Friday, March 17, 2006

Brave Cultral World

We have rapidly moved from the information economy to the networked economy and, in my view are approaching the 'cultural economy'. It chimes with the view that 'capitalism is a finished chapter in world history' according to Arie de Geus, author of The Living Company, and former head of Shell's Group Planning Unit.

At the same time we see Antony Mayfield at Harvard Communications giving us a view of the “The authentic voice of the global media market, Rupert Murdoch hails the coming revolution that the Internet will bring.” Murdoch has shifted the goal and talks about 'all... on a journey'. He has moved away from the corporate to the cultural in one leap. And, according to The Economist, his News Corporation spent more than a billion dollars buying barely profitable internet companies.

He said: "It is a creative, destructive technology that is still in its infancy, yet breaking and remaking everything in its path. We are all on a journey, not just the privileged few, and technology will take us to a destination that is defined by the limits of our creativity, our confidence and our courage."

It chimes with the view that 'capitalism is finished chapter in world history' offered by Arie de Geus, author of The Living Company, and former head of Shell's Group Planning unit.

Gitte Larsen review of the Geus thesis summarised here:

When the capital market became a buyer’s market in the late 1990s, there came an economic price, a world price of capital, and why should we keep on running companies to maximize shareholder value? Today, you should run a company to maximize the value that is returned to the people that are a part of the company. The reason that doesn’t happen yet is that you have an internal reality in the company that says results are entirely the result of human talent, while at the same time you have an external reality that says you must continue to see capital as the dominant production factor.

“A hundred years ago, a company was based mainly on capital; the human element was a minor element. The most important was capital assets. That’s absolutely untrue today, because the human talent you have in the company defines your success, with other assets playing a lesser role. Just look at how many assets Microsoft has, for example. Its capital assets are minimal compared with its market value. The difference between market value and the balance sheet is the value of the human ‘community’ in the company. That’s completely ignored in the language of today. And that’s the tension or great challenge for companies today. We have to change the way we talk about companies. Business is about people working together to produce economic material wealth and quality design. Denmark has beautiful examples of how good ideas and good design quality are essential – for example, Lego and B&O. Their success is based on the quality of the people that work there, not the quality of their machines.

“The Living Company doesn’t have employees or abilities. The company has members, and these members have a set of shared values. And this is certainly the “mysterious thing” about Toyota. Toyota has a strong ‘corporate culture’; if you are a member of Toyota, you share the values of that culture. That’s just one aspect of the Living Company, but it’s a very central and important one,” says de Geus. “There are examples of companies that have survived a long time – Shell, for example, is more than 100 years old – and these successful old companies have a strong culture. They have a set of values that the people in them share. That’s the biggest difference between a living company and how we usually define a company; that is, according to legal and economic definitions. The living company is a community of people from the start.”

Here is an mp3 of the Arie de Geus interview at the Busieness Innovation conference in Copenhagen this week.

Picture: City of Bradford