One of the key mindset shifts required for transformation relates to the way we think about capitalism itself. Capitalism’s combination of for-profit enterprise and competitive markets has contributed to incredible innovation, wealth creation and rising living standards.
However, we need to recognize that capitalism is also generating outcomes that are hugely unsustainable. Generating long-term returns demands a reinvented model of capitalism that rewards true value creation, not value extraction. A reinvented capitalism will be characterized by five features: stakeholder-oriented, impact-internalizing, long-term, regenerative and accountable.
A REINVENTED CAPITALISM THAT
GENERATES TRUE VALUE WILL ENSURE
We explore this mindset in more detail, including specific guidance on the actions that business, and the CFO community in particular, can drive, alongside aligned asks for policymakers, in our Vision 2050 issue brief:
WHAT DOES A REINVENTION MINDSET LOOK LIKE?
Companies cannot reinvent capitalism on their own. But they can recognize that the system they are part of is failing society in significant ways and do something about it. Companies, especially big multinational ones, can play a role in addressing the negative outcomes from our current approach, and corporate mindsets must shift to reflect that fact. However, markets – and the outcomes they deliver – are shaped both by those participating in them, such as businesses and investors, and those overseeing them, such as governments and regulators. For that reason, business can and must both walk the talk through its actions, and advocate for changes to the “rules of the game”.
There have been many high-profile proposals for a reinvented, reimagined, or reset capitalism in recent years, and all share characteristics. A reinvented capitalism will be:
STAKEHOLDER-ORIENTED, rather than shareholder value maximising
IMPACT-INTERNALIZING, rather than impact-externalizing
GEARED TOWARDS THE LONG-TERM, rather than the short-term
REGENERATIVE, rather than degenerative
ACCOUNTABLE, rather than unaccountable.
Together, these features will shift the purpose of business so that it generates long-term true value for all: employees, customers, suppliers, communities, the natural environment and, of course, shareholders.
OTHER MINDSET SHIFTS
To explore this mindset shift in more detail, download
our Vision 2050 issue brief, or explore the key sections of our Vision 2050 report.