I was invited to present at Cisco Live in Barcelona at the start of the year, followed by Confex in London a few weeks later. The main thrust of my speech was mutuality, little did I know then the challenges that we now face as a society.
The financial shock, in 2008, was at the time a turning point for the global economy.
The way we had been doing things was too wild and had little thought for long term consequences. Thoughtful business people started talking with me about changing business attitudes. A key part of those conversations was that the contribution of businesses extended beyond their payroll, products, and taxes. We all saw that business needed to help society become a better place. 2008 showed how dominant and unacceptable business attitudes could be bad for business. However, when business helps society, those values of responsibility and mutuality augment better business practices.
Mutuality is about investing in our relationships.
In an interconnected world, business does not operate in a vacuum, on the contrary business profits from positive networking. I am putting forward here today how we can all improve our businesses, ourselves and the societies that we live and work in by following one simple route – I am going to show you what happens when we pursue this idea of mutuality.
Since my company started in 2011, it has been a slow, hard journey and I have learned a lot.
In the first few months of business, most people I spoke to could not see the benefits of a social contribution. So we listened to them and adjusted what we did. I remember the phone call I received at the end of 2011. We had our first client, an Investment Bank with 170 people who wanted to do a Charity Bike Build. There were only a few minor problems – we had no money, no equipment and no staff. So of course, I told our new soon to be client ‘Yes, we can do it!’ and after much work, we succeeded.
The group from that bank built 34 bikes, but their story did not finish that day. The bikes were donated to a youth club in East London in an area associated with a violent crime so bad that the locals called it the Murder Mile. The 34 bikes changed the range of activities offered by the Youth Club, which began organising cycle rides to the Olympic Stadium, and my client, the bank, then donated money to help them build a gym.
All that happened nine years ago. But the legacy of that first event is still ongoing. Since then, my company o3e and our clients have donated over £1 million of equipment and money to charitable causes, community projects and schools throughout the UK and Europe.
We have created all ability basketball clubs, wheelchair tennis clubs, well-being cycling clubs and installed beds for families with children in desperate need.
We have made specialist trikes that are helping people with brain injuries go cycling. This development enables their cognitive functions and is a vital step in getting to some kind of normality.
A lot of charities reach out to O3e in need, and we do our best to partner with businesses to offer them a solution.
I want to talk about how the future of business is changing yet again and how I see 2020 and the Covid 19 crisis being a pivotal time for our society and I want you to be part of that change too.
To explain what that change is I am going to tell you something that happened to me in my home town of Brighton. Brighton is an interesting place. We are a progressive City. We have the UK’s only Green MP and the UK’s largest LGBT community outside London. The only thing we do not tolerate is intolerance.
Similarly, there is another side to our city; according to the organisation Shelter, we have the UK’s fourth-highest number of individuals sleeping on the streets. This is a substantial community of homeless people, who account for one in every 77 of the city’s inhabitants.
Just before New Year, I was going out for a drink with work colleagues and we walked along the main road full of shops and Christmas lights. As usual, we passed someone in a shop doorway sleeping under blankets and plastic bags. I looked at them and wondered what I could do to help. As I was walking, a bus went by and sprayed me with cold water from a nearby puddle. I turned my head to see a job advertisement for new Bus Drivers – they are paid up to £23,000.
I thought what obstacles stops that homeless person applying for that job and making a more positive life for themselves.
It began with a discussion about how we could get that person into that driver’s seat and feel less isolated from society. We identified a number of things that needed to happen, safe shelter, good health, nutrition, work that matters like volunteering, mentoring, clean clothes and finally training. From then on we started to try to work out who could make it happen.
Most of our group believed it was the government’s responsibility. We recognised that our government has known about homelessness for a long time and still have not solved it.
Others thought that we might have an impact as individuals but we had doubts about whether our own skill set fitted the challenge. Finally, we all managed to agree on the solution – this was opportunity for the business community.
Business philanthropy there’s an idea! Of course this is not a new idea.
Philanthropy was prevalent in 19th Century Europe where numbers of rich industrialists practiced FPP or 5% profit philanthropy. They bought houses and then rented them out to lower-income working families in the neighbourhood for a 5% profit. Some, like Gustav de Liagre in Germany, only took a 3% return and George Peabody just reinvested the whole profit in more housing. Over 150 years later, Peabody’s legacy continues. The Peabody Trust has 66,000 homes in London and the South-East of England supporting thousands of people.
Family companies like Cadburys and Lever Brothers built whole towns like Bournville in the Midlands region of England and Port Sunlight near Liverpool. They recognised that the welfare of society was their responsibility which in turn led to higher productivity and wellbeing. They are based on the principle of mutuality. “You can see that if all companies adopted this welfare approach to society, communities would continually improve.
The last 50 years has seen a profound economic and social change.
An economist from the Chicago Business School, Milton Friedman, demonstrates a high level of mutuality. From the early 1980s forward, many governments and businesses have championed his goals of reducing restrictions on business and reducing the state’s responsibilities.
Freidman suggested that:
“There is one and only one social responsibility of business – to use it’s resources and engage in activities designed to increase its profits so long as its stays within the rules of the game, which is to say engages in open and free competition without deception and fraud”.
Business leaders have unfortunately interpreted these values as a license to increase shareholder value at the expense of everything else.
All too often, deception and fraud have become irresistible tools for larger companies. Big firms are reluctant to pay their fair share of taxes and pressure governments to support them. Several smaller companies have emulated their model.
Moreover, the organisations on who we depend to make sure that businesses stick to the rules are driven by the same principle. International accountancy firms somehow keep missing the corruption of some of their biggest clients. You may not be surprised to know that the big four have set aside £162 million in 2020 for legal fines and claims.
As a society, we wait for the next apology and then for the next scandal.
Right now business communities are taking an important step. They are recognising that business has an important part in changing our society for the better. They recognise that focussing on shareholder value is not working anymore and that stakeholder value is the most important factor.
The term ESG, is becoming part of business mainstream. It stands for Environmental, Social Governance, or, as we can call it, Planet, People, Performance. The argument here is that we should not be driving business performance based on turnover and profit. What business does to help society is also a key performance indicator and some businesses are already walking the walk.
1000 inmates over 20 years – Inmates in the Italian prison system have been presented with an opportunity to better their lives by studying at Cisco Academies within the prisons. And do you know how many have reoffended? None.
Mars the confectionery, food and beverage giant began the process a few years ago amongst other initiatives. They recognised that they had the ability to create a much fairer supply chain. They began to create micro-entrepreneurs. This meant providing insight into research, expertise, and practical guidance on soil testing, fertilisation and reducing water consumption. They improved the welfare of their supply chain so much that subsistence-living women farmers can now afford to send their children to school full-time.
These are all big companies and there is a league table of businesses who are making significant steps in this area.
When Lego switched from using oil based to vegetable based plastics in their products, the news went viral and was celebrated all over the world – which also helped sales. And, it put them at the top of the league table.
Microsoft and Google are 3rd and 4th respectively and Cisco are 12th. This is good news as large multinationals are the answer. Governments are becoming increasingly insignificant in helping society to evolve. Their influences are often curtailed at borders, and at the end of their elected term. That even includes Donald Trump! The key to our future is socially-minded multinationals with responsible boards. They have the reach and the obligation to put things right. In fact, today 69 out of the 100 richest entities in the World are businesses, not governments. If you are wondering whether they have the money to invest in making the world better, Microsoft, Apple and Alphabet have $366 Billion Dollars in cash reserves.
Climate change has become a defining factor in companies’ long-term prospects.
Last September, when millions of people took to the streets to demand action on climate change, many of them emphasised the lasting impact that it will have on economic growth and prosperity. A risk that markets to date have been slower to reflect. But awareness is rapidly changing. I believe we are on the edge of a fundamental reshaping of finance said Larry Fink CEO, Black Rock the Worlds largest Shareholder!
And what of Milton, in 1976 Milton Freidman was given a Nobel Prize in economics. By 2014, Forbes magazine awarded him the prize for the most dumbest idea ever!
A major stumbling block is that money talks!
I have been a big football fan all my life, my team is Arsenal. Although we are currently mid-table in the English Premiership we are 9th in the World in terms of revenue. Since football is what we do, I am more interested in our league position than the amount of money the club makes. I don’t think the 80,000 or so who attend Camp Nau each week are motivated because Barcelona is the second richest club in the World.
Instead, they want to know if Messi is playing because if he is playing they have a better chance of winning, and winning makes fans happy!
Film box office takings are the measurement of a film’s success and the value of a painting overshadows the art.
If mutuality is indeed important to us, those values can be achieved perfectly well without resorting to such policies.
Why has money become the defining factor of our welfare?
And this obsession with money is an issue. Social goodwill has to be calculated and shown on the bottom line. This is complex but completely possible. Specialist accountants and consultancies are already helping not for profits calculate their value.
A new style of balance sheet, maybe!
???? =?+?1ln(???)+?2??? +?3??? +???
??? = ?? + ???
???????? = ?(????−1,???)
The above formula is to calculate the wellbeing value of homelessness
When you enter the data the formula shows that moving a homeless person to temporary accommodation has a social value of £16,448 and if then able to move to settled accommodation (£8019) has a total value of *£24,467. Many businesses would welcome this addition to their business!
*Source: The Wellbeing value of tackling homelessness 2015 (Simetrica/Hact)
The formula below is one that we at o3e can use to put a value on a bike donation:
???? =?+?1??+?2Q? +?3?1? +??
A bike donation to someone who is excluded due to distance or transportation who can then utilise it to enjoy team sports like football and be integrated in a community is worth £1,127.00.
Businesses need to look at their value in a completely new way.
Not shareholder value but the companies’ actual impact value on society and the environment. Businesses that largely function on the basis of winners and losers will lose out to smarter enlightened businesses that care about their place in society.
With all the tragedy around us, it can be difficult to be optimistic about the future. However, the conversations I am having now with friends and business colleagues are ones around not going back to business as usual. They are about helping each other. Reconnecting with old friends and family and reflecting on how simple, less consumerist and enjoyable life can be. Importantly the desire to help others within our society to achieve mutual wellbeing for all. We have an opportunity for the first time since WWII to recreate our society around mutuality please, let’s not waste it!
Peter Lindsay is the founder and CEO of o3e – Only 3 Elements, the UKs leading team building company that gives back to the community.