Optimism may sound misplaced given that Britain is embarking on an age of austerity. But Jeremy Darroch FRSA believes that the private sector can come to be seen as a positive force.
Enduring recovery will only come through commercial investment and a positive environment for wealth creation. It is private enterprise that will create jobs and generate the tax revenues that pay for schools, hospitals and other public services. Private companies will also provide and maintain the hi-tech infrastructure essential to the growth of a successful, modern economy. And private capital will develop the innovations to stimulate consumer demand.
The economic crisis has also given oxygen to a debate not just around what government does, but what it does not do. Many companies already reach beyond the traditional boundaries of their business models; for example, to tackle climate change or encourage healthier lifestyles, such as our own Sky Ride initiative to promote cycling.
So, the squeeze on state spending provides a chance to rebalance economic activity in this country and, as the state withdraws, there is an opportunity for the private sector to prove its value by extending its broader contribution even further. But for too long business has been the bogeyman. It has become accepted wisdom in some quarters that companies are driven only by greed and the ruthless pursuit of profit, caring little for the customers and communities that sustain them.
The financial crisis reinforced this view. Indeed, research taken two years on from the demise of Lehman Brothers suggests that the reputation of private companies remains ugly. Top of the head associations with large firms included ‘greedy’, ‘corrupt’, ‘crooks’ and ‘liars’. This widespread mistrust that has taken root weakens the loyalty of customers and staff. Over the long term it limits the opportunity for private enterprise to flourish and reach its full potential.
So, while the government is engaged in wiping out the budget deficit, the private sector must overcome a ‘trust deficit,’ because the suspicion it feeds is in danger of hobbling business. We urgently need to do something about it. But if we’re going to turn around the perception of private enterprise in this country, then business needs to undergo a significant culture shift.
First, we need to understand that we have to start selling ourselves. Not as individual companies with products or services to offer, but as the private sector making a vital economic and social contribution. We need to set about rebuilding trust in private enterprise and to market that brand. Too often the rhetoric from business people is like the old Millwall refrain: ‘No One Likes Us, We Don’t Care’. It’s time to start engaging in the debate and singing the praises of private enterprise.
Second, we need to acknowledge the damage caused by a historic addiction to short-termism and a fixation on quick returns. Business leaders, investors and entrepreneurs have to switch focus to the long term. To build companies that invest to create sustainable value, continually evolve and innovate in response to the demands of customers, and build trust by making a broader contribution to society.
This is the tougher challenge since it requires a major reappraisal from businesses themselves and those who invest in them. But there are significant commercial incentives from a more long-term approach, with substantial rewards for those who seize the initiative.
For businesses it will mean more customers: who stay with you for longer, spend more, and recommend you; attracting, retaining and motivating the best talent; and reducing exposure to volatile energy markets. For investors who liberate executives from the demands of instant rewards at the expense of greater returns over the long term, it will mean sustained and stable growth that maximises the potential of the investment.
Just think of the pensions time bomb. Don’t we all wish that twenty years ago people had taken steps to address the unaffordable liabilities building up, rather than two decades of inaction and today’s very real crisis? By adopting a sustainable approach now, therefore, companies can in my view put themselves in a much stronger position for years to come. We may not all be around to enjoy the full benefits, but our successors will be very glad we took it.
Times are tough and I certainly don’t underestimate the challenges facing every business in Britain. Budgets are tight and spending in the boardroom and the home scrutinised intently. But helping to lead the economy back into growth; having business recognised for its broader contribution to society; and conquering the trust deficit with a new, sustainable approach, will establish and entrench a pro-enterprise culture in Britain. That’s what makes this an age of opportunity.
Jeremy Darroch is Chief Executive of BSkyB