"Capital vs. Talent: The Battle That's Reshaping Business", Roger Martin -- Rotman School -- Lifelong Learning, May 30, 2003, 8:30 a.m.

Roger Martin, Dean, Rotman School of Management, U. of Toronto

These participant's notes were created in real-time during the meeting, based on the speaker's presentation(s) and comments from the audience. These should not be viewed as official transcripts of the meeting, but only as an interpretation by a single individual. Lapses, grammatical errors, and typing mistakes may not have been corrected. Questions about content should be directed to the originator. These notes have been contributed by David Ing (daviding@systemicbusiness.org) at the IBM Advanced Business Institute ( http://www.ibm.com/abi).


Financial Times: 5 years ago, U. of Toronto was in top 100, now top 10

Theme:  A tricky time of capitalism

Throughout history, a institution has picked up the responsibility of well-being and prosperity.

Argue that business has been thrust into the position.

Wrote Virtue Matrix


"Capital vs. Talent: The Battle That's Reshaping Business"

Article that Rogert Martin is publishing in July 2003 Harvard Business Review, so this is a preview

Meeting in 1978 -- George Lucas, Michael Eisner (Paramount), Barry Diller (Paramount)

Theodore Forstman -- fund

George Soros followed with the hedge fund

Kleiner Perkins venture capital

By 2000, 15 venture capitalists all on the top Forbes list.

IBM, Intel, etc., no students were showing up for campus interviews

1987:  Buffett invests in Solomon, Inc -- investment banking

1991:  Jeffrey Katzenburg (Disney Studios) leaked a note to Variety -- why do studios take all of the risk and put up the money, but the talent (writers, actors) get rich?

CEO compensation dropped between 1960 and 1980

What happened around 1980?

Second industrial revolutoin:  1900 to 1935

Labour collectivized and politicized:  1935 to 1960

Round three:  1981

Talent began to flex its muscles

Talent is now in its ascendency

Uniqueness:  will be difficult for generic labour.

Will be a miserable time for capital.

Capital will get hostile:  tired of passing through talent.

Think that labour will collectivize and politicize (again)

What strategies for capital?

Best businesses for capital have three characteristics:

e.g. Canadian retail banks are good for this; Canadian investment banks are bad for this

e.g. P&G is good; Loblaws is good -- Dick Currie earned a lot of money, but he was the only one

Capital has to watch for a run on the bank:

Owners of capital need to stay involved

Capital and talent will work together


Lucas with Eisner

Group together talent (e.g. George Lucas) and CEOs (who destroy capital by taking some).  Distinction?

In globalization, the ideas on the western world.  The lines are getting blurred.  Human capital is becoming available. Powers like China by 2020?

Said that capital could collectivize and politicize, as did talent.  What should talent do?

Talent and capital in marriage, in entrepreneurism.

Right now, an oversupply of capital.  Capital is available for a low price.  In certain sectors, IT services in less-developed countries.  Is this something that capitalists can leverage?

In the global economy, a lot of financial services impacted by IT. e.g. ING Direct.  Platforms threaten franchise.  Banks have huge capital bases.  Steady returns.  Necessity for talent management in stodgy business.


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