Capitalism: You're doing it wrong.
Updated: May 3, 2019
(mild spoiler ahead for Avengers: Endgame. If you haven't seen the movie and are sensitive about that kind of thing skip the first paragraph below).
A Möbius strip looks like a belt that has had its ends twisted around and stapled together. So if
you were to move along one side of it you would end up on the back side after one loop. The non-intuitive way to get back to where you started in one piece is to go around it twice. At some point in Avengers: Endgame Tony Stark realizes that to save the world, natch, to save the universe from the destruction brought up on it by Thanos, our heroes would have to go around a theoretical Möbius strip twice. Red Rocks Credit Union out of Denver, Colorado (link) is more modest in its ambitions. They're not aiming to save the whole universe. Saving the Earth will do for now. And if it's true that it is money that makes the world go round, then that is where they'll focus, and they’re doing it in a way that is—at first glance at least—as non-intuitive as Iron Man’s solution.
Earlier this week I had an interesting conversation with Judah Musick (link), Chief Innovation Officer for Red Rocks, and it seems to me that they’re on to something.
Let me start by saying that there are a number of things that are surprising about this. Red Rocks is a financial institution, not some group of wide-eyed tree-huggers. As a financial institution—albeit a not-for-profit-one—they are in the business of money, so focusing their efforts on doing good would seem out of character. The second thing that is surprising is that they are not alone in this effort. Large-bore capitalist companies like Mars and InBev also subscribe to the thoroughly innovative notion that the only way forward for capitalism is to do well by doing good.
It goes like this.
For years now corporations the world over have paid lip-service to the notion that “our employees are our most important asset.” Well, maybe. But if that is so, how come the benefits that your “most important asset” receive are forty years out of date? There is plenty of real-world evidence that backs up the contention that, in addition to financial capital (that is dollars and euros to you and I), human capital is central to a firm’s profitability. We know this now, and if we know it, how come are we doing so very little to address it? There are many reasons, the three that stand out for me are:
We focus too much on financial instruments, making money from money seems obvious and easy. The fact that it is a sugar rush without nutritional value is ignored by the simplistic expedient of taking even more sugar;
Fifty years of policies inspired by the Chicago School make it seem, to most of us, like unbridled greed is the normal, “natural” way of the world. It isn’t.
It is easy to measure financial capital. Do you have one more dollar than you did before? Yes? Good. No? Not good. By comparison measuring human capital is trickier, there are no universally accepted standards and very few tools to actually measure it. If we don’t measure what we value, we’ll end up valuing what we can measure and so we ignore human capital and go back to counting pennies.
What if someone, someone or some company with knowledge of how money works, with knowledge of how human capital works, founded by the very same people that make up that human capital came up with a tool to measure and manage human capital. That would be the kind of innovation that could potentially transform the way we do business.
That in a nutshell is what Red Rocks are doing. Designing and building a platform for businesses to manage their employees’ benefits in a way that grows human capital. Benefits management is something that all businesses must do and it is usually seen as a cost center. (Remember, profits=good; costs=bad?). However, these same companies could be using their benefits to increase their human capital and in the process transform how capitalism works. By giving businesses a clear way to measure and manage human capital they, the businesses, end up making more money.
It’s true, money makes the world go round, but the path forward is not a simple loop, it’s a Möbius strip, and this is how we’ll be able to go around it successfully.
This isn’t the shinier shiny new object that many people think about when they think of innovation. This is nuts–and–bolts customer intimacy value delivery. Knowing more about the needs of your customers than they know themselves and giving them the tools to address those needs.
And in the process, changing the world.
Look out Tony Stark, you have competition.