The capitalist system is under siege, says Michael Porter, Harvard Business School and the originator of the term Competitive Advantage. Porter talks about how business is a popular choice to play the role of the bad guy in Hollywood and how there is a deluge of opinions about it causing societal problems. Business has tried to take on “Social Responsibility” but this openness and good will seems to have opened up more criticism. Private equity, which has saved thousands of jobs and protected the longevity of companies, is also under fire and being questioned.
This declining trust has caused politicians and market regulators to add more rules and policies to cripple the capitalist system.
As always, business needs to be the first to step forward in a new direction and look for solutions. Already there are signs that business has been the first to recognize, the business model that worked well ten years ago may now be growing swiftly stale.
One such framework to review is the way business views value creation. It is the short time financial focus in a bubble, while missing customer needs and broader societal influences that determine long term success.
Obviously, those companies who are large enough to have the luxury of participating in round tables and what not, and can take the time to influence and brainstorm the issues.
Yet in Canada, 80% of company owners run smaller businesses and from the ones I see on a daily basis, they are running on whiffs of fumes. For example, plastic bag manufacturers are having to deal with plastic bags manufactured with logo and all in China and shipped at a tiny cost. How can a small Canadian based company making slim profit margins compete? How can the Canadian government demand more from their taxes, paperwork and health and safety regulations while opening up the door to competitive products not burdened with labour law or higher capital costs?