“Mayer is a believer. Despite the great gobs of gloom he dispenses about some aspects of the global corporate economy, his book is a resounding paean and radical road map towards a bright future for the corporation and capitalism. Companies — the name derives from the Latin cum panis, implying to break bread together — were a brilliantly conceived and powerful vehicle for prosperity, and are now potentially “our saviour and source of social as well as economic wellbeing”.
Prosperity, the new book by Colin Mayer, is a path to better business. As former dean of Oxford university’s Saïd Business School, and now the driving force behind the Royal Academy’s Future of the Corporation Initiative, Mayer has long seen the writing on the wall for corporate solipsism, and Prosperity makes a powerful case for ‘the border between creation and cataclysm’ upon which we now stand.
As I argued this month, 2019 will be a year of great change for the role of business in the world, and the opportunity and obligation it now has to step forward as a force for good – reinstating the ideal of corporate purpose that means more than today’s cynical exercises in ‘purpose’-led branding.
But before this step change can occur, as Mayer writes, businesses must once again become long-term organisms: structured to support ‘stable ownership, board accountability and social purpose’ to anchor a socially beneficial legacy over short-term shareholder pay-outs. He rightly cites the foundations that ensure this in businesses like Tata, Bosch and Carlsberg, but other methods can provoke the necessary systemic change.
When I co-founded B Lab UK, the UK branch of Benefit or B-Corporation movement leading the way for sustainable business accreditation, our mission was to bring exactly these mechanisms of long-term change to British business. Mayer’s ‘embarrassingly simple’ solution to our current quandary is to enshrine purpose statements in articles of association, making them a ‘commitment device’, and not a set of imposed rules, for every business. Benefit Company law, now enshrined in the US and under review in the UK, explicitly builds a holistic stakeholder focus into business from the ground up. It gives leaders permission to move from shareholder-hostage to the freedom and duty to also operate for employees, communities and the environment. Another model, from my work as part of the G8 Social Impact Investment Taskforce, is equally simple, if the will is there: Intent, Duties, and Reporting. Intent to achieve social impact, a duty to strive to achieve that impact, and reporting to demonstrate the impact created. But they hang in delicate balance. Intent will only ever be fleeting without the structures to deliver it, and effective measurement and reporting to sustain it.
Purpose is not rocket science, and it is not intangible. As B-corps accreditation makes plain, corporate purpose exists in the how, not the why. By using a stated purpose as the holistic lens by which to explore systems, processes and ways of working, it’s often clear what must be done. But as we know too well, even charitable or governmental organisations – which must have a purpose clearly enshrined and exist solely to deliver it – veer off course when this connected view is not taken.
I’ve conducted purpose-led reviews and interventions for The Royal Albert Hall, the Big Lottery Fund and the BBC. In each case, the necessary actions were clear once the ‘commitment device’ of purpose was fully examined. The Royal Albert Hall had ceased to live its purpose when soaring costs ensured only the wealthy few could enjoy the culture it provided. The education and outreach programme that resulted has now welcomes thousands of London’s most deprived children. The Big Lottery Fund – suffering, like all QUANGOS from poor oversight and complexity – had ceased to live its purpose with extravagant percentage-based costs, which saw it take 7% of the Lottery funds annually regardless of actual need – at the direct cost of the charities it exists to distribute funds to. The BBC was struggling to measure and communicate how it delivered its purpose, during another bitter row about funding. Under my tenure as Trustee for England, the BBC released its first purpose-led report, which restructured its traditional modes of measurement to provide a coherent framework for ‘Delivering our Purposes’. We cannot treasure what we do not measure. Now, at Time Partners, the mission continues in the form of our own purpose: to build better, more purposeful businesses.