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Tuesday, November 20, 2007

"Socialist" capitalism

The House Un-American Activities Committee (from Wikipedia)

I am trying to get my head around this rather intriguing paradox. Many of the best and most successful businesses behave -- to a limited but crucial extent -- very much like communists, that is, everyone in the group is treated equally, with all rewards for the means of production shared.

Entrepreneur Seymour Schulich, for example, in his book describes how his executive team all received exactly the same compensation, not more, not less, regardless of their individual performance during the year. The idea of course is to r =ecognize that while we all have some ups and downs, if we can bridge the gap, co-operate, and work together without personal conflicts or internal competition, we'll all do much better (and take a longer-range view).

Consultants like Sonny Lykos, Michael Stone and Bill Caswell freely give away the core of their concepts without cheesy come-ons where you have to sign up and pay for services, books, tapes seminars, or private programs to get the 'real truth'. Now I agree you aren't going to get them to fly to your city and speak with you for a week without compensation -- but I'm sure they will return emails, phone calls, and the like, and you'll be hard pressed to find any commercial pushing here. Simply put, they aren't in it for the money (though of course the money flows to them as a beneficial side-product.)

Look at this blog, for example. Outside of one modest source of revenue (and the revenue is really modest, and the rules of service for this revenue are that I must not discuss it in these pages) it is all about sharing, not hoarding. (Wait, that doesn't sound very communist to me -- go to any real 'socialist' country, say Zimbabwe, and you won't find many people with much to share). My only failing is finding a way to effectively give value to some of the people who email or phone me each month wishing to advertise in markets where we don't currently have significant business operations. (Of course, I send relevant sales leads straight to our sales department; this is a business, after all.)

These observations may suggest why some communist countries -- such as China and now Vietnam -- are starting to do so well economically. Enough of the old-style sharing and communist values are overlayed with some pure (and relatively unregulated) capitalism to create the incredible energy and accomplishments necessary for success and achievement.

My point is that most truly successful businesses create within their organization an element of mini-communism; everyone is treated fairly, equally, and with respect and within reasonable limits, systems are designed to prevent anyone achieving a prima donna place in the organization (while allowing people with real talent to truly express, and be recognized, for their accomplishments and contributions.) And, externally, we reflect these values with a not-so-greedy approach to the marketplace.

(If I tried to write this in the late 1950s, would I have had to deal with the House Un-American Activities Committee and Joseph McCarthy? Time changes things, even though I believe most of the essential principals of business and life are timeless.)


Sonny Lykos said...

Mark, in my opinion Seymour Schulich was just a great investor, period. The fact that he paid his executives exactly the same amount is no different than companies paying their sales staff the same exact percentage.

As for businesses being mini-communism, I don’t agree with that assertion either. The “same” of anything to a degree must be in place to eliminate chaos. Ditto for families. Every “group” has certain aspects expected to be adhered or that chaos I mentioned is guaranteed.

As far as fairness, equality, and respect, is again,indicative of what’s expected of the members of any group. Of course, the reality is that there are always “favorites” within any group, even families, so “fairness” and “equality”, like beauty, is in the eye of the beholder.

Finally, in democracies, individuals are allowed to flourish. In communism, they are rigidly constrained. In democracies, employees can quit; not so easy in communism. Finally, in democracies, an employee can speak up about unfairness in the work place. In communism, that surely would cause one to disappear - permanently.

As for prima donnas, I never have, nor ever will tolerate one.

Construction Marketing Ideas said...

Sonny, points taken -- but my argument is that some intriguingly "communinistic" behaviour sometimes supports and encourages successful business, if only to enhance order and ensure a longer-range team effort. (And so called socialist or communist states, by denying human expression, creativity, and independence, can foster the worst forms of greed, corruption and poverty.)