Thursday, May 12, 2016

A Dirty Little Secret about Capitalism

The Eastman Kodak Company, the iconic photography company started by George Eastman in 1880, has been in business for 136 years.  In its heydays it had over 85% of the market share for the U.S. camera and film business, over $10 billion in annual sales, and employed over 145,000 people worldwide. But by 2012 it was in bankruptcy, and today Kodak is a shell of its former self. Despite inventing the digital camera in 1975, Kodak failed because it didn't transition to digital photography soon enough. And by the time Kodak finally did get into the digital photography business, it's competitors were decades ahead technologically. 

A dirty little secret about capitalism is that, despite the best efforts of business managers, employees, and governments, all businesses will eventually fail! Like people, plants, and animals, nothing lasts forever. And Kodak is just one example of the millions and millions of businesses small and large that were born, lived, prospered, declined, and eventually died. This sobering fact probably keeps most business managers awake at night.

All of us know that our lifespans are finite; so why do business managers run their companies as if they were going to live forever?  One of the longest surviving corporations, the British East India Company (which ironically owned the ship that was the guest-of-honor at the Boston Tea Party in 1773), only lived for 274 years!

Most normal people want to live, to love, to learn, and to leave a lasting legacy for their loved ones, their employers, and their community after they pass on. Since we all know we're not going to live forever, most of us do our best to raise healthy, well adjusted children so that they can just maybe do a little bit better than we did, and just maybe make the world a little bit better place to live in. And since we all know we're not going to work forever, most of us try to be good workers in order to make the companies we work for a little better after we leave. And finally, most of us try to be good, law-abiding citizens in order to make our communities a little bit better place to live in after we're gone.  

Companies should be more like normal people who know they're not going to live forever; so they should strive to be more paternalistic and leave a lasting legacy with their employees, their families, and their communities after they're gone. And in doing so, just maybe make our world a little bit better place to live in.

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