‘Capitalism needs to evolve’: Joseph Jaffe talks to eatbigfish
Coronavirus is having an unprecedented impact on society and business around the world. While many companies are understandably in a state of paralysis, others have quickly begun reimagining themselves and finding opportunities in a new and emergent way of life. History shows that those who change and adapt quickly to new environments are the ones that thrive. While this has always been true, the changing world in this instance is drastic and sudden.
We interviewed author, consultant and sought-after speaker on innovation and change, Joseph Jaffe, at our London office before the COVID-19 health crisis erupted. He is known for being a provocative and funny storyteller, and his message of endings and new beginnings seem even more pertinent now in light of the crisis and its potential impact. In this interview, Jaffe talks about the demise of the corporation, strategies for saving it, and why brand purpose so often falls flat for large companies.
Why is the corporation in demise?
Look at thousands of years of history, the Ottomans, the Egyptians, the Byzantines, the Romans, Nazi Germany. All of these civilisations or empires were full of arrogance and hubris and thought they could rule the world and live forever. Not one of them did. And if you look at the corporation as an empire, as a civilisation, it too will go the same way. Charles Darwin said, "it is not the strongest of species which survive, nor the most intelligent, but the one that is most adaptable to change."
Change is the one thing that large corporations struggle with and resist. Anecdotally, we see it, from Thomas Cook, to Kodak, to Blockbuster. And we see the data. The lifespan of the corporation has dropped from 67 to 15 years. Less than 50 companies of the original Fortune 500 remain in the list. 70% of Fortune 500 companies from 1990 are gone, or not in the list any more. The writing is on the wall.
There's a redistribution of power and the fall of corporations. And their replacement by new companies. No one said, there wouldn't be companies any more. But we are seeing a changing of the guard.
Size, economies and efficiencies of scale, the whole idea of being global, having networks, having all of these synergies, from linked, connected resources, the very things that helped corporations grow are now growth inhibitors. Corporations have become too big, too siloed, too political, too dysfunctional, they're slowing down when the world is speeding up, and they've lost their competitive edge.
Jeff Bezos called an all-hands meeting, and he said, "one day we will fail and go out of business, and it's your job is to delay that for as long as possible." I love that comment because if Bezos can say that about Amazon, is there a company on this planet that that statement wouldn't be true for? The answer is there isn't.
What type of organisation will replace them?
The next wave, the inevitable wave, which will suck one day too, but until that, the next wave of challengers will be enthused with new-capitalist thinking. Warby Parker and Toms Shoes and this whole direct-to-consumer wave, many if not all of them, have a strong philanthropic purpose and a responsible approach to business. Now, whether we want to call that a new or evolved capitalism, you can call it whatever you want.
These companies embody the tenets and traits of both challenger brands but also companies that are not built to suck. I’m an entrepreneur, and I’m a capitalist, but I also believe that I’m part of something much bigger. We all are. And so if we can come up with an operating system that keeps everybody happy, growth is a natural by-product, and growth is inevitable.
How can corporations survive?
There are four pillars that create a strong foundation for change and transformation:
Digital disruption. Digital has become too boring and predictable. If digital isn't disrupting, digital is not being used the way it was meant to be.
Talent resurrection. Attracting and retaining the best and the brightest, yes, but also turning our talent into entrepreneurs and intrapreneurs. The word employee should be outlawed. Disney calls its talent' cast members' and companies should have their own version of that.
Customer obsession. No more customer service, no more customer experience. We need to be customer-obsessed and to demonstrate that. It's mandatory.
Corporate citizenship. Companies have got to be model citizens today; they've got to be public servants. Governments will not save our planet, but companies might save it. Act responsibly, do good, be good.
On that last point, capitalism needs to evolve. Whether it's Ray Dalio, Mark Bertolini or John Mackey the founder of Wholefoods, the more people in positions of leadership I talk to and listen to, the more people are saying that. We have to rethink and disrupt capitalism. That does not mean a move to socialism. It's about evolution and change. If companies are model citizens, they can not only make enough money to keep everybody happy. But make a difference and save this planet, because this planet needs saving.
When do brands get corporate citizenship wrong?
You can't fake authenticity. Companies are diving headfirst to discover their purpose when the fact is purpose is not something to be discovered, it needs to be remembered. Brands should go back to when they were the challengers to find purpose that’s authentic. Reconnecting with and implementing that, is real purpose. As opposed to the fake or artificial stuff we see today.
It's why when McDonald's turned its 'M' into a 'W' for national women's day the hashtag Droopyboobs started trending. They turned the ‘M’ upside-down in several flagship stores. It cost them millions of dollars. What if they donated that money to planned parenthood or breast cancer research? That would be purpose.
Purpose should also be a little more grounded. It's often from 30,000 ft. Brands need to act and deliver on the promise of purpose and do that sustainably. Without that longevity and endurance, and the ability to see it permeate through the entire organisation, it's nothing more than lip service and it's why so much of purpose is falling flat.
Corporations are not looked at today as saviours or as good guys. They're seen as bad guys. And it's why they're falling and failing. It's why corporations are built to suck. They're not implementing the four pillars. They're not using digital in a disruptive fashion, they don't respect employees, they exploit customers, and they're not good guys, at the end of the day.
Abigail Disney, one of the heiresses to the Disney fortune, criticised the CEO of Disney. She worked out that from his annual bonus he could have paid for a 15% pay increase to every single employee at Disneyland, and he still could have walked away with $10m. The point is, Disney, for all its language of cast members etc., still has an imbalance when it talks purpose. The CEO walks away with a bonus of $65.7m while its cast members are walking around in Mickey Mouse suits, expected to bring cheer to one and all, while on minimum wage — or at least needing a raise.
It's not easy. I never said it was easy. Like so much in life, it's tough, but it's worth it. And if the stakes for companies are survival, then it has to be worth it.