The emergence of NetWork Capitalism is nothing but a reset in how we think about doing business. It requires the capacity to unlearn as well as to learn. These Q&A's help you do so.
What's the key proposition of NetWork Capitalism?
Successful companies drive progress and prosperity within society.
What's the definition of being a successful company?
A successful company creates economic value for itself and its stakeholders at the same time.
Why should a company be bothered with creating value for its stakeholders?
Because it's in the company's own interest. A company that doesn't create value for its stakeholders can never live up to its purpose. Companies who succeed in establishing integrated value are the winners and heroes of the 21st century networked economy.
What does it take to become such a successful company?
It takes two things; First, a company's capacity to create high value stakeholder networks. Second, its ability to do business by engaging in mutually beneficial partnerships.
What do high value networks look like?
A high value network is a dynamic business environment in which a group of companies, suppliers, customers, NGO's, government organizations, research centres or any kind of other organization work together based on a shared purpose. They are united via matters that transcend their own self-interests. Membership is voluntary and dependent of each participant's unique contribution to the overall objective(s).
What is meant by engaging in mutually beneficial partnerships?
To capitalize the full potential of high value networks means the network's participants must engage in mutually beneficial partnerships. Partnerships are meaningful and sustainable in the sense that they are based on interdependence and shared responsibilities towards making the network flourish. As such, partnerships move well beyond traditional, transaction oriented, types of cooperation.
What's the first thing a company should do to align itself with NetWork Capitalism?
Be completely honest in answering this question: 'How can the company be successful and at the same time contribute to creating a better, more meaningful world worth living in?'
And what is as second, third and fourth?
Second. Be rude and make a plan to stop all current activities that don't match the answer given on the first question.
Third. Be trustworthy for your company stakeholders and start the process of creating your high value networks.
Fourth. Go do it!
Why is there so much emphasis on high value networks and partnerships?
The biggest challenge regarding the emergence of NetWork Capitalism is to unlearn what has been institutionalized in over 200 years. The way we think about economics, doing business and how society in general works has been strongly influenced by the cornerstones of Industrial Capitalism; productivity and efficiency. Replacing these old cornerstone by the new ones of NetWork Capitalism is the core transition to be made. As such, it deserves all the attention it can get.
Are productivity and efficiency no longer considered important?
Productivity and efficiency are still important, but they no longer make the difference whether or not a company is successful. Better, cheaper and faster production has become merely a commodity. It has little to do with driving progress and prosperity in society at large.
Does NetWork Capitalism put stakeholder value above shareholder value?
According to NetWork Capitalism this distinction is irrelevant. The real issue is to be successful and boost progress and prosperity at the same time. That's what entrepreneurship is about and that's what a company and its executives should focus on. Increasing the level of well-being within society should be the common denominator in doing business for all stakeholders. Partial benefits from a supplier, shareholder, customer or employee perspective only are subordinate.
How does innovation fit into Network Capitalism?
Innovation is vitally important, because it enables the process of creative destruction. However, innovativeness created via high value networks must always be inclusive and not exploitation or zero-sum oriented. Mutually beneficial stakeholder partnerships are a prerequisite for this type of innovation.
Is NetWork Capitalism propagating a revival of the moralistic 1950's?
By far. NetWork Capitalism simply shows that times have changed. In order to be successful in the networked economy the best thing a company can do is to invest in meaningful stakeholder relations. There is nothing moralistic about that, it's plain and simple business acumen.
Does NetWork Capitalism limit an entrepreneur's spirit to pursue its own interests?
Not the least. NetWork Capitalism is built upon Adam Smith's original idea that entrepreneurs pursue their own interests. Yet, in today's networked economy and society the best way to pursue one's own interest is to advocate inclusiveness.
Is NetWork Capitalism the 21st century version of socialism?
Not at all. NetWork Capitalism is probably a more pure version of Capitalism than contemporary Industrial Capitalism. Whereas the latter has evolved into a modern version of (pré Capitalism) Feudalism, the first is firmly rooted in the true spirits of Capitalism.
Is NetWork Capitalism the online version of Capitalism?
NetWork Capitalism is inline. It makes no distinction between online and offline.
Is NetWork Capitalism a 'dream-on' version of Capitalism?
Although the overall purpose of NetWork Capitalism is to create a better world worth living in, it is nothing but soft or hippy-style. Free competition and free entrepreneurship are its core. Yet, free in the sense of ruthless exploitation will no longer do the trick. Inclusiveness and meaningfulness are the new standard. Companies that live this new standard will prove to be the strongest and most successful competitors.
What's the influence of NetWork Capitalism on economic science, business education and leadership?
For more than 200 years economic science, business education and leadership were strongly influenced by the core principles of Industrial Capitalism. As NetWork Capitalism reinstalls Capitalism's original focus on increasing wealth within society at large this means the current over obsession and dominance of productivity, efficiency, profits and GDP need to be replaced. NetWork Capitalism will cause an institutional reset with much wider consequences than only for economic science, business education and leadership.
NetWork Capitalism is a paradigm shift. What does it mean?
Paradigm shifts occur when new times call for new insights to understand the world we're living in. In economic history these shifts have occurred before. For example at the end of the Middle Ages when Columbus's discovery of the West resulted in the birth of a new economic era. Exploring the world, gaining access to natural resources and international trade were the new key ingredients for increasing the overall level of wealth. They not only replaced the craftsmanship and agriculture dominated economies that prevailed until then, but also redefined the economic meaning of welfare.
Another well-known example of an economic paradigm shift involves the invention of the steam engine in 1769. This marked the beginning of a new economic time-zone called Industrial Capitalism. Industrial production based on continuous improvements in productivity and efficiency substituted global exploration and international trade and became the new centre-piece for creating progress and prosperity. But even more important, economic rules were rewritten; for the first time ever it now was possible to increase the total amount of wealth instead of only distributing a vast amount of it.
Is NetWork Capitalism a rebranding of Corporate Social Responsibility?
Not at all. Although Corporate Social Responsibility (CSR) should be praised, the big problem of CSR is that its primary focus is to minimize (or even delete) the externalities of contemporary Industrial Capitalism. CSR doesn't take away the root causes, it institutionalizes sub-optimality and in neutralising negative side-effects it takes away valuable resources from the process of value creation, only to undo the damage done. NetWork Capitalism solves the root causes of today's key-issues and deploys all resources to do the right thing instead of going for second-best.
Does NetWork Capitalism aspire a society based on App's and robotization?
Who are you kidding? NetWork Capitalism regards the digital transformation as an catalysing enabler, not as an outcome. Only Technology buffs dream of unprecedented robotization and App's that solve all our problems. However, this has nothing to do with creating progress. As long as the old productivity and efficiency principles are applied to the new digital technologies, it's just more of the same. If only Tech buffs would read some e-books on economic history they would learn that disruptive technologies are never linear nor absolute. Simply because they are disruptive.
Why has contemporary Industrial Capitalism lost its golden boy status?
For over 200 years Industrial Capitalism resulted in tremendous growth in wealth and welfare. Yet, since the eighties it lost its core purpose to drive progress and prosperity out of sight. Ever bigger, faster and cheaper production, continuous improvements in efficiency and productivity, and the dominance of short-term profitism became an end in itself. Further continuation contemporary Industrial Capitalism is a dead-end street that will only make things worse.
Why is Industrial Capitalism portrayed as something bad?
Industrial Capitalism isn't bad and its key principles still hold value for many. However, in the 21st century its key-principles (raising productivity and efficiency) will not lead to sustainable competitive advantages, nor will they make the world a better place. Its murky dark downside and the new networked era demand nothing less than a renewed, second generation of Capitalism.
Should a company stop raising its productivity and profits?
A company should not stop focussing on raising productivity and profits as long as both contribute to the success of its high value networks and its purpose driven partnerships with stakeholders. Without such a contribution raising productivity and profits becomes an end to itself and ultimately the company's biggest existential risk.
Is NetWork Capitalism only relevant for Western Europa? Or is it cross-cultural?
NetWork Capitalism has a global and cross cultural scope. It's overall purpose is valid in societies all over the world and so are the problems it intends to solve. Off course there are differences between countries, cultures and societies regarding the fit with NetWork Capitalism. Yet, what is considered a (dis)advantage for one, is considered a (dis)advantage for the other. A one size fits all version of high value networks and meaningful partnerships is the last thing needed.
Has NetWork Capitalism a global, national or regional scope?
NetWork Capitalism is about creating high value networks and engaging in mutually beneficial partnerships. Whether these are local, regional or global makes no difference.
Does NetWork Capitalism only work in 'rich' societies?
No, it makes no difference between 'rich' and 'less rich' societies. It is not a luxury that less fortunate ones can't afford. As so-called 'rich' societies gained a lot of their present wealth from Industrial Capitalism it might even be harder for them to handle the implications that come along with NetWork Capitalism. Other countries have less a burden to carry along. Plus, defining 'richness' only by financial values is outdated and requires a reset. Some of the 'richest' societies may be rather poor when measured by non-financial indicators of wealth.