Harvard Business Publishing

The real question is will people recognize new-DNA / old-DNA growth.

Meaning, will we learn the wrong lessons if the economy "improves" in the short-term? Will we be unable to make the same hard decisions and trade-offs in times of success that we feel the need to make in times of distress? Will a temporary pickup cause people to stop thinking about making "real" change?

Essentially, my question is how can we frame the opportunities and create the "identifiable wins" for new-DNA growth that can become the case studies, guidelines and leaders for new-DNA growth?

When I read that NYT article, I remember a conversation I had with an investment banker friend a year ago, or so. Back then, I wanted to know where he himself invested his own money - thinking that he would know the inside scoop on where to safely gain some sweet returns. He replied that he couldn't really tell me anything particularly interesting, that his investments were really conservative, with fairly low interest rates. I thought he was kidding me and that he didn't want to give it away. Today I know better - he was telling the truth because he knew that the returns they were raking in weren't based on real and sustainable economics. And he was not going to subject his own personal money to that kind of casino game.

Peter Drucker wrote on this topic when he devoted a whole chapter to it in Managing in Turbulent Times, wherein he refers to it as the delusion of profit, and 'profit' as an accounting illusion.

I believe wholeheartedly that in order to reform our businesses and economy we will have to redefine profits using Drucker's definition as a starting point.

Essentially, the harm done to economics by treating profits as reward for past performance (enormous CEO bonuses, wasteful spending to protect old industries and the status quo) is that it ignores the true investment needed today to not only stay in business, but also to create capital and wealth that is needed for future generations. We have become a deficit-producing nation of businesses. There is no future in that. The purpose of business has to be for capital formation that is put to use for social good and sustainable economic activity.

By occupation I work in media and have posted numerous pieces on how newspapers and traditional media have 'profit harvested' to their demise, and are ill-prepared to survive the market disruption by new media and the inversion of advertising models. If interested you can see it here. http://bizasif.com/dont_panic

Thanks for keeping the dialogue alive on such important economic topics.

Perhaps not directly on-topic as related to profit, but pertinent to the last 6 or 7 posts here ...

Margaret Atwood, a reasonably well known Canadian writer, has recently had published a short book titled "Payback - Debt and the Shadow Side of Wealth" in which she uses a range of devices and stories to show us just how deeply embedded in our human socio-psychological DNA is the concept being debtors and creditors.

I certainly like the concept of banking being regulated somewhat like a utility but boy o boy would we ever need a degree of trust in the motives and behaviours of those appointed as "the bankers" to make that work, and unless I am fundamentally mistaken, there would need to be some fundamental re-writing of core principles of what we understand as capitalism to allow the utility-like regulation to take place .. no ?

This is also interesting ..

We all go together when we go

The first great financial crisis of the 21st century has begun. Nobel prize-winning economist Paul Krugman explains how it happened, and how it can be cured

(an excerpt from his new book titled "The Return of Depression Economics and the Crisis of 2008"

Happy New Year Umair!

Let's hope the New Year will bring good changes in corporate culture, a new DNA as you call it. Nearly a decade into the 21st century, now is no time to be revisiting 20th century corporate culture.

Regards,
Ward
Cusco, Peru
http://lifeinperu.com

Aren't profits supposed to be mostly cannibalized in order to sustain the business model?

In this case, it seems that the bonuses would have been better off being used to create more winners (creators of real value), instead of rewarding those who picked the winners (mostly empty value).

nice comment thread ...

2009, redefining what it means to be a human being ...

and being forced to by existence, which is not a bad thing ...

enjoy the process,

gregory