Week 23, 2020
The Infinite Game: Shareholder Primacy, Corporate Longevity, and Leadership Practices.
Each week I share three ideas for how to make work better. And this week, those ideas come courtesy of Simon Sinek’s The Infinite Game.
Why am I writing about this? Two reasons. First, I just read the book and so it’s top of mind. Second, it’s message is, as one might expect from Sinek, very much relevant to the future of work.
Takeaways as follows:
1. Shareholder Primacy
We’ve lost our way. When Adam Smith wrote the Wealth of Nations back in the 1770s, he thought it self-evident that businesses should serve their customers. But that changed when Milton Friedman arrived on the scene. Writing in the NY Times some 200 years after Smith, Friedman declared that the sole purpose of business was to make money and increase shareholder value. Shareholder primacy quickly became conventional wisdom. And today, we’re left with a financial system obsessed with market share and quarterly earnings reports.
For more on this, read [The Origins of the World’s Dumbest Idea](The Origin Of ‘The World’s Dumbest Idea’: Milton Friedman).
2. Corporate Longevity
In 1986, James P. Carse — Professor Emeritus at New York University — published an essay on finite and infinite games that perfectly encompassed the ideological difference between Smith and Friedman. In this view, Friedman personified the finite mindset; he thought of businesses as a game in which the winner takes all. Smith, on the other hand, had an infinite mindset. He understood you can’t ‘win’ at business just like you can’t ‘win’ at life. Infinite games are open-ended. And the objective is not to win. The objective is to perpetuate the game. The object is to stay alive and continue to serve.
Did you know longevity is on the decline? For more, see w182019.
3. Leadership Practices
“We can’t choose the game. We can’t choose the rules. We can only choose how we play.” And if we choose the play the infinite game, says Sinek, we must adopt five leadership practices. And of those five, arguably the most important one is the advancement of a purpose beyond profit — what Sinek calls a just cause. Infinite-minded organizations stand for something. They exist not to create shareholder value but to forward a cause bigger than themselves. And that’s why longevity is so important. The longer you play the infinite game, the further you can advance your just cause.
For a list of all five practices, visit the Infinite Game website.
The Infinite Game is a good read. It doesn’t offer anything new or particularly groundbreaking, but it does make for an excellent reminder that success in business can and should be measured in ways other than profit. The fact that you can get rich by going against these principles is beside the point. Advancing a just cause and treating people well is not a better way to make a killing. It’s a better way to make a living. And that’s what the infinite game is all about.
That’s all for this week.
Until next time, stay calm.
/Andreas
