Insights

In this day and age, the success factor in any business or industrial model getting funded and eventually being a catalyst in innovation and growth trends is one underscoring dogma-Introducing 'Capitalism 2.0'.

The world has seen advanced economies running on the principles of capitalism, struggle with financial meltdowns and debt issues from the last 30 years. Hence, all stakeholders in the world financial systems, be it, business owners or investors, need to question the consequences of capitalism...and examine the reinvention of it into an advanced framework that seems to have the potential to drive our future.

Capitalism dogmatically rested on the idea of maximizing shareholder wealth by focusing on parameters such as maximising return on capital, growth and return on investment as businesses run in the race of corporate competitiveness for dominance and survival. Mostly guided by short term and profit first motives, the capitalism market focus has been global. However, is it working? Consider classic capitalism breakdown cases like Enron, WorldCom, the 2008 financial crisis and many cases where customers, regulators and other stakeholders like environment and sustainability been overlooked.

With the onset of disruption in capitalism, the horizon is long term and the market focus is local and inclusive of wider social responsibilities. The purpose is redefined to creating shared stakeholder value which includes environment and sustainability. Today's capitalism creates collaboration in the model as companies and communities, in alignment work on shared concerns, endeavours and challenges.

Business models, especially start-up’s today solve the evident need of reinventing institutions in society around the socio-capital model for innovation, interdependence, sustainability, and integrity. Given the crisis, fraud, and busts, previously prevalent, capitalism pushed for transparency in the organizational and reporting infrastructure of the business, however, now the current trends expedite the transparency level and call for it being naked. It can already be noted that investors and sources of financial capital for Capitalism 2.0 are moving beyond the traditional stock market, big financial institutions to smaller financial institutions, customers, employees, and local communities.

The business models are now becoming circular from traditionally, linear, as it underscores not only the profit motive but the planet and people as well. In this higher form of capitalism, profits involve a social purpose, not from a philanthropic point of view (or Corporate social responsibility) but wider self-interested behaviour —one that will enable society to advance more rapidly while allowing companies to grow even more as economic value is created by social value. The competition enables the externalities faced by the stakeholders of business’ to be internalised in pursuit of market confidence, resulting in examples such as sustainable supply chains, ethical investing, fair trade consumer movements etc.

Whilst there is rapid technological change, the world sees the introduction of a new class of professionals outside the traditional box that becomes a catalyst to new concentrated market forms of data pools for advanced statistics and reasoning. Embracing a new set of principles for the 21st century — collaboration, openness, sharing, interdependence, and integrity- Capitalism 2.0 does not seem like a mirage in the future.

Embracing a new set of principles for the 21st century — collaboration, openness, sharing, interdependence, and integrity- Capitalism 2.0 does not seem like a mirage in the future.