Book review: Corporation 2020 by Pavan Sukhdev

Corp2020

Change won’t just happen as there  are no easy or elegant solutions – Pavan Sukhdev

Corporation 2020 is a very strong book. It is also much nuanced. It hits directly where wealth and power resides.

Not only it challenges the businesses to transform themselves into the corporations of the future, it also challenges the governments to provide enabling conditions for those corporations of the future. And those who are not interested, run a high risk of their very own survival. The book first details the current systemic problems and then details the solutions to overcome them.

But it’s not an easy read. It takes a while to get into the flow – and once you get the hang of it, you just don’t want to stop. Why? Because you start to understand the premise and the thinking behind this book – a major overhaul of accounting framework, advertising, financial leverage and taxation principles.

A step-by-step manual for becoming Corporation 2020

Owing to his background in the financial sector, Pavan Sukhdev builds a strong business case for senior leadership giving a clear vision of how a corporation of 2020 ought to look like. He starts off with taking the reader through a detailed tour of how the corporation of 1920 era came into being and how it is evolving into a corporation of the coming years by laying down four very relevant and distinct set of tools that when correctly used will allow companies to break from the 1920 mind-set to the 2020 thinking. They are:

  • Incorporating Externalities
  • Accountable Advertising
  • Limiting Financial Leverage
  • Resource Taxation

Pavan’s knowledge and passion shines through as he walks the reader through the pages. Don’t be amazed while in the middle of the reading, you start to wonder whether Pavan is writing it as a banker with all the presented data or as a harbinger, taking the voices of the stakeholders to the board rooms or as a social activist, giving voice to the underprivileged and giving it to the governments or as an academician with detailed analyses and report writing skills.

Also read Why Pavan Sukhdev thinks the mandatory 2% CSR spend is short-sighted

But Pavan’s avatar doesn’t matter. What matters is his belief – that Corporation 1920 cannot and will not deliver a green economy. Period.

So, the essential question that Pavan asks is why companies fail to notice the $20 bills on the sidewalk?

In other words, if there is money to be made by acting more responsibly and from environmentally sustainable activities – then why companies haven’t picked up on those –why aren’t they already doing it? How companies can correctly price the resources so that there is value-add and not a value-subtract from the economy? How can advertisers, who are no better than telemarketers in terms of ethics and honesty, be held accountable for mass manipulation? How can companies not become TBTF (too big to fail) by limiting their financial leverage? And how resource taxation can help end brown economy?

The answers to the above lie in the Four strands of a New DNA of Corporation 2020 that Pavan talks about – Goals aligned with those of society, viewing a corporation as a capital factory (not just goods & services one), corporation’s role as a community and corporation as an institute of learning. Once these strands begin to tie into the fabric of a 1920 mindset, the resulting change will be the breakthrough model of capitalism giving birth to the new Corporation 2020.

Look no further

Concepts like Conscious Capitalism, Compassionate Capitalism, End to profit maximization, Creating Shared Value have found their way into business vocabulary in the recent times. And the ground breaking works of Michael Porter,  V.Govindrajan, Stu Hart and several others have had an immense positive impact on many companies. But still, majority of companies don’t get it. They are not bad per se but are more often than not, confused. They still view this as “something nice to have” or “on the fringes” or “after the profit is made” kind of thing.

Pavan Sukhdev, has done a brilliant job in showing the economic invisibility of nature by bringing nature into the balance sheets. I really do hope the book is read by executives and policy makers, because this book removes all the confusion. But mind you, this is not a feel-good book!

This is an action manual. And that is why it’s not an easy book to digest in one sitting – sometimes getting too tough to understand for a person not versed with financial knowledge and mainstream economics – the very reason why it ought to be read by every senior manager – because if senior management doesn’t get it, then no one else will. At the very least, they will have had a much needed crash course in MBA finance with specialization in environmental accounting.

For more info, please visit http://corp2020.com

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Comments

  1. I’ve always believed that the “incorporation of externalities” would have to happen through legislation. How does Mr. Sukhdez believe it will happen? What do you think?
    The other change I look forward to seeing in the corporate world is “End to profit maximization”. I find that the tactics that many corporations use to maximize profit are so detrimental to our environment and our society (ex: dumping waste, offshoring of labour, attacking labour unions, eliminating employee benefits, paying minimum wage rather than a “living wage”). But, then again, I’d probably make a terrible capitalist :)

    • Yeah…terrible in a sense of capitalism as it exists today!
      I feel that Pavan Sukhdev takes a very balanced view of the issue – not simply attacking and blaming the corporations but also giving them a roadmap that can be followed…afterall they are the ones with lobbying power, wealth and resources to affect change. He takes 2 examples of externalites – Puma,with one of its kind Envrironmental accounting balance sheet, which calculates Puma’s environmental negative externalities at $188 mn and Infosys (Indian software firm) with a positive externality calculated at $1.4 bn in 2012 (human capital produced by way of skills training and those employees leaving Infosys and joining other companies)
      No doubt regulations are necessary, but it is more of seeing a value in incorporating externalities than anything else…of course what companies may call as profit may very well be negative externalities that don’t get accounted for in the balance sheets!

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  1. [...] 2020 was reviewed by Linking Sustainability and is scheduled to be reviewed by The Environmentalist. Pavan Sukhdev posted another piece to his [...]

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