July 30, 2024

A Hearty Welcome to the Return and Rise of Customer Capitalism

A Hearty Welcome to the Return and Rise of Customer Capitalism

A far cry from the entrepreneurial capitalism that powered industry starting in the 1880s giving rise to illumination, communication, mechanization, transportation, capitalism has become “aberrant” with government entanglement, fixation on...

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A far cry from the entrepreneurial capitalism that powered industry starting in the 1880s giving rise to illumination, communication, mechanization, transportation, capitalism has become “aberrant” with government entanglement, fixation on financialization, and command and control management. Enter "customer capitalism" - competing on customer satisfaction, embracing networks and innovation, and seeing profit as the outcome of a satisfied customer interacting with a satisfied workforce.

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The topics and opinions express in the following show are

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solely those of the hosts and their guests and not

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What's working on Purpose? Anyway? Each week we ponder the

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answer to this question. People ache for meaning and purpose

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at work, to contribute their talents passionately and know their

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lives really matter. They crave being part of an organization

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that inspires them and helps them grow into realizing their

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highest potential. Business can be such a force for good

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in the world, elevating humanity. In our program, we provide

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guidance and inspiration to help usher in this world we

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all want Working on Purpose. Now, here's your host, doctor

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Elise Cortez.

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Welcome back to the Working of Purpose program, which has

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been brought to you with passion urprise since February of

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twenty fifteen. It's great to have you back. I'm your host,

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Doc Jurlie's Cortes. If we've not met before and you

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don't know me, I'm an organizational psychologist and local therapist,

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speaker and author. My team and I at gusta Now

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help companies to enliven and fortify their operations by building

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a high performance, invigorated culture and leadership activated by meaning

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and purpose. Our mission is to help our clients create

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a destination workplace where people flocked to join, are intrinsically

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related to form with their best, can grow to their

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fuller potential, and are committed to stay in dynamically and

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deliver on the company's mission, which translates to more satisfied

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customers and higher profits for you. You can learn more

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about us and now we can work together at gustodashnow

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dot com or my personal website at least Coortes dot com.

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Getting in today's program we have with us today. Hunter Hastings,

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who is an economist who took up a career in

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corporate marketing and occupied the post of chief marketing officer

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in a global consumer products business, Chief executive of cert

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in a Silicon Valley startup enterprise and senior partner in

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a global consulting company. He has been an adjunct professor

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at Holt International Business School, the largest global graduate business school,

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and is the author of Aberate Capitalism, The Decay and

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Revival of Customer Capitalism, which we're talking about today. He

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joined us today from San Diego. Hunter, Welcome to Working

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on Purpose.

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Hello Elish, thank you for inviting me to a great honor.

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Quite happy to have you on, kin Serius. I told

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you before we got on air, I learned so much

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from this beautiful book you put out here. In the

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nice crisp seventy nine pages of this book, you really

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did blow my mind. How's that?

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Well, I'll try and maintain that.

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Yes, I just really am delighted by what you have

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really helped me understand about how capitalism has evolved over

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the last two ord and forty years as you talk

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about it, and so I want to get to that here.

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What I want to do in this program today, listeners

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and viewers, is as let him share with you some

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of the concepts from the book that help understand these

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different errors that he talks about in his book. And

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then really we're going to showcase what he puts forth,

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which is the promise of customer capitalism, and we'll get

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that in the last segment. But to kick us off here,

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we want to start with something that many people already know,

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and that is that capitalism has gotten a bad rap,

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especially among some of the younger generations. So let's start there.

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What's under that, Yes, that's a problem to solve that.

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It's capitalism, as you say, has a bad rap. One

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of the data points we used was a twenty twenty

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two Pew Research survey among eighteen to twenty nine year olds,

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and they asked how many of them would express positive

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sentiments about capitalism and it was less than forty percent,

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and how many would express positive sentiments about socialism and

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it was over forty percent.

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So we're underwater.

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And if you analyze that alease, we found that a

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lot of those comments are not about capitalism the system,

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but about the corporations who implement capitalism. So we start

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our book off with the figure one, which is the

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growth of per capital income globally over the last couple

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hundred years, and it's about twelve x So that's per

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capital real income globally for everybody in the world, and

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as you say, in the US, we tripled the per

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capita GDP over fifty years from the mid eighteenth century

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of mid nineteenth century, sorry to the start of the twentieth.

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So capitalism has been good for everybody to improves people's lives.

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In fact, that's what it's about. The purpose of capitalism

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is well being, which we can express as customer value.

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And the customer wants to get from a situation that're

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dissatisfied with to one that they feel better about it, and

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that's what capitalism helps them do. So we tried to

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dig into the corporation and we can go through the

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three phases. I'm sure we will over the period of

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this recording. But at the beginning, the corporation was a

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brilliant invention of capitalism. So we start before the Industrial

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Revolution with the Wedgewood Company and in Great Britain, which

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revolutionized the production of china, which were just becoming a thing.

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The world.

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People will learning how to drink tea out of cups,

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some cereal out of bowls. And it's a story of

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a growth corporation and a creative corporation, a marketing corporation

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and innovating corporation. But it wasn't a corporation in the

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sense we see today. It was a partnership of a

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couple of guys, and therefore was unable to grow at

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the scale that we think about today. So shift to

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the second half of the nineteenth century and legal rules

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created the idea of the limited line ability corporation. That

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meant that you could invest money in these growth corporations

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and your loss was limited to the amount that you'd invested.

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So that enabled great entrepreneurs to create big companies. We

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talk about Standard Oil, Quaker Oats, we talk about Singer

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sewing Machine, and Standard Oil is my favorite because John D.

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Rockefeller thought of what he was doing as what.

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He called civilizing.

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Yes, back in those days, candles and other forms of

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illumination are really expensive. Only rich people could afford them.

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And he brought kerosene, and he brought the price of

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kerosene down by about thirty times during a short period

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of time that everybody could afford. So he thought about

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families being at home instead of being in the dark.

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They could turn on the kerosene lamp. They could work

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in the barn, they could help the kids with their homework,

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they could spend family time together. That's what he thought about.

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That's a good example of customer capitalism. The hopers of

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capitalism was to improve people's lives. And of course there

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were additional giant undertakings of customer capitalism like transportation and

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communication and food and seers and Roebuck, which did Roebuck

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thought of them bringing the technology revolution to farmers in

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the countryside, so that they enjoy all the benefits of

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the new tools and the new technologies. So really, until

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about the First World War, we could say that customer

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capitalism was the driving force. It was the driving entity,

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and there wasn't much stock market activity then, there wasn't

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much government regulation. These entrepreneurs drove these companies and created

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lots of benefit, lots of wellbeing from nothing. They built

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them up slowly, and they grew them by their own

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initiative and by feedback by customers telling them what they

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wanted and what worked for them what didn't. So that's

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what we think of as kind of the golden age

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of capitalism.

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Yeah, and I found some of those stories really inspiring.

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I did actually capture Standard Oil, and I thought that,

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you know, I was really taken as somebody who helps

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organizations to detect and articulate their purpose and weave it

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into their culture. I have to share with our listeners

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and viewers what you cite in the book about what

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they claim here. So in this whole notion that I

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can't even imagine that you think having to go to

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bed early because you don't have any lights. So let's

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just go to bed. And so I love what you

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have here. Is that this standard oil business communication included

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this mission statement. It said, I may claim for petroleum

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that it is something of a civilizer, as promoting among

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the poorest classes of these countries a host of evening occupations, industrial, educational,

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and recreative not feasible prior to its introduction, And if

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it has brought a fair reward to the capital ventures

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in its development, it has also carried more cheap comfort

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into more poor homes than almost any discovery of modern times.

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Sounds good to me.

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It's wonderful.

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And back then, as we thought of it, business was

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a force for good, and of course it still is,

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but we didn't have some of the developments that we'll

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talk about in the twentieth century.

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But that whole era of growth.

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Imagine to take that concept that you just read from

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standard oil and apply that across people's lives, the ability

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to communicate with each other faster, the ability to produce

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things with higher quality and greater speed, the ability to

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enjoy better, more nutritious, safer food. Just their lives are

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being improved at a great rate. It was a splendid time, right, But.

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Then we got to the next era, and I really

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the way you described this Hunter just was so it

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was something that I could I can understand as a novice,

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and this isn't this isn't isn't my you know, economists

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speak is not my thing, but the way to help

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me understand how this changed so much. So once we

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got into the First World War, you introduced a few

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things that then altered capitalism for pretty much until today.

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So I want to talk about those things. I know

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there's a new Deal, I know, there's the War Economy,

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there is the War Powers Act. So there's a few

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things that you could just kind of situate the start

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of that next era that really made the difference in capitalism.

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Yes, yeah, I'd be glad to. So there's one critical transition,

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and that is that we described the owners and leaders

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of these companies that we've just enumerated as entrepreneurs.

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I mean that in the.

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Economy sense which an entrepreneur looks to customers, looks at

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what their needs and desires are, and tries to meet

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those needs and takes the reward of the marketplace for

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doing so. Once the entrepreneurs left, they either died or

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they moved on, or they sold their companies. Managers took over.

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So that's the first big transition from entrepreneurship to managerialism,

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as we coined the wood. Now, that wasn't bad to

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begin with. We talk about a couple of instances. Procter

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and Gamble, which is my alma mater, invented the brand

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management system in the nineteen thirties. So that was management

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creating the idea that each brand was a business and

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it would know its customers really well and respond to

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those customers with innovations. And so managerialism wasn't so bad

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in itself. But then it became after the First World

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War and especially after the Second World War, a control

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oriented bureaucracy. Now one of it came from the war economy,

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as you say, that started in World War One, where

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central government for the first time started to command the

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resources in the economy. They had to build tanks and

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ships and aeroplanes and conscript young people, and so that

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was a command approach. We will do it this way,

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we will focus on these things, will will run our

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projects at the speed. A lot of the people who

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were on those committees, on those war boards moved into

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the private sector, and so that was one big step. Meanwhile,

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government had intervened in the Great Depression and said, boy,

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we can't have depressions. Capitalism must be controlled from the center.

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And so we got all of those all of those

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committees and the kinds of boards that Franklin Roosevelt put

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up to again command and control the economy. The Second

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World War intensified that. So the Great War economy then

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became the blueprint for post Second World War corporate management.

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So those people went to run GE and IBM and

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companies like that with that central control kind of idea.

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So that became management. It became what corporations do. And

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there's a passage we use in the book, and I

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enjoyed researching it about Reginald Jones, an Englishman who was

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CEO of GE. And what the managers called the central

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control was strategic planning and so they had strategic planning units,

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strategic business units. REGGE had about forty of them. At

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one point he said, well that's too many. He said,

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We'll have had ten more, but they'll sit on top of

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the forty we've already got. And then finally at the

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end of it, he said, we have too much strategic planning.

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I don't even know what we're doing. So management kind

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of destroyed itself and that led to slow growth, That

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led to the bureaucratic sclerosis, where you've got people working

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in the corporation not for the customer and not for effectiveness,

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not for innovation, but for efficiency and cost control. And

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that became the norm for a long time in the US.

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Yeah, and so I certainly recognize that. And the way

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that you describe in the book, can I think of

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the really really large organizations and to me they scream

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still command and control and bureaucracy and so the But

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the idea though, this was pretty interesting to me too, though,

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that the idea then that when you got into the

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post war capitalism, you got in the age of control.

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But what the way that you talk about that was

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really arresting to me. And you say, within the company,

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the tool for control and power was accounting, which was

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no longer a passive function of counting, reporting and reporting,

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but rather an aggressive function for the relentless pursuits of

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efficiency and profit. That really brought home to me a

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lot of how I experienced the companies in that time period.

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Yeah, so this idea of command and control, as you say,

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at least became aggressive. We must control and manage those

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people out there in the corporation. This is the bureaucrats

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in the central planning units talking because otherwise they'll waste money,

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or they'll execute projects badly, or they'll do things that

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we don't approve of. And so you got all these rules,

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you got all of these processes.

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And one of.

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The movements in post war capitalism was what they call

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BPM business process management, which meant every process in the

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corporation will be documented, will be controlled, each step will

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have a gateway, and you'll have to get through the

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gateway and report to a senior executive on each of

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that and ask for approval for the next step, and

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so on. It just became absolutely sclerotic in you in

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a very negative way. And then the next element of

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that is financialization, and what we mean by that is

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that the finance sector, which includes the bureaucrats inside the

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corporation doing finance and accounting, and the financial sector outside

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doing stock trading and managing bond issues and doling out capital,

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became more of the focus of the corporations than the

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customer did. So I'm now managing for the financial sector

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that includes things like quarterly earnings. I've got to hit

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my target every quarter.

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Well, one way to.

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Do that is don't spend any money on R and D,

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spend it all on managing earnings. And Jack Welsh of

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ge became kind of the you know, the living embodiment

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of that. He was well known for earnings management, which

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is you always hit your targets and maybe you go

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over by a penny or two so that you can

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say that you that you beat the target. And he

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created pools of cash and revenue inside the corporation to

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feed into earnings at the end of the quarter. It

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was it was pretty well known on Wall Street that

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he was doing that. But the point is that the

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financial sector took over the focus, and the customer lushed

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that focus and wasn't as well.

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So we're trying to go on there.

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Hunter let's take a great break, because I want to

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really delve more into that. There's a couple of things

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that are specifically interesting to me about that period. So

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hold that thought, if you would. Let's grab our first break.

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We've been on the era with a Hunter of Hastings,

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who is an economist who took up a career in

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corporate marketing and occupied the post of chief marketing officer

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and a global consumer products business, chief executive officer in

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a Silicon Valley startup enterprise, and senior partner in a

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global consulting company. We've been talking a bit about how

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he has begun narrating the evolution of capitalism. After the right,

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we're to talk more about the age of financialization and

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go on to the way forward. We'll be right back.

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Doctor Release Courts has It's a management consultant specializing in

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meaning and purpose. An inspirational speaker and author, she helps

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companies visioneer for greater purpose among stakeholders and develop purpose

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inspired leadership and meaning infused cultures that elevate fulfillment, performance,

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and commitment within the workforce. To learn more or to

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invite a lease to speak to your organization, please visit

312
00:18:20.119 --> 00:18:23.319
her at elisecortes dot com. Let's talk about how to

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get your employees working on purpose. This is working on

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Purpose with doctor Elise Cortes. To reach our program today

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00:18:35.640 --> 00:18:38.400
or to open a conversation with Elise, send an email

316
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to Alise A Lisee at eliscortes dot com. Now back

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to working on Purpose.

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Thanks for staying with us, and welcome back to working

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on Purpose. I'm your host, doctor Elise Cortes, as I too,

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am dedicated to help and create a world where people

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realize their potential at work and are led by inspirational

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leader that help them find and contribute their greatness, and

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we do business and betters in the world. I keep

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researching and writing my own books, so my last one

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came out in March of twenty twenty three. It's called

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The Great Revitalization. How activating meaning and purpose can radically

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in liven your business. And I wrote it to help

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leaders and business owns understand just how much the workforce

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has changed, what do they want in order to give

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their best? And then I offer you twenty two best

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practices to building your culture to help create that for them.

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You can learn more about it at my website. Gustodeshnal

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00:19:26.839 --> 00:19:29.880
dot com or Amazon if you are just now joining us.

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My guest is Hunter Hastings, and he's the author of

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Aberrant Capitalism, The Decay and Revival of Customer Capitalism, which

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we've been talking about today. So you're about to say

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a bit more about this period of financialization here and

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then I also wanted to talk about this notion of

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the government being the customer.

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So the financialization era saw the financial sector grow in

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influence and power relative to the productive sector. There's a

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Bank of International Settlement's paper that we quote in the

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book that maps this out. It shows as the financial

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sector gets bigger, the productive sector gets smaller. More and

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more people are employed in the financial sector and few

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in the productive sector. The money goes into stock trading

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and dividends and stock buybacks and less into R and

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D and those kinds of functions. And so there's there's

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a data support for this idea. But one of the

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driving elements that transformed financialization in the latter part of

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the twentieth century was this idea of.

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Maximizing shareholder value.

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Yes, yes, a lot of people attribute that to Milton

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Friedman's famous article in The New York Times where he

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said the only purpose of a corporation is to make

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a profit. And that's okay because what he meant by

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that was that profit's a good thing and that gets

358
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reinvested in all kinds of directions, and so it's a

359
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signal from the market that the customer approves of what

360
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you're doing and how you're using resources. But the financial

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sector didn't take it that way. They created this maximizing

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shareholder value idea, which is that's what the corporation should do,

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not maximize customer satisfaction, but maximized shareholder value. Obviously, you've

364
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got to have a customer because the customer pays and

365
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that cash flow eventually goes to shareholder value. But it's

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the diversion of resources that is the problem, So dividends,

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stuck buybacks, and the lack of investment in places like

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R and D and experimentation and innovation that's been well documented.

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And this maximizing shareholder value became a real detriment in

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how we thought about capitalism about how corporations were managed.

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I think with stakeholder capitalism, where I was going to

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go to the movement that you're involved in conscious capitalism,

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we're trying to soften that a little bit.

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But it's not a solve problem.

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Yet, No, it really isn't. And then I went on,

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this was really interesting here. Well, I also want to

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add how you describe maximum the maximization shareholder value. It's

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a subtractive management bottle. I thought that was very, very

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very interesting to hear you describe it that way, and

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it seemed that way to me as well. Then you

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also went on to explain interestingly enough, that you know,

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in this environment of high and increasing regulation, corporations can

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be seen diverting resources from the end user and customer

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as you've been saying, and redirect them to the to

385
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the to government as the customer. And this is this

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where it gets really interesting for me that you want

387
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you go on to say this shift is evidenced by

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an increased allocation of resources to lobbying efforts. Then you say,

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careful investment in a Washington lobbyist can yield enormous returns

390
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in the form of taxes avoided or regulations curb curbed

391
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the basis of the economics of lobbying. That's scary. That's

392
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scary to me. It really is the power of that.

393
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Yeah, it is, and in fact, we were in a

394
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dangerous situation a lease where the entanglement as we called

395
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it in the Book of Corporations and the government is

396
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at a pretty high level now. So these big companies

397
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obviously have the government as a customer. If you look

398
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at Microsoft and Amazon and those kinds of companies that

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they do projects for the government, and the billions of

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dollars in the defense area and research areas and so

401
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on like that. Customers like companies like Palenteers another one

402
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with huge government contracts. So that's one area. The second

403
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is this increasing regulation of industry by the government, this

404
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feeling that we have in our current state of capitalism

405
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that must be regulated. There are more regulations every day,

406
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there are hundreds of thousands of pages in the federal register,

407
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and corporate have come to accept that. In fact, one

408
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of the big bureaucratic departments is compliance. How do how

409
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do we comply with all these regulations? And then it becomes, hey,

410
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let us write the regulations and that will favor the incumbents,

411
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the big pseudo monopolistic companies, and maybe shelters of our

412
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industries from incursion and disruption and innovation by smaller companies,

413
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So that has been well tracked, and a lot of

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the lobbying companies actually write the regulations, they take them

415
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to the congress people or the bureaucrats in the government,

416
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they co develop them and then get them approved. That's

417
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a pretty well known industry, is a big industry. That

418
00:24:47.440 --> 00:24:49.880
quote that you mentioned is from Jeffrey Bernbaum, who's a

419
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much deeper analyst into government entanglement than i am. But

420
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that's clearly a decision that there was a famous observation

421
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that Google, which used to have no lobbying presence in Washington,

422
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D C. In the toly days, now has the biggest

423
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lobbying presence in Washington, d C. And in Sacramento and

424
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the state capital. So it's really become a big industry

425
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of let's write these regulations together because they're for both

426
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of us.

427
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Thank you for explaining that. It's just there's just so

428
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much dearth there. So now that we've thoroughly frustrated and

429
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maybe depressed our listeners and viewers, let's bring them back

430
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up and talk about the way forward, a brighter future

431
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of capitalism. And so, you know, you've been talking about

432
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these realities of financialization, bureaucracy, the failures of management, theorizing,

433
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the destruction of entanglement of corporations with government, the uselessness

434
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of prevailing economics, and the distorted purpose of the corporation.

435
00:25:51.480 --> 00:25:54.359
So now we've surfaced all that, and you do a

436
00:25:54.359 --> 00:25:56.960
beautiful job of explaining that to us as to what happened,

437
00:25:56.960 --> 00:25:59.559
and I think the progression over time really helps us

438
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understand as well. So now we have the promise of

439
00:26:02.960 --> 00:26:07.160
customer capitalism in the digital age no less. So let's

440
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start talking a bit about that promise.

441
00:26:11.359 --> 00:26:14.559
Well, there's a new magic business model release and that

442
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is direct connection to the customer. So the theory of

443
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customer capitalism is customer sovereignty or consumer sovereignty to be accurate.

444
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That that comes from a lot of mid century economists

445
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who are looking back at the era that you and

446
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I were just been talking about and said, really, the

447
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customer's boss. The customer decides what is produced. The customer

448
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decides which firms are successful, the customer sends the message.

449
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To the firms.

450
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And that was true, that it ceased to be true

451
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because of everything we've just been through. But this new

452
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magic business model of direct connection to the customer is

453
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going to change everything. Because Amazon's a simple example, or

454
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if there are many more. But I can go to

455
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Amazon as a customer, I can click on what I

456
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want to buy. That's an instant piece of information for Amazon,

457
00:27:04.160 --> 00:27:08.160
it says Hunter, or at least likes this. I can

458
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derive some patents about what they want. If I make

459
00:27:10.680 --> 00:27:14.599
comments about satisfaction, they can react to those, and very

460
00:27:14.680 --> 00:27:18.799
very quickly in the digital age, they can revamp the production,

461
00:27:18.960 --> 00:27:23.319
the inventory, the response rates, the advertising, the marketing in

462
00:27:23.400 --> 00:27:27.519
response to the customer. And the firms that are doing

463
00:27:27.559 --> 00:27:31.559
that at the highest and most sophisticated levels are the

464
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ones that are starting to win today. Test is another

465
00:27:34.599 --> 00:27:38.720
great example, because every second you're driving, the car has

466
00:27:38.759 --> 00:27:41.480
its twenty four sensors and cameras.

467
00:27:41.200 --> 00:27:41.640
Or how many.

468
00:27:41.640 --> 00:27:43.640
There are probably a lot more than that now and

469
00:27:44.119 --> 00:27:49.119
constantly gathering information so that eventually the ultimate and sovereignty

470
00:27:49.160 --> 00:27:53.359
that car can be can be self driving. And that's

471
00:27:53.440 --> 00:27:57.200
the business model. Direct connection, a flow of information, the

472
00:27:58.319 --> 00:28:02.160
analysis of those and so we can derive an understanding

473
00:28:02.200 --> 00:28:06.519
of the customer satisfaction and then the constant improvement.

474
00:28:06.079 --> 00:28:07.920
Cycle which can move with great speed.

475
00:28:08.440 --> 00:28:11.599
So with that at its heart, I think there is

476
00:28:11.640 --> 00:28:15.559
a lot more customer capitalism become in the digital age.

477
00:28:15.599 --> 00:28:16.759
I'm very excited about it.

478
00:28:17.480 --> 00:28:20.119
Yeah, I am too. I'm really excited about that, and

479
00:28:20.799 --> 00:28:23.000
I appreciate it too that you also said somewhere and

480
00:28:23.039 --> 00:28:26.759
here that right now only about fifteen percent of companies

481
00:28:26.759 --> 00:28:29.799
would be described as operating in this new fashion that

482
00:28:30.200 --> 00:28:32.160
you're talking that we've been talking about. We'll talk a

483
00:28:32.240 --> 00:28:35.039
bit more about that, right is do I have that right?

484
00:28:35.079 --> 00:28:35.759
Fifteen percent?

485
00:28:36.119 --> 00:28:40.920
Yeah, it's a guess or an intelligent estimate, hopefully at least.

486
00:28:40.920 --> 00:28:44.240
And really it's looking at the biggest corporations where we

487
00:28:44.279 --> 00:28:48.079
can see inside them and understand what they're doing. So

488
00:28:48.079 --> 00:28:51.519
we've talked about Tesla, We've talked about Amazon. There's some

489
00:28:51.599 --> 00:28:57.960
interesting businesses not typically thought of by US customers. There's

490
00:28:58.039 --> 00:29:03.799
a business in China called Higher Hier which has changed

491
00:29:03.839 --> 00:29:08.720
this management model to be entrepreneurial. So it doesn't have

492
00:29:08.839 --> 00:29:12.799
a big central planning unit, it doesn't have bierarchical control.

493
00:29:13.599 --> 00:29:17.400
Every business unit is entrepreneurial, and typically it's about fifty

494
00:29:17.480 --> 00:29:23.200
or seventy five people. It's entrepreneurial in the sense of

495
00:29:23.640 --> 00:29:27.079
they call it closeness to the customer. They have an

496
00:29:27.119 --> 00:29:31.079
expression in Chinese which translates as zero distance to the customer,

497
00:29:31.680 --> 00:29:34.519
So how can I know the customer? They make a

498
00:29:34.519 --> 00:29:38.519
lot of appliances. For example, they acquired ge appliance in

499
00:29:38.559 --> 00:29:40.759
this country, so we'll see if they can apply it.

500
00:29:41.359 --> 00:29:44.319
You make that model work here, but the model is

501
00:29:44.480 --> 00:29:48.680
understand the customer. Translate that into new products and innovations

502
00:29:48.680 --> 00:29:53.400
and service as quickly as possible. Zero bureaucracy, zero overhead.

503
00:29:53.680 --> 00:29:56.440
There are a few central planning units in terms of

504
00:29:57.839 --> 00:30:01.559
marketing that might be spread over several these entrepreneurial units,

505
00:30:01.880 --> 00:30:04.200
but there's a whole new way of thinking about doing business,

506
00:30:04.240 --> 00:30:07.720
so very entrepreneurial, just like we talked about in the

507
00:30:08.640 --> 00:30:13.480
nineteenth century. There's another model out there for a little

508
00:30:13.519 --> 00:30:19.599
company called hand which makes consumer wearables and consumer goods

509
00:30:19.839 --> 00:30:22.640
that can be ordered on the Internet, and it's got

510
00:30:22.720 --> 00:30:25.160
lots of those little front ends, typically three people, a

511
00:30:25.720 --> 00:30:30.720
product person, a designer person, marketing person. They're selling through

512
00:30:30.759 --> 00:30:33.759
e commerce on the web. That data comes back, goes

513
00:30:33.799 --> 00:30:37.680
straight to a data layer, doesn't go through any bureaucratic layers,

514
00:30:37.839 --> 00:30:40.079
and then to the back end of the factories which

515
00:30:40.160 --> 00:30:45.880
respond quickly with new ideas and new manufacturing. So they

516
00:30:45.920 --> 00:30:51.359
call that digitally enabled autonomy. So we getting away from

517
00:30:51.480 --> 00:30:56.359
managerialism and all the way to not only customer sovereignty,

518
00:30:56.440 --> 00:30:59.920
but autonomy of the frontline people who are closest to

519
00:31:00.079 --> 00:31:03.000
the customer. So there's really some exciting new business models

520
00:31:03.000 --> 00:31:05.599
coming out, and I think there's a lot of promise

521
00:31:05.640 --> 00:31:06.559
there for the future.

522
00:31:07.079 --> 00:31:09.400
I think so too, and I'm a fan of promise.

523
00:31:10.079 --> 00:31:12.480
Let's on that note, get let our customers, let our

524
00:31:12.519 --> 00:31:14.559
listeners and viewers think about what we've been talking about here.

525
00:31:14.640 --> 00:31:16.200
Let that settle in for just to smedge as we

526
00:31:16.240 --> 00:31:19.599
take our last break here. I'm your host, doctor Elise Cortez.

527
00:31:19.599 --> 00:31:21.519
We've been on the air with Hunter Hastings, who is

528
00:31:21.559 --> 00:31:24.319
an economist who also took up a career in corporate marketing.

529
00:31:24.319 --> 00:31:26.200
Over the years, he's done a lot of things with

530
00:31:26.279 --> 00:31:30.119
various companies. We've been talking about his book abert Capitalism.

531
00:31:30.400 --> 00:31:31.720
After the break, we're going to do is We're going

532
00:31:31.759 --> 00:31:34.839
to spend that time focusing on showcasing some of these

533
00:31:34.880 --> 00:31:38.880
really best in class practices that these newer companies that

534
00:31:38.960 --> 00:31:42.079
Hunters talking about are doing to move themselves forward. Think

535
00:31:42.119 --> 00:31:43.039
what this will be right back.

536
00:31:58.279 --> 00:32:01.799
Doctor Elise Cortez is a management consultant specializing in meaning

537
00:32:01.880 --> 00:32:05.680
and purpose. An inspirational speaker and author, she helps companies

538
00:32:05.759 --> 00:32:09.559
visioneer for greater purpose among stakeholders and develop purpose inspired

539
00:32:09.640 --> 00:32:13.599
leadership and meaning infused cultures that elevate fulfillment, performance and

540
00:32:13.680 --> 00:32:16.880
commitment within the workforce. To learn more or to invite

541
00:32:16.920 --> 00:32:19.640
a lease to speak to your organization, please visit her

542
00:32:19.720 --> 00:32:22.960
at elisecortes dot com. Let's talk about how to get

543
00:32:23.000 --> 00:32:31.799
your employees working on purpose. This is working on Purpose

544
00:32:31.920 --> 00:32:35.160
with doctor Elise Cortes. To reach our program today or

545
00:32:35.200 --> 00:32:37.960
to open a conversation with Elise, send an email to

546
00:32:38.039 --> 00:32:44.039
Elise Alise at elisecortes dot com. Now back to working

547
00:32:44.119 --> 00:32:44.799
on Purpose.

548
00:32:50.480 --> 00:32:52.079
Thank you staying with us, and welcome back to working

549
00:32:52.160 --> 00:32:54.920
on Purpose. I'm your host, doctor Elise Cortes. I mentioned

550
00:32:54.960 --> 00:32:57.440
in the last break that my last book, The Great Revivisation,

551
00:32:57.519 --> 00:32:59.279
came out in March of twenty twenty three. What I

552
00:32:59.319 --> 00:33:01.720
did for you is I created a three page assessment

553
00:33:02.000 --> 00:33:04.880
that you can take off my site gustodashnow dot com

554
00:33:05.160 --> 00:33:07.240
and that will help you understand the extent to which

555
00:33:07.319 --> 00:33:11.319
your current culture is meeting the needs of today's discerning workforce.

556
00:33:12.160 --> 00:33:13.839
If you are just now joining us. My guest is

557
00:33:13.920 --> 00:33:16.799
Hunter Hastings. He is the author of Aberrant Capitalism, the

558
00:33:16.839 --> 00:33:19.680
Decay and Revival of Customer Capitalism, which we've been talking

559
00:33:19.680 --> 00:33:22.519
about today in the program. So for this last bit

560
00:33:22.559 --> 00:33:25.640
of our segment here, Hunter, I really want to focus

561
00:33:25.680 --> 00:33:29.640
on the management practices and the characteristics of some of

562
00:33:29.680 --> 00:33:32.960
these more forward thinking companies that are in this new

563
00:33:33.000 --> 00:33:35.240
era here, so our listeners and viewers can start thinking

564
00:33:35.240 --> 00:33:37.480
about how can they fold this in their own organization.

565
00:33:37.680 --> 00:33:40.839
So you list Gosh, it looks to be like about

566
00:33:40.880 --> 00:33:47.039
eight or so different practices that these organizations, especially Tesla

567
00:33:47.119 --> 00:33:50.440
and SpaceX, are using as management practice. So I want

568
00:33:50.440 --> 00:33:51.880
to I want to kind of walk through as many

569
00:33:51.880 --> 00:33:54.920
as those as we possibly can. I'm happy to queue

570
00:33:54.920 --> 00:33:56.359
them up, or if you want to, if you just

571
00:33:56.400 --> 00:33:58.079
want to talk about the ones that are most important,

572
00:33:58.079 --> 00:34:00.119
but I'd like to cover all of them if we can.

573
00:34:01.960 --> 00:34:05.880
Well, walk us through them, and I'll try to elucidate

574
00:34:05.920 --> 00:34:07.039
each one perfect.

575
00:34:07.039 --> 00:34:11.519
Okay, first one is an extremely flat organization, right.

576
00:34:11.559 --> 00:34:17.679
So the great theory of management and structure and organizational

577
00:34:17.719 --> 00:34:22.239
planning in the twentieth century has been the hierarchy that

578
00:34:22.280 --> 00:34:24.880
you've got a boss you've got different layers. The borders

579
00:34:24.880 --> 00:34:26.719
come from on high and they've worked their way down

580
00:34:26.800 --> 00:34:30.840
to the people at the front line, and that in

581
00:34:30.880 --> 00:34:34.199
itself is a problem. It slows down the flow of information,

582
00:34:34.360 --> 00:34:35.760
it's slow decision making, it.

583
00:34:37.639 --> 00:34:39.239
Is a lot of waste.

584
00:34:39.360 --> 00:34:41.519
So one of the things that Elon Musk has done

585
00:34:41.639 --> 00:34:44.559
is tried to eliminate a lot of layers. The goal

586
00:34:44.599 --> 00:34:47.920
would be to get to a completely flat kind of

587
00:34:47.960 --> 00:34:52.719
corporate organization. But management per se then doesn't take place.

588
00:34:52.840 --> 00:34:58.440
Everybody is creating value, they're connected, they're integrated. There might

589
00:34:58.480 --> 00:35:01.159
be somebody who's got the most knowledge about this particular

590
00:35:01.199 --> 00:35:04.480
problem at this point in time. Then that person who

591
00:35:04.639 --> 00:35:07.400
I am is in jug they're the leader at that stage.

592
00:35:07.679 --> 00:35:11.880
That's flexible and dynamic. So with the with the help

593
00:35:11.960 --> 00:35:14.880
of technology and networks and AI, we can do that today.

594
00:35:14.920 --> 00:35:18.960
So flat versus hierarchical is the goal.

595
00:35:20.000 --> 00:35:22.559
Okay, So this next one is going to really be

596
00:35:22.800 --> 00:35:24.800
really frightening for several people that are listening to this,

597
00:35:25.000 --> 00:35:27.119
especially if they are in more of a traditional human

598
00:35:27.159 --> 00:35:31.679
resource capacity. And that is this notion of assembling teams,

599
00:35:31.880 --> 00:35:35.159
cross functional teams that are flexibly deployed so that individuals

600
00:35:35.199 --> 00:35:37.519
can leave and enjoy freely based on the needs of

601
00:35:37.559 --> 00:35:40.840
the team and the task at hand for specialized expertise.

602
00:35:41.199 --> 00:35:42.880
And here's the part that's going to scare them a lot.

603
00:35:42.880 --> 00:35:45.719
There are no job descriptions to limit the potential contribution

604
00:35:45.760 --> 00:35:49.840
of individuals. That sounds like collocracy to me. Actually, the

605
00:35:49.920 --> 00:35:53.159
practice of holocracy.

606
00:35:52.039 --> 00:35:55.360
Well, holocracy has been a good attempt in the direction

607
00:35:55.440 --> 00:35:58.000
that we're trying to go in. It's run into some problems.

608
00:35:58.000 --> 00:36:03.400
But there is a famous company in northern California called

609
00:36:03.480 --> 00:36:07.000
morning Star. It's it's a global company now it's one

610
00:36:07.000 --> 00:36:09.199
of the case studies, and they don't have job descriptions.

611
00:36:09.280 --> 00:36:13.760
They have undertakings between individuals. You and I have to

612
00:36:13.800 --> 00:36:15.880
work together. Released so here's what I'm going to do,

613
00:36:16.239 --> 00:36:18.119
and you approve that. Here's what you're going to do,

614
00:36:18.159 --> 00:36:22.119
and I approve that, and we review that constantly. And

615
00:36:23.639 --> 00:36:26.360
the other part of that is that we used to

616
00:36:26.400 --> 00:36:31.360
being organized in divisions and departments. I'm in the marketing department,

617
00:36:31.400 --> 00:36:34.199
you're in operations, and so we never see each other,

618
00:36:34.199 --> 00:36:38.960
we never get together. If you've organize functionally, we need

619
00:36:39.000 --> 00:36:42.679
to build a brand. That brand is built on customer satisfaction,

620
00:36:43.159 --> 00:36:46.760
customer satisfaction might be a nice creative ad, so I

621
00:36:47.360 --> 00:36:49.800
can talk persuasively about what we do for the customer.

622
00:36:50.159 --> 00:36:54.519
But it's also excellence in operations. It's making the product perfectly,

623
00:36:54.559 --> 00:36:58.119
it's delivering it on time, it's meeting expectations that way.

624
00:36:58.360 --> 00:37:01.280
So in that sense, the operation and marketing are on

625
00:37:01.320 --> 00:37:03.559
the same team. So let's have a team of customer

626
00:37:03.599 --> 00:37:07.280
satisfaction or a team of brand building, and we're all

627
00:37:07.280 --> 00:37:10.559
on it together. We're all connected through the network, and

628
00:37:11.039 --> 00:37:13.519
we both have that responsibility. It might not be the

629
00:37:13.519 --> 00:37:15.920
only thing I do, so I work on several of

630
00:37:15.960 --> 00:37:19.440
those teams, and that we're slowly figuring that out. I

631
00:37:19.480 --> 00:37:23.199
think that helaucracy was an attempt. In fact, they it

632
00:37:23.239 --> 00:37:26.159
was a bit too structured. And now we're finding this

633
00:37:26.280 --> 00:37:31.559
idea of dynamic, constantly rotating, constantly changing teams is starting

634
00:37:31.599 --> 00:37:32.000
to work.

635
00:37:32.679 --> 00:37:35.440
It sounds really exciting to me. There are several other

636
00:37:35.480 --> 00:37:36.760
ones that we could talk to. Let me just pick

637
00:37:36.800 --> 00:37:38.559
the ones that I think are really most interesting. So

638
00:37:38.719 --> 00:37:40.239
this next one that I want to want to have

639
00:37:40.320 --> 00:37:42.840
you talk to, please, is the short term problem solving

640
00:37:42.840 --> 00:37:44.119
over long term planning.

641
00:37:46.079 --> 00:37:48.960
Yeah, so this goes back to financialization to a great

642
00:37:49.000 --> 00:37:52.840
extent that we talk about quarterly earnings, and that's that

643
00:37:52.960 --> 00:37:56.960
becomes your mindset. That means meeting the monthly sales fall

644
00:37:57.039 --> 00:38:00.360
and hitting the weekly stroll. And when I was working

645
00:38:00.440 --> 00:38:02.039
in corporation, I was the one who went and got

646
00:38:02.039 --> 00:38:03.239
the daily sales.

647
00:38:02.880 --> 00:38:04.000
From the computer side.

648
00:38:04.679 --> 00:38:07.280
You can managing the short term and you cut the

649
00:38:07.280 --> 00:38:09.519
budget if you're not making sales and something like that,

650
00:38:09.920 --> 00:38:14.280
whereas true value creation is thinking about the long term.

651
00:38:14.320 --> 00:38:17.840
How can I serve a customer for the longest period

652
00:38:17.840 --> 00:38:22.280
of time with innovation, with change, but constantly elevating their life,

653
00:38:22.280 --> 00:38:25.079
and not thinking about earnings this week or this month

654
00:38:25.159 --> 00:38:28.039
or even this year, but thinking about the long term

655
00:38:28.159 --> 00:38:31.599
value that I'm creating for the customer. And so a

656
00:38:31.599 --> 00:38:34.119
lot of companies are trying to think that way. They're

657
00:38:34.159 --> 00:38:37.920
still repressed by the financial sector demanding these reports, so

658
00:38:37.960 --> 00:38:40.400
we've got to figure out how to release them from that.

659
00:38:41.239 --> 00:38:45.679
One way will be a different relationship with the financial markets.

660
00:38:46.000 --> 00:38:49.840
So private equity, which has a bad rap historically because

661
00:38:49.840 --> 00:38:52.760
of some of the things that it's associated with, is

662
00:38:52.840 --> 00:38:58.519
now starting to develop the idea of patient capital. We'll

663
00:38:58.559 --> 00:39:02.039
invest this money and you're innovation in your firm. We're

664
00:39:02.079 --> 00:39:04.239
not going to demand quarterly earnings. We're not going to

665
00:39:04.239 --> 00:39:06.440
demand a report at the end of the year, but

666
00:39:06.480 --> 00:39:08.199
we're going to look at for a big return in

667
00:39:08.280 --> 00:39:11.639
seven or ten years time. So we'll be patient capital

668
00:39:12.280 --> 00:39:15.000
and we'll look for the growth of the corporation, the

669
00:39:15.000 --> 00:39:17.840
growth of its purpose, and the growth of its innovation.

670
00:39:18.000 --> 00:39:21.320
But we're not going to demand those short term benchmarks.

671
00:39:21.639 --> 00:39:25.079
Such an interesting new relationship with capital. It's not the

672
00:39:25.119 --> 00:39:29.559
stock market, but it's still capital coming from financial markets.

673
00:39:29.559 --> 00:39:31.599
So there's a lot of new things happening in that

674
00:39:31.679 --> 00:39:32.559
relationship too.

675
00:39:33.800 --> 00:39:36.519
It's just a quick segue here I've learned, and you'd

676
00:39:36.559 --> 00:39:38.400
be a perfect person asked this. You know, there's just

677
00:39:38.480 --> 00:39:41.920
a couple of long term stock exchanges that have been established.

678
00:39:42.440 --> 00:39:46.079
Let's sure view on them, their role and their contribution.

679
00:39:47.519 --> 00:39:49.920
Well, yeah, I think that's an example of the financial

680
00:39:50.000 --> 00:39:53.480
sector thinking in these terms as well. There are some

681
00:39:54.159 --> 00:39:57.400
options that you can buy that have long terms. Obviously,

682
00:39:57.480 --> 00:40:00.599
the bond market tends to be longer term, by ten

683
00:40:00.679 --> 00:40:04.639
year and thirty year bonds, and so this general approach

684
00:40:05.000 --> 00:40:08.079
a lease of thinking long term, not sure term, not

685
00:40:08.360 --> 00:40:12.960
trading stocks, but investing and thinking for the long term,

686
00:40:13.320 --> 00:40:14.519
it's beginning to turn.

687
00:40:14.559 --> 00:40:15.880
It really is beginning to turn.

688
00:40:16.519 --> 00:40:18.760
I'm happy to hear that. Let's just talk about two

689
00:40:18.800 --> 00:40:21.239
more of these management aspects here before we go on

690
00:40:21.280 --> 00:40:24.159
to the characteristics that I think are interesting. Anyway, this

691
00:40:24.280 --> 00:40:28.320
notion of having middle management being eliminated and replaced by

692
00:40:28.320 --> 00:40:31.199
AI to provide real time information about the implication of

693
00:40:31.199 --> 00:40:35.400
employee actions for the corporation's mission and goal, that's fascinating,

694
00:40:35.760 --> 00:40:36.880
really really fascinating.

695
00:40:37.880 --> 00:40:40.679
Yeah, we don't really know where AI is going, but

696
00:40:40.679 --> 00:40:43.719
a lot of people thinking about this create the vision

697
00:40:43.960 --> 00:40:47.400
of I'm on a team. One of my friends call

698
00:40:47.440 --> 00:40:52.400
it homo sapiens and digital sapiens. So I've got a

699
00:40:52.480 --> 00:40:54.480
human and the human can do things that only humans

700
00:40:54.480 --> 00:40:56.840
can do. It can have empathy, it can be creative

701
00:40:57.159 --> 00:40:59.639
in different ways, can imagine things in the way that

702
00:40:59.679 --> 00:41:04.039
AI can't. But hey, for data analysis and process management

703
00:41:04.079 --> 00:41:05.880
and so on. Maybe I've got the AI on my

704
00:41:06.000 --> 00:41:09.960
team as well, and so we'll be working in teams

705
00:41:10.039 --> 00:41:13.559
to do that. One of the fascinating ideas in that

706
00:41:13.679 --> 00:41:17.519
concept is the the AI cio. You know, your boss

707
00:41:17.519 --> 00:41:19.960
will be the AI, but you'll still be doing interesting

708
00:41:20.000 --> 00:41:22.079
work and serving customers. And so all like that. So

709
00:41:22.480 --> 00:41:24.760
we don't really know where it's going to go, but

710
00:41:24.880 --> 00:41:30.199
certainly that kind of organizational flexibility, the digital world and

711
00:41:30.239 --> 00:41:33.480
the human world coming together, I think that's that's a

712
00:41:33.559 --> 00:41:36.760
real possibility, and it certainly won't be vertigal or be horizontal,

713
00:41:36.920 --> 00:41:39.239
be each of us working with an AI assistant and

714
00:41:39.360 --> 00:41:42.440
working on teams and being connected that way. So that's

715
00:41:42.480 --> 00:41:44.559
another way that middle management is going to go away.

716
00:41:44.719 --> 00:41:45.679
And if you remember what.

717
00:41:46.239 --> 00:41:48.480
That's what Elon must try to do at Tesla and

718
00:41:48.480 --> 00:41:51.480
then at Tutor when he got there, are now x

719
00:41:52.199 --> 00:41:55.840
And he said, if you think carefully, there's not a

720
00:41:55.920 --> 00:41:58.519
lot of stuff that you that needs to be done

721
00:41:58.519 --> 00:42:01.280
by middle management. You can all So you know, that's

722
00:42:01.320 --> 00:42:04.280
not nothing nasty to people. It's being nasty to the

723
00:42:05.159 --> 00:42:10.199
way that organizations were structured in these hierarchical vertical organizations,

724
00:42:10.199 --> 00:42:11.840
and we don't need it anymore.

725
00:42:11.639 --> 00:42:14.119
Right, I totally get that. Well, since we're getting close

726
00:42:14.159 --> 00:42:15.519
to the end of the time, let's go ahead and

727
00:42:15.519 --> 00:42:18.159
move on to a few of these interesting you talk about.

728
00:42:18.159 --> 00:42:21.559
The newly imagined pattern of management exhibits these characteristics, and

729
00:42:21.599 --> 00:42:24.639
so there's a few that are fascinating to me. First, principles,

730
00:42:24.719 --> 00:42:27.320
not rules. That sounds really good to me as somebody

731
00:42:27.400 --> 00:42:29.400
who is not a big fan of rules.

732
00:42:30.679 --> 00:42:34.320
Right. So, at the company I mentioned before morning Star,

733
00:42:34.800 --> 00:42:38.400
the guy who started at Chris Ruffer started on the

734
00:42:38.400 --> 00:42:42.480
basis of principles when he had two and you know,

735
00:42:42.679 --> 00:42:48.079
everything is collaboration, there's no coercion, and you build from there.

736
00:42:48.159 --> 00:42:51.079
So what are the principles of long term truth on

737
00:42:51.119 --> 00:42:53.920
which you're going to build your business? You talk about purpose,

738
00:42:53.960 --> 00:42:56.239
and that's you know, that's one of those principles. We

739
00:42:56.320 --> 00:42:59.239
all share that purpose and then you can figure out

740
00:42:59.280 --> 00:43:03.159
what we all do with that within that purpose. There's

741
00:43:04.239 --> 00:43:06.639
a concept coming up now, sort of job descriptions.

742
00:43:06.679 --> 00:43:09.119
You have role mapping in.

743
00:43:09.000 --> 00:43:13.719
This particular situation or this particular area of what we're doing.

744
00:43:14.639 --> 00:43:16.039
What's my role, what's your role?

745
00:43:16.039 --> 00:43:17.960
How do we map it all together so that things

746
00:43:18.000 --> 00:43:23.119
get done properly. So we have role mapping as a

747
00:43:23.159 --> 00:43:26.719
replacement for other forms of organizational design.

748
00:43:27.920 --> 00:43:31.920
Okay, yeah, you do talk about purpose, I also which

749
00:43:31.960 --> 00:43:35.880
I of course, that's that's my jam here. And then

750
00:43:36.119 --> 00:43:37.800
the next one that's interesting too, of course, which you

751
00:43:37.800 --> 00:43:39.760
can talk about this whole time. The customer is the

752
00:43:39.800 --> 00:43:44.119
business model that's obviously something we've been echoing here. And

753
00:43:44.159 --> 00:43:47.039
then this is really interesting. Revenue growth and profit are

754
00:43:47.079 --> 00:43:48.239
emergent outcomes.

755
00:43:50.000 --> 00:43:53.199
Right, So that the word emergence a bit a bit technical.

756
00:43:53.199 --> 00:43:57.320
It comes from complex systems science, which is a growing science,

757
00:43:57.360 --> 00:43:59.639
which is very relevant to I've been talking about today,

758
00:43:59.639 --> 00:44:04.840
that that systems are areas of interaction of individuals like

759
00:44:04.920 --> 00:44:12.119
people and parts of the corporation from which results emerge. Now,

760
00:44:12.119 --> 00:44:14.119
you can guide them, you can constrain them, you can

761
00:44:14.159 --> 00:44:15.960
point them in the right direction, but you can't always

762
00:44:16.000 --> 00:44:18.280
predict what's going to happen. But one thing we do

763
00:44:18.440 --> 00:44:22.239
know is that if we serve customers, cash flow will

764
00:44:22.239 --> 00:44:24.719
be emerging from that. Right, they'll pay for the value

765
00:44:24.719 --> 00:44:28.079
that we're giving them, and out of that comes profit,

766
00:44:28.199 --> 00:44:32.159
comes reinvestment. But if we focus on this one idea,

767
00:44:32.239 --> 00:44:36.119
the customer is the business model, we know we're creating value.

768
00:44:36.280 --> 00:44:39.000
If they pay for value, that's the pivot point that

769
00:44:39.159 --> 00:44:43.280
you turn subjective value into cash, and then that cash

770
00:44:43.320 --> 00:44:47.920
becomes comes flowing through the organization and we can allocate

771
00:44:47.960 --> 00:44:52.639
it appropriately. So this long term idea of we're creating

772
00:44:52.760 --> 00:44:55.840
value and our pivot point is that people pay for

773
00:44:55.920 --> 00:44:58.719
value and that everything else follows from that.

774
00:45:00.679 --> 00:45:02.800
Love that, and now then we bridge onto this here.

775
00:45:03.079 --> 00:45:05.119
This is really fascinating for me, especially because of the

776
00:45:05.159 --> 00:45:08.119
work that I'm doing. This idea of subjective value and empathy.

777
00:45:08.320 --> 00:45:10.480
You go on to say, the determination of value in

778
00:45:10.519 --> 00:45:14.079
this new model lies entirely with the customer. Value is subjective,

779
00:45:14.159 --> 00:45:18.719
determined by the customer's feelings and identified in their mental evaluation. Therefore,

780
00:45:18.800 --> 00:45:22.679
a core skill for the corporation today is empathy, the

781
00:45:22.719 --> 00:45:25.880
ability to diagnose customer feelings, how they make choices, and

782
00:45:25.920 --> 00:45:28.719
how they develop the mental models that determine those choices.

783
00:45:28.920 --> 00:45:31.039
Empathy is not a process that can be mapped or

784
00:45:31.079 --> 00:45:36.840
automated at a cultural orientation. Is not yet that can be,

785
00:45:37.079 --> 00:45:39.360
but it can be nurtured. Sorry, and that's important that

786
00:45:39.400 --> 00:45:43.360
it can here. So more empathy companies, with more empathy

787
00:45:43.360 --> 00:45:45.920
companies succeed. So I think that is really really critical.

788
00:45:45.960 --> 00:45:48.119
I do champion that a lot in my work that

789
00:45:48.199 --> 00:45:51.559
I'm doing with my culture building. So I have to say, Hunter,

790
00:45:51.679 --> 00:45:54.960
when I heard economists champion this, I knew I was

791
00:45:54.960 --> 00:45:55.800
in the right lane.

792
00:45:57.920 --> 00:46:04.480
Well, so there's subjective value is a concept of economics.

793
00:46:04.480 --> 00:46:07.440
To see number one concepts, the purpose of purpose of

794
00:46:07.480 --> 00:46:09.639
the economy is to produce subjective value.

795
00:46:09.840 --> 00:46:10.679
Now what does that mean.

796
00:46:11.199 --> 00:46:14.119
It means it's entirely in the head of the customer,

797
00:46:14.159 --> 00:46:17.800
the consumer. It's a feeling, it's an experience. And to

798
00:46:17.800 --> 00:46:21.360
get a little bit more technical, they listen to your

799
00:46:21.519 --> 00:46:24.599
value proposition. Hey, here's how I'm going to benefit from

800
00:46:24.760 --> 00:46:28.559
a deliver a benefit to you. If they buy, they

801
00:46:28.599 --> 00:46:32.199
then experience what you propose to them.

802
00:46:32.079 --> 00:46:33.920
And then they evaluate it.

803
00:46:33.960 --> 00:46:36.880
So the value comes after the experience and if they

804
00:46:36.960 --> 00:46:39.920
like it, they'll continue. If they don't, they won't. So

805
00:46:40.000 --> 00:46:43.679
that is the whole purpose of economics. Now, if it's

806
00:46:43.719 --> 00:46:47.760
in the customer's head, how can I understand that? And

807
00:46:48.199 --> 00:46:53.440
the technical term for that proposal is empathy, and empathy

808
00:46:53.719 --> 00:46:57.840
is trainable. We can get better at it. Yes, one

809
00:46:57.840 --> 00:47:01.599
of my colleagues talks about building their mental model. How

810
00:47:01.639 --> 00:47:04.440
did they think? And then if I run my value

811
00:47:04.440 --> 00:47:07.800
proposition through their mental model, I'll understand if it does

812
00:47:07.840 --> 00:47:11.599
create value if it doesn't. And here's something wonderful, Alis,

813
00:47:11.639 --> 00:47:13.360
I was looking this up the other day before I

814
00:47:13.400 --> 00:47:17.960
talk to you. If you Google, I shouldn't say Google.

815
00:47:18.000 --> 00:47:24.280
If you research Apples, Apple's marketing philosophy and in nineteen

816
00:47:24.360 --> 00:47:27.800
seventy seven, Steve Jobs and Mike Markela wrote it down

817
00:47:27.920 --> 00:47:33.159
and proposition number one is empathy. We will understand our

818
00:47:33.199 --> 00:47:37.400
customers better than anybody else. We will understand how they feel,

819
00:47:37.519 --> 00:47:41.079
we'll understand their motivations, and we will live up to

820
00:47:41.119 --> 00:47:44.679
that and deliver value. So Steve Jobs and Mike Marcola

821
00:47:44.760 --> 00:47:47.280
understood that in nineteen seventy seven. But it is the

822
00:47:47.400 --> 00:47:49.719
number one skill in business. You might not learn it

823
00:47:49.760 --> 00:47:53.239
in business school, you'll learn it as an entrepreneur, and

824
00:47:53.760 --> 00:47:57.000
the better you are. We call it empathic diagnosis. There's

825
00:47:57.039 --> 00:47:58.920
a fancy term for it, but you know, if you

826
00:47:58.920 --> 00:48:02.639
can diagnose what driving the customer and then meet them

827
00:48:02.679 --> 00:48:05.599
on their own grounds by delivering value to them. So

828
00:48:06.320 --> 00:48:09.199
we've got to find a way as economists to improve

829
00:48:09.239 --> 00:48:12.559
this word value. You know, we think about as subjective value.

830
00:48:13.039 --> 00:48:16.280
The people who thought about maximizing shareholder value obviously didn't

831
00:48:16.280 --> 00:48:17.800
think about it that way. So we've got to find

832
00:48:17.800 --> 00:48:21.199
that that right term. My term is well being. People

833
00:48:21.400 --> 00:48:23.840
seek well being and we'd like to deliver well.

834
00:48:23.679 --> 00:48:27.400
Being that works for me, well, we I It has

835
00:48:27.400 --> 00:48:29.360
been a delight to read your book, to learn from

836
00:48:29.360 --> 00:48:31.079
your book, to be connected to you and have you

837
00:48:31.119 --> 00:48:33.320
and share you with my listeners of viewers across the world.

838
00:48:33.760 --> 00:48:35.840
What would you like to leave our listeners with today.

839
00:48:37.119 --> 00:48:42.679
Well, that we're entering a great new hyper entrepreneurial era,

840
00:48:43.559 --> 00:48:48.199
and by entrepreneurship I mean understanding customers' needs, as we've discussed,

841
00:48:48.199 --> 00:48:52.000
and then creating innovations to serve those needs better. I

842
00:48:52.039 --> 00:48:54.239
think we're going to eliminate a lot of waste that

843
00:48:54.559 --> 00:48:58.840
is in bureaucracy and financialization, and the world will become

844
00:48:58.880 --> 00:49:02.360
a lot better because we make customers' lives better one

845
00:49:02.400 --> 00:49:05.320
step at a time, and that's through entrepreneurship. So I

846
00:49:05.320 --> 00:49:08.159
think everybody should be an entrepreneur in some role or another,

847
00:49:08.199 --> 00:49:10.559
and everybody should be a value creator. That's what I'd

848
00:49:10.599 --> 00:49:11.320
like to leave them with.

849
00:49:12.159 --> 00:49:14.360
I am right along there with you, hundred That's the

850
00:49:14.400 --> 00:49:16.159
world that I want to live in. Thank you so much.

851
00:49:16.239 --> 00:49:18.440
What a beautiful way to finish.

852
00:49:18.480 --> 00:49:20.920
Thank you, Lillise. Thank you very much for inviting me today.

853
00:49:21.480 --> 00:49:23.360
Very welcome. A listener's in view is you're going to

854
00:49:23.400 --> 00:49:26.199
want to learn more about what Hunter Hastings is doing

855
00:49:26.280 --> 00:49:28.679
his work as an economist or as a corporate executive

856
00:49:28.719 --> 00:49:33.719
and his book Avere Capitalism, so you can visit devaluecreators

857
00:49:33.880 --> 00:49:36.079
dot com as a website that's a place to start.

858
00:49:36.360 --> 00:49:38.880
You can also find him on LinkedIn. Last week, if

859
00:49:38.880 --> 00:49:40.400
you missed the live show, you can always catch it

860
00:49:40.440 --> 00:49:42.880
be recorded podcast or wherever you get your podcast. We

861
00:49:42.920 --> 00:49:46.119
were on here with Pam August of the firm Connecting Potential,

862
00:49:46.360 --> 00:49:49.519
where she guides organizations, teams and leaders to unlock potential

863
00:49:49.679 --> 00:49:52.599
that is already there for the transformation results. We talked

864
00:49:52.599 --> 00:49:55.320
about the framework she offers in her new book Potential,

865
00:49:55.400 --> 00:49:58.360
how to connect what's already there for exponential impact to

866
00:49:58.440 --> 00:50:02.000
completely elevate your own potential and across your organization. It

867
00:50:02.119 --> 00:50:05.000
was fabulous. Next week we'll be on air with Karen

868
00:50:05.039 --> 00:50:08.679
Gold and Biddle talking about her book The Untapped Power

869
00:50:08.719 --> 00:50:12.079
of Discovery, How to Create Change that Inspires a Better Future,

870
00:50:12.119 --> 00:50:14.800
where she teaches us how to embrace discovery as an

871
00:50:14.800 --> 00:50:17.840
everyday habit to unlock all manner of new innovation and

872
00:50:17.920 --> 00:50:20.519
keep the ideas we launch getting the traction they merit.

873
00:50:20.840 --> 00:50:22.400
See you there and remember that work is one of

874
00:50:22.440 --> 00:50:24.800
the best adventures and means of realizing our potential, making

875
00:50:24.840 --> 00:50:27.199
the impact we crave. So Let's work on Purpose.

876
00:50:30.039 --> 00:50:32.679
We hope you've enjoyed this week's program. Be sure to

877
00:50:32.719 --> 00:50:36.400
tune into Working on Purpose, featuring your host, doctor Elise Cortes,

878
00:50:36.519 --> 00:50:37.880
each week on W four C.

879
00:50:38.079 --> 00:50:38.239
Why.

880
00:50:38.800 --> 00:50:42.840
Together, We'll create a world where business operates conscientiously. Leadership

881
00:50:42.880 --> 00:50:46.280
inspires and passion performance, and employees are fulfilled in work

882
00:50:46.320 --> 00:50:49.519
that provides the meaning and purpose they crave. See you there,

883
00:50:49.760 --> 00:50:51.159
Let's work on Purpose.