Saturday, November 14, 2009

Capitalism Has not Failed.. Companies need to...

Sramana Mitra is disturbed about capitalism.

And our talented youth gets seduced by this profession of speculation known for its easy and abundantly flowing financial rewards, avoiding those that require much greater intellectual capacity. Most importantly, very early in their lives, our talented youth come to realize that fields that may earn them a Nobel Prize--cancer research or multi-core computing--may not make them rich. But moving money from here to there will.

And thus, we lose Berkeley Ph.Ds in nuclear physics to hedge funds and MIT computer scientists capable of delivering computing to 6 billion people to derivative manipulation on Wall Street. Rand, somewhere down the road, you lost me. I don't see how free market capitalism fixes this systemic flaw.

And I am deeply disturbed.

Capitalism hasn’t failed, it is just not enough. Instead, innovators need to change the old approach of “Focus on profits”, to instead put people and planet first. Then sustainable profits will result.

My father used to say, “What is good for GM is good for the country.” We learned that GM was not a sustainable business model, because they did what was best to make the largest profit, rather than doing what was best for the users, the country and the environment. Others came along who did make products that were far better in quality and lasted far longer than the 3 years that GM designed their cars to last.

So, capitalism did not fail. Failure of GM and others could have been avoided if the companies had done the following:

· Look at their products as part of an entire system, that includes all of the stakeholders- Users and everyone else on earth as well as the earth itself. And then determine-

o What is really needed to create the greatest VALUE. Focus on NEEDS not WANTS.

o Critically examine what exists. How could it be made to perform better, cost far less and be far friendlier to the planet

o Then commit to creating what would be better for people and planet.

The good news is that I see a whole new group of young people who “get it.” They truly want to make the world a better place, by putting people and planet first. And they have already started to create meaningful products and companies. See as one example- they have created a sustainable alternative to Styrofoam.

Full Disclosure- This new venture started in my class, Inventor’s Studio at RPI and I am an investor.

1 comment:

Anonymous said...

In Grad school I saw brilliant classmates going off to investment banks and consultancies, it really seemed like the next piece in a logical puzzle... in some ways an investment bank is just like a continuation of what is being pushed in schools, standardized tests like investment banking is about pushing numbers around while being detached from the real world.

though I do see hope in that more of my classmates went off and started ventures like and they really do seem happier then my banking friends.

It seems to me that when your driven by a goal like profit you tend to drift off into mediocrity, but when driven by making a huge positive impact on the world your life gets better and better.