By BJ Bjornson
Today�s recommended reading is this Forbes.com article from Steve Denning reviewing Roger L. Martin�s book, Fixing the Game, which notes that a lot of capitalism�s present problems come from incentives and laws that divert resources and talent away from the real market of producing goods and services for customers and making real profits and instead focus on the expectations market of the stock prices and �maximizing shareholder value� in the immediate short term. An analogy as excerpt:
�Imagine an NFL coach,� writes Roger Martin, Dean of the Rotman School of Management at the University of Toronto, in his important new book, Fixing the Game, �holding a press conference on Wednesday to announce that he predicts a win by 9 points on Sunday, and that bettors should recognize that the current spread of 6 points is too low. Or picture the team�s quarterback standing up in the postgame press conference and apologizing for having only won by 3 points when the final betting spread was 9 points in his team�s favor. While it�s laughable to imagine coaches or quarterbacks doing so, CEOs are expected to do both of these things.�
Imagine also, to extrapolate Martin�s analogy, that the coach and his top assistants were hugely compensated, not on whether they won games, but rather by whether they covered the point spread. If they beat the point spread, they would receive massive bonuses. But if they missed covering the point spread a couple of times, the salary cap of the team could be cut and key players would have to be released, regardless of whether the team won or lost its games.
There is more at the link, and while the article nor the book covers every problem our economy faces, the one it does cover is a biggie, and one that needs to be dealt with, sooner better than later.