How much can you trust a profit-making company? This seemed to be the big question raised by last night’s lecture by Dr Paul Lindley, founder of baby food company Ella’s Kitchen and recipient of an honorary doctorate from the University of Bristol yesterday.
I was really looking forward to hearing Dr Lindley’s talk, entitled ‘Disrupting the system: Bringing the humanity back into business‘, and he didn’t disappoint. Clearly a compassionate and thoughtful man, he started Ella’s Kitchen with the honourable philosophy of improving children’s relationships with food, and has made it a great success. My children were raised (in part) on the company’s vegetable and fruit pouches – brilliant for snacking on the move and busy times in the family – so it was great to hear from the man behind the snacks. His background in economics was evident as he talked about the principles of shareholder capitalism, Milton Friedman and monetarism, and how we needed a new model of business.
Interestingly, as soon as he started talking specifically about Ella’s Kitchen as a business (I should make clear that he sold the business in 2012 and is no longer involved at any level), I felt my belief in what he was saying wane. This reaction surprised me: there was nothing wrong and many things right, to my mind, about what he was saying about the mission of the business. So why did I feel so cynical, all of a sudden?
I wasn’t the only one: while some of the questions were straightforward requests for advice and information, one questioner in particular wanted to take Dr Lindley to task about business, tax avoidance, and the role of government. But it wasn’t until I woke up this morning that I realised that my visceral reaction was exactly what Dr Lindley had been talking about: a fundamental lack of trust in companies and businesses. We do not, at our core, believe that businesses have our interests at heart. This makes many of us view any discussion of mission, purpose and ethics with a somewhat jaundiced eye, which is what I found myself doing as soon as the Ella’s Kitchen mission was up on screen. For someone who spends a lot of time working with companies on their mission and purpose, that was a bit of a blow.
You can point to a number of reasons for this lack of trust, and Dr Lindley’s lecture did just that. It’s not hard to find examples where companies have betrayed our trust despite all their customer charters, missions and values, and I could list several off the top of my head right now. But he is right that fundamentally, how business is structured and governed is a major factor. As long as a company director’s primary duty is to maximise shareholder return, other stakeholders (such as customers, the environment and the community) will never be top of the list, and in return, those other stakeholders will never trust that business to act in their interest.
It goes further than just structure, governance and regulation, however. I wrote about this a while ago, highlighting the fact that a company can act perfectly legally, and still behave in a way that is unethical and liable to shatter our trust. Values, morals and social contracts are as important to that trust as laws and regulations, and in that piece, I quoted a fantastic essay Will Hutton wrote for the Work Foundation calling for a new way of doing business (which I can no longer find online, sadly):
“Capitalism is a subtle co-existence of apparently inconsistent values; capitalists are stewards of their assets even while they relentlessly pursue profit. They rely on a vigorous public realm that nurtures science, education and infrastructure even while they are go-getting individualists. They need flexible adaptable workforces; but they also need committed, loyal and trained workforces. In the run-up to 2008, the social and public values of this equation, paradoxically essential to a strong capitalism, were systematically torched.”
Since writing that earlier piece, I have come to believe that this subtle co-existence of inconsistent values is not just at the heart of business, but at the heart of being a human member of society. We exist in a constant balancing act between self-interest and altruism; between doing what we want and what society expects of us; between caring for others and taking care of our own needs. So it’s not surprising that our businesses reflect this tension, and that at times, the balance tips too far towards self-interest.
The often-quoted narrative about Cadbury’s is a great example: taking one view of the company’s history, the owners of Cadbury’s built housing for their workers and provided healthcare and leisure opportunities because they were Quakers and cared about their fellow man. Viewing the same facts through another lens, I have seen it argued that their beliefs and altruism had nothing to do with it: instead they shrewdly realised that healthy, happy workers were more productive and therefore would make them more money. How we decide to view that narrative depends in large part on our level of trust in people to act – even if only partly – altruistically.
So how does business regain our trust? That’s a puzzle to which I don’t think we yet have the answer. Beyond publishing missions, values and charters, beyond living and breathing their values, and all the other concepts that consultants like me love to discuss, there are many independent initiatives out there. Dr Lindley used his speech at the London Stock Exchange in 2015 to call for the establishment of ‘public benefit’ companies, and his speech was timed to coincide with the launch of B Lab’s B Corporations (of which Ella’s Kitchen is one).
As the B Corporation organisation says: “The B Impact Assessment evaluates how your company’s operations and business model impact your workers, community, environment, and customers. From your supply chain and input materials to your charitable giving and employee benefits, B Corp Certification proves your business is meeting the highest standards of verified performance.”
I was interested to learn that as part of its B Corp status, all Ella’s Kitchen’s suppliers have to complete the B Impact Assessment annually, and improve their scores year on year, in order to maintain their supplier relationship. This kind of initiative can be highly effective in driving ethical behaviour through the whole supply chain.
(On a complete aside, I loved a line from the social enterprise beer company Toast, mentioned as an example of a purpose-led business: ‘To change the world, you have to throw a better party than those destroying it’.)
The B Corporation initiative feels like a step in the right direction, although while it remains an optional extra, it is always going to rely on consumers making good choices for its impact. I still think that taxation and regulation has to play a larger part in eroding inequality and capping the levels of profits that can be made by single people or entities, and I don’t know whether B Corporations go far enough towards the ‘public benefit’ companies Dr Lindley originally envisaged – I’d love to ask him sometime. And I think that the current interest in becoming purpose-led businesses with altruistic missions can, perversely, damage trust even further if an organisation’s behaviour fails to match its espoused values. But I entirely agree with him that without a fundamental change in how business works, we’re screwed.
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Also published on Medium.