Saturday, April 23, 2011

Book Review - The New Capitalist Manifesto: Building a Disruptively Better Business

Book Title: The New Capitalist Manifesto: Building a disruptively better business  
ISBN: 978-1-4221-5858-6
Author: Umair Haque

Review: The book is a call for re-inventing the 21st century capitalism; capitalism with a human face; capitalism that reinvents societal ties; capitalism that no longer divides, exploits and sheds societal disasters wherever it surges. The open-ended consumption model we have today is not sustainable. The book is a call for a capitalism that cares about others; economic, social, environment.

The foreword written by Gary Hamel is a strong support to the call for the 21st century capitalism. Hagel questions why “…consumers doubt that large corporations are good for society. Why are executives regarded as ethically more inferior than lawyers, journalists or doctors?”

Umair Haque makes strong argument for what 21st capitalism should look like, in a very passionate style and with strong arguments from different industries. In order to make his case, Umair Haque describes several examples, sometimes with astonishing and sharp analogies; companies like Wal-Mart, Google, Apple, Nike, Microsoft, Threadless, Gap, among others help illustrate different points. In this book, Umair haque uses, as a support to his case, the results of a study performed under his guidance on 250 companies.

Umair Haque introduces a blueprint for building a “disruptively better business”. How?
By throwing away the old cornerstones of capitalism (value chains, value propositions, strategies, protection, and goods) for the cornerstones of a 21st century constructive capitalism (value cycles, value conversations, philosophies, completion, and betters).
Umair Haque demonstrates how current capitalistic practices create what he calls “thin value”; that artificial, unsustainable value that depletes resources and never gets to re-use them or replace them with something better; value that is often created for shareholders at the expense of the people, communities, or society. In contrast, Umair Haque encourages companies to create “thick value”, which is described as generating profits by activities that create sustainable value in the benefit of both shareholders and society.

The book presents a visionary, idealist, realist and human look at how we should create economic value in the future; how we could build up “constructive capitalism”.

The book Chapters:

Chapter 1: The Blueprint for a Better Kind of Business sets the scene and makes the argument that the current type of capitalism is not sustainable. Haque introduces the concept of thin/thick value and lays the groundwork for how capitalism can go through a revolution to meet the challenges. Thin value is Artificial, Unsustainable, and Meaningless with respectively examples like McMansion, Hummers and McDonald; 
“Who benefits when we all eat Big Macs?

The Blueprint for a Constructive Capitalism
Chapter 2: Step 1: Loss Advantage, from value chains to value cycles, this chapter
describes in detail the elements of the first step to become a constructive capitalist and the value cycle– with which Umair suggests to replace the current (Porter’s) value chain - using StarKist and Wal-Mart strategies as an example. “…Loss advantage happens by re-conceptualizing, re-organizing, and re-building production and consumption as a value cycle instead of value chain.” The goal of value cycle is simple: waste nothing, replenish everything.
Cycles yield a new kind of economy for the 21st century: economies of cycle.”

The Value Cycle - Umair Haque 2010

Chapter 3: Step 2: Responsiveness, from Value Propositions to Value Conversations is all about gaining agility and ability to engage customers, suppliers and the Market; mastering responsiveness. Don’t dictate Value propositions, hold Value Conversations instead! Threadless business model is used as the main example to support this topic. 20th century businesses were built on value propositions, but 21st century businesses are built on a new institution: the value conversation. Participation, Deliberation, association and Dissent are the main pillars for value Conversation.

Chapter 4: Step 3: Resilience, from Strategy to Philosophy, this chapter is about mastering resilience. The ability to evolve by constantly challenging its own business model, products and markets. Google is used as an example of a resilient organization that has the capacity to evolve itself faster than rivals; interesting analogy between Microsoft MSOffice and Google’s data liberation front. “Disrupt yourself instead of protecting yourself.

Chapter 5: Step 4: Creativity, from Protecting a Marketplace to Completing a Marketplace is about mastering creativity. The chapter discusses the different levels of creativity and how they apply to new ways of looking at market opportunities. TATA, Hindustan Unilever, Microsoft Zune vs. IPod, Sony PS3 vs. Nintendo Wii, this chapter provides good examples on how different the approach is between “protecting a marketplace” and “completing a new one”.

Chapter 6: Step 5: Difference, from Goods to Betters, this chapter is about mastering difference. This chapter is a focus on creating products that support positive outcomes rather than just delivering features and functions. Nike Plus, Nintendo Wii are cited as examples of producing betters. Instead of just producing goods, a constructive capitalist makes betters – bundles of products and services that make a difference to people, communities, and society by having a tangible, meaningful, enduring positive impact on them.

Chapter 7: Step 6: Constructive Strategy, from Dumb Growth to Smart Growth covers how to create constructive strategy and business models based on ideas such as Generosity, Creativity, Resilience, etc. This chapter offers a broader strategic model, starting with the game board tool.

Chapter 8: Constructive Capitalism provides a summary of how the steps and concepts fit together. Specialized definitions are described for an accurate understanding.
Six steps to Constructive capitalism

The Constructive Capitalist Game board, Umair Haque 2010


The book is complex, profound and academic, but accessible to profanes. The book invites us to think about how the future should look like, what we should stop doing, what we must do more and recommends a blueprint how to do it.

The New Capitalist Manifesto is a “Food for thoughts” book, for strategists and those who are looking to understand; for those who share the noble idea that capitalism should create “economic value” and “thick value” at the same time. 

The book is a must read for anyone wondering what will come next.
The New Capitalist Manifesto is recommended for executives, who want to understand how to compete in the future, and how to help build up the “Constructive Capitalism”.

Question to Umair: What is (or should be) the relation of your “manifesto” and Michael Porter’s “shared value” concept? Shouldn’t you work together to create the best framework ahead?

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