Achieving a Healthy Balance Between Offense and Defense in 21st Century Capitalism

Harvard Business Review (HBR) / McKinsey M-Prize for Management Innovation: Long-Term Capitalism Challenge (April 2012)

7 Pages Posted: 12 Oct 2012

Date Written: April 26, 2012

Abstract

An old sporting aphorism states that "offense wins games, defense wins championships". The financial crisis clearly highlighted the imbalance that currently exists between offense and defense in the corporate mind-set. This imbalance is reflected in the unequal focus on bringing the dollar in through the front door (offense), and the focus on preventing the dollar from leaving through the back door (defense). Recent events indicate that short-term capitalism tends to focus disproportionately on the former, often neglecting the latter. Such a mind-set has resulted in excessive risk taking in search of short-term rewards at the expense of longer-term sustainability.

If capitalism in the 21st century is to deliver long-term sustainable value, it must achieve a healthy balance between offense and defense. Corporate strategy must therefore incorporate a balance between the two in order to arrive at a natural equilibrium. This will require a subtle blending of these antagonistic yet complimentary principles, which are inherently intertwined and mutually interdependent within a dynamic system. In essence, the principles of offense and defense represent two sides of the same coin, and therefore cannot and should not be addressed in isolation of one another.

Keywords: corporate, oversight, defense, defence, governance, risk, compliance, intelligence, security, resilience, controls, assurance

JEL Classification: G3, G30, G34, M14

Suggested Citation

Lyons, Sean, Achieving a Healthy Balance Between Offense and Defense in 21st Century Capitalism (April 26, 2012). Harvard Business Review (HBR) / McKinsey M-Prize for Management Innovation: Long-Term Capitalism Challenge (April 2012) , Available at SSRN: https://ssrn.com/abstract=2157182

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