Why Do the Right Thing is valuable
I set up The Space to help organisations Do the Right Thing. Why is that valuable? Two reasons.
One: Do the Right Thing will replace creating shareholder value to become the common factor in the strategies of successful companies of the future.
Two: Do the Right Thing is difficult.
Let’s look at these two things and then at some possible responses.
It’s time to try something different
We’d better start with any healthy skepticism you might have at reading statement One above.
Quite simply, we can’t go on like this. The hypothesis of maximising shareholder value as the only goal and final arbiter of decision making by corporate strategists has been pushed to the ideological max since Milton Friedman’s model was widely adopted in the mid-Eighties. And the results of this experiment? Sure, look at all the wealth. But also look at how that wealth is massively concentrated. Look at the rainforest. Look at the plastic. Look at climate change. Look at mental health. Look at the tone of public discourse.
Maximising shareholder value didn’t directly or solely cause these worrying trends, but it’s not doing anything quickly enough – some would say at all – to turn the tide. And that’s what we were promised it would do – fix stuff like that by creating wealth. It’s had a 30 year unchallenged run at it robustly and expensively supported by the majority of the world’s governments and its most powerful people. How’s that for a track record of success?
Shareholder value as the one true grail is a busted flush. Some people just don’t know it yet.
There are two possible scenarios. We will continue purely to pursue the profit motive driven on by those with interests in maintaining its predominance…and end up breaking society and some other precious stuff as a result. Or we’ll find another way. Certainly this is what The World Economic Forum is focused on*.
Let’s be optimistic and assume that civilisation survives and we do find another way. What might that end up being? I’m not really sure. But the best thinking about ‘where next?’ all contains an element of Do the Right Thing. It’s been shown that firms which pursue strategies that come under the heading of ‘sustainability’ or ‘social responsibility’ enjoy higher returns, lower risks and lower costs of capital**. Colin Payer, a professor at the SAID Business School, has just made the case for Do The Right Thing in much more depth in a new book, Prosperity: Better Business Makes the Greater Good. *** I learned about both of these sources and others in The Economist: as far as corporate strategy goes, that’s pretty mainstream.****
Simple, then, Do the Right Thing.
Only not simple. Difficult. For two reasons.
The first reason that Do the Right Thing is not simple is that ours is an increasingly ‘un-simple’ world. The US Military’s assessment of the post-Soviet environment as being volatile, uncertain, complex and ambiguous (VUCA) is playing out in technicolour before our very eyes. The link between cause and effect here is problematic. We can’t just flip from the magical thinking of ‘shareholder value will save the world’ to the equally hopeful and unlikely ‘saving the world will create economic growth’.
The second reason Do the Right Thing isn’t simple is because: who decides what The Right Thing is? Getting everyone to understand a financial target is a simple story. We humans tend to like and choose simple coherent stories: whether true or not. Arguments over world-views tend to be neither simple nor coherent. For proof of these two statements: tune into the news. How does one get a group of people to line up behind a ‘purpose’ without relying on a charismatic leader or a dangerous oversimplification of the facts?
So what’s the big answer? I’ve already said I don’t know. As the article in The Economist points out, no one does. The unified, over-aching ‘theory of the firm’ for our age is yet to be written. In fact it probably won’t be written, rather it will emerge: not be invented but be discovered. And that’s the very reason that we have to act now. If we wait for ‘someone’ to come up with ‘the answer’ it’ll be too late and wrong. We’ve got to act now based on what we know. And I’m not saying that’s what you need to do if you want to save the planet (it is). I’m saying that’s what you need to do if you want to save your company, save your job. Maximising-shareholder-value strategy and thinking is the comfort blanket that needs a wash, the side of the pool you’ve got to let go of.
Don’t do nothing
If you accept that:
- Maximising shareholder value as the be-all-and-end-all is a busted flush
- Do the Right Thing is a less tangible but more sustainable strategic intent
- The full expression of this as a business model that everyone will want to follow is yet to emerge
Then what’s to be done?
You’re not going to solve world hunger here. This is about small experiments in new approaches with a slightly different perspective. You’ll learn something at least. The potential upside is of course to change the game at what you’re doing – jump from incremental improvements to 10 x better.
We advocate four things.
- Crystal clear intent
- Laser focused, undivided attention
- Letting go
- Build – Measure – Learn
Be clear in your intent
Do something. Pick a project and decide that your overall goal is to Do the Right Thing. Work at a scale you can handle and choose something that you have a degree of influence over. Balance the risk of doing something new with the reward of doing something better. And then commit. Commit to designing a new approach from the ground up as a means of learning as much as possible about how to create value using Do the Right Thing thinking. Tell everyone that’s what you’re doing and why – if you can’t face the prospect of making the case, perhaps you’ve not made it to yourself yet.
If your goal is to Do the Right Thing you need first to decide what The Right Thing is, and then do it. This first task is one of gaining insight, the second is one of creativity. You must find a way of harnessing as much attention as possible and focusing it undivided on these two things for enough time to make a difference. That means involving, exciting and motivating plenty of people (the more the better) and giving them some clear dedicated time and relevant information, asking them the right questions and getting them to talk about these.
You will inevitably enter this process with ideas about the sort of insight that will emerge and the sorts of things you will do as a result. Let them go. Make the space for the insight and ideas of the people you have involved to percolate and breathe. And then choose the most robust and best. If these end up being the same as the ideas you entered the process with, then perhaps you need to involve some more people in making the choice…just to be sure. In fact, why not build this in from the start?
- Let go of your ideas
- Let go of your responsibility to choose ‘the answer’.
- But retain the responsibility for the outcomes and learning.
No one said this would feel comfortable.
Build – Measure – Learn
In our VUCA world the chances of getting it right first time are small. This knowledge is part of the process. My physics teacher said it’s better to be about right than perfectly wrong. Design Thinking and Agile methodologies work by eschewing unattainably ‘perfect’ thinking up front and replacing it with building stuff, trying it, being focused in learning as much as possible from that process and going again. Quick, iterative cycles of learning. Try that.
There are more of us than you think
I’m aware that the thinking at the heart of this piece of writing will not go down well with the majority of people in business. That’s fine. They can get on with it in their way. I believe, though, that there are a significant minority who might agree with it broadly and have the power and inclination to try something different. I set up The Space as my big, brave statement of intent: a company to help others Do The Right Thing (try and find that in the HMRC Business Categories list). We urge you to pick a project and make your own big, brave statement of intent. And then why not share your experience with us. We’ll tell you what we’re doing too and that can’t help but make us both more likely to succeed – or at least feel less lonely.
** “The Impact of Corporate Sustainability on Organisations Process and Performance”, Management Science, Vol 60, No 11
*** Oxford University Press
**** Working for a purpose, The Economist 1-7 December 2018 p69