By Charles Handy

Harvard Business School x 303pp x $22.50

If you're an investor, an employee of a public corporation, or a top executive, you've heard the phrase "shareholder wealth creation" countless times. You can hardly read an annual report anymore without coming across it. Boards of directors, newly sensitive to shareholders' concerns, have helped make it the mantra of modern management. Companies exist to produce profits for their investors. Period.

Entrepreneurs who have challenged this notion--from Ben and Jerry to the Body Shop's Anita Roddick--are often celebrated by the media and public. But many in the business Establishment privately consider them eccentrics.

Those same people may well view Charles Handy, author of The Age of Paradox and something of a New Age business philosopher, as a flake, too. Calculator-carrying MBAs and hard-headed managers are likely to dismiss his newest ruminations on capitalism as leftist fluff. But the idealistic message that runs through his book deserves a wide audience. The immediate interests of shareholders, Handy asserts, have assumed too much importance. They must be balanced with the interests of other stakeholders: employees, customers, suppliers, and the community at large.

Handy's insightful comments on the future of the corporation and the people inside it helped win a large following for his previous book, The Age of Unreason. A key aim of the earlier work was to help working people accept and cope with a new reality: that jobs are becoming harder to get and keep, and thus conventional, steadily ascending career paths are disappearing, as heightened competition causes more companies to turn to temporary contract employees, offshore manufacturing, and outsourcing.

Handy, a visiting professor at London Business School, sounds the same note in this worthy if sometimes disjointed sequel. "Instead of being a castle, a home for life for its defenders, an organization will be more like an apartment block, an association of temporary residents gathered together for mutual convenience," he writes.

As before, Handy's overarching theme is that we live in a time of change and confusion. To illustrate this, he identifies and explores what he calls nine "paradoxes of mature economies." The Paradox of Productivity, for example, is that higher productivity doesn't necessarily lead to job creation. And in what Handy calls the Paradox of Aging, he notes that every generation perceives itself as unique, yet plans as if its successor generation will be the same.

"Paradox does not have to be resolved," writes Handy, "only managed." So, having set forth his paradoxes, he tackles them with a blend of helpful anecdotes, pointers, quotes from philosophers and statesmen, and frameworks for viewing the future.

Most resonant is Handy's discussion of the Paradox of Intelligence. Contemporary managers, he observes, generally say people make the difference--that intelligence is a kind of asset, more valuable than such traditional sources of wealth as raw resources, land, money, or technology. How, then, can public corporations, especially those that are profitable and healthy, lay off thousands of employees, even as their CEOs routinely declare that employees are their most important assets?

Handy urges business to go beyond measuring success and failure in terms of balance sheets. Executives, he says, should track the "intellectual assets" of their companies, the value of satisfying customers, employee training and morale, and the company's investments in the environment and the community. Then, they should compare their companies' performance on these measures with that of other companies. "Counting it makes it visible," he writes, "and counting it makes it count."

The Age of Paradox is a joy to read, mainly because of Handy's spare, elegant prose. But some of his arguments go over the edge. One example: He suggests that public companies should be run as "self-governing communities." Their shareholders should treat their investments as if they were loans similar to mortgages, intervening managerially only if the business reneges on its payments--a share of the company's income stream. This proposal calls to mind cooperatives and employee-owned businesses, neither of which can claim much of a track record for success.

Still, much of what Handy says will ring true to those who regret that profit and efficiency have won the day over commitment and compassion. As he puts it: "We were not destined to be empty raincoats, nameless numbers on a payroll.... If that is to be its price, economic progress is an empty promise." As a CEO in the rough-and-tumble world of 1990s capitalism, Charles Handy would fail miserably. A Jack Welch wannabe, he isn't. But as a business philosopher, he excels at analyzing and challenging conventional wisdom.

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