Should we think about Business differently?
Published on 05.11.2019
Firstly, let’s look at the historical development of business and its early principles.
The word ‘business’ or even ‘company’ has a much briefer history than words like ‘community’ or ‘family’. Initially, life operated at a family level and then along came trade. By around the Middle Ages in Britain – companies were formed which specialised in trades: making shoes, smelting metals, baking bread. Their purpose was to sustain the families and crafts of those who shared the endeavours – including earning money, training apprentices and defining standards; and the Guilds were established to assess both youngsters’ skills and product quality.
The development of business models in the UK from the 17th and 18th Centuries in particular emphasized how business ownership fitted into the class structure, especially their relationship to the aristocracy, and the desire to use their wealth to purchase landed estates, to be in control of these estates and pass down their wealth through titles. In the USA they had their own challenges with the development of the ‘Robber Barons’ in the 1830’s and 40’s with great exploitative industrialists developing around the unregulated frontier towns and railways.
Since the the Industrial Revolution the UK has taken multiple steps to focus on business purpose, of which 3 are demonstrative. Firstly, in a series of Companies Acts, we have defined the accountability of directors as being primarily to their shareholders. (Technically the 2012 Act enshrined a broader conception of ‘stakeholders’, but it is very limited).
Secondly, the world of business accountability – held by the Guilds with their strong church connections – has been largely ceded to the accountancy institutions which have specified, ever more carefully, the definition of profit. Thus, the annual results of a business – comprising thousands of people and hundreds of products – are frequently reduced to a single sentence about the profit earned. What about its myriad impacts on customers’ health, or the jobs of staff, or justice in suppliers’ businesses, or the shared environment? What about relationships and reputations? No, only the impact on shareholders really counts.
This, thirdly, has a major impact on the managers and directors of a business. When a business is considering its strategy – and this applies to almost any decision – you can be certain that a decisive aspect is the financial consequences. This has become so accepted as to be uncontroversial. The law now reverses this trend: it is within living memory that employee safety has become a requirement of every business: The Health & Safety at Work Act became law as recently as 1974.
The consequence of these steps is that businesses today – whatever other goals are paraded before us – are run with a single primary objective: profit. In terms on nations we think in terms of GDP. This is a very limited understanding of business purpose compared to our forebears, and it leaves many in the workplace today feeling over-focused on making money and under-excited about their work.
Yet increasingly, business leaders and even some governments ( Scotland, Iceland & New Zealand – Wellbeing Economy Alliance ) are reviewing this situation and considering alternatives.
What does re-thinking business look like?
Re-thinking business begins by re-visiting purpose. Business is about using the resources of the world and the skills of its people to provide a product or service people need and will willingly pay for. It’s about serving people.
So, at its best, business isn’t primarily about profit, but service. It’s not about my benefit but the common good and the community it serves. We need to renew and re-equip the language of accountability, and challenge the goals of businesses and their people: what, for example, comprises real wealth and true happiness, and how are you helping to provide it? We need to investigate the impacts of our production and consumption in a non-defensive, open manner, which enables truth to emerge and people to be encouraged to use their skills to create, innovate and serve, enabling better outcomes for everyone – including the business itself.
This frees people to identify the most important goals, not just the most profitable goals; it encourages engagement in the broader outcomes, not just the money; and so it creates a more sustainable, fun and satisfying workplace, which is more diverse and altogether richer even if accountants find it harder to measure.
This is being practised by many businesses, often the newer ones with younger people. Think of Patagonia, or Ben & Jerry’s, or Innocent Drinks. I spoke with an ex-Director at Unilever who talked about the renewed enjoyment of work for her new team when the goals were broadened from being solely profit-oriented – product cost reduction and market share increase – to life-oriented: developing recyclable packaging, treatable wastewater and improved customer health. As a result, she has developed a new business foundation to support this goal in all businesses. Maybe I should delay my retirement and recovered a love for work?
The simple truth of business is this: it is the only sustainable way of helping people out of poverty and serving most of their basic needs; yet it is the unsustainable, inhuman and greedy face of business which deters people from pursuing careers there.
Interested in this subject it is worth looking at this www.wellbeingeconomy.org/
Thanks to Rev R. Stanier for information on early development of guilds.
Also worth looking at www.rebootthefuture.org/
Text: Francer Chesterman