CAPITALISM
This is the centerpiece of our economy. There are some fundamentals at work in capitalism, that requires some specific focus based on what drives this system. We need to understand, execute and be successful. These are based on an excellent capitalism definition shown below.
Accept change as normal, required daily.
Driving capitalism – Innovation. What is the next new product, service, more efficient in production, transportation?
Individually or within a corporation, create new markets, technologies, organizations.
Create a competitive advantage.
How are you or your company doing within a capitalism environment?
Change – A common understanding, change is not something employees or organizations prefer. My experience, change is welcome by some and not others; in some levels and not others in the organization. Any individual or level in the organization can be a barrier. If it persists, the company’s sustainability is at risk. In a capitalism economy, accept change as normal, required daily is essential in any company’s culture. How is change viewed in the culture where you work?
Innovation – Innovation is an advantage and helps organizations in a capitalism environment. For example, the top 3 companies in the 2019 Drucker Institute, Claremont Graduate University Company Survey of 640 companies in the Innovation Survey Segment have the following results from 2014 to 2018, the latest year available. Look this over and compare it to your business results or your employer. The figures are from the individual company’s annual reports. Is your company realizing results from innovation or R&D Investment? If not, why?
Amazon
Overall Effectiveness Score is at Number 1 from the 2019 Drucker Survey
Overall Innovation Score is at Number 1 from the 2019 Drucker Survey
R&D total spend 2014 to 2018 is at $89.4 Billion
R&D average percent of sales 2014 to 2018 is at 12%
Average sales % change 2014 to 2018 is at 26% increase
Average profit % change 2014 to 2018 is at 333% increase
Stock price % change December 31, 2014 to January 24, 2020 is at 601% increase
Microsoft Corporation
Overall Effectiveness Score is at Number 2 from the 2019 Drucker Survey
Overall Innovation Score is at Number 2 from the 2019 Drucker Survey
R&D total spend 2014 to 2018 is at $63.2 Billion
R&D average percent of sales 2014 to 2018 is at 13%
Average sales % change 2014 to 2018 is at 7% increase
Average profit % change 2014 to 2018 is at 9% increase
Stock price % change December 31, 2014 to January 24, 2020 is at 351% increase
Apple
Overall Effectiveness Score is at Number 3 from the 2019 Drucker Survey
Overall Innovation Score is at Number 3 from the 2019 Drucker Survey
R&D total spend 2014 to 2018 is at $50.0 Billion
R&D average percent of sales 2014 to 2018 is at 4%
Average sales % change 2014 to 2018 is at 10% increase
Average profit % change 2014 to 2018 is at 9% increase
Stock price % change December 31, 2014 to January 24, 2020 is at 288% increase
While innovation is an essential factor, there are other factors for companies to deliver results. The combination of these all point to their results.
Capitalism – creating new markets, technologies, organizations
Let’s look at history
1950’s Innovation – Buzz Feed July 12, 2013
| Credit cards | Diet soda | Roll-on deodorant |
| TV dinners | Color TV | Microwave oven |
| Automatic doors | Velcro | Ultra sound |
| Bubble wrap |
Top Innovations 2012 – Past 25 Years – Poplar Science 2012
| B2 Bomber 1988 | Seedless Watermelons 1988 |
| ABS 1990 | Digital Camera System 1991 |
| Web Browser 1994 | Spy Drone 1995 |
| Gas Plasma Display TV 1997 | Forerunner to Portable Defibrillator 1997 |
| Google Maps 2005 | iPhone, App Store 2007, 2008 |
Since 2012, new products, services of all kinds have accelerated on the economic landscape, which demonstrates that within the capitalism system, there is room for you, your employer, me to impact and achieve success. Opportunity is what entrepreneurs look at and pursue through innovation. This is what corporations identify within their walls or outside their walls, opportunity that turns into an economic success. How are you or your employer doing with discovered opportunities?
Create a competitive advantage – Many think of price, but competitive advantage is more than just price. As shown below in the definition on competition. “…it is not price competition which counts, but competition which commands a decisive cost or quality advantage, and which strikes not at the margins of the profits and the outputs of the existing firms but at the foundations and their very lives.” How would you explain your competitive advantage, is it like this? How would you explain the competitive advantage of market leaders in your industry?
Joseph Schumpeter in 1950 defined capitalism with innovation at its center as, “Capitalism…is by nature a form or method of economic change, and not only never is, but never can be stationary… The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers’ goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that the capitalist enterprise creates… in capitalist reality, as distinguished from its textbook picture, it is not price competition which counts, but competition which commands a decisive cost or quality advantage, and which strikes not at the margins of the profits and the outputs of the existing firms but at the foundations and their very lives.” (Fast. Norman. The Rise and Fall of Corporate New Venture Divisions. Research Press. Pp. 9, 10)
All the best, as we strive in our businesses to capitalize on opportunities.