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The post-recession business model is one of co-creation and long term gain. It's time to change the culture.
Where does corporate culture come from? More importantly, when corporate culture starts to drift who is there to challenge those who are charged with its oversight? Some would argue that that task is in the hands of the regulators but if corporations are truly outward facing then there should be no need for regulation.
Putting the question another way, was Ian Leslie in fact right when in 2012 he said “put a bunch of confident aggressive men in the same room and reward them for taking risks and you create a pressure cooker from which probity and prudence evaporate like steam.” Now we are not suggesting that every corporation acts like a ‘lads club’, nor are we suggesting that company boards have all been guilty of promoting a culture of reward over prudence; but when negative business story after story hits the headlines we can perhaps be forgiven for wondering.
Perennially since the financial crisis hit it has been the banks and finance houses which have come in for negative comment. But they are not alone. In the past week we have seen the fall-out from the announcement by the new Tesco Chief Executive, Dave Lewis, of a “full and frank” enquiry into profit overstatements. Ofgem too has had cause to launch a review of energy firms’ communications with customers, branding the tactic of writing as if from a third party debt recovery service as “unacceptable.”
Whilst enquiries into these are still ongoing there are plenty of other examples of cases in which regulators have fined corporations for mis-selling, lack of transparency or poor governance. Looking back, it is perhaps easy to see why, although not so easy to condone. The era before the recession was the era of big business. Too big to fail, too influential to gainsay was a mantra which dominated political and regulatory thinking. As corporation after corporation took hold, smaller businesses were gobbled up or went under and our high streets became clones at best, empty at worst. It was the era of short term gain over long term stability and it seemed as though nothing would stop the juggernaut.
But with the recession came a sea change in thinking. Businesses previously seen as invulnerable came crashing down and the public mood changed. Those made redundant or who struggled to find work set up new entrepreneurial businesses in their thousands and the name of the game switched to agility, openness, customer service and transparency. Partly responding to the public mood and partly to the realisation of the extent of the crisis, regulators stepped up to their responsibilities and started investigating and censuring those who had allowed their culture to slip into one which paid no attention to consumer or investor.
Some organisations have quickly adapted to the new model, others are still struggling to overcome the legacy of past attitudes. For all organisations the solution is simply one of changing the culture from one of inward-looking ‘short-term profit is king’ to one which puts the long term needs of investors and consumers at the forefront of every process and every action.
Admittedly this cultural change is not solely in the hands of organisations. Consumers will need to step up and be prepared to play their part in co-creating products in tandem with organisations. And if organisations are truly creating products with an outward-looking viewpoint, consumers may have to get used to a reduction in choice or a change in products as sustainability and ecology are taken into the mix.
For their part, investors will need to accept that the era of fast profits is over and that long term stability and growth are now the name of the game. This means that they in their turn will have to stop castigating and start rewarding organisations which look to the long term and to ‘doing things right.’
The change won’t be easy, but in truth there is no choice. The marketplace has changed, the mood has changed and those which want to survive have to look to sustainability, transparency and a culture of care. The recession is well and truly over, now it is time to co-create the future.