Dear Reader, this article is a bit of a leftfield departure from my standrad innovation blog fare - but hey that's no bad thing for an innovation blog. This article gives my own jaundiced take on the current western economic context and for those of you who find this a bit political I can only apologise. Normal service on the why's and wherefore's of Innovation will recommence shortly. Have fun reading
It is now over 5 years since the western
economic machinery almost ground to a halt as a result of the entrepreneurial/cavalier/negligent/fraudulent
(choose your own adjective) activities that generated the credit crisis. Now, regardless of your choice of adjective,
you would had to have been living in a very isolated bubble not to grasp, that
when it comes to the conduct of business and the general public’s viewpoint on
it, the world has changed.
Prior to 2008 you could describe the
general public’s view on how big businesses operate as at best apathetic. For most people the economy was delivering,
house prices were rising, jobs were plentiful and savings were growing. There was a wonderfully/tragically naive
level of trust in big business as it simply got on with doing its thing. Little did we, the general public of the
western democracies, realise that the economic “good times” were only temporary
and that we would be paying heavily for them over the next decade or so.
However, after the initial shock of the
crash has faded, it is clear that the public has neither forgiven nor forgotten
the captains of industry as the strictures of austerity are felt across the
western economies. Far from it. Instead the public’s attitude has become
increasingly hardened and militant when it comes to the conduct of big business
and its leaders.
This hardening of heart towards big
business has been further fuelled by the continuing scandals that have battered
the ramparts of big business. Most
scandals can pretty much be reduced to a combination of the following headlines
– (Insert the correct adjective) Incompetent/greedy/fraudulent (Insert the
correct noun) fat cat/banker/boss (insert correct verb) steals
from/defrauds/rips-off (insert correct noun) customers/investors/public.
This diet of expose and scandal has only
been exacerbated by the simultaneous undermining and exposure of both the
politicians and media who are supposed to be the guardians of society who have
also been caught with their noses in the trough and the seemingly ineffective
activities of the multiple regulators.
Now whilst most citizens feel little or
no desire to go on an Occupy Wall Street demo or riot in the streets you only
need to do a quick vox pop to discover that the public is frustrated by/angry
at/loathing of those who appear to have profited from the crisis whilst others
have suffered. Nowhere is this more
obvious than in those businesses that the public consider to be vital to them
as they conduct their daily lives.
Specifically, located in the bullseye of public antipathy are the retail
banks, the utilities and the transport providers closely surrounded by the
supermarkets, public services and the oil companies with the communications
providers just a bit further adrift but still in range.
The public seems to have concluded that
just letting capitalism do its thing in these vital areas of societal infrastructure
is both highly risky and morally wrong, but how do you do it without getting
into a big unproductive mess of public ownership and a return to the
1970s. The beast of public opinion is hungry for
action but it seems only to be being served up an occasional soupcon of
schadenfreude by the regulators and courts and piecemeal tit bits and solutions
by the politicians who seem remarkably short on ideas but long on rhetoric.
Leaving aside the specifics it appears
that when it comes to the provision of the core societal infrastructure
services, what the public wants is to have well run industries that price
fairly, with a view to make enough money to both survive and reinvest into
their services but do not make “excessive” profits for their senior executives. In my opinion the public is now genuinely
interested in creating a framework within which a socially responsible business
could operate. Last week the Swiss
public voted against capping executive pay at 12 times the pay of the most
junior staff. Now, the fact that this
was even an option for a public vote is truly notable and an interesting sign
of the times.
So what would a true corporate social
responsibility agenda be about? Clearly
it has to be about more than the standard delivery of the raft of the good and
worthy charity related activities that drive employee engagement and positive
PR. Currently social responsibility is
a corporate nice to have not the overwhelming business philosophy that the
public are demanding. To my mind there
are a few key aspects that would both meet with public approval and deliver
reasonable economic outcomes for the western economies. These may feel very heavy handed and a tad “socialist”
but I sense that the public is only interested in having this layer of social
engineering sitting over its key infrastructural services not the entire
economy. Also, having worked extensively
with financial services clients over the last five years it is clear that many
are looking diligently to reinvent themselves and regain the trust of the
public but they struggle to persuade their senior management teams and
institutional shareholders that becoming a truly “responsible” corporate social
entity is in their own best interests – legislation is therefore required.
And what would be the constituent
elements of a publically acceptable yet business compatible set of legislation
that could be applied to those businesses that constitute our societal infrastructure? Here are 5 ideas as a starter, all other
ideas gratefully received. NB These are
all ideas that already exist and are applied by some businesses. I’ve just bundled them up and given them a
context.
1) Customer Stewardship. Ensuring that a company
actively supports their customers in the procuring, provision and usage of
their products or services – actively keeping the interests of those who rely on the products and services
at the heart of their business processes.
2) Tax Probity. Ensuring that all taxes are paid fairly and
fully in their country of origin. Not
doing deals to hide taxable money but openly and willingly contributing to the
country of operation by paying tax
3) Reward Sharing. Ensuring that the differential between the
remuneration packages of the most senior employees and the most junior
employees are within a defined ratio e.g. 1;12 as per the Swiss option
4) Long Term Management – Ensuring that any additional rewards (bonuses/pay-offs etc) are related
only to long-term positive outcomes for the business.
5) Infrastructural Reinvestment – Ensuring that a substantial proportion of the profits
generated are reinvested into long-term infrastructure projects to ensure the
effective long-term, low cost, assured delivery of the service for generations
to come
Of course this kind of radical
reengineering would be hated by the business world but the debate shouldn’t
hurt us. Look forward to hearing your
viewpoints.
