Why Traditional Recession Tactics Are Doomed to Fail This Time

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On the third, and deepest, level, strategists must rediscover entirely new sources of advantage as old ones fade and decay. Once we rediscover how to create value, we must learn how to sustain and maintain it. But the sources of advantage we teach in business schools and boardrooms alike were built for an industrial-era—not a hyperconnected, hypercomplex 21st century. For example, brands ain't what they used to be—and, as the investment banks just showed us, neither is scale, proprietary knowledge, or top-notch relationships.

Tomorrow's sources of advantage aren't like yesterday's. They're not built on being able to exploit, dominate, or coerce more strongly than others—they don't result from being harder, better, faster, stronger. They're about exactly the opposite: being softer, better able to fail, having the ability to be slower, gaining the capacity for tolerance and difference. Ultimately, they are about a true advantage—one that accrues not just to the corporation, at the expense of people, society, or the environment; but one that accrues to all.

Let's go back to our Starbucks example. If Starbucks wants to survive the 21st century, it must get radically experimental, learn to tap the power of network effects, shift to becoming resilient, develop and live a sense of purpose, or learn to occupy the creative high ground. It is only through new economic avenues like those that Starbucks can make sure its own advantage isn't just the flipside of Detroit's, Dar es Salaam, or Dhaka's disadvantage—that it's not just, like the investment banks, building an economic house of cards.

That's incredibly difficult—because industrial era DNA is built to power a nakedly competitive advantage; one that's deliberately blind to being unfair, unsustainable, or flat-out imaginary.

There's a different way to say that. Discovering new sources of advantage depends on new DNA—on building new kinds of institutions with entirely new capacities. Because, at root—and as we'll discuss at length shortly—the macro crisis isn't really a financial crisis, an economic crisis, a liquidity crisis, or a solvency crisis. It's an institutional crisis: the economic institutions of capitalism are in shock.

And though it's a scary, frustrating time—the cool part is this: it's up to us to reimagine, reconceive, and reinvent them. We get to rethink the institutions of capitalism for a new century.

What could be cooler than that?

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