Fixing The Game

Fixing the Game: Bubbles, Crashes and what Capitalism Can Learn From the NFL is a book published in May 2011 by Roger Martin, a professor at the University of Toronto's Rotman School of Management. The book describes our current economic system's short term focus and emphasis on expectations instead of reality. Martin outlines the structural problems that this creates and describes how best to fix them.
Book Summary
Martin cites the need for reform after our three recent crises in corporate management (the early 2000s tech bubble, the mid 2000s option back dating scandal, and the 2008 financial crisis). He argues that we have not taken adequate measures, and still tie much of our economic growth to the expectations market versus real growth. He uses the analogy of the National Football League and compares the point spread market to the stock market, discussing the implications if the NFL began to cater to gamblers expectations rather than creating a product for their fans. He draws the comparisons of this hypothetical approach to our current economic model and its relation with the stock market, arguing that we are in need of economic realignment and a shift in overall perspective.
Martin posits several changes that we could start to implement that would drastically improve our economic structure: (1) shifting the focus of companies back to the customer - real performance for those customers - rather than on increasing shareholder value, (2) rethinking stock compensation, ideally eliminating it, and changing executives focus from continuously reaching expectations to focusing on long term real value, (3) changing board governance to make it a form of public service, rather than a way to realize personal gain, (4) effectively regulating and managing market players in the expectation market, especially those that create no value for society, most notably hedge funds, (5) encouraging business executives to take a broader view of how their enterprise can contribute to society.
Reaction
"Fixing the Game" is the most provocative or Martin's books. It heavily criticizes certain aspects of the economy and attempts to solve some of the world's broader problems. Many reviews have praised Martin for tackling issues of misaligned incentives and a runaway corporate sector. As cited in the New York Times review, his approach contrasts with more market oriented and libertarian thinkers such as Tyler Cowen or historical figures like Friedrich Hayek.
He has been drawn to the forefront of much of the discussion going on about how to combat our current economic difficulties and how best to combat the misalignment of incentives.
See Also
*Roger Martin
*The Design of Business
*The Opposable Mind

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