Roger Martin: The problematic economic efficiency mindset that threatens corporations and democratic society

Abstract

Purpose

“On its current path, American democratic capitalism is, I believe, heading for an ugly fall.” So warns Roger L. Martin in his new book, When More is Not Better: Overcoming America’s Obsession with Economic Efficiency. Professor Martin has been concerned for some time now about the capability of the American capitalistic model in its current guise to deliver continued prosperity for the many and keep the American democratic dream alive.

Design/methodology/approach

Martin sees a serious problem in how the benefits of the American economy and its corporations are distributed; this has been shifting for some time now from a largely Gaussian (widely spread) to an increasingly Pareto (narrowly spread) pattern.

Findings

The shape of this distribution is getting ever more extreme, leading to a situation in which the richest families in the country are reaping a wildly disproportionate share of the benefits of economic growth. This kind of distribution tends to be self-reinforcing and that is not consistent with a well-functioning democratic capitalist system.

Practical implications

The actors within the system will keep adjusting to any change in the rules of engagement, and the tendency for them to keep “gaming” the system should be anticipated as both natural and inevitable and provided for accordingly. Breaking the company into subject-matter siloes has little chance of helping the company prosper. It tends to cause independent pursuits of efficiency that don’t add up to effectiveness.

Originality/value

The author of 11 books, Professor Martin has been ranked at the top of numerous lists of the world’s best strategic thinkers, and is a seminal contributor to the design thinking and integrative thinking movements. In his writings he seeks “to develop a new understanding of the broader public conversation around shared and sustainable prosperity, an essential piece of democratic capitalism.” A long-time consultant to major global firms, he offers insights for corporate executives.

Citation

Leavy, B. (2020), "Roger Martin: The problematic economic efficiency mindset that threatens corporations and democratic society", Strategy & Leadership, Vol. 48 No. 6, pp. 3-9. https://doi.org/10.1108/SL-07-2020-0107