I became aware of the ‘inclusive growth’ debate through my newly acquired fellowship of the RSA. I see inclusive growth as an encapsulating framework that can enable the aspirations of my business model; as well the focus on policy changes that, I believe, are necessary to foster a move to a post-capitalist, purpose led form of business entity.
Now while there is a wealth of discussion on the policy decisions that are necessary, the one question that really needs addressing is how the overworked business leader can begin the transition towards an inclusive growth model.
What they need is the ‘how to’ guide. So let’s consider an approach.
The EU referendum felt somewhat surreal, having returned from New Zealand to the UK with a purpose-led business model that, by coincidence, offers what I believe is a solution to some of the perceived causes of ‘Brexit’.
The failure of trickle down can be ascribed to the enshrinement of the maximisation of shareholder wealth as the fiduciary responsibility of a director: the investment risk taken by a shareholder is of more value than the employment risk taken by a solo parent.
This is the fundamental structure of capitalism, as it stands, and the governance legislation that is perpetuating a broken model. There is no intrinsic, or extrinsic benefit, in moving from the existing model, and giving up wealth maximisation as a goal.
That people feel like they are no more than assets of the organisation, treated as if they are ‘human resources’ (how apt a title?) to be managed, despite the decades old rallying cry that ‘people are our most important asset’.
So there are two fundamental changes that need to happen:
1. A legislative framework that incentivises the use of an better, purpose-led model of business, and
2. That model of business, where purpose supplants profit as the business objective, has to be easily achievable.
While there is adequate focus on how central and local government can move the inclusive debate forward, we need to begin the encouragement of businesses that are purpose led. I believe that a major inhibitor is a practical method of articulating what ‘purpose’ means and translating it into action, and results.
Since returning from New Zealand I have tried to confront this challenge in the gestation of a purpose-led, for-profit enterprise called BizHealthCheck and have developed a framework that translates our purpose into a meaningful agenda for each stakeholder group.
If we can subjugate profit to purpose, we can begin to treat our stakeholders equitably, and that means we can begin to work out what our purpose means for each group.
Community and society benefit from business being purpose-led.
Word of mouth generates demand. Returns to the shareholder can be at least equal than if the organisation were profit-led.
That’s the process. What we need is to help business leaders to step through the change to being purpose-led, and to provide them with the tangible incentives to do so.