want to go home. Essentially, they are in it for life (or at least as long as they work there). The opportunity for Netflix and chill is sadly lacking. Last October, Apple HR demonstrated it’s conscious capitalism by unveiling its philanthropy programme, and it would match any donation to causes that its employees made.
In an age where most all of us in the Western world own a laptop, smart phone and most likely an Apply product or two, these companies are literally part of millions of people’s lives. Capitalism affects us on a global scale and Apple’s stocks just keep growing. New technologies are being developed and to stay current, you have to stay ahead of the competition. But to appeal to the masses and to remain in our pockets, you have to be conscious of what the consumer wants. Earlier in the year, when Taylor Swift called Apple out on their policy of not paying artists for the first three months of Apple Music, Apple responded, ‘we hear you, Taylor Swift’ in an attempt to appeal human, they came out smelling of roses when they could easily have ran into a PR blunder. By looking like they care about what Swift and other artists had to say, they showed their conscious capitalist ethics.
Whether you believe that Jobs was a conscious capitalist or not, he managed to create a company that has changed millions of lives and made his mark on the twenty-first century. I’m not sure whether the film is supposed to make Jobs look like a complete tool when it comes to his personal life, but perhaps it is showing us that, for Jobs, the company came first, and as a consumer, that makes me feel a lot better!
By Charles Hampden-Turner, co-author of Nine visions of capitalism.
The City and Wall Street head the world in mergers, acquisitions and take-overs. The conventional wisdom is that if Company A has more money than Company Z then it should be allowed to take it over. This will help us all since the more successful companies are taking control of the less successful, the very rich are acquiring those of lesser means and therefore the whole economy improves. If you can convince shareholders that they can earn more when Company A takes over Company Z then this will put the target company under better management than before. Those with the most cash to spare are better by definition.
But is this so? Affluent economies are expensive places to make goods and services. Nearly all standard products are cheaper to produce elsewhere. The major exceptions to this rule are innovative products and services. If your product is original you have no competitors for several months or more and can charge for it what the market is prepared to pay. We in the West must innovate or die. There are signs that we are meeting this challenge to some extent but the question arises as to whether large companies that like to acquire others are as innovative as the companies they are gobbling up. The evidence is that most innovation comes from start-ups and relatively small companies. These are not only many times more creative but have much better labour relations, evoke more loyalty, spend more on training their people, think longer term, have better more trusting relationships and serve their customers and communities better. Gallup has found again and again that most citizens like small companies and trust them whereas up to 80% dislike large companies and distrust them. With size there comes bureaucracy, formality, rigidity and pre-programmed behaviour. To have these larger companies gobble up the small may be of very doubtful benefit to these smaller companies, to our economy and to our society.
In any event how can you ‘buy’, ‘own’ or ‘take over’ someone else’s genius? Hewlett Packard bought Autonomy for $1.7 billion, 79% above its market price and had to write down its value by $8.8 billion only months later. This is presently under furious litigation with accusations of deliberate misinformation filling press reports. We know nothing of these details and take sides with neither litigant. We would point out however that the value of information within the heads of genius founders is very difficult to know, hard to value properly and almost impossible to ‘acquire’. In the absence of a good and close relationship with that genius the value of intellectual property will melt away. The 79% premium over market price depended on the sharing of future strategies. How much s/he shares with you is largely optional and you may gain or lose you billions. You can legally mandate that the founder stays in your company for X years but not what will happen during that interval. In any case having received much of your money the genius cannot wait to found another start-up with the money made. Why benefit someone who claims to ‘own you’ and demands that you report to her/him on a regular basis?
Hostile takeovers are especially tricky. You can acquire the real estate, the inventory, the machinery, products in the pipeline, even signed contracts but what the company had in mind for the future could be its most valuable asset and in the face of hostility you may never learn it. You have the bits and pieces but not the values which held these together and gave the company direction. Apparently 79% of the value of Autonomy lay in its future and HP could not afford to fall out with those envisioning that future. Of course there is good reason why large companies are risk-shy. They have mountains of money to lose and any gains would be fractions of that mountain, while start-ups have almost nothing to lose but have bright horizons to explore. The shareholders in large corporations have little appetite for risk. Their pensions are at stake, while the ‘friends, families and fools’ rallying round the founder of a new company relish the wild ride and hope to found a dynasty.
There is also the question of time. A small, privately owned company is thinking how to support the children and grandchildren of its owning family. This is a time-horizon of twenty to forty years. An investment made now could greatly assist your grandchildren. In contrast shareholders in a publicly owned corporation now retain their shares for an average of six to eleven months. They are less investors than traders and will trade on the basis of the latest quarterly report. To reduce risk they have tiny fractions of their portfolios in any one company, care little about that company and may not even know that they ‘owned’ it for a few months last year! It follows that having a private company acquired by a public one might actually harm the economy and greatly shorten its view of the future.
Nearly all investments that aim to grow a company take many years to pay back. R&D, executive development, increased quality, new plant and equipment may justify themselves ten to twenty years hence. In contrast selling your HQ building and leasing it back, buying your own shares so that the price jumps, laying off researchers and cutting the training budget will all produce more money for shareholders this quarter and the longer term damage will not be manifest for a few years, that is after the present CEO retires. His pension may be tied to profits! The company has become a machine for maximizing shareholders’ take and resources are transferred from those who do the actual work to those who collect rents.
Companies who are on an acquisition spree either accumulate a cash mountain so that they can pounce swiftly or they borrow extensively so that their acquisition is heavily in debt. Both tactics may be detrimental the target company and to the economy. The cash mountain is not being re-invested and the debt burdens and even cripples an acquired company which must now concentrate on repayment, not innovation. The truth is that investing in R&D and in the training of your own employees makes you vulnerable to being taken-over. The raider says to your shareholders, ‘would you not like the money being spent on employees in your own pockets now?’ The answer is often ‘yes’ and since those to whom this offer is made include the most senior people in the target company who typically have share options, they have personal reasons for selling out their company! No wonder that Professor Colin Mayer studying take-overs in the UK, especially that of Cadbury by Kraft, found that most of these acquired companies were well managed. It was precisely this which made them vulnerable. They were spending on the future and not today.
What seems to happen to companies who grow by acquisition is that they try to ‘buy the growth’ of others but do not grow organically themselves and the companies they acquire tend to stop growing and become ways of moving money to shareholders. No wonder that Virgin bought back its shares from the public, that Sainsbury’s fought off acquisition, that Hewlett Packard slashed its R&D spending much to the disgust of the founding family and that Chanel has refused all overtures. No wonder that Lidl and Asda are gaining at the expense of Tesco whose shareholders expect a larger slice of the supermarket pie. Privately held companies usually want to use money to create industry and make an industrious future for their families. Publicly held companies want to use industry to make money for their owners and see them enriched even at a cost of employees and customers.
Capitalism in crisis: top culture management gurus map the route to a fairer global economy
Capitalism has been in a state of crisis for nearly a hundred years. The effects of the stock market crash of 1929 were felt well into the 1950s. The turbulence in international currency markets in the late 1960s, which sparked worldwide street protests in 1968, was unresolved until the mid-1980s. And the avalanche of financial crises that followed the failure of Lehman Brothers in September 2008 is still falling on businesses, consumers and communities around the world. In the face of such evidence it would be easy to think that capitalism is a doomed system.
However in Nine visions of capitalism: unlocking the meanings of wealth creation authors Charles Hampden-Turner and Fons Trompenaars suggest otherwise. Capitalism does have a future, they say, but only if the standard Anglo-American model of capitalism is radically transformed. As the authors point out, creating wealth is much more than simply making money. They say, “A community is only better off when it creates wealth through the transformation of money into products and services and the transformation of these back into money via revenue received.” The current model of capitalism has led to a situation where the net worth of the world’s top 10 billionaires stands at over $500 billion, enough to end world poverty instantly twice over. But the global economy is not richer for the presence of billionaires if the money in their pockets has simply been transferred from those of other people.
So how can this failing model be fixed? Hampden-Turner and Trompenaars argue that accommodating diversity is a pre-requisite for the reinvention of wealth creation. China’s spectacular growth, the dynamism and flexibility of the Mittelstand of German-speaking economies, Singapore’s hybridization of East and West, the world’s vibrant immigrant communities and the drive for renewable energy offer different aspects of an authoritative and challenging blueprint for the future of capitalism. Finally, the authors draw on examples of innovation in capitalism such as the Conscious Capitalism movement in the US, the Cambridge Phenomenon in the UK and the Global Alliance for Banking on Values, which has members from Mongolia to Patagonia as well as the US and UK, to demonstrate what can be done to reinvigorate tired models, and provide a realistic, practical and powerful transformation agenda for the global economy.
About the authors
Management philosopher Charles Hampden-Turner was Senior Research Associate at the Judge Business School at the University of Cambridge. The creator of Dilemma Theory and co-founder and Director of Research and Development at the Trompenaars Hampden-Turner Group in Amsterdam, he was Goh Tjoei Kok Distinguished Visiting Professor to Nanyang Technological University in Singapore in 2002–3 and Hutchinson Visiting Scholar to China in 2004. He is a past winner of the Douglas Mc Gregor Memorial Award and has received Guggenheim and Rockefeller fellowships. Fons Trompenaars is an organizational theorist, management consultant and bestselling author known globally for the development of the Trompenaars’ model of national culture differences. He was awarded the International Professional Practice Area Research Award by the American Society for Training and Development and Business magazine ranked him as one of the world’s top five management consultants. In 2013 he was ranked in the Thinkers50 of the world’s most influential management thinkers. He is the author or co-author of numerous books including Riding the Waves of Culture and 100+ Management Models.