Changemakers in Business – 3 Takeaways with Professor Rebecca Henderson

Can you reset capitalism? Speaking to Hoffmann Institute’s Executive Director, Katell Le Goulven in the latest Mission to Change episode, Professor of Economics at Harvard University, Rebecca Henderson speaks about the dangers of capitalism, and the roadmap of ways business can catalyse change. Here are three takeaways from their conversation.

Climate change is one of the greatest threats facing the planet. However meaningful progress to a greener, cleaner, and healthier planet cannot be achieved amid staggering wealth inequality. According to a 2020 Oxfam study, the 22 richest men in the world have more wealth than all the women in Africa. Making the richest one percent pay just 0.5% extra tax on their wealth over the next 10 years would equal the investment needed to create 117 million jobs in sectors such as elder and childcare, education, and health. Clearly there is a broken system causing the rich to get richer and the poor, poorer.

It is on this topic that we spoke to Rebecca Henderson about her book re-imagining capitalism. Henderson believes this economic system can play a crucial role in helping combat the climate crisis, wealth inequality and social injustices.

1. Accessible Activism

Activism doesn’t have to take the traditional form of protesting on picket lines. It is just as much about outreach and accessible education as it is about making noise. Henderson’s book is not a scholarly one, yet it draws on 15 years of research and teaching to ensure her arguments and beliefs are mapped out in a logical manner, to have maximum accessibility and impact for the reader.

The book provides a roadmap for gentle activism. It first gives a sense for what you can do right now and the second; how these individual actions might add up to result in an impactful change. It also shows how to talk about this subject with your colleagues, with your investors and your customers. The book, since publication, has been shortlisted for the FT & McKinsey Business Book of the Year Award 2020 proving the demand for such activist forms.

2. Work With What You Already Have

If a model or plan isn’t working, don’t immediately cast it aside and search for a radically opposed alternative. Instead pause, evaluate and re-imagine. Rebecca asks us to re-imagine and re-build capitalism, not just cast it aside and start living by a new economic model. But why not just get rid of something which is not functioning for everyone? Sometimes the solution is right in front of your eyes but is clouded by background noise.

“Capitalism is a tiger. It's incredibly powerful. It's very efficient. It is an engine of innovation and productivity and change. And so, incredibly powerful…GDP has more than quintupled, we lead lives that our grandparents could never really have imagined, but like all tigers, you don't want one running wild in your living room. It has to be balanced. It has to be controlled. And what I believe is we have a need to reform and reimagine capitalism.”

3. Combat Overload

Companies don’t implement change for all sorts of reasons - from being measured on short-term returns to inertia. However, what is the biggest barrier for companies to implement change? Overload. Rebecca has calculated that most companies, when they add up all their current projects at any given time, it amounts to 300% of avaliable capacity. Companies are taking on three times as many projects as they have resources for. This need to keep adding another project is one of the major factors in barring meaningful, architectural change within a company.

Bonus business takeaway: Question everything!

If a business is preaching something that sounds too good to be true, then it probably is! If you are a student wanting to enter a company that takes sustainability seriously, then get smart about the measurements. Rebecca says delve into the company numbers and check the financials in the business model. Does the company truly have a sustainability agenda and purpose integrated into their strategy?

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To listen to the full conversation, visit Mission to Change, and explore more of our episodes about the journeys of changemakers.