Constructive Capitalism (Umair Haque)
Different framework for 21st century value creation. My question: Is Haque’s argument veiled communism?
It seems that people who really like this talk are the same people who ask the question: “Is growth really, really what we want?”
One of his is arguments is “outcomes, not incomes.” What he means is that revenue, gross profit, gross margin, return on equity, and the other key financial metrics are not going to create value in the 21st century. Instead institutions need to focus on the “outcomes” of their actions. Does your operating behavior make people’s lives better?
If you watched this, I’d love your thoughts. My gut on this was that he is outlining a vision for more innovative capitalism that operates on a different set of principles than the one of the past (suck up resources, extract value out of them, move on.) I don’t think he’s a communist, but he might be. I’ll need to watch it again and read more.
Watching the video now… what strikes me immediately is how fuzzy Haque’s thinking seams to be. I’m trying to find a cohesive thesis, but between the name dropping, buzzwords, and sudden topic jumps, I’m unfortunately having a hard time finding it.
Haque also seems to be setting up “orthodox capitalism” as a straw man by defining it as exploitative / controlling / evil by nature. Ultimately, the core of capitalism is voluntary transactions between parties that makes each better off- that’s what “value creation” means. It’s certainly important to understand the consequences / outcomes of what you’re doing (anticipated and unanticipated) and try to eliminate negative outcomes. That doesn’t strike me as a different form of capitalism – if anything, it’s just getting better at how business actually works.
Still listening… more to come.
Josh,
Yeah, I think you nailed it. I felt dumb when I didn’t get his point on the first take, but I think you’re right. Haque isn’t communicating clearly.
But he has some nice nuggets. I especially like the idea of “competition, not conflict.” The idea that pharma companies spend $12B per year discrediting one another is astounding. I’d certainly like them to invest that money in R&D rather than “my drug is better than your drug and if you don’t believe me that’s ok, because I’ll send you a trip to Puerto Rico if you sell 10 units to your patients and then we both win.”
I generally don’t like his going in assumption that “orthodox capitalism is evil and exploitative.” There are definitely profitable exploitative companies. But there are plenty of companies that provide net benefits to all stakeholders. It’s pretty easy for guys like us and Haque to dwell on the excesses of oil/coal industry and all the plastic piling up in waste dumps. However, the hundreds of millions of people across the developing world who have leaped from back breaking poverty to middle class lifestyles have an entirely different perspective on capitalism and what it means for humanity.
I agree with Haque that the measurements need to evolve, and that firms need to focus on outcomes more, but that doesn’t mean income isn’t a necessary or appropriate measure.
Perhaps he is just being intentionally provocative. I’d have a hard time believing that he doesn’t think return on equity, revenue growth, and healthy margins are a necessary measurement in business. I think it’s “outcomes and incomes” instead of “outcomes, not incomes.”