Thursday, September 28, 2023

How the business world has changed in recent decades

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I caught up with Jim Collins last week, whose book Good to excellent ranks at the top of my list of the best business books of all time. Collins recently posted an update of earlier work, Beyond entrepreneurship 2.0, originally published in 1992. I looked forward to talking with him about how the business world has changed since then.

Collins’ work focuses on the enduring rules of corporate leadership and he resists those who cheat change. In the new book, he recounts a conversation with a 20-something who said his generation “needs a whole new way of leading to inspire and motivate us … We demand that our leaders not only guide us, but that they also tell us why. And that has to be a “why”, it’s more than maximizing profits for shareholders. “

Collins Response: “The biggest corporate builders have always done this. You confuse what is rare with what is new. “His examples include companies like Johnson & johnson, Merck, and Patagonia.

Readers of this newsletter know that I think a lot has changed. Intellectual property and intangible assets represent a larger share of the value of businesses today than they did three decades ago; which forces companies to focus more on their employees. The pace of change is faster and scaling up is easier than before; This makes it more difficult for key leaders to provide detailed direction and it is more important that they empower employees and define a shining North Star. Social media has improved transparency; which makes leaders more responsible for the impact of their companies on society. And the younger generation is indeed different – perhaps not in their desire for meaning, but in the way they accomplish it. Millennials are slower to get married, less likely to belong to an organized religion, less inclined to join civic clubs than previous generations – leaving the employer as their primary formal link with society. They want meaning in their work.

Collins did not dispute these changes. And he acknowledged that more and more companies today are pursuing a goal beyond profit – although he cautioned about the need to distinguish between real goal and “goal-washing”. Nevertheless, in his opinion, the basic rules have not changed. In the 1992 book, he wrote: “We ask you to reject the classic doctrine of business schools. “Maximizing Shareholder Wealth” is a simple theoretical way of looking at a business, but it is not supported by the reality of many large companies… For them, profit is simply a strategic necessity rather than the ultimate end point.

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Alan murray


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