What Leaders Can Learn From 50 Years Of Economic Insight

Forbes

30-05-2025

Almost everything we think we know about business is wrong. So argues Sir John Kay, one of Britain's most incisive economic thinkers. His latest book, The Corporation in the 21st Century, is a treasure trove of insights for leaders seeking to navigate volatility and uncertainty in today's markets.
I recently had the privilege of participating in a conversation with Sir John Kay hosted by the University of Oxford's Kellogg College and Skoll Centre. Professor Joshua Getzler, Visiting Fellow Suzanne Schneider, and Professor Jonathan Michie OBE joined in the discussion of Kay's analysis of the transformation of business over the last half-century. His is a call to rethink not only what business is, but how we talk about it.
Kay's reflections are both timeless and acutely relevant. What can today's leaders learn from his work? I offer three key takeaways.
Kay reminds us that the dominant time horizons in business today – quarterly earnings, rapid investor turnover, short CEO tenures – are fundamentally at odds with the time horizons required to build the industries of the future. Supply chain resilience, energy security, and food security are but a few examples of the multi-generational challenges leading global businesses must solve to stay relevant. And yet, short-term incentives and flimsy governance mechanisms for long-term commitment continue to hamstring even the most forward-thinking companies.
Part of the reason for this, Kay observes, is that corporate ownership has fundamentally shifted. Citing examples from airlines to Amazon, Kay points out that today's largest firms own little of the capital they deploy. Rather, capital is treated as a service, rendering the very concept of 'owning' a means of production outdated. This creates a fundamental mismatch between the investment horizons of businesses and the timelines on which the industries of the future depend. Kay's idea is this: If we are to build businesses that are truly resilient and trustworthy, we must reorient corporate governance around long-term value creation.
In what I found to be the book's most compelling chapter, Ambiguity Is a Feature, Not a Bug, Kay addresses what he calls the need for 'moral imagination' in modern business. His comments call to mind the work of Elizabeth Anscombe, one of Oxford's most celebrated female philosophers, who argued, 'Our moral imagination is the ability to conjure what lies beyond our direct experience'. This is Kay's call to action for leaders: from scrupulously researched historical examples, he builds a compelling argument that stakeholders are not mere inputs to be managed, but ends in themselves. This reframes the conversation, inviting leaders to move from transactional to relational approaches to strategy.
Rather than reducing debate to the tired binary of shareholder versus stakeholder capitalism, Kay invites us to ask a deeper question: 'How can a corporation create value in a way that is durable because it is mutual?' His conclusion is simple but profound: 'If the corporation is to flourish, it must contribute to the flourishing of the society in which it operates.'
This is not sanctimonious. It is systems thinking, and it is smart.
Perhaps Kay's most lasting legacy will be his insistence that today's business language – the metaphors, models, and assumptions leaders use daily – are anachronistic. The language of principal-agent, of command and control, of the firm as a machine – these no longer describe business well, if they ever did. In today's business landscape, they obscure as much as they explain.
This matters because language shapes imagination. Imagination shapes action and innovation. If we want to build institutions that are fit for this century and the next, we must begin by speaking differently about what they are for and whom they serve. Kay's book is not merely a critique. It is an invitation to imagine better.
In a time when the word 'capitalism' itself is often deployed as a rhetorical device rather than an analytical term, Kay calls for precision. His critique—that 'capitalism' means wildly different things in different contexts—is not pedantic. It is a vital insight. From the deregulated markets of the late 20th century to today's state-led capitalism to data-driven global economic giants, the realities of 'capitalism' differ starkly. So too should our analysis.
Business has fundamentally changed since the last century. Remarkably, most of the vocabulary we use to describe it has not. And that, Kay argues, may be our greatest liability. Leaders must grapple with meaning. Today's leadership challenge is to build businesses that are not only efficient and competitive in the short term, but credible, trustworthy, and resilient over time. Sir John Kay's work is a masterclass in how to begin.