When we separate ownership and equity from accountability, we end up with dysfunctional organizational behavior. When the shareholder perspective is the only reason for a corporation’s existence, profit becomes a destructive rather than a creative force, taking management’s focus away from the long-term sustainability of the organization, its people and the communities in which it exists, and it can result in great harm to the planet.
When equity and ownership are aligned with contribution and accountability, the profit incentive can help reinforce the value creation process of the firm. Those most involved in value creation are rewarded with the upside of their initiative, helping to build a positive feedback loop that creates a true and deep sense of ownership in any enterprise.
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Marjorie Kelly’s The Divine Right of Capital is one of those mind-bending books that deserves to be read by a large audience. It tells a behind-the-scenes story of capitalism that we don’t often hear; one that shows how our preoccupation with shareholder “primacy” distorts capitalism in ways that generate serious harm for society and the planet. Kelly shows how our current problems with capitalism are not necessarily intrinsic to market forces or even capitalism itself, but to the particular version of it that we have today.
Facebook users invest massive time, energy and social capital in building the underlying value of this service, so what would it look like to really open the company’s IPO in ways that helped its user build a fuller sense of equity?
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Antique stock ticker image from donjd2. Thank you.