Regular reader(s) of this blog will know that I find work fascinating. Like Jerome K Jerome, I can look at it for hours. And for a while I’ve been interested in how we organise ourselves to jointly create (*) goods and services that provide a value for society. It has always seemed to me that, given the opportunity, in most cases we would never reinvent businesses the way they are now. They seem to have become primarily concerned with keeping people occupied rather than productive, and creating wealth for shareholders rather than society at large. I always thought that it would be a useful exercise to hit the pause button and start again. Well, now I’m not so sure.
The contract between society and wealth-creating companies has become stretched. Society sees the egregious behaviours and extraordinary rewards of the minority and tars the majority with the same brush. Productivity continues to decline, in-work poverty increases, investment stagnates, and share buy-backs remain in fashion. Meanwhile, the world has moved on. Mega trends affecting the business environment, and making VUCA real, include the growing impact of technology, big data, automation, AI, globalisation, an ageing population, and, of course, sustainability and the eco-environment. Societal trends include Millennials, with their very different mindsets and values, the growing gap between rich and poor, and the rise of both populism and nationalism. (The last three social trends have, arguably, led to Brexit and Trump. One lesson for business is that they need to deal with the dichotomy of creating wealth, on the one hand, and the broken society of left-behinds on the other.)
Forward-thinking businesses are looking at radical ways to address these issues. After all, no business has a right to exist in perpetuity; and all need to run fast to remain relevant. And so some are looking at replacing hierarchy and bureaucracy with holocracy and even adhocracy. Flexible and agile are seen as good ways to encourage creativity, collaboration, partnerships, and new ways of working. Rigidity and process don’t work so well in the gig economy. Risk and reward needs to be recalibrated. Jobs for life morphed into five jobs in a lifetime. Now it’s five jobs at the same time.
And so I’ve come to believe that rather than it being time to hit pause, it’s actually time to hit the accelerator. If business doesn’t change for the better – that is, become more productive, relevant, socially-focused, and cognisant of the change around it – then change will be forced upon it. Frankly, I’ve never felt that being told what to do leads to the right behaviours. Certainly I feel that is the case with government. For me, the role of government is to create the environment in which all in society, including business, can flourish. Mandating change through evermore punitive legislation seems to me heavy-handed. And so business needs to be supported in making change real. It needs to challenge itself on how it can contribute effectively to society and everyone in the community rather than focus on a narrow band of shareholders. It needs to be honest with itself about how effective its oversight and governance is. I have always felt the focus of boards on risk, audit and financial performance has been too narrow. As a result, NEDs have traditionally been appointed from a narrow pool of people with plc and audit experience. This circular firing squad has led to an arms race in executive pay and the exclusion of faces around the board table with valuable leadership insights from other sectors of society. Some say that it is essential that NEDs have audit and business experience; in response, others would reply pointing out how that didn’t stop the banking crisis. Not only did NEDs, let alone the executives, not understand the implications of some of the financial instruments that had been created but few probed the real behaviours and culture within the organisations that they purported to lead.
So how can we best support businesses to be a force for good? For me the story goes back 20 years to when I first became a Fellow of the RSA. For it was then and there that Tomorrow’s Company was born, helping to foster my interest in business change. It was and remains passionate about inspiring and enabling businesses to play a purposeful role in society. It is dynamic and radical and not afraid to push hard against both recalcitrant organisations or received wisdom. Tomorrow’s Company is not about providing palliative care for yesterday’s companies; it is about creating a vision of how best to create long-term sustainable wealth for all in society given the complex environment we live in. I’m now playing a small part in helping it fashion a future for business in society that it is more effective, equitable, and engaging. And as a result of all our combined efforts perhaps, as the great Dan Quayle said: “The future will be better tomorrow.”
(*) Yes, I know it’s a split infinitive; and yes, it is grammatically correct as opposed to being merely a Victorian fashion; and yes, English literature is littered with similar examples from our greatest writers.