Managerial capitalism - why scaled companies don’t build new things

Managerial capitalism leads to a clear separation between ownership and management in large organizations, resulting in a professional manager class that holds control despite owning minimal stakes in the companies they manage. This dynamic is inevitable due to the increasing scale and complexity of modern enterprises, necessitating skilled managers to oversee operations. While these managers excel at managing large-scale operations across various sectors, they tend to lack the inclination, training, and incentives to innovate or build new products and services. Their primary focus is on job security and maintaining the status quo, minimizing risk, and avoiding actions that may disrupt current operations. Consequently, the role of startups and entrepreneurial capitalism has emerged as a crucial counterbalance, reviving aspects of the older bourgeois capitalist model. This resurgence facilitates innovation by providing the necessary funding and support for tech founders and other entrepreneurs, allowing new ideas and solutions to flourish within a predominantly managerial framework.