A Hearty Welcome to the Return and Rise of Customer Capitalism

0:00 The topics and opinions express in the following show are solely those of the hosts and their guests and not those of W FOURCY Radio. It's employees are affiliates. We make no recommendations or endorsements radio show, programs, services, or products mentioned on air or on our web. No liability, explicit or implied shall be extended to W FOURCY Radio or it's employees are affiliates. Any questions or comments should be directed to those show hosts. Thank you for choosing W FOURCY Radio. What's working on Purpose? Anyway? Each week we ponder the answer to this question. People ache for meaning and purpose at work, to contribute their talents passionately and know their lives really matter. They crave being part of an organization that inspires them and helps them grow into realizing their highest potential. Business can be such a force for good in the world, elevating humanity. In our program, we provide guidance and inspiration to help usher in this world we all want Working on Purpose. Now, here's your host, doctor Elise Cortez.

1:04 Welcome back to the Working of Purpose program, which has been brought to you with passion urprise since February of twenty fifteen. It's great to have you back. I'm your host, Doc Jurlie's Cortes. If we've not met before and you don't know me, I'm an organizational psychologist and local therapist, speaker and author. My team and I at gusta Now help companies to enliven and fortify their operations by building a high performance, invigorated culture and leadership activated by meaning and purpose. Our mission is to help our clients create a destination workplace where people flocked to join, are intrinsically related to form with their best, can grow to their fuller potential, and are committed to stay in dynamically and deliver on the company's mission, which translates to more satisfied customers and higher profits for you. You can learn more about us and now we can work together at gustodashnow dot com or my personal website at least Coortes dot com.

1:48 Getting in today's program we have with us today. Hunter Hastings, who is an economist who took up a career in corporate marketing and occupied the post of chief marketing officer in a global consumer products business, Chief executive of cert in a Silicon Valley startup enterprise and senior partner in a global consulting company. He has been an adjunct professor at Holt International Business School, the largest global graduate business school, and is the author of Aberate Capitalism, The Decay and Revival of Customer Capitalism, which we're talking about today. He joined us today from San Diego. Hunter, Welcome to Working on Purpose. Hello Elish, thank you for inviting me to a great honor. Quite happy to have you on, kin Serius. I told you before we got on air, I learned so much from this beautiful book you put out here. In the nice crisp seventy nine pages of this book, you really did blow my mind. How's that?

2:41 Well, I'll try and maintain that. Yes, I just really am delighted by what you have really helped me understand about how capitalism has evolved over the last two ord and forty years as you talk about it, and so I want to get to that here. What I want to do in this program today, listeners and viewers, is as let him share with you some of the concepts from the book that help understand these different errors that he talks about in his book. And then really we're going to showcase what he puts forth, which is the promise of customer capitalism, and we'll get that in the last segment. But to kick us off here, we want to start with something that many people already know, and that is that capitalism has gotten a bad rap, especially among some of the younger generations. So let's start there.

3:23 What's under that, Yes, that's a problem to solve that. It's capitalism, as you say, has a bad rap. One of the data points we used was a twenty twenty two Pew Research survey among eighteen to twenty nine year olds, and they asked how many of them would express positive sentiments about capitalism and it was less than forty percent, and how many would express positive sentiments about socialism and it was over forty percent. So we're underwater. And if you analyze that alease, we found that a lot of those comments are not about capitalism the system, but about the corporations who implement capitalism. So we start our book off with the figure one, which is the growth of per capital income globally over the last couple hundred years, and it's about twelve x So that's per capital real income globally for everybody in the world, and as you say, in the US, we tripled the per capita GDP over fifty years from the mid eighteenth century of mid nineteenth century, sorry to the start of the twentieth.

4:37 So capitalism has been good for everybody to improves people's lives. In fact, that's what it's about. The purpose of capitalism is well being, which we can express as customer value. And the customer wants to get from a situation that're dissatisfied with to one that they feel better about it, and that's what capitalism helps them do. So we tried to dig into the corporation and we can go through the three phases. I'm sure we will over the period of this recording. But at the beginning, the corporation was a brilliant invention of capitalism. So we start before the Industrial Revolution with the Wedgewood Company and in Great Britain, which revolutionized the production of china, which were just becoming a thing.

5:28 The world. People will learning how to drink tea out of cups, some cereal out of bowls. And it's a story of a growth corporation and a creative corporation, a marketing corporation and innovating corporation. But it wasn't a corporation in the sense we see today. It was a partnership of a couple of guys, and therefore was unable to grow at the scale that we think about today. So shift to the second half of the nineteenth century and legal rules created the idea of the limited line ability corporation. That meant that you could invest money in these growth corporations and your loss was limited to the amount that you'd invested. So that enabled great entrepreneurs to create big companies. We talk about Standard Oil, Quaker Oats, we talk about Singer sewing Machine, and Standard Oil is my favorite because John D.

6:21 Rockefeller thought of what he was doing as what. He called civilizing. Yes, back in those days, candles and other forms of illumination are really expensive. Only rich people could afford them. And he brought kerosene, and he brought the price of kerosene down by about thirty times during a short period of time that everybody could afford. So he thought about families being at home instead of being in the dark. They could turn on the kerosene lamp. They could work in the barn, they could help the kids with their homework, they could spend family time together. That's what he thought about. That's a good example of customer capitalism. The hopers of capitalism was to improve people's lives. And of course there were additional giant undertakings of customer capitalism like transportation and communication and food and seers and Roebuck, which did Roebuck thought of them bringing the technology revolution to farmers in the countryside, so that they enjoy all the benefits of the new tools and the new technologies. So really, until about the First World War, we could say that customer capitalism was the driving force. It was the driving entity, and there wasn't much stock market activity then, there wasn't much government regulation. These entrepreneurs drove these companies and created lots of benefit, lots of wellbeing from nothing. They built them up slowly, and they grew them by their own initiative and by feedback by customers telling them what they

7:52 wanted and what worked for them what didn't. So that's what we think of as kind of the golden age of capitalism. Yeah, and I found some of those stories really inspiring. I did actually capture Standard Oil, and I thought that, you know, I was really taken as somebody who helps organizations to detect and articulate their purpose and weave it into their culture. I have to share with our listeners and viewers what you cite in the book about what they claim here. So in this whole notion that I can't even imagine that you think having to go to bed early because you don't have any lights. So let's just go to bed. And so I love what you have here. Is that this standard oil business communication included this mission statement. It said, I may claim for petroleum that it is something of a civilizer, as promoting among the poorest classes of these countries a host of evening occupations, industrial, educational, and recreative not feasible prior to its introduction, And if it has brought a fair reward to the capital ventures in its development, it has also carried more cheap comfort into more poor homes than almost any discovery of modern times.

8:58 Sounds good to me. It's wonderful. And back then, as we thought of it, business was a force for good, and of course it still is, but we didn't have some of the developments that we'll talk about in the twentieth century. But that whole era of growth. Imagine to take that concept that you just read from standard oil and apply that across people's lives, the ability to communicate with each other faster, the ability to produce things with higher quality and greater speed, the ability to enjoy better, more nutritious, safer food. Just their lives are being improved at a great rate. It was a splendid time, right, But.

9:40 Then we got to the next era, and I really the way you described this Hunter just was so it was something that I could I can understand as a novice, and this isn't this isn't isn't my you know, economists speak is not my thing, but the way to help me understand how this changed so much. So once we got into the First World War, you introduced a few things that then altered capitalism for pretty much until today. So I want to talk about those things. I know there's a new Deal, I know, there's the War Economy, there is the War Powers Act. So there's a few things that you could just kind of situate the start of that next era that really made the difference in capitalism.

10:22 Yes, yeah, I'd be glad to. So there's one critical transition, and that is that we described the owners and leaders of these companies that we've just enumerated as entrepreneurs. I mean that in the. Economy sense which an entrepreneur looks to customers, looks at what their needs and desires are, and tries to meet those needs and takes the reward of the marketplace for doing so. Once the entrepreneurs left, they either died or they moved on, or they sold their companies. Managers took over. So that's the first big transition from entrepreneurship to managerialism, as we coined the wood. Now, that wasn't bad to begin with. We talk about a couple of instances. Procter and Gamble, which is my alma mater, invented the brand management system in the nineteen thirties. So that was management creating the idea that each brand was a business and it would know its customers really well and respond to those customers with innovations. And so managerialism wasn't so bad in itself. But then it became after the First World War and especially after the Second World War, a control oriented bureaucracy. Now one of it came from the war economy, as you say, that started in World War One, where central government for the first time started to command the resources in the economy. They had to build tanks and ships and aeroplanes and conscript young people, and so that

11:56 was a command approach. We will do it this way, we will focus on these things, will will run our projects at the speed. A lot of the people who were on those committees, on those war boards moved into the private sector, and so that was one big step. Meanwhile, government had intervened in the Great Depression and said, boy, we can't have depressions. Capitalism must be controlled from the center. And so we got all of those all of those committees and the kinds of boards that Franklin Roosevelt put up to again command and control the economy. The Second World War intensified that. So the Great War economy then became the blueprint for post Second World War corporate management.

12:54 So those people went to run GE and IBM and companies like that with that central control kind of idea. So that became management. It became what corporations do. And there's a passage we use in the book, and I enjoyed researching it about Reginald Jones, an Englishman who was CEO of GE. And what the managers called the central control was strategic planning and so they had strategic planning units, strategic business units. REGGE had about forty of them. At one point he said, well that's too many. He said, We'll have had ten more, but they'll sit on top of the forty we've already got. And then finally at the end of it, he said, we have too much strategic planning.

13:41 I don't even know what we're doing. So management kind of destroyed itself and that led to slow growth, That led to the bureaucratic sclerosis, where you've got people working in the corporation not for the customer and not for effectiveness, not for innovation, but for efficiency and cost control. And that became the norm for a long time in the US. Yeah, and so I certainly recognize that. And the way that you describe in the book, can I think of the really really large organizations and to me they scream still command and control and bureaucracy and so the But the idea though, this was pretty interesting to me too, though, that the idea then that when you got into the post war capitalism, you got in the age of control.

14:30 But what the way that you talk about that was really arresting to me. And you say, within the company, the tool for control and power was accounting, which was no longer a passive function of counting, reporting and reporting, but rather an aggressive function for the relentless pursuits of efficiency and profit. That really brought home to me a lot of how I experienced the companies in that time period. Yeah, so this idea of command and control, as you say, at least became aggressive. We must control and manage those people out there in the corporation. This is the bureaucrats in the central planning units talking because otherwise they'll waste money, or they'll execute projects badly, or they'll do things that we don't approve of. And so you got all these rules, you got all of these processes.

15:18 And one of. The movements in post war capitalism was what they call BPM business process management, which meant every process in the corporation will be documented, will be controlled, each step will have a gateway, and you'll have to get through the gateway and report to a senior executive on each of that and ask for approval for the next step, and so on. It just became absolutely sclerotic in you in a very negative way. And then the next element of that is financialization, and what we mean by that is that the finance sector, which includes the bureaucrats inside the corporation doing finance and accounting, and the financial sector outside doing stock trading and managing bond issues and doling out capital, became more of the focus of the corporations than the customer did. So I'm now managing for the financial sector that includes things like quarterly earnings. I've got to hit my target every quarter.

16:23 Well, one way to. Do that is don't spend any money on R and D, spend it all on managing earnings. And Jack Welsh of ge became kind of the you know, the living embodiment of that. He was well known for earnings management, which is you always hit your targets and maybe you go over by a penny or two so that you can say that you that you beat the target. And he created pools of cash and revenue inside the corporation to feed into earnings at the end of the quarter. It was it was pretty well known on Wall Street that he was doing that. But the point is that the financial sector took over the focus, and the customer lushed that focus and wasn't as well.

17:04 So we're trying to go on there. Hunter let's take a great break, because I want to really delve more into that. There's a couple of things that are specifically interesting to me about that period. So hold that thought, if you would. Let's grab our first break. We've been on the era with a Hunter of Hastings, who is an economist who took up a career in corporate marketing and occupied the post of chief marketing officer and a global consumer products business, chief executive officer in a Silicon Valley startup enterprise, and senior partner in a global consulting company. We've been talking a bit about how he has begun narrating the evolution of capitalism. After the right, we're to talk more about the age of financialization and go on to the way forward. We'll be right back.

17:58 Doctor Release Courts has It's a management consultant specializing in meaning and purpose. An inspirational speaker and author, she helps companies visioneer for greater purpose among stakeholders and develop purpose inspired leadership and meaning infused cultures that elevate fulfillment, performance, and commitment within the workforce. To learn more or to invite a lease to speak to your organization, please visit her at elisecortes dot com. Let's talk about how to get your employees working on purpose. This is working on Purpose with doctor Elise Cortes. To reach our program today or to open a conversation with Elise, send an email to Alise A Lisee at eliscortes dot com. Now back to working on Purpose.

18:50 Thanks for staying with us, and welcome back to working on Purpose. I'm your host, doctor Elise Cortes, as I too, am dedicated to help and create a world where people realize their potential at work and are led by inspirational leader that help them find and contribute their greatness, and we do business and betters in the world. I keep researching and writing my own books, so my last one came out in March of twenty twenty three. It's called The Great Revitalization. How activating meaning and purpose can radically in liven your business. And I wrote it to help leaders and business owns understand just how much the workforce has changed, what do they want in order to give their best? And then I offer you twenty two best practices to building your culture to help create that for them. You can learn more about it at my website. Gustodeshnal dot com or Amazon if you are just now joining us. My guest is Hunter Hastings, and he's the author of Aberrant Capitalism, The Decay and Revival of Customer Capitalism, which we've been talking about today. So you're about to say a bit more about this period of financialization here and then I also wanted to talk about this notion of the government being the customer.

19:47 So the financialization era saw the financial sector grow in influence and power relative to the productive sector. There's a Bank of International Settlement's paper that we quote in the book that maps this out. It shows as the financial sector gets bigger, the productive sector gets smaller. More and more people are employed in the financial sector and few in the productive sector. The money goes into stock trading and dividends and stock buybacks and less into R and D and those kinds of functions. And so there's there's a data support for this idea. But one of the driving elements that transformed financialization in the latter part of the twentieth century was this idea of.

20:41 Maximizing shareholder value. Yes, yes, a lot of people attribute that to Milton Friedman's famous article in The New York Times where he said the only purpose of a corporation is to make a profit. And that's okay because what he meant by that was that profit's a good thing and that gets reinvested in all kinds of directions, and so it's a signal from the market that the customer approves of what you're doing and how you're using resources. But the financial sector didn't take it that way. They created this maximizing shareholder value idea, which is that's what the corporation should do, not maximize customer satisfaction, but maximized shareholder value. Obviously, you've got to have a customer because the customer pays and that cash flow eventually goes to shareholder value. But it's the diversion of resources that is the problem, So dividends, stuck buybacks, and the lack of investment in places like R and D and experimentation and innovation that's been well documented.

21:45 And this maximizing shareholder value became a real detriment in how we thought about capitalism about how corporations were managed. I think with stakeholder capitalism, where I was going to go to the movement that you're involved in conscious capitalism, we're trying to soften that a little bit. But it's not a solve problem. Yet, No, it really isn't. And then I went on, this was really interesting here. Well, I also want to add how you describe maximum the maximization shareholder value. It's a subtractive management bottle. I thought that was very, very very interesting to hear you describe it that way, and it seemed that way to me as well. Then you also went on to explain interestingly enough, that you know, in this environment of high and increasing regulation, corporations can be seen diverting resources from the end user and customer as you've been saying, and redirect them to the to the to government as the customer. And this is this where it gets really interesting for me that you want you go on to say this shift is evidenced by an increased allocation of resources to lobbying efforts. Then you say, careful investment in a Washington lobbyist can yield enormous returns in the form of taxes avoided or regulations curb curbed the basis of the economics of lobbying. That's scary. That's scary to me. It really is the power of that.

23:05 Yeah, it is, and in fact, we were in a dangerous situation a lease where the entanglement as we called it in the Book of Corporations and the government is at a pretty high level now. So these big companies obviously have the government as a customer. If you look at Microsoft and Amazon and those kinds of companies that they do projects for the government, and the billions of dollars in the defense area and research areas and so on like that. Customers like companies like Palenteers another one with huge government contracts. So that's one area. The second is this increasing regulation of industry by the government, this feeling that we have in our current state of capitalism that must be regulated. There are more regulations every day, there are hundreds of thousands of pages in the federal register, and corporate have come to accept that. In fact, one of the big bureaucratic departments is compliance. How do how do we comply with all these regulations? And then it becomes, hey, let us write the regulations and that will favor the incumbents, the big pseudo monopolistic companies, and maybe shelters of our industries from incursion and disruption and innovation by smaller companies, So that has been well tracked, and a lot of the lobbying companies actually write the regulations, they take them to the congress people or the bureaucrats in the government,

24:39 they co develop them and then get them approved. That's a pretty well known industry, is a big industry. That quote that you mentioned is from Jeffrey Bernbaum, who's a much deeper analyst into government entanglement than i am. But that's clearly a decision that there was a famous observation that Google, which used to have no lobbying presence in Washington, D C. In the toly days, now has the biggest lobbying presence in Washington, d C. And in Sacramento and the state capital. So it's really become a big industry of let's write these regulations together because they're for both of us.

25:21 Thank you for explaining that. It's just there's just so much dearth there. So now that we've thoroughly frustrated and maybe depressed our listeners and viewers, let's bring them back up and talk about the way forward, a brighter future of capitalism. And so, you know, you've been talking about these realities of financialization, bureaucracy, the failures of management, theorizing, the destruction of entanglement of corporations with government, the uselessness of prevailing economics, and the distorted purpose of the corporation. So now we've surfaced all that, and you do a beautiful job of explaining that to us as to what happened, and I think the progression over time really helps us understand as well. So now we have the promise of customer capitalism in the digital age no less. So let's start talking a bit about that promise.

26:11 Well, there's a new magic business model release and that is direct connection to the customer. So the theory of customer capitalism is customer sovereignty or consumer sovereignty to be accurate. That that comes from a lot of mid century economists who are looking back at the era that you and I were just been talking about and said, really, the customer's boss. The customer decides what is produced. The customer decides which firms are successful, the customer sends the message. To the firms. And that was true, that it ceased to be true because of everything we've just been through. But this new magic business model of direct connection to the customer is going to change everything. Because Amazon's a simple example, or if there are many more. But I can go to Amazon as a customer, I can click on what I want to buy. That's an instant piece of information for Amazon, it says Hunter, or at least likes this. I can derive some patents about what they want. If I make comments about satisfaction, they can react to those, and very very quickly in the digital age, they can revamp the production, the inventory, the response rates, the advertising, the marketing in response to the customer. And the firms that are doing that at the highest and most sophisticated levels are the ones that are starting to win today. Test is another great example, because every second you're driving, the car has its twenty four sensors and cameras.

27:41 Or how many. There are probably a lot more than that now and constantly gathering information so that eventually the ultimate and sovereignty that car can be can be self driving. And that's the business model. Direct connection, a flow of information, the analysis of those and so we can derive an understanding of the customer satisfaction and then the constant improvement. Cycle which can move with great speed. So with that at its heart, I think there is a lot more customer capitalism become in the digital age. I'm very excited about it. Yeah, I am too. I'm really excited about that, and I appreciate it too that you also said somewhere and here that right now only about fifteen percent of companies would be described as operating in this new fashion that you're talking that we've been talking about. We'll talk a bit more about that, right is do I have that right?

28:35 Fifteen percent? Yeah, it's a guess or an intelligent estimate, hopefully at least. And really it's looking at the biggest corporations where we can see inside them and understand what they're doing. So we've talked about Tesla, We've talked about Amazon. There's some interesting businesses not typically thought of by US customers. There's a business in China called Higher Hier which has changed this management model to be entrepreneurial. So it doesn't have a big central planning unit, it doesn't have bierarchical control. Every business unit is entrepreneurial, and typically it's about fifty or seventy five people. It's entrepreneurial in the sense of they call it closeness to the customer. They have an expression in Chinese which translates as zero distance to the customer, So how can I know the customer? They make a lot of appliances. For example, they acquired ge appliance in this country, so we'll see if they can apply it.

29:41 You make that model work here, but the model is understand the customer. Translate that into new products and innovations and service as quickly as possible. Zero bureaucracy, zero overhead. There are a few central planning units in terms of marketing that might be spread over several these entrepreneurial units, but there's a whole new way of thinking about doing business, so very entrepreneurial, just like we talked about in the nineteenth century. There's another model out there for a little company called hand which makes consumer wearables and consumer goods that can be ordered on the Internet, and it's got lots of those little front ends, typically three people, a product person, a designer person, marketing person. They're selling through e commerce on the web. That data comes back, goes straight to a data layer, doesn't go through any bureaucratic layers, and then to the back end of the factories which respond quickly with new ideas and new manufacturing. So they call that digitally enabled autonomy. So we getting away from managerialism and all the way to not only customer sovereignty, but autonomy of the frontline people who are closest to the customer. So there's really some exciting new business models coming out, and I think there's a lot of promise there for the future.

31:07 I think so too, and I'm a fan of promise. Let's on that note, get let our customers, let our listeners and viewers think about what we've been talking about here. Let that settle in for just to smedge as we take our last break here. I'm your host, doctor Elise Cortez. We've been on the air with Hunter Hastings, who is an economist who also took up a career in corporate marketing. Over the years, he's done a lot of things with various companies. We've been talking about his book abert Capitalism. After the break, we're going to do is We're going to spend that time focusing on showcasing some of these really best in class practices that these newer companies that Hunters talking about are doing to move themselves forward. Think what this will be right back.

31:58 Doctor Elise Cortez is a management consultant specializing in meaning and purpose. An inspirational speaker and author, she helps companies visioneer for greater purpose among stakeholders and develop purpose inspired leadership and meaning infused cultures that elevate fulfillment, performance and commitment within the workforce. To learn more or to invite a lease to speak to your organization, please visit her at elisecortes dot com. Let's talk about how to get your employees working on purpose. This is working on Purpose with doctor Elise Cortes. To reach our program today or to open a conversation with Elise, send an email to Elise Alise at elisecortes dot com. Now back to working on Purpose.

32:50 Thank you staying with us, and welcome back to working on Purpose. I'm your host, doctor Elise Cortes. I mentioned in the last break that my last book, The Great Revivisation, came out in March of twenty twenty three. What I did for you is I created a three page assessment that you can take off my site gustodashnow dot com and that will help you understand the extent to which your current culture is meeting the needs of today's discerning workforce. If you are just now joining us. My guest is Hunter Hastings. He is the author of Aberrant Capitalism, the Decay and Revival of Customer Capitalism, which we've been talking about today in the program. So for this last bit of our segment here, Hunter, I really want to focus on the management practices and the characteristics of some of these more forward thinking companies that are in this new era here, so our listeners and viewers can start thinking about how can they fold this in their own organization.

33:37 So you list Gosh, it looks to be like about eight or so different practices that these organizations, especially Tesla and SpaceX, are using as management practice. So I want to I want to kind of walk through as many as those as we possibly can. I'm happy to queue them up, or if you want to, if you just want to talk about the ones that are most important, but I'd like to cover all of them if we can. Well, walk us through them, and I'll try to elucidate each one perfect. Okay, first one is an extremely flat organization, right. So the great theory of management and structure and organizational planning in the twentieth century has been the hierarchy that you've got a boss you've got different layers. The borders come from on high and they've worked their way down to the people at the front line, and that in itself is a problem. It slows down the flow of information, it's slow decision making, it.

34:37 Is a lot of waste. So one of the things that Elon Musk has done is tried to eliminate a lot of layers. The goal would be to get to a completely flat kind of corporate organization. But management per se then doesn't take place. Everybody is creating value, they're connected, they're integrated. There might be somebody who's got the most knowledge about this particular problem at this point in time. Then that person who I am is in jug they're the leader at that stage. That's flexible and dynamic. So with the with the help of technology and networks and AI, we can do that today. So flat versus hierarchical is the goal.

35:20 Okay, So this next one is going to really be really frightening for several people that are listening to this, especially if they are in more of a traditional human resource capacity. And that is this notion of assembling teams, cross functional teams that are flexibly deployed so that individuals can leave and enjoy freely based on the needs of the team and the task at hand for specialized expertise. And here's the part that's going to scare them a lot. There are no job descriptions to limit the potential contribution of individuals. That sounds like collocracy to me. Actually, the practice of holocracy. Well, holocracy has been a good attempt in the direction that we're trying to go in. It's run into some problems. But there is a famous company in northern California called morning Star. It's it's a global company now it's one of the case studies, and they don't have job descriptions.

36:09 They have undertakings between individuals. You and I have to work together. Released so here's what I'm going to do, and you approve that. Here's what you're going to do, and I approve that, and we review that constantly. And the other part of that is that we used to being organized in divisions and departments. I'm in the marketing department, you're in operations, and so we never see each other, we never get together. If you've organize functionally, we need to build a brand. That brand is built on customer satisfaction, customer satisfaction might be a nice creative ad, so I can talk persuasively about what we do for the customer.

36:50 But it's also excellence in operations. It's making the product perfectly, it's delivering it on time, it's meeting expectations that way. So in that sense, the operation and marketing are on the same team. So let's have a team of customer satisfaction or a team of brand building, and we're all on it together. We're all connected through the network, and we both have that responsibility. It might not be the only thing I do, so I work on several of those teams, and that we're slowly figuring that out. I think that helaucracy was an attempt. In fact, they it was a bit too structured. And now we're finding this idea of dynamic, constantly rotating, constantly changing teams is starting to work.

37:32 It sounds really exciting to me. There are several other ones that we could talk to. Let me just pick the ones that I think are really most interesting. So this next one that I want to want to have you talk to, please, is the short term problem solving over long term planning. Yeah, so this goes back to financialization to a great extent that we talk about quarterly earnings, and that's that becomes your mindset. That means meeting the monthly sales fall and hitting the weekly stroll. And when I was working in corporation, I was the one who went and got the daily sales. From the computer side. You can managing the short term and you cut the budget if you're not making sales and something like that, whereas true value creation is thinking about the long term.

38:14 How can I serve a customer for the longest period of time with innovation, with change, but constantly elevating their life, and not thinking about earnings this week or this month or even this year, but thinking about the long term value that I'm creating for the customer. And so a lot of companies are trying to think that way. They're still repressed by the financial sector demanding these reports, so we've got to figure out how to release them from that. One way will be a different relationship with the financial markets. So private equity, which has a bad rap historically because of some of the things that it's associated with, is now starting to develop the idea of patient capital. We'll invest this money and you're innovation in your firm. We're not going to demand quarterly earnings. We're not going to demand a report at the end of the year, but we're going to look at for a big return in seven or ten years time. So we'll be patient capital and we'll look for the growth of the corporation, the growth of its purpose, and the growth of its innovation.

39:18 But we're not going to demand those short term benchmarks. Such an interesting new relationship with capital. It's not the stock market, but it's still capital coming from financial markets. So there's a lot of new things happening in that relationship too. It's just a quick segue here I've learned, and you'd be a perfect person asked this. You know, there's just a couple of long term stock exchanges that have been established. Let's sure view on them, their role and their contribution. Well, yeah, I think that's an example of the financial sector thinking in these terms as well. There are some options that you can buy that have long terms. Obviously, the bond market tends to be longer term, by ten year and thirty year bonds, and so this general approach a lease of thinking long term, not sure term, not trading stocks, but investing and thinking for the long term, it's beginning to turn.

40:14 It really is beginning to turn. I'm happy to hear that. Let's just talk about two more of these management aspects here before we go on to the characteristics that I think are interesting. Anyway, this notion of having middle management being eliminated and replaced by AI to provide real time information about the implication of employee actions for the corporation's mission and goal, that's fascinating, really really fascinating. Yeah, we don't really know where AI is going, but a lot of people thinking about this create the vision of I'm on a team. One of my friends call it homo sapiens and digital sapiens. So I've got a human and the human can do things that only humans can do. It can have empathy, it can be creative in different ways, can imagine things in the way that AI can't. But hey, for data analysis and process management and so on. Maybe I've got the AI on my team as well, and so we'll be working in teams to do that. One of the fascinating ideas in that concept is the the AI cio. You know, your boss will be the AI, but you'll still be doing interesting work and serving customers. And so all like that. So we don't really know where it's going to go, but certainly that kind of organizational flexibility, the digital world and the human world coming together, I think that's that's a real possibility, and it certainly won't be vertigal or be horizontal, be each of us working with an AI assistant and working on teams and being connected that way. So that's another way that middle management is going to go away.

41:44 And if you remember what. That's what Elon must try to do at Tesla and then at Tutor when he got there, are now x And he said, if you think carefully, there's not a lot of stuff that you that needs to be done by middle management. You can all So you know, that's not nothing nasty to people. It's being nasty to the way that organizations were structured in these hierarchical vertical organizations, and we don't need it anymore. Right, I totally get that. Well, since we're getting close to the end of the time, let's go ahead and move on to a few of these interesting you talk about. The newly imagined pattern of management exhibits these characteristics, and so there's a few that are fascinating to me. First, principles, not rules. That sounds really good to me as somebody who is not a big fan of rules.

42:30 Right. So, at the company I mentioned before morning Star, the guy who started at Chris Ruffer started on the basis of principles when he had two and you know, everything is collaboration, there's no coercion, and you build from there. So what are the principles of long term truth on which you're going to build your business? You talk about purpose, and that's you know, that's one of those principles. We all share that purpose and then you can figure out what we all do with that within that purpose. There's a concept coming up now, sort of job descriptions. You have role mapping in. This particular situation or this particular area of what we're doing.

43:14 What's my role, what's your role? How do we map it all together so that things get done properly. So we have role mapping as a replacement for other forms of organizational design. Okay, yeah, you do talk about purpose, I also which I of course, that's that's my jam here. And then the next one that's interesting too, of course, which you can talk about this whole time. The customer is the business model that's obviously something we've been echoing here. And then this is really interesting. Revenue growth and profit are emergent outcomes. Right, So that the word emergence a bit a bit technical. It comes from complex systems science, which is a growing science, which is very relevant to I've been talking about today, that that systems are areas of interaction of individuals like people and parts of the corporation from which results emerge. Now, you can guide them, you can constrain them, you can point them in the right direction, but you can't always predict what's going to happen. But one thing we do know is that if we serve customers, cash flow will be emerging from that. Right, they'll pay for the value that we're giving them, and out of that comes profit, comes reinvestment. But if we focus on this one idea, the customer is the business model, we know we're creating value.

44:36 If they pay for value, that's the pivot point that you turn subjective value into cash, and then that cash becomes comes flowing through the organization and we can allocate it appropriately. So this long term idea of we're creating value and our pivot point is that people pay for value and that everything else follows from that. Love that, and now then we bridge onto this here. This is really fascinating for me, especially because of the work that I'm doing. This idea of subjective value and empathy. You go on to say, the determination of value in this new model lies entirely with the customer. Value is subjective, determined by the customer's feelings and identified in their mental evaluation. Therefore, a core skill for the corporation today is empathy, the ability to diagnose customer feelings, how they make choices, and how they develop the mental models that determine those choices.

45:28 Empathy is not a process that can be mapped or automated at a cultural orientation. Is not yet that can be, but it can be nurtured. Sorry, and that's important that it can here. So more empathy companies, with more empathy companies succeed. So I think that is really really critical. I do champion that a lot in my work that I'm doing with my culture building. So I have to say, Hunter, when I heard economists champion this, I knew I was in the right lane. Well, so there's subjective value is a concept of economics. To see number one concepts, the purpose of purpose of the economy is to produce subjective value.

46:09 Now what does that mean. It means it's entirely in the head of the customer, the consumer. It's a feeling, it's an experience. And to get a little bit more technical, they listen to your value proposition. Hey, here's how I'm going to benefit from a deliver a benefit to you. If they buy, they then experience what you propose to them. And then they evaluate it. So the value comes after the experience and if they like it, they'll continue. If they don't, they won't. So that is the whole purpose of economics. Now, if it's in the customer's head, how can I understand that? And the technical term for that proposal is empathy, and empathy is trainable. We can get better at it. Yes, one of my colleagues talks about building their mental model. How did they think? And then if I run my value proposition through their mental model, I'll understand if it does create value if it doesn't. And here's something wonderful, Alis, I was looking this up the other day before I talk to you. If you Google, I shouldn't say Google.

47:18 If you research Apples, Apple's marketing philosophy and in nineteen seventy seven, Steve Jobs and Mike Markela wrote it down and proposition number one is empathy. We will understand our customers better than anybody else. We will understand how they feel, we'll understand their motivations, and we will live up to that and deliver value. So Steve Jobs and Mike Marcola understood that in nineteen seventy seven. But it is the number one skill in business. You might not learn it in business school, you'll learn it as an entrepreneur, and the better you are. We call it empathic diagnosis. There's a fancy term for it, but you know, if you can diagnose what driving the customer and then meet them on their own grounds by delivering value to them. So we've got to find a way as economists to improve this word value. You know, we think about as subjective value.

48:13 The people who thought about maximizing shareholder value obviously didn't think about it that way. So we've got to find that that right term. My term is well being. People seek well being and we'd like to deliver well. Being that works for me, well, we I It has been a delight to read your book, to learn from your book, to be connected to you and have you and share you with my listeners of viewers across the world. What would you like to leave our listeners with today. Well, that we're entering a great new hyper entrepreneurial era, and by entrepreneurship I mean understanding customers' needs, as we've discussed, and then creating innovations to serve those needs better. I think we're going to eliminate a lot of waste that is in bureaucracy and financialization, and the world will become a lot better because we make customers' lives better one step at a time, and that's through entrepreneurship. So I think everybody should be an entrepreneur in some role or another, and everybody should be a value creator. That's what I'd like to leave them with.

49:12 I am right along there with you, hundred That's the world that I want to live in. Thank you so much. What a beautiful way to finish. Thank you, Lillise. Thank you very much for inviting me today. Very welcome. A listener's in view is you're going to want to learn more about what Hunter Hastings is doing his work as an economist or as a corporate executive and his book Avere Capitalism, so you can visit devaluecreators dot com as a website that's a place to start. You can also find him on LinkedIn. Last week, if you missed the live show, you can always catch it be recorded podcast or wherever you get your podcast. We were on here with Pam August of the firm Connecting Potential, where she guides organizations, teams and leaders to unlock potential that is already there for the transformation results. We talked about the framework she offers in her new book Potential, how to connect what's already there for exponential impact to completely elevate your own potential and across your organization. It was fabulous. Next week we'll be on air with Karen Gold and Biddle talking about her book The Untapped Power of Discovery, How to Create Change that Inspires a Better Future, where she teaches us how to embrace discovery as an everyday habit to unlock all manner of new innovation and keep the ideas we launch getting the traction they merit.

50:20 See you there and remember that work is one of the best adventures and means of realizing our potential, making the impact we crave. So Let's work on Purpose. We hope you've enjoyed this week's program. Be sure to tune into Working on Purpose, featuring your host, doctor Elise Cortes, each week on W four C. Why. Together, We'll create a world where business operates conscientiously. Leadership inspires and passion performance, and employees are fulfilled in work that provides the meaning and purpose they crave. See you there, Let's work on Purpose.