Can Companies Practice Customer Capitalism during Covid-19?

This article originally appeard on LinkedIn.

I have been writing about the growing dissatisfaction with traditional capitalism and the focus on balancing investor interests with those of customers, employees, communities, and a sustainable environment, among others.

A series of news pieces have hit my inbox recently that have me further reflecting on this topic. In a Wall Street Journal piece, "How’s the CEO ‘Stakeholder Pledge’ Working Out? Depends Who You Ask," John Stoll looks at the Business Roundtable pledge that 181 CEOs signed last year. In it, they agreed to prioritize customers, employees, suppliers and their communities, along with shareholders.

The pandemic has had an impact, but this kind of shift was always going to be a complicated undertaking. Progress will sometimes be halting. While I think companies absolutely benefit from focusing on customers, I must admit I’m a bit skeptical about broad stakeholderism as the next step in the evolution of capitalism. A myopic focus on shareholders won’t work, but neither can organizations run in five directions all at once.

Also making headlines is Apple, a company I’ve often cited as an example of healthy customer obsession. Its stock has taken a breathtaking climb, leading to a $2 trillion valuation (see "Apple Reaches $2 Trillion, Punctuating Big Tech’s Grip" by Jack Nicas in the New York Times). Of course, this record is heavily influenced by Covid-19 stock market dynamics, but what especially caught my attention was a quote from Apple CEO Tim Cook:

“We are focused on growing the pie, making sure our success isn’t just our success and that everything we make, build or do is geared toward creating opportunities for others.”

Cook has previously declared that market cap and stock returns are not the most important measures of success, that customers and innovation drive everything they do at the company. Apple’s recent revenue disagreement with the maker of the popular Fortnite game aside, Cook maintains that the company tries to keep the playing field even and transparent. By making it attractive for lots of developers and suppliers to build successful businesses, the company has created a sustainable community of contributors, to customers’ delight.

You might argue that a company as profitable as Apple could earn points with customers by cutting prices, and with app developers by cutting its revenue split. But Cook seems to be pursuing a different path to happy customers, one focused on innovation, safeguarding personal data and providing outstanding customer experiences. I would argue he’s practicing a particularly sophisticated brand of customer capitalism, one resulting in a lot of happy shareholders.


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