Tag Archives: capitalism

This is what we do to dreamers

memobottle+manLet’s say you are starting a startup and today you are standing in front of a venture capitalist.

With impatience in his voice, the VC says,

“Tell me again exactly what your enterprise is for. How are you going to create value?”

This is what we do to dreamers.

Because the answer to this question almost always comes to you in a mad conceptual scramble for the simplest, most obvious, most literal statement of what your enterprise is “for.”

You stand, you deliver:

“Our product will help people solve problem x for consumer y cheaper than competitor z.”


But not so fast. Because now you are wedded to it. Every time someone asks, you are obliged to repeat your simplest, least interesting statement of what your company is for.

It’s the opposite of poetry. Every time you repeat your “value proposition” it gets more obvious, practical, functional, literal, uninteresting and unbeautiful. Your dream is withering.

In the summer of 2015, Hal Varian, Google’s chief economist, insisted, against all measures and most opinion, that U.S. productivity was actually up.

The trouble, he suggested, is that we can’t see these gains because we are using old measures. When the GDP measure was developed in the 1930s, Hal observed, it focused on things like steel and grain. The improvements that come from Silicon Valley are harder to see.

Radical Hal. No, call him Heretical Hal. This was the beginning of the end of capitalism as a blunt object, as a search for mere utility. This was an opportunity to free ourselves from those people who see the world as a solutions to problems, and the more pragmatic and practical the better.

But we can’t complete this heresy until we begin to make certain value visible. We need to show how our enterprise will create value of a social, cultural, human kind. We will have to show that Uber is not merely cheaper than a taxi cab, but a richer, more human way to discover a city. (I set aside the labor issues for another time.) We will have to show the Airbnb is not merely a cheaper hotel room, but that it is a richer, more human way to discover a city. As it stands, and as far as capitalism (and Uber and Airbnb themselves) are concerned, this remains “dark value.”

Sometimes dark value is revealed, but typically this revelation comes late in the process. Ideas happen, capital is made added, enterprise springs into the world, innovations are rolled out. And then someone says, “Er, what about marketing?”  Planners, strategists, creatives, designers, ethnographers are summoned to contemplate this poor, beaten creature.

With any luck the post mortem goes pre mortem. The innovation springs to life, it’s coat glossy with new meaning. But often even this creative genius can’t do anything for the “innovation.” It is beyond all hope. It is designed to solve a problem that no one cares about because it adds virtually nothing to the world. “Whiter whites” are a death mask.

But sometimes these creatives discover, invent, conceptualize dark value. And the consumer will say, “Oh, that’s what it is. You kept telling me what it’s for. No, that I like. I can live that.”

By this time of course it’s all up stream. The creatives are working with something that’s mostly formed and they are working with people who really in their heart of hearts think “all the creativity stuff is really just icing for the cake. It’s the sizzle that sells the steak.  It’s the stuff you have to say to persuade the consumer to buy a product that frankly should have sold itself on the strength of it’s functionality. I mean, really, what is the matter with these people.”

What if we started looking for and working with dark value from the very beginning?

And if this sounds like a good idea, please consider buying my new book Dark Value here. It’s a bargain at $2.99.


Thanks to Leora Kornfeld for engaging me this morning with a useful email. And thanks to many people on many media who have offered encouragement for the Dark Value project.

The image is from this website.

Does capitalism have thermals (aka, the evolution of Paramecium, Inc.)

A couple of months ago, I had the good fortune to have lunch with Napier Collyns.  Mr. Collyns is one of the founders of the Global Business Network and a man with a deep feeling for the rhythms and complexities of capitalism.

I came home and banged out this little essay.  It’s an effort to think about the possibility that “value” goes from the material to the immaterial.  A company might begin by making hammers but sometimes it ends up making value that is  less literal and more broad.

Does capitalism have thermals?


A bigger picture may be called for when we think about capitalism.   In his famous essay, Marketing Myopia, Theodore Levitt encouraged people to ask, “What business are you in?”   The question had a strategic purpose: to rescue managers from their literalism.

In the early days of the railroads, managers were preoccupied with laying thousands of miles of track.  The next generation devoted itself to making a magnificent delivery system for industrial America.  With the rise of the automobile, the truck and the plane, things changed.  But the conceptual shoe didn’t fall for management until Levitt gave them a big picture. “You’re not in railroads, you’re in transportation.”

There is perhaps an inevitable developmental pressure.  As the world becomes more complicated (and capitalism routinely makes the world more complicated), the ideas with which it is understood must become more sophisticated.  One minute we’re laying track.  The next, we’re wondering how to compete with things that fly.

The only way to grasp the intellectual challenge is to generalize.  This helps break the grip of literalism, the one that says, trains are trains and planes are planes.  No, says Professor Levitt, trains and plains are the same thing but only if we move to a higher vantage point.

A second thermal comes in the shape of commodity pressure.   In every market, incumbents eventually draw imitations (aka “knock offs”) into play.   The incumbent is faced with two choices.  It can engage in a “race to the bottom” that occurs as incumbent and imitator sacrifice margins until everyone finds themselves mere pennies above cost.  (Thus does the innovation has become a commodity.)

Or, the innovator can climb the value hierarchy, moving from simple functional benefits that the imitators can imitate to “value adds” they cannot.  Thus did IBM find itself challenged by off-shore competitors who offered bundles of software and hardware at 40% of what IBM was charging.

Customers snapped up these cheaper alternatives, only to discover that the commodity player was not supplying the strategic advice and intelligence that came with the IBM version of the bundle.   Now IBM had to learn to talk about this value, and to make more of it.   They were obliged to cultivate a bigger picture.

Here’s another “thermal.”  Premium players traditionally defend themselves from commodity attack by creating higher order value that almost always comes in the form of idea and outlook.  Thus Herman Miller, the furniture maker, confronted by an off-shore competitor that was prepared to make chairs for much less, redoubled it’s effort to sell not just chairs but new ideas for what an office could be.  This thermal intensified as new commodity players have emerged from China, India, and Brazil.

Paramecium, Inc.

We could argue that capitalism has thermals from almost the very beginning.  In this beginning, enterprise were inclined to be structurally simple, a single cell mostly oblivious to the world outside itself.  Call this “Paramecium Inc.” or Level 1.  The enterprise makes hammers.  It assumes someone out there wants hammers but the focus of attention is on the hammer.

Eventually someone comes along and says, “actually, what the company makes matters less than what the consumer wants.”  Thus spoke Charles Coolidge Parlin in 1912 when he asserted that the “consumer was king.”    Closing the gap between company and consumer has been a work in progress.  New methods, theories, and resolve have come from the likes of Peter Drucker and A.G. Lafley, and somehow the gap persists.   But at least the Paramecium is evolving, reckoning with things outside itself.  This is Level 2.

In time someone says, “we need to think more systematically about our competitors.”  This is the long standing focus of Economics, but in the late 1970s, Michael Porter offered a new approach and strategy proved influential.  Here too the organization is sensing and responding to the world outside itself.  It is scaling not so much up as out.  We are now at Level 3.

With each new Level, we “dolly back” to see more of the world. Our “paramecium” is increasing aware of itself and the world outside itself.  This is a movement from the narrow to the broader view, from the local to the global, from the provincial to the cosmopolitan.

Level 4, collaboration, has several moments.  The enterprise, once less solipsistic, can entertain partnerships.  The organization that once insisted on a crisp, carefully monitored border now consents to something that looks more porous.  The Japanese influence helps here.  So did the “outsourcing” movement.  Most recently, with the advent of new media and digital connections, collaboration expands to include still more, and more diverse, parties.

In Level 5, we are encouraged to see that the enterprise must reckon with the meanings, stories, identities, subcultures, and trends with which people and groups construct their world.  Noisy and rich in its own right, culture supplies some of the “blue oceans” of external opportunity and the “black swans” of external threat.  A great profusion of consultancies and aggregators springs up to cover culture.

Level 6, context, was once merely a field or container for all the other levels.  But now the field has come alive, no mere ground but now a source of dynamism all its own.  In this bigger picture, the enterprise can feel itself a tiny cork in a veritable North Sea.  Disruptive change comes from all directions.  Strategy and planning become more difficult, and some enterprises descend into a simple adhocery. The world roils with deliberate change and its unintended consequences.

There is an intellectual challenge at Level 6.  Making sense of a world that is so turbulent, hard to read, and inclined to change is difficult.  Indeed identifying the unit of analysis is vexing.  Are we looking at “trends,” “stories,” “scenarios,” or “complex adaptive system?”   Should the enterprise do this work by hiring x, y or z?

“Context” is a wind driven sea.  The horizon keeps disappearing, navigational equipment is dodgy, the world increasingly unfamiliar, inscrutable and new.  We are to use the language of T.S. Kuhn, post –paradigmatic.

The movement of levels 2 through 4 has been conducted under expert supervision.  But Levels 5 and 6 are vexing partly because there is no obvious intellectual leadership.  Even the “experts” are challenged.  The problem created by Levels 5 and 6 are simply unclear and we continue to disagree on even simple matters.

Reading this through, a couple of hours after publications, it occurs to me that there is for some corporations a Level 7.  This is where the corporation embraces its externalities and takes an interest in the larger social good that can come when the corporation thinks about what value it can create for creatures other than itself.

I was in a strategy session a couple of years ago when a guy from Pepsi, I believe he was actually the CMO (let me check my notes), actually said, “I am committing my organization to solving every environmental problem it has in its purview and can get its mitts on.” Wow, I thought, this is capitalism writ large.

The Mystery of Capitalism

I am always surprised that no one bothers to tell the story of capitalism.

No, the stories we prefer to tell our children is that capitalism is a dangerous, soulless, relentlessly exploitative exercise.  Indeed, this story is so preferred as our received wisdom that it is exceedingly rare to hear anyone recent Adam Smith’s magical insight, that good things can and do come from people pursuing their own, sometimes narrow, objectives.

The anti-capitalism view is an ideological fixture of our education systems at every level, from grade to graduate school.  We could call it orthodoxy if it were not so much like boilerplate.  It’s not so much argued as assumed.

Capitalists are sanguine.  Apparently, they don’t feel they have to tell the story of capitalism.  Somehow capitalism will teach its own lessons.  Once people escape the magic kingdom of education, the truth will dawn.  Once they have spend a little time in the marketplace, the penny will drop.  Or, as the English like to say, "if a man’s not a Marxist at 20, there’s something wrong with his heart.  But if he is still a Marxist at 30, there’s something wrong with his head."

When Peter Robinson interviewed Gary Becker, Professor at the University of Chicago and winner of the Nobel Prize, recently, the master surprised Robinson be announcing, "Markets are hard to appreciate."   Robinson asks for clarification and Becker obliges:

"People tend to impute good motives to government. And if you assume that government officials are well meaning, then you also tend to assume that government officials always act on behalf of the greater good. People understand that entrepreneurs and investors by contrast just try to make money, not act on behalf of the greater good. And they have trouble seeing how this pursuit of profits can lift the general standard of living. The idea is too counterintuitive. So we’re always up against a kind of in-built suspicion of markets. There’s always a temptation to believe that markets succeed by looting the unfortunate."

And I think this gets at some part of the heart of the problem.  Capitalism is, as Becker says, counterintuitive.  It tells a bad story.  In fact, it isn’t a story.  It is anti-storyish.

Capitalism doesn’t have heroes.  It doesn’t have people called to higher motives.  It doesn’t have noble sacrifices for the good of others.  It doesn’t, usually, have daring action on a public stage.

No, capitalism is just has some guy who owns a handful of dry cleaning outfits in a small town in New Hampshire.  He works hard, supplies a service, pays off his loans, coaches Little League, goes to church, gets his kids through college, and spends his very few disposable hours on the golf course.

Script!  Casting!  Someone call the studio!   This is appalling.  It doesn’t matter that out of these mundane activities in lots of towns big and small, played out by millions of people across the US, something remarkable will come.  This just isn’t a story anyone wants to listen to.  So no one much wants to tell it.  Not Hollywood.  Not our mythmakers.  Not our story tellers.

The economist has spoken.  It is a little clearer why we do not tell the story of capitalism.  It just doesn’t tell very well. But if the anthropologist may join in here.  Can we at least acknowledge that there is something fabulously odd about a culture that depends on capitalism but that will not ever acknowledge it in the stories it tells itself about itself.


Robinson, Peter.  2010.  Basically an Optimist–Still.  The Wall Street Journal.  March 27 -28.  p. A13.

Note: This post reposted December 23, 2010.  It was lost due to Network Solutions incompetence and only just tonight resurfaced on the net.