Capitalism: Don’t hate the game; hate the bad players.

I have been rediscovering how to frame what “good” looks like for one of the most critical institutions in our lives – companies. In this edition, let’s explore the overarching theme of the essence of “capitalism,” without which we will not be able to align on the underlying details.

Tour de France: Should we blame a tournament for the choices of dopers?

What comes to your mind when I say “Tour de France?” I anticipate two types of reactions. Some might say that it is the world’s most elite cycling tournament. Others might say it’s scandalous due to the history of doping among elite cycling athletes.

Neither group is wrong. But it is important for us to delineate what each group is really talking about. The first group is talking about the essence and intention of the Tour de France and the vast possibility behind it. The second group is likely thinking about their observations of unethical individuals and groups and their behaviors in or around the Tour de France.

In the case of cycling, it’s okay for some of us to not care about this delineation and even entirely avoid the Tour. But that is not true when it comes to doing business. The air we breathe and the water we drink, not to mention everything else around us, are directly shaped by how we buy, invest, and work.

It is true that an amazing actor can take on a bad script and be part of a terrible movie. But the reverse can be equally true. A great story or book can be handed to a lousy writer, a poor director, and bad actors to create an unwatchable movie. If we were a writer, director, or actor, what would be a better use of our energy? Should we preemptively assume others won’t pull their weight, or should we focus on putting our best foot forward?

Blaming an idea for the ineptitude of its enactors is not helpful.

In the past week alone, I was part of these random and unsolicited conversations:

A gentleman shared his “corporate trauma” experience with me for two hours. He explained his challenge with people holding more powerful seats treating him poorly, which led him to say that “corporations are generally bad.”

Over lunch last week, a small business owner carefully inspected the giardiniera and said, “I used to work in the food business, and I was thinking about how we used to source all these ingredients.” Someone else at the table asked, “Did they prioritize the 'business' or quality?” The protagonist responded with some derision, “Of course, the business!”

In another conversation, the owner of a small marketing agency shared: “My largest client changed the incentive structure just before we were paid our bonus . . . so they could maximize their own payout at our expense. That’s capitalism for you.”

This is the sad reality of our ecosystem. Whether it’s Hollywood, politicians, everyday decision-makers, individual contributors, or customers, most blame “capitalism” or “companies” for their troubles. These examples, like many others we encounter daily, stem from the deliberate or negligent actions of individuals who deviate from expected behaviors. The underlying behaviors that lead us to react this way are the equivalent of doping and match-fixing in any sport as opposed to the essence of the sport itself.

Would any of us agree with this? “I grew up in a terrible family. So, family is a bad institution.

No! People who feel this way likely grew up with individuals who failed to create a healthy family. Companies are no different.”

In all these situations, we are blaming an idea for the conscious or subconscious choices of bad or incompetent actors.

Money decoupled from value entices bad actors and behaviors.

No top-tier athlete starts playing their sport for trophies. They play the sport because they enjoy competing and the joy that comes with the day-to-day realities of the sport. In such pure competition settings, it’s hard to fake it because there are very clear rules of engagement and what winning looks like. Even an athlete using performance enhancers will likely possess the innate talent required to compete at a high level.

But in the sport of capitalism, the rules of engagement and measurement of victory have been far more squishy, which allows perceptions to overshadow the real nature of the competition.

A common misperception is that money is the foundation of capitalism. It is not, and this misunderstanding threatens to distort the very essence of capitalism.

Money, which includes all currencies, crypto, and any token such as gold or silver, exists to serve one purpose: to act as a score sheet. We could use anything that cannot be forged without collective agreement as “money.”

Money is simply a token. The barter system is an effective and simplistic form of capitalism, where trading requires one to be good at raising chickens, growing bananas, or treating diseases, and one gets to trade those specific goods and services in exchange for others. We only created money to ease the logistical constraints associated with getting a disease treated in exchange for handing over a chicken. Money allows us to transact value without going through a cumbersome live exchange of goods or services that create value.

For instance, excitement to hand over one form of money, like US dollars, in exchange for another form, like Bitcoin, to create a perception that the latter is better is simply misbehavior that breaks all fundamental rules of engagement in a capitalistic economy.

Money was always meant to be a token to flow in the opposite direction of value, the creation of which is the real purpose of capitalism. Nothing more, nothing less!

What is value?

Value is the benefit that solves a real-world problem. That problem could be connected to any intrinsic human experience spanning psychological, emotional, physical, or other facets. In our complex world, the creation of value may flow along a long chain that leads up to tangible human needs.

Conversely, talking about value isn’t value, and engaging in activities that take money off the table or produce money without constructively moving the needle on the flow of value is not helpful. It’s simply misbehavior to extract money without solving real-world problems.

What is capitalism?

Capitalism is a competitive sport that is intended for the best value creators to win, i.e., it intends problem-solving to be the most valuable attribute.

It’s not intended to engage in the creation of perceptions that distort value exchange equations. Bad actors and behaviors try to break the value exchange equation and take more than what they put in, usually in the form of money.

Creating more money decoupled from value is the equivalent of making more forged trophies in a sport. It simply dilutes all value-centered activities.

Many dislike the idea of competition, but that’s naïve. Competition is innate in every living and non-living thing in our universe. Going on a safari and watching animals for several days should make it clear that the natural world is a pure form of competition. We will find the same essence of competition if we look at cellular biology, physics, and chemistry. . . . Just as energy can neither be created nor destroyed, competition in its purest form persists, whether in nature or human activities.

Beyond naïveté, one might argue against competition to manipulate a group with the intention of taking advantage of that group. Other economic theories, such as communism and socialism, are distortions of nature where the masses are essentially manipulated by a few in power. These are distorted competitive ecosystems where a few convince the rest not to compete.

Even though competition is core to human nature, so is misbehavior. As we increasingly demand complex and nuanced problems to be solved in our lives, we must also embrace sophistication in the rules of engagement of how we conduct trade, without which misbehaviors will always tarnish the purest form of value exchange.

For today, let’s start with a very simple choice. . . . Do we compete on value creation or do we compete on misbehaviors?

To dope, or not to dope. . . .

The dilemma that we are all left with when involved in a sport with bad actors and misbehaviors is a simple one: Do we dope to win, or do we uphold our honor and sportsmanship to train harder and longer, even if that is the arduous path to victory?

The answer to this question is personal. Over the years, I have accepted that there is no such thing as “work life” and “personal life.” There is just life.

Our incentives, decisions, and actions around buying Christmas gifts tend to be similar to how we spend company funds as employees. The objectivity with which we hire the next employee or serve customers reflects how we treat strangers compared to our friends and family.

• Should we spend time complaining about customers or challenge our company to improve?
• Should we backchannel and talk negatively about others at work, or should we let the quality of our work speak for promotions and compensation?

Doping in a sport isn’t just about the person consuming it. Everyone involved in the value chain and aware of it is complicit.

For today, my proposition is for us to recalibrate our vantage point about actions and events around companies from our own personal perspectives, zoom out, and try to see each company as a complete ecosystem that includes customers, investors, employees, partners, and even bystanders.

How do our choices impact the entire ecosystem of a company we buy from, sell to, work for, or invest in?

If we think only about ourselves and our desire to get little trophies at every turn, we risk emulating those who don’t consider whether their chemical concoctions eventually lead to a doping scandal.