Fixing the Game
Bubbles, Crashes, and What Capitalism Can Learn from the NFL
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- USD 24.99
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- USD 24.99
Descripción editorial
American capitalism is in dire straits, caught in a perilous pattern of increasing volatility, decreasing investor returns, and ongoing bad behavior by executives. And it’s getting worse. Since the turn of the twenty-first century, we’ve seen two massive value-destroying market meltdowns and a string of ethics breaches, including accounting scandals, options-backdating schemes, and the subprime mortgage debacle.
Just what is going on here? Is it the inevitable decline of the American economy? Is it the new normal in a technology-enabled global marketplace? Or is it possible that the very theories we’ve embraced to underpin our capital markets are actually producing these crises?
In Fixing the Game, Roger Martin reveals the culprit behind the sorry state of American capitalism: our deep and abiding commitment to the idea that the purpose of the firm is to maximize shareholder value. This theory has led to a massive growth in stock-based compensation for executives and, through this, to a naive and wrongheaded linking of the real market—the business of designing, making, and selling products and services—with the expectations market—the business of trading stocks, options, and complex derivatives. Martin shows how this tight coupling has been engineered and lays out its results: a single-minded focus on the expectations market that will continue driving us from crisis to crisis—unless we act now.
Using the National Football League as his primary example, Martin illustrates that it is possible to take a much more thoughtful and effective approach than we now do to the intersection of the real and the expectations markets and to governance in general in the capital markets. Martin shows how we can act to end the destructive cycle, including:
• Restructuring executive compensation to focus entirely on the real market, not the expectations market
• Rethinking the meaning of board governance and role of board members
• Reining in the power of hedge funds and monopoly pension funds
Concise, hard-hitting, and entertaining, Fixing the Game advocates seizing American capitalism from the jaws of the expectations market and planting it firmly in the real market—and it presents the steps we must take now to do so.
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Amid the glut of economics books and theories saturating current markets emerges a unique concept. Martin, dean of University of Toronto's Rotman School of Management, proposes that capitalism can avoid bubbles and crashes by emulating the NFL. In the NFL the focus of the real game is on the fans, rather than the owners. Therefore, the goal is to put a real product on the field. If it pleases the fans, it will then reward the owners. Martin (The Design of Business: Why Design Thinking is the Next Competitive Advantage) argues that corporations aim to "feather nests" of their executives which leads to market upheavals based on an "expectations" market rather than a real market of tangible goods and services. If the real market is dominant, companies will focus on even better ways to serve their customers, as opposed to focusing on traders in an "expectations" market; in turn they will always profit, regardless of the results. Martin cites well-known examples of corporate greed but also details the psychological toll on many executives who lose their "sense of authenticity" in the current climate. He concludes his very accessible text with suggestions for reform that will improve both authenticity and the bottom line.
