John Kay, a distinguished British economist and author, dives into the complex realities of modern business in his latest work. He questions traditional profit-driven narratives and argues for the rising significance of human capital over mere financial assets. The discussion highlights the dramatic shift from long-standing corporate giants to the prevalence of 'hollow corporations.' Kay also addresses the evolution of business leadership, urging a fresh perspective on management and innovation in our fast-paced economy.
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insights INSIGHT
Business Is Not Profit Maximization
People in business often do not maximize profits or personal income.
Instead, they cope with a complex and uncertain world, challenging standard economic assumptions.
insights INSIGHT
Modern Business Centers on People
The essence of modern business is its people, not physical capital.
Companies now buy physical capital as a service and are run by professional managers.
insights INSIGHT
Understanding Economic Rent
Economic rent is the profit from unique capabilities others can't replicate.
It explains corporate profits more than returns on capital in today's economy.
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This book examines the evolution of corporations in the 21st century, analyzing their structures, strategies, and impact on society.
Good Strategy/Bad Strategy
The Difference and Why It Matters
Richard Rumelt
In *Good Strategy/Bad Strategy*, Richard Rumelt clarifies the distinction between effective and ineffective strategies. He argues that a good strategy is a specific and coherent response to overcoming obstacles, harnessing power where it will have the greatest effect. Rumelt debunks elements of 'bad strategy' such as equating goals, motivational slogans, and financial targets with actual strategy. He introduces the 'kernel' of strategy, which includes a diagnosis of the challenge, a guiding policy, and coherent action. The book uses diverse examples from business, nonprofit, and military contexts to illustrate these concepts and emphasizes the importance of analytical rigor and focused effort in strategy development.
Full of history and written in a compelling narrative style, this book describes a shift in the underlying assumptions of the relationship between capital & labor. Kay describes how and why we have come to "love the product" as we also "hate the producer".
Kay discusses areas of particular change such as the relationship between business & finance, the concept of the "hollow" corporation, what we mean when we say "growth", and the motivations and standards of industry leaders.
Old ideas of owning the means of production are redundant as workers are increasingly the means of production. Capital is now often a disconnected service contracted from a specialized supplier, and businesses are run by professional managers whose main skill is exerting authority.
New Books in Economics 