AHC Group, Inc.
156 Stone Church Road, Ballston Spa, NY 12020 , U.S.A.
New World Companies: The Future Of Capitalism
How does a good company generate value in society? How do the leaders of these new world companies reshape and remake our families’ available goods, our friendship networks, and the many smaller firms that support them?
As a management consultant to over a hundred firms in the last thirty years, my team and I have worked with global companies such as Toyota, Suncor, Siemens, and FedEx, to name a few, to help them transform into new world companies – companies ready to take on the challenges of today’s global economy. In doing this, I derived a way to describe how companies mature by seeing the process as a symbolic clock of corporate competitiveness. As this concept evolved, I came to focus not on the clock itself, but on what it represents: time. Furthermore, I’ve broken down the time periods into segments that represent significant stages in the life of a global business. I often refer to these timeframes as “urgencies,” because, as I view it, corporations must accomplish the business goals outlined within each time period if they are to be successful.
Throughout the years, I have revised my description of these timeframes in a company’s life to take into account the emergence of what I call social response capitalism. I became increasingly aware of the financial ramifications of social response capitalism while working with new world companies. I came to see how each company contributes to this most important new business movement in decades, and why this evolution is crucial to the health of any company – whether a large global corporation or a small regional family business.
The Six Timeframes of a Company’s Life
The first of the six timeframes in the life of a company can be summarized by the term “profit margin improvement.” Increasing revenues and profits is of primary significance for success in this initial stage.
During the second timeframe of a company’s life, business practices must focus on improving efficiency in the areas of manufacturing, distribution, and sales. The essentials of efficient manufacturing include improving the automation of the manufacturing process, and finding outsourcers who can reduce production costs. A company’s sales and distribution may produce as much as 80 percent of its profits. What has become known as distribution channel realignment is a crucial area in which companies can significantly enhance performance. This may include strategies such as broadening networks, reducing transportation costs, and improving customer service.
Enhanced performance expedites the third stage of a company’s life: expansion of its global customer base. Successful companies must develop globally if they hope to remain competitive. Expansion may not be the “mother” of invention, but it certainly is the “sibling.”
Presuming a company progresses to a successful third phase – and only a few do – its fourth stage must focus on product differentiation. In the extremely competitive environment of global business, companies must continually increase the recognizability of their products against those of their competitors. Once this goal is attained, the corporation enters the fifth stage – reducing risk factors for investors. Whatever companies produce, they must do so with fewer financial and operational risks than their competitors.
The sixth and final stage of a successful global business focuses on environmental, social, and governance practices – three areas of concern that lie outside company operations. This recently evolved step involves a company’s efforts in responding to the social concerns of its customers and clients; having these actions recognized by the analysts and investment managers who assess its likelihood of success.
This is social response capitalism. One of the most significant ways of evaluating a company’s prospects and performance rests with its social products differentiation. This involves the assimilation of “social response values” into its products and services. Throughout the years – as I’ve refined my approach to corporate success by adding social concerns as measurable criteria – I’ve come to realize that this sixth stage is necessary not only for corporate success, but also for corporate survival.
Unless a firm takes into account the profound changes that have become part of the new global corporate culture, it can neither thrive nor can it survive.