The Great Transition: What it means for businessesDecember 5, 2010
Those who have been following me on this blog will know that I believe that we are in a period of significant transition as economic power shifts from West to East, as technology changes our expectations and opens up new opportunities, as we acknowledge that there are many intractable social problems that state action alone cannot solve, and above all as our population ages, making it harder to maintain the same approach to running our society as before as baby boomers start to retire on masse. This change, combined with the need to reduce our deficit (or at least not to keep increasing our annual spend exponentially), has implications for local authorities and the voluntary and community sector, who will have significant opportunities and freedoms in the medium term, but will face challenges over the coming 12-18 months in terms of transition.
But what about business? Well, the Prime Minister has set out a vision which gives us some clues. The role of business in this transition, and how it can itself transition, has three elements:
The first is to (continue) to be responsible. In exchange for government seeking to provide an operating environment over the longer term of economic stability, lower taxation, and less red tape, business is offered a deal in which by taking responsibility, demand is reduced for public services from social breakdown and injustice, which provides the means for government in turn to provide the enabling environment that business needs. So business is being invited to continue to treat its employees fairly, pay them well, adhere to the law, treat suppliers fairly and pay them promptly, not exploit workers or customers alike, not abuse market power or position – all the things that all businesses should do. But business is also encouraged to look at how it can at times knowingly or unknowingly harm social as well as environment capital, accelerating social breakdown perhaps through its approach to local planning, supply chains, and hiring, or not being a long-term investor in people and places. On Thursday, business was asked to do more, which is to take part in Every Business Commits, a movement of businesses who take on board voluntarily priorities outlined by government. Every Business Commits has five voluntary pledges that business can sign up for around which government will pledge to work in a coordinated way so the asks of business becomes less confusing:
Reduce carbon and protect the environment
Improve skills and create jobs
Support your community
Improve quality of life and well-being
Support small and medium sized enterprises
The second way that business can help, particularly in these difficult times, is to support the efforts of local government bodies such as local authorities, and particularly voluntary and community organisations – especially small front-line ones which it is harder for government to support (for example through its Transition Fund) – with the fundraising, marketing, HR/volunteer management, governance, and financial skills support they will need, as well as any other resources such as access to space and funds that they might be able to provide locally harnessing the generosity of customers and employees. As part of this, an initiative has been launched as a collaboration between government and businesses, called the Business Connectors programme. Further details will follow in the coming months, but the programme builds on existing highly successful models in many businesses around the country in which staff locally (such as a store manager) are seconded or freed up to help identify needs in communities that local businesses could help with, and broker in the relevant skills, finances, and other assets that are needed that business could provide, harnessing online and offline tools, and coordinating with local stakeholders such as local government and local representatives of civil society. Where it has been operating it can be a great way to help streamline and make less confusing cooperation between business and communities, avoid duplication, and help businesses and their employees do more and to be more effective in their philanthropy, volunteering, and (social) investment support. An area that will need to be thought through in particular is how to support communities which lack a significant business presence, particularly in deprived areas where a more national/local approach may be needed.
Over the medium term, harnessing the creativity and resources from businesses, together with the public and voluntary sectors, this kind of collaboration could help tackle some of the challenges around unlocking the capacity and hidden wealth of citizens – their time, finances, and leadership.
The third and final way is by empowering citizens through their own business models, supporting them to take more control over their lives. This could be by pursuing opportunities to provide public services in more responsive and effective ways than government alone. Or it could be through the products they make that create genuine social benefit and lower the costs for citizens to access services that improve their lives. Or it could be by harnessing citizens’ own energy to put them more in charge of a customer experience – whether through models such as we find on the internet (we essentially volunteer every day for Spotify or Apple, to create our own experiences of music and share knowledge and entertainment with our friends – also known as collaborative consumption) or for example through the People’s Supermarket, where customers help volunteer to stack shelves and get really affordable organic food as a consequence. Such business hybrids, social businesses, time-credit based businesses and social enterprises, citizen franchises, and freemium models represent in my view the cutting edge of business today, and stand alongside more traditional forms of businesses such as mutuals, cooperatives, and employee-owned trusts and partnerships by blurring the distinction between value created for the business, and value created for individual customers, and value created for communities. In effect they can offer when well-designed a win-win-win for all concerned.
As is often the case with transition, there will be many challenges and barriers to overcome; less red tape around volunteering to enable employees to more quickly get involved in communities whilst still protecting children and health generally; a less onerous approach from the competition authorities when businesses collaborate to improve their communities; and reforming the benefits system to make it more possible for businesses to employ on a casual and part-time basis people who are on job-seekers’ allowance so they can gain experience.
But the good news is that businesses are up for the challenge. 77% of business leaders participating in the report survey say they could do more to scale up strategic support for communities across their business, while 80% feel they could do more to engage other businesses to scale up their support. The benefits businesses most feel they get from being engaged are in terms of employee motivation and the ability to draw in more employees from excluded backgrounds, the ability to build sustainable communities (and in turn sustainable businesses and revenues), and in terms of brand and local relationships.