A change of tack today. I am sure I have begun posts before by reminding folk that I am not a fan or corporations. However today I have advice for business. I often don’t say anything to people because whatever I am thinking simply seems too obvious, I later discover that the point I would have made was actually never considered by the person with whom I am speaking. It occurred to me today that the usual polemical debate going on between the two sides in this issue might be a sign that many people did not realise there is a middle path other than compromise. Most business owners are simply too busy working to give deeper consideration to the environment in which they operate. This is why there is a necessity for academics to have think tanks in which they address issues on economics, sociology, etc. Today I therefore offer the following advice to the corporations of the world, and in fact anyone else who wishes to find a gap in the market. If it is followed then the result should be profits, happy people, healthy world, and even a change in my opinions.
The main aim of modern business is to make profit. If it weren’t enough that this is the desire of the business owners and board it is also enshrined in law by the Companies Act. When making decisions there is a set of priorities to which the decision makers must adhere. When it comes to things that affect the environment and greater society there is little more than an optional footnote to consider. If that weren’t enough to upset people even customer satisfaction ranks well below profit.
Naturally this rule is very easy to enforce. People like profit. People like profit to such an extent that it even blinds some of them to avenues by which they might obtain more profit. Many of you will be aware of the psychology experiment where children were left alone in a room with a plate of sweets and the promise of being allowed two if they could resist the temptation to take one. For those who do not know this experiment there were two ways in which the children approached the task. Some of them distracted themselves, playing with toys or looking elsewhere. Others obsessed on the cakes, staring at them until they could no longer take the tension and had to have one. The ability to focus on other things turned out to be a valuable trait in later life. Being able to consider long term benefit over short term benefit helps many people in business and also in their personal finances; imagine where we would all be if we could not prepare for our old age. One of the theories put about concerning the demise of the Neanderthal was that it lacked our ability to think in the long term. It always feels necessary to obsess on the bottom line in business, but this is what stops one thinking ahead.
It is a constant complaint read in the business press that thinking in the short term is a continual source of trouble, from businesses being ill prepared for the future to the entire financial collapse. With larger businesses the fault is difficult to pinpoint as even when the managers care about the long term they have to balance this against a a multitude of smaller issues, the most obvious of which being that many of the little people can only make enough money to live a decent life if they throw away their ethics in pursuit of bonuses. When I worked in retail I lived in a culture of customer service where the company insisted we believe in making the customer happy and at their ease at all times. We also had to balance this against the company insisting we must always make more money and compete against other stores in an effort to achieve an unobtainable bonus that had the same chances of being won as the carbolic smoke ball company planned for their £100 reward. It didn’t matter how ethical the company was because we weren’t permitted the luxury of our own ethics. Nor did I believe the company’s ethics had been seriously developed.
The result was that our business did reasonably well but superficially skimming the web revealed that hundreds of people hated us, hated our stores, and even hated us approaching them. The reason this continues is all down to profit; until the enmity is reflected in the bottom line none of the directors will think to do anything about it. Unfortunately at that point the share price starts diving into a horrible spiral from which many companies fail to recover.
The profit motive itself can be damaging to further profit.
The biggest profits are those being made by banks and utilities, the two most hated types of organisation must be the same. A lot of people are moving to building societies to escape the first, entire towns are going solar to escape the second.
Goodwill can be difficult to get. Obtaining new customers is traditionally reckoned to cost about five times as much as retaining old customers. At present though we are in the middle of a worldwide, highly publicised financial crisis. In addition to this we are more connected than ever. People don’t even get out of bed before they have read the concerns of their friends and acquaintances. Many of those concerns are about greedy companies, greedy politicians, corporate mismanagement, environmental disaster, extinction, etc. Goodwill is rapidly ebbing, bad will is snowballing. Groups manage to gather hundreds and thousands of signatures on anti corporate petitions in a matter of hours. Perhaps these petitions aren’t as effective as the public are hoping, but how long will the public put up with that before upping their game.
This might all sound like bad news and negativity but many of the greatest entrepreneurs do not recognise such a thing as bad news, only untapped opportunity. When people turn away from one paradigm in droves, they turn towards another. Apple’s Tim Cooke recently told his shareholders that if they didn’t like Apple’s decisions then they had the option to sell their shares. This was reported as being in reaction to disgruntlement over maintaining environmental standards that were not reflected in profit. Tim said that Apple did not use profit as its main motivation. In my opinion he meant that Apple did not use short term profit as its main motivation. The respect he gained by making the statement will translate to future sales.
The only way to succeed in a competitive market is to stay one step ahead of the competition. This is easily done in the current business environment. Where there are a huge number of disgruntled customers the obvious course of action is to give them what they want. The big reveal is that this isn’t being done because companies don’t know what they want; worse, they think they do know. It is in general a race to the bottom in prices. In corporate philosophy this is the best method to ensure continually increasing profits. That is not what the people ultimately want though. Whilst it is easy to sell things when they are cheap and often things are horribly overpriced, there are other concerns about which people are bothered. The whole conspicuous consumption thing is built into us by our evolution but that does not mean it is beneficial for us in the modern world. Some trees will keep growing taller until they collapse under their own weight when they are put in an indoor environment. We will keep handing over cash for junk as long as it is at a good price because we have the built-in desire to consume and compete. We are as likely to destroy ourselves as the tree because our evolutionary urges use as little thought as the tree despite our ability to think.
We are only just beginning to think at a wider angle. We are only just beginning to focus in the long term. This is a great opportunity for business because a broad field is about to open in which the fallen behemoths of the corporate world will lie, destroyed by their inability to adapt with the same flexibility as their customers. When the public are unhappy then it is obvious their desires are not being met. Wherever businesses are thinking about how to protect their future they should realise that if they have something people want then they are going to be in demand. What people are now concerned about begins at the bottom of Maslow’s hierarchy of needs; their safety is paramount, they need a healthy environment to live in; their family is important, they need to leave a world for their children; their health is important, they are beginning to learn that so many substances developed in recent years are damaging to health; their egos are important; they don’t wish to see that they are on the bottom rung of the social hierarchy while a minority sit in extravagant luxury at the top. Ultimately their spiritual needs are of importance and these are not supplied by filling the world with Tarmac and burning the forests any more than any of their other needs.
If you think it is business as usual when the world is changing all around you and there is disgruntlement en masse then you are not going to be in business for long. If you learn to anticipate and recognise the turning of the tide before your competitors then you may be one of the heroes of the future world just as Henry Ford was one of the heroes of the past. I am not going to patronise anyone by describing in easy to follow steps how to start a business for the changing world; some businesses will succeed and some will fail, the same as it has always been. I just wish to point out that supply should meet demand and that the public is now demanding something that is being supplied by precious few entrepreneurs.