Fixing the Game: Bubbles, Crashes, and What Capitalism Can Learn from the NFL

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Fixing the Game: Bubbles, Crashes, and What Capitalism Can Learn from the NFL

by Roger L. Martin

Harvard Business Review Press | May 3, 2011 | Hardcover |

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American capitalism is in dire straits, caught in a perilous pattern of increasing volatility, decreasing investor returns, and ongoing bad behavior by executives. And it's getting worse. Since the turn of the twenty-first century, we've seen two massive value-destroying market meltdowns and a string of ethics breaches, including accounting scandals, options-backdating schemes, and the subprime mortgage debacle.

Just what is going on here? Is it the inevitable decline of the American economy? Is it the new normal in a technology-enabled global marketplace? Or is it possible that the very theories we've embraced to underpin our capital markets are actually producing these crises?

In Fixing the Game, Roger Martin reveals the culprit behind the sorry state of American capitalism: our deep and abiding commitment to the idea that the purpose of the firm is to maximize shareholder value. This theory has led to a massive growth in stock-based compensation for executives and, through this, to a naive and wrongheaded linking of the real market—the business of designing, making, and selling products and services—with the expectations market—the business of trading stocks, options, and complex derivatives. Martin shows how this tight coupling has been engineered and lays out its results: a single-minded focus on the expectations market that will continue driving us from crisis to crisis—unless we act now.

Using the National Football League as his primary example, Martin illustrates that it is possible to take a much more thoughtful and effective approach than we now do to the intersection of the real and the expectations markets and to governance in general in the capital markets. Martin shows how we can act to end the destructive cycle, including:

• Restructuring executive compensation to focus entirely on the real market, not the expectations market
• Rethinking the meaning of board governance and role of board members
• Reining in the power of hedge funds and monopoly pension funds

Concise, hard-hitting, and entertaining, Fixing the Game advocates seizing American capitalism from the jaws of the expectations market and planting it firmly in the real market—and it presents the steps we must take now to do so.

Format: Hardcover

Dimensions: 272 Pages, 5.12 × 7.87 × 0.79 in

Published: May 3, 2011

Publisher: Harvard Business Review Press

Language: English

The following ISBNs are associated with this title:

ISBN - 10: 1422171647

ISBN - 13: 9781422171646

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– More About This Product –

Fixing the Game: Bubbles, Crashes, and What Capitalism Can Learn from the NFL

Fixing the Game: Bubbles, Crashes, and What Capitalism Can Learn from the NFL

by Roger L. Martin

Format: Hardcover

Dimensions: 272 Pages, 5.12 × 7.87 × 0.79 in

Published: May 3, 2011

Publisher: Harvard Business Review Press

Language: English

The following ISBNs are associated with this title:

ISBN - 10: 1422171647

ISBN - 13: 9781422171646

From the Publisher

American capitalism is in dire straits, caught in a perilous pattern of increasing volatility, decreasing investor returns, and ongoing bad behavior by executives. And it's getting worse. Since the turn of the twenty-first century, we've seen two massive value-destroying market meltdowns and a string of ethics breaches, including accounting scandals, options-backdating schemes, and the subprime mortgage debacle.

Just what is going on here? Is it the inevitable decline of the American economy? Is it the new normal in a technology-enabled global marketplace? Or is it possible that the very theories we've embraced to underpin our capital markets are actually producing these crises?

In Fixing the Game, Roger Martin reveals the culprit behind the sorry state of American capitalism: our deep and abiding commitment to the idea that the purpose of the firm is to maximize shareholder value. This theory has led to a massive growth in stock-based compensation for executives and, through this, to a naive and wrongheaded linking of the real market—the business of designing, making, and selling products and services—with the expectations market—the business of trading stocks, options, and complex derivatives. Martin shows how this tight coupling has been engineered and lays out its results: a single-minded focus on the expectations market that will continue driving us from crisis to crisis—unless we act now.

Using the National Football League as his primary example, Martin illustrates that it is possible to take a much more thoughtful and effective approach than we now do to the intersection of the real and the expectations markets and to governance in general in the capital markets. Martin shows how we can act to end the destructive cycle, including:

• Restructuring executive compensation to focus entirely on the real market, not the expectations market
• Rethinking the meaning of board governance and role of board members
• Reining in the power of hedge funds and monopoly pension funds

Concise, hard-hitting, and entertaining, Fixing the Game advocates seizing American capitalism from the jaws of the expectations market and planting it firmly in the real market—and it presents the steps we must take now to do so.

About the Author

Roger Martin is dean of the Rotman School of Management at the University of Toronto and a professor of strategic management at the school. He authored The Responsibility Virus, The Opposable Mind, The Design of Business and many articles in leading business publications including Harvard Business Review, BusinessWeek, Fast Company, and Barron''s.

Editorial Reviews

“excellent book” – The Guardian “All business leaders, not just the one who wants to be chief executive of the “American company” should take notice.” “Professor Martin makes the point particularly vividly, observing that the way we currently reward corporate C.E.O.’s is roughly equivalent to rewarding football teams for exceeding expectations rather than winning games.” — The New York Times Economix blog "As Roger Martin details in his brilliant, Fixing the Game: Bubbles, Crashes, and What Capitalism can Learn From the NFL , CEO pay exploded when companies adopted reward systems based upon maximizing shareholder value.” — Huffington Post “what the reader gets in Fixing the Game is deeply thoughtful business commentary with an excellent marketing case study to boot, namely the NFL” — Graziadio Business Review “One of the few business school leaders to confront the disgrace of business leadership through the economic crisis, Martin is also a big football fan, and draws provocative lessons from his enthusiasm for the sport.” - CBS News Named the Best Management Book of 2011 by strategy+business magazine “Fixing the Game is a passionate, timely, and incisive look at how today’s capitalist system, with its commitment to shareholder value, is leading to bubbles and crashes. He presents some tough-minded solutions.” – The Globe and Mail “American capitalism h
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