256: John Kay’s The Corporation in the 21st Century

Good morning good friends
 
/strategy
Last week’s letter introduced you to John Kay’s The Corporation in the 21st Century. It’s a sprawl of a book collecting thoughts, analysis and occasional scathing asides about how business has evolved and what we get wrong about it. It was both a New Statesman Book of the Year and a Financial Times Best Business Book of the Year in 2024. Kay promises a follow-up volume soon, one that connects this thinking to practical action. I look forward to seeing the circle closed.
 
At its heart is a critique— that we have fundamentally misunderstood the nature and purpose of business. Instead of recognizing firms as social institutions grounded in relationships, trust, and collective capabilities, we have come to see them primarily through the lens of financial abstraction—entities to be optimised for shareholder value, governed by contracts, and justified by metrics.
 
This shift, Kay argues, has led to a transactional, instrumentalist view of the firm that not only erodes the conditions for long-term success but also distorts the broader relationship between business and society. Profit-maximisation has become both the method and the goal, leaving little room for judgement, community, or purpose. Ultimately destroying the creativity and connection that powers entrepreneurial success.
 
Kay’s critique, whilst seemingly ideological, is based in a clear-eyed analysis of outcomes – both for individual businesses and society – achieved over the past fifty or so years. Time and again he shows how the narrow view of a business results in its ultimate failure (along the way he takes potshots and names executives and others who enriched themselves while everyone else – shareholders, employees, taxpayers, communities – were almost always losers).
 
I’m curious to see how his second book links the analysis to pragmatic action. For now, the strategy takeaway is this: businesses perform better when they give primacy to relationships and space for the not-knowing that leads to creativity.

It’s a simple, subtle, powerful point. Strategy, change management, transformation—these conversations often get mired in analysis, contracts, negotiations, benchmarking, and more. Kay’s work is a refreshing return to first principles: Are we building relationships? Are we making a meaningful difference to the people we serve? Are we creating or copying?
 
All the analysis means nothing without the principle.
 
//self
Our progress, Kay argues, is rooted in the accumulation and sharing of knowledge, transformed into practice by communities.  
 
Human performance improves not simply through individual effort, but through the power of collaboration.
 
He uses the story of 1924 Olympian Harold Abrahams and his coach Sam Mussabini to illustrate the point: “Mussabini could train Abrahams to win Olympic gold but could never have run the race himself; Abrahams could run faster than any man alive but had no understanding of sports mechanics.”
 
Their partnership exemplifies what Kay calls “the power of combinations of capabilities” — a dynamic that extends well beyond sport into every domain of collective achievement.
 
In his signature wry style, Kay observes “Runners’ times have also fallen because the pool of talent from which elite athletes are drawn has widened. The athletes against whom Abrahams competed in 1924 were white men who had received a university education in Britain or the United States. Strikingly, today most short-distance and extreme-distance champions are, respectively, of West African and East African descent. Inclusivity – which allowed people from diverse nationalities and social classes to compete for gold – together with sports engineering, the scientific analysis of the determinants of performance, nutritional advance and systematised training protocols, gave us sub-ten-second sprints and sub-two-hour marathons.”
 
Elite athletic performance today is faster because it is inclusive.
 
In Kay’s framing, excellence is never solitary. “Combining individual skills with more mundane complementary resources builds the distinctive capabilities of teams,” and these teams in turn shape the capabilities of organisations and societies. We succeed, in the end, not through isolated brilliance, but through the thoughtful choreography of shared endeavour.
 
It is an important reminder. Many of us drew on enormous personal resilience to achieve what we have achieved. Our self-reliance created opportunities that weren’t there. And still, we are more powerful, more effective, in collaboration.
 
When last did you ask for help?  
 
///soul
I loved the story “the enchanted car park”. It is about Parque Prado in Medellin – an urban architecture project with a twist.
 
When firm Connatural was briefed with reinventing a derelict parking area and abandoned houses, the obvious solution would have been to demolish and build a sculptural statement of some kind.
 
They followed a different path, breaking concrete to allow groundwater to seep and seeds to seed, simply aiding nature to take over the site. There are, of course, architectural elements but it is also a homage to what nature can achieve when we get out of the way (Here are some pics).  
 
Now, let’s be brave and see whether we can connect back to Kay.
 
He observes, “Both businesspeople and critics of business… exaggerate the benefits of size. The advantages of scale are technological and appear visible; the disadvantages are mostly human and less immediately apparent. If pricing power is not eroded by competition, as it usually is, regulation will generally follow. Large organisations develop entrenched interests which inhibit the development of collective intelligence and the adoption of new business methods and innovative products. We have Intel and Microsoft, not IBM, to thank for our laptop computers; Apple, not AT&T and Verizon, to thank for our smartphones; and Tesla, not General Motors, for pioneering electric and autonomous automobiles.”
 
The Parque Prado and Kay made me think about the ongoing evolution of the media sector.
 
There was a time when media meant community newspaper, local radio station, at most a city daily. Then, the deregulation of the late 70s and early 80s unleashed a wave of finance capital fueled consolidation and media-mammoths emerged. But then came the web, money moved, and many businesses died, their finance story of scale no longer making sense. Yet, the human desire for story, connection and knowing remains. And so, in the detritus of big media, all sorts of interesting businesses are emerging.
 
Two of my favourites are science magazine, Nautilus, and The Continent, a free weekly African-focused newsletter distributed on WhatsApp (declaration, co-founder Sipho Kings is a client).
 
The Continent offers spectacular photographic work – Malians engaged in annual re-plastering of the Great Mosque of Djenné, and city-specific series on Lagos, Napata, and Addis Ababa and more.
 
Even in abandoned parking lots—and abandoned sectors—there can be, and is, hope. It may not look the way we were told it should. But the subtitle of Kay’s book is “Why (Almost) Everything We’re Told About Business Is Wrong”—and that’s worth remembering as we build our world.
 
We have a choice. We have many choices. And they will likely look different from what we were told to expect.
 
And that, too, is a kind of freedom.
 
All the best
 
Karl
 
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PPS: Thank you to those who’ve reached out for introductory conversations. I look forward to meeting you in the next few weeks. My coaching practice is fully booked until October, but I’ll share an update here as soon as space becomes available.