Rethinking Capitalism or Rethinking Expectations?

A very interesting interview of Michael Porter focuses on his recent work (thoughts) on how firms going forward are going to have to rethink how they formulate strategies.

Creating shared value, Porter effectively states that firms will have look at their value proposition, look at quality, and look at their role as members of society.  That instead of operating through models that extract, they will need to share.  It is a revolution of CSR, which he believes has sees coming to the end of its useful life, and will force core changes to firms.

The one question that I kept asking was what about the role of expectations. Particularly those of markets and investors.

Are these stakeholders ready for “fair” profit, and “fair” products, that cost more and spin off lower profit margins?  Or are these groups happy with the current relationship in capitalism where the externalities of production are kept outside the retail cost formula, and the maximum amount of profits are made (for investors)?

For me, this is a question that is important as ultimately for these initiatives to continue being supported, a realignment of expectations will need to occur.  Expectations that align in a way that supports the firm’s changeover.

Without that, the conditions supporting the “business as usual” extractive model will persist.

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