Hi, I'm Vimla Appadoo
[00:00:03] and I'm Tim Panton,
[00:00:04] and you're listening to the distributed future podcast where we talk to guests about their insights, their expertise, and what the future will look like. And today's podcast is really focused on the future of the corporation and what that entails.
And really, interestingly, the role of government in understanding how to build sustainable businesses that not only look after profit, but if after people as well. And this has been an ongoing theme throughout the podcast. and I think it says a lot about mine. And Tim's. Network of people that we like to surround ourselves with, but what we really tried to do was challenge, challenge the status quo of what it means to be a business in the 21st century.
Colin's perspective is really interesting and insightful because he looks at it from an academic point of view and understanding how future economies might work. And I've not really looked at it from that perspective before.
[00:00:53] Yeah, no, we were, I was, was stuck in a, I'm not stuck, but I had a long car journey yesterday, which I wasn't expecting.
And we ended up talking about part of what we were talking about, which was the future of the economy and what it looks like and whether, whether the very centralized models that we're all building at the moment actually work in the future. so it interesting to see how that, that fits in with government.
[00:01:17] Yeah. I think it's also, and I'm, I struggle with this because I never know. To what extent I'm living in my own little bubble, but from, from what I see in my bubble, is that such a big trend on buying ethically understanding, sourcing, understanding what the world, like the role you play in the global economy in UN.
Really being aware of structures like just conscious consumers, and I just don't know how far out that trickles, if that's just just my network or if that's a genuine friends.
[00:01:50] I, I think it's to some extent a genuine trend, but it's also a luxury thing. There's a, there's a, there's two ends of the spectrum of move simply either.
Too rich to care or too, I mean, that's a huge generalization, or, or, or where the money matters so much and is in such short supply, but that kind of luxury can't be taken. And that's why, I mean, it's kind of what it is that's available. And so I think we do both live in a comfortable bubble where those are choices you can make without essentially without sacrifice.
That's the risk that we were doing these things without really. Having to give anything up that we can't like, that we struggle to give up. That's not actually true. You know, there's all the people who are giving up, giving up eating red meat who like their red meat, but decided not to. So it is possible, but, but I think, yeah, was interesting.
Interesting. I think we are, we do live somewhat in a bubble, but,
[00:02:51] yeah, exactly. And then it goes down to, well, does it matter if I'm doing my bit. Does it matter if I live in ? as long as you're aware that not everyone has access to the same luxuries, and I think that's what I find difficult. Is it still such a privilege to be able to.
To like take part in, in that different economy.
[00:03:11] Yeah. I mean, there's an argument which says that by, by us spending our money in that space, we drive the prices up. On the other hand, there's another argument, which is that we're creating a market which will drive the future process down. And so. It's actually quite, I never know which of those two roles I'm playing.
Am I like snapping up the only available products in that category and therefore driving the price up? Or am I, am I allowing people to say, Hey, yeah, actually running organic farm makes sense financially and therefore we'll do more of that in the future. Yeah. I mean, if you look at Solar solar, the ultimate one of that looked like the cost of installing solar power has gone down so fast because people installed it.
Yeah. And the, and the economies of scale have kicked in. So it's actually quite, you know, the early solar installers did us a huge favor.
[00:04:02] Yeah. Yeah, that's true. And then I guess the same is going to happen with electric cars or is happening at the moment.
[00:04:08] Yeah. We were also talking about those. and that's going to be.
That's quite complicated because, and that's the role of government. I mean, it's just, which is sort of, I think, subject to the interview, the role of government, and it's really quite complicated. Like I hear that the car electric car manufacturers are holding back on releasing electric cars until April, so they fit in the new financial year.
[00:04:32] Jeez. Yeah.
[00:04:34] Because they've got the attached targets to hit, and so there's no, they're not shipping any until like, they're not going to have any in March.
[00:04:42] Yeah. That's really interesting. And it's, I just, I think this like government is slow. So how do you speed up government legislation and ways of working to keep up with how everything's changing?
[00:04:59] Yeah, I mean, again, it was something else that crops up in this conversation is that, and particularly in the context of Brexit, that was an interesting point. It was made like that. The smaller the government is, the more light on its feet. It can be, you know, it's quite difficult to get 27 countries to to make a decision and implement it.
Whereas one smaller country can probably do that rather quicker. Yeah. If they have the political will to do it. You know, some, there were some interesting kind of discussion around the idea that the smaller you can make your decision making space, the more likely you are to be able to make change, which I think is really interesting.
[00:05:43] It depends on what their pushback is as well. Like. The freedom and autonomy you can, you can have in that space to make those decisions as long as you're willing to take whatever negative fallout outcomes with it as well. There's a lot of protection built into decision making at the moment, and that kind of protection, I mean, lack of responsibility being made for who, who makes those decisions.
[00:06:05] Right, right. So they're, they're externalizing from the risk. I think that's the fact that it being decoupled is, is, is scary. Risks should always come back to the person you're taking the decision and, and that's less. True, isn't it? Maybe it used to be. When you say corporations, like w what do you mean?
What's a corporation in your mind?
[00:06:28] So the focus of the podcast is actually large scale multinationals. so talking really big scale corporates that fundamentally need to shift their way of working to take more responsibility for, for their global impact. and how you can build in legislation around that to make sure that they're held accountable to doing good.
[00:06:47] In on a, on a multinational scale. Yeah. Yeah. Well, that sort of thing, that if you decided that that needs doing, that's the sort of thing that only things of the scale of the EU can pull off because like anything else, which is going to get any other individual government will just get ignored by,
[00:07:05] unless your economy's really strong.
if you, if you have a strong enough. Economy, that it's almost non-negotiable that multinational would work with you or is dependent on your income to survive. Then I think you've, you've got some ability to call the shots.
[00:07:25] Yeah, but it's rare that that isn't a double edge sword, that like if you've got a company that makes, makes a lot of money in your country, then typically it employs a lot of staff and a lot of tax.
I mean, that's actually that, that's less true than it used to be. Both those things. I mean, if you think about something like Google, where. They make an awful lot of money in the UK and as does Facebook, but actually they don't even, probably very many stuff, and they don't pay very much tax, so you can hit, you can legislate against them with limited downside, except that they got a propaganda arm that can beat you around the head.
[00:08:03] I think that's a big part as well as the story, the reality or the story that you tell so. I, I think it would be easy to manipulate the system when it comes to doing good, purpose through the story that you tell rather than the reality of what is happening.
[00:08:19] Yeah. Yeah. And I wonder how you, how, whether there's a role, I mean, I'm always fascinated by whether there's a role full with things that are known governmental to, to shift.
I mean, if you start in a kind of good and purpose for the roles of the. The church and sovreigns rather than the government itself. typically, and it was kind of, you know, you look at things like the Quaker movement and people like that where they know, like, you get huge change effect to by, nongovernmental organizations who just had a religious or moral purpose, abolition of slavery, you know, things like that are not, those were done.
Well, by non-governmental grouping. So just decided that they had to happen and unforced, it went public and the backing. But in the end it was to do with like individual moral strengths, group moral strength
[00:09:15] and then also massive war.
[00:09:18] yes. Although I mean the, you know, the Quakers and, and, and their, you know, improvement of things like.
industrial, working conditions that wasn't, there was no war necessary. They just, I think they even just produced a better product by treating the workers better and therefore they won economically. I don't know enough about them, but I think it's really, really exciting. It'd be fun to spend some time learning about the historically learning about them, because I think that sort of, I'd see in the future a role for that kind of activity.
[00:09:54] And that definitely goes back to what you were saying of, Like smaller decision making powers and closing that loop between what people are saying, what needs doing, and then actually being able to prove the market viability even those changes.
[00:10:08] Yeah. I mean, I, I also think we might be heading towards. I mean, we've talked about this, how it comes to a while ago about like the craziness of shipping stuff around the world just to get it washed or whatever.
I, I one I think we might, we might be moving back to a more local time when, when things are bought more locally and source more locally.
[00:10:31] Yeah, I agree.
[00:10:33] Whether localities necessarily geographical, I don't know, maybe it's social localities
[00:10:40] I read an interesting blog. Well, I think it was a BBC article, actually, I over the weekend that was saying the impact of buying locally is almost negligible.
Like it has. No. Environmental impacts are , really in relation to what it is that you're eating. So it's more important to think about what you're consuming rather than where it's coming from, which I thought was really interesting.
[00:11:02] Oh, you mean like buying oranges in the local shop makes three different cause they were Valencia or Africa or wherever.
Interesting. Yeah. No, I mean, I think unless you know the provenance and the thing of buying you, you're, you're really only relying on. You're kind of outsourcing your ethics to the shop you're buying it from. Yeah. Like your, you're relying on them having made a choice, conscious choice to buy local to them, I suppose.
What was the conclusion? I mean, I don't want, I don't want to kind of totally take the conclusion out of this, but, but was there a sense that like governments can, can impact this and do, and when would and should. Yeah, definitely. I think that's, that's the whole point. So the podcast is based on a paper that was written by the British Academy, to go out to corporates in government.
And the next, the next thing that they really want to do is lobby government for these such changes. so the, the argument is that there, there definitely is a role that government needs to play and should be playing. It'd be interesting to see the timelines for what that looks like. They,
Well, I mean, I've looked forward to listen to it, see what we w what we feel at the end of it.
[00:12:15] hi, this Vimla Appadoo and you're listening to the distributed future podcast.
Today we have professor Colin Mayer with us who is the author of the British academies, "future of the corporation" paper Colin, would you, like to give a quick introduction to who you are and what you do.
[00:12:29] Thank you very much Vimla my name is Colin Mayer. I'm a professor at the spy business school in Oxford university, and I lead a program at the British Academy, which is the UKs national Academy of the humanities and social science.
On the future of the corporation. And that program is looking to understand how business needs to reform over the coming decades to address the social, environmental, and political challenges it faces and to take advantage of the technological advances that are in progress for the benefit of society as a whole.
[00:13:10] It's amazing. I mean, I'm, I'm, I'm lucky enough to have been involved in, in part of a small part of the paper. but if you had to summarize, what would you say are the biggest challenges that the corporations face both economically and politically at the moment?
[00:13:24] Well, there are three really big challenges that it currently faced, one of which is the environment and climate change and how to cope with that.
The second is in terms of levels of inequality in companies, in countries and around the world, and the. Lack of social inclusion with the rise of economic prosperity. And the third is the a growing level of mistrust of business and the very low levels of trust that people have. In business and corporations.
[00:14:07] Yeah. Do you think those three things are connected as well?
[00:14:11] Absolutely. They have a common underlying cause in the way in which we've structured our businesses, the motivations behind them, and the way in which we run our economies. And the basic underlying problem is the notion that businesses, sole purpose or main purpose is simply to make.
Money that shouldn't be the driving force behind business business is potentially an incredibly powerful vehicle for addressing the social and environmental problems and other challenges that we face in to do so in a way that's financially viable and sustainable.
[00:14:53] Yeah, I mean, I completely agree. and it was interesting when.
I was faced with kind of opposition to the perspective of this, that a lot of people kind of were challenging me and saying, but, profit is in, in and of itself a social good like profit, a profit driven business can be used to alleviate social injustice and to push people out of, poverty in, in essence.
And I found it really difficult to actually. Oh, I don't believe that. I believe that, you know, business has a, has a purpose to give back in more ways than just through the economy. But I find it quite difficult to articulate that in a coherent way. What would you, kind of, how would you summarize it?
[00:15:35] The, it can do exactly the opposite to, addressing social problems.
It can create. terrible problems. And we only have to think about the impact that it's had on the environment and the fact that, the pursuit of profitable ways of delivering energy created immense problems for the current generation and in particular for future generations. And furthermore, it's not just the businesses.
Benefiting from creating problems as well as solutions. It's that if thought about in the right way and driven by the notion that its primary objective is to solve problem, but do so in a profitable way, then that translate the way in which people think about businesses and the way they look to run those businesses.
And that's what we're really trying to achieve with this British Academy program.
[00:16:35] And what's the response been like so far?
[00:16:38] It's been amazing in so far as a year ago, in November, 2018 we brought out a first report, which said that to address these problems, we need to reconceptualize business around the notion of it's purpose being
To solve problems profitably. To do so, one needed to have the associated trustworthiness, the business, and the appropriate values and cultures of business. And after that happened, throughout 2019, there was a growing realization that purpose. Actually, it was a key issue driving force business. And we had statements by the largest investment managers in the world, by the largest, the directors of the largest companies in the world, the business round table in the United States.
We had the financial times launching its largest campaign ever. On resetting capitalism and the notion that purpose needs to be at the heart of this, and I've just returned from the meetings that Davos in Switzerland at the world economic forum where the notion of corporate purpose. And the universal declaration.
that the purpose of companies and the fourth industrial revolution as they've turned the meeting, was the main theme of the gathering of business leaders and political leaders from around the world. So it's been a, an immense change in attitude and views that have occurred in a very short space of time.
[00:18:18] That is incredible. I think. Being someone that's in the employment, like that's employed at the moment, and seeing the trends from, a worker's perspective. There's definitely a new wave of people looking for more from work than just a nine to five job that, and I think that's part of the puzzle that's often missing.
We focus so much on what the business is delivering and how the corporation is being run. We forget about the employees themselves and the role that they play in. their satisfaction and happiness and how they need to feel apart of that as well. and I know that was a big part of the conversation that we were having at the time too.
[00:18:57] Yeah, absolutely. That's the real driving force behind this. We, we, we all want to do a good job. We all want to contribute, to the firms and enterprises, that we're working for. And we want to feel we're doing so in a meaningful and fulfilling way. we want to feel sense of pride and dignity, in the work that we're doing.
and a key element of purposeful business is to provide that commitment to. The purpose that people can really buy into and feel fulfilled by contributing to and creating the sense of teams, that is required to really promote the success of those purposes. and that, and that idea that, people really are looking to
contribute towards the success of those endeavors is really what lies behind the importance of purpose. It's giving a purpose to everybody's lives, to, our lives as consumers, as communities, but in particular our lives, in the, the work that . We do, and to make us feel that the, the, the reason that we're getting up in the morning is not simply to produce a profit, for a shareholder, but to produce an outcome that is going to be a real benefit and helping people to solve the problems and to make their lives more purposeful.
So that, that's really the, the driving force behind this.
[00:20:35] Yeah. Yeah, definitely. I think it's multifaceted. It's kind of me as an individual, me as part of a team, and then me as part of this, this business, and how do you do three of those layers and structures work together to. To be a sustainable business that can deliver, deliver value, solve problems, we'll say give back to the world.
[00:20:55] Yeah. I think that's absolutely right. And just thinking about it in the sustainable context, one of the best illustrations of this is to think about people who work for, oil companies, fossil fuel companies. Yeah. and how to really motivate them and to feel pride and dignity about what they do.
Not shame and embarrassment when they talk about, that, that the job and, the, the, the, the way to think about that is to say, well, first of all. Oil companies are rapidly repositioning themselves as being energy companies. And if you say, well, what, what is the purpose behind an energy company? The purpose behind an energy company is to solve our energy problems, in very short order, in a way that, is not environmentally devastating for us and future generations.
And to solve that problem in short order. And if. People feel that they are working for organizations that are doing that, not simply, producing oil out of the ground and, and then, burning it, but to solve our energy problems, then that becomes a real motivating force for people working for those companies and something that they can feel a real sense of pride and dignity about.
[00:22:17] Absolutely. I can, I couldn't agree more. I mean, there are obvious challenges with. With what we've set out with what the paper sets out to do. But how much of this do you think is down to a mindset shift and cultural change.
[00:22:33] It's very much a mindset change. And one of the reasons why this notion of purpose, I think has caught on so rapidly, in the business world is.
That it, it, it's very inspiring for everybody. I've just described what I think it's inspiring for people who work for companies, but it's equally inspiring for those who run companies and those who invest, in companies. Because what, what it's saying is that the, the, the objective of those firms is to produce profitable solutions for the problems of people in planet and not to profit from producing.
Problems for people or planet. And once, once you begin to think about your business in those ways, that then leads to a completely different notion of how to conceptualize the strategy of the business, the way in which investment is undertaken in, in business, and the way in which business should partner with a whole variety of other organizations.
To find those solutions because the nature of those problems means that in many cases, companies themselves do not have all of the necessary, resources and know how, and they don't have the right contacts and engagement with communities to be able to really provide effective solution. So it. It leads companies to think in novel ways.
It's essentially a business innovation. It's not not just a technological innovation. It's a way of innovating in terms of the way in which one runs a business to think about it as a powerful force for solving problems.
[00:24:20] Yeah, definitely. And the speed at which things being innovated. Now at the moment, it's something that most legacy businesses, the kind of multinationals can't afford.
Not today if they want to stay a player in business in the future. I think I have, no,
[00:24:35] I think that's absolutely right. And indeed the, the way in which multinational enterprises. Can really convert what they're doing to something that people feel an association with. And, an involvement with at a very local level is one of the key elements that, multinational businesses need to think about.
And, some of the most successful ones are addressing exactly that. And it, a lot of this builds. Too. How do you establish relations of trust within organizations by which you don't just run them in a very hierarchical fashion from the top, but you empower people at a very local level to make decisions based on the, the values of the business that then translate into relationships that they can build up with people at a very local level.
And so that notion of. benefiting from the access to resources and knowhow that a multinational can bring together with, its ability to engage at a very local level is part of this transformation process that companies will be going through in terms of solving these problems.
[00:25:49] Yeah, yeah, absolutely.
And I think it's, it's an amazing. Call to arms in times of, you know, this is, this is how we can bring everything together in the future. This is how we're going to change, change the world and change the way that things are done in the moment. Do you think there's a problem or a potential problem with how genuine that is for people?
So, I know the paper sets out and saying there needs to be new legislation and there needs to be new governance structures for businesses to ensure that this is a part of theri core, but do you think that takes away from them how genuine it will become and whether, whether that's an issue or not, just does it matter.
[00:26:31] Well, I do think that there will be a need for a change in law to show, to ensure, that it's really embedded. I don't think it, if it's done in the right way, I don't think it takes away from, the genuineness of the process. Because the notion of what one's trying to do with the law is not to impose this as a external regulation.
we've relied a great deal on regulation as the mechanism for solving the problem. And it's, it's not delivered what people had hoped it would deliver. And that's because since it's an externally imposed, it's not inherent or intrinsic to the way in which people think about running their businesses. So really the notion of the change in the law, that one's seeking to bring about is to make the idea of a purpose beyond profit, a core component of the business, so that the responsibilities of those running companies is to put that notion of a purpose first and foremost.
in the objective function of those who are running it, and to move away from the idea that the primary objective is simply to make money for shareholders. So, so the idea of using the law as a vehicle is to really make it a, an inherent, Part of running a business now, there's a great deal that companies can do within the existing structure of the law and what I've been talking about in terms of the changing attitudes that are going on, a part of that process.
but for, for it to really. Be something that people believe in and think is credible and something to which companies are really committed. They will have to ensure that all of the processes in the business are aligned with the delivery of those purposes. And in particular, they need to ensure that the values of those businesses and the culture that.
prevails in the firm is consistent with the delivery of those, purposes. And that takes real leadership in terms of, making that an embedded part of what goes on in the firm right from the top, from the board, right down to the shop floor.
[00:28:59] Absolutely. And I think you've hit the nail on the head.
The, leadership is suburb rule in, in this and in any kind of social change or, purpose driven business because. As soon as you start having a defined path, she holds yourself accountable to it. And that accountability is, is, in my opinion, what's really missing from business at the moment. So when you look at oil spills in the ocean or, you know, any kind of catastrophe that happens, for me, that lack of accountability in the.
The lack of responsibility that's taken from, from corporations is what's missing. There's no kind of pushback. It's just accepted. That is something that happens in business and we sweep under the carpet and move on and well, I really hope to see in the future is that that's not the case anymore. That when it set out that this was all purpose.
This is a good that we're bringing back. We're going to be held accountable to it. And that business then is held accountable.
[00:29:54] I absolutely agree. The notion of companies being accountable for what they do, both in a positive sense in terms of helping to solve problems and in a negative sense of avoiding.
profiting from producing problems is absolutely critical to that, and to have that real accountability. Then one, first of all, needs to have the ways of establishing whether businesses really are fulfilling their purposes, whether they really are. Avoiding creating damage. And so a lot of the work that's currently going on is around how does one provide the measures, the indicators of what businesses are doing?
How does one increase the degree of transparency, of what. companies are delivering. and those notions of measurement should extend well beyond what we currently measure to incorporate the impact and the fact that companies are having not just on the, physical plants and buildings and their financial capital, but also the impact that they're having on the environment, on society and on the natural world.
And so delivering those those measures is, is key. But then once one's got that greater degree of transparency. Then there also has to be a, an accountability in the sense that, those who are affected should be able to, influence the way in which companies, respond to their success and failures.
And there should be a real accountability, not just to the owners of companies, but to those on. Whom the business impacts in, in their workforce, in their societies. and, in particular, in relation to future generations.
[00:31:52] Yeah, I 100% agree. I think there's a big undertone here for me, which is, you know, we now live in a global society where we're citizens of the world rather than of of anything else.
And it's globalization has happened. It's meant that we do need to look holistically around our impacts on our world, not just, ot just our locality. And that's really difficult to do because you then you're thinking really big and you're thinking really small, continually. And. It's actually, when I start to say, when we were talking about climate change, I can immediately get behind it.
I'm like, this is going to be great. This is a huge positive change. If we can start holding companies accountable to their impacts on climate change, global warming, and CO2 emissions, that's amazing. But then I quite quickly feel very disheartened by it because I'm, I think it's not going to happen quick enough.
It's, all the efforts going to be few times was it really gonna make that much of a difference and it has to be done enmass. It can't be an isolation. And what do you think will happen in the future? How do you think this is going to play out?
[00:33:00] Well, I absolutely agree with you that the key issue is the extent and the speed with which the transformation takes place.
And that the timescale that many companies that. Talking about is, simply, too long. Now, there are, I think, examples of where. Companies are really grasping the nettle. and one, which happened, a couple of weeks ago, was, from Microsoft when Satya Nadella, the CEO of the second largest company in the world.
said that, Microsoft was going to make itself in terms of its own operations. not just, net carbon zero, but. It's going to make it absolutely carbon zero in terms of, not, emitting any carbon at all in its own operations. And furthermore, by, 2030, making itself net carbon zero in terms of its entire supply chain as well.
so. that, that was a very strong and clear statement with, measures by which the company can be held to account that the CEO of, of the second largest company, was, setting, his objectives. And furthermore. he went on to say that, in a positive sense, what, Microsoft was seeking to do was to provide the technologies that would allow other companies to have the information and the control systems that they need to be able to follow a similar process of rapidly making themselves, carbon zero.
Now, what. One hopes that sort of announcement will do is to encourage competition, but competition in the new sense of a run to the top, not a run to the bottom in terms of the way in which companies are seeking to make a positive contribution to society and the environment. and once that. Type of, competition takes place.
Then the speed at which a transformation can take place, becomes very, rapid so, so that's, that is one way in which I, I'm hoping that, this issue can be addressed.
[00:35:28] Yeah. And it's really interesting that you mentioned competition because I think that touches on some of the fear that people have both by shifting to
beyond profit and into into purposes. If you strip out competition, you, your economy fails, you aren't able to innovate. You end up with a kind of a lax way of running business. Actually, what we're saying here is it's a shift. It's changing what competition is, and it's, we're not saying profits bad. We're just saying it needs to be more than profit alone.
And I think that's the bit that often gets miscommunicated or, Swept aside is actually, this isn't about getting rid of profit. It's just changing the way we run our business.
[00:36:10] Absolutely. Right. This is, this is not trying to undermine. Markets. It's exactly the opposite. It's trying to make them work better.
And the reason why there are so many failures of markets is because of the underlying objectives that those who operate in markets, as soon as one shifts those objectives in the direction of solving problems, not just making money. Then those markets become potentially a very powerful force for bringing about a, a rapid move in a positive direction of solving those problems.
So it's a way of enhancing, not undermining the functioning of markets.
[00:36:53] Yeah. Yeah, I completely agree. and we've touched on it briefly, but, talking about capitalism and mainly referencing the, the kind of BBC article that was put out just before the paper was launched, I think the term that was used was, "an extreme form of capitalism" that's here in the UK.
And could you just take a bit deeper into what you meant when you were saying that? what makes.
[00:37:19] Well. Okay. This is the first point to make is that, the form that capitalism take varies appreciably across countries. We tend to look at, the notion of capitalism is, having a particular set of characteristics associated with it, most of which we're attribute to what we observe.
In the UK and the U S now actually, those forms of capitalism are. At one end of the spectrum, the end of a spectrum, where the way in which companies are owned and run is particularly driven by the investor community and the investor community of financial institutions, investing in companies. That's very different from the way in which it runs in many countries around the world where there are large.
Dominant owners, shareholders, and companies that aren't just financial institutions, but, families. families are in fact the largest single. A holder of shares, even in the largest listed companies in the world. And in some cases, in particular in Denmark and in Germany, there are a lot of companies that are owned by what are termed foundations, their industrial foundations owned by foundations and trusts.
Now. The reason why those, ownership patterns are very important is that the, the nature of the ownership heavily influences the objectives and purposes of companies. So whether families, then those families potentially can be a great force for good. if the underlying values and principles that via the families have, are in the direction of creating.
Purposeful companies. The foundation owned firms of very often have those broader societal aims in mind in terms of the way in which they seek to, to oversee the running of, of their companies. At the other end, what we have in particular, in the UK is a system by which. It's simply the financial institutions, that exercise control over the way in which companies run and their objectives are.
Essentially driven by the interests of, of their investors on financial returns. And so what we have in the UK in particular as a system that is heavily focused on driving as high for financial returns from companies as possible. And in a sense, the UK has a particularly extreme form of capitalism.
That is driven by for financial motives.
[00:40:15] Yeah. I think that's a really great explanation of it. it's, it's interesting because people, when I've spoken to people about the article and about the paper, even people that don't work in big companies or are quite. Purposefully minded, get defensive when I start talking about how we might be able to reform capitalism in the UK.
And it's a strange sense of ownership of, well, this is how we do it here. And it's, it's almost linked to like national pride and and how people want to see their country on a global stage. We want to be leaders in how we run our businesses. And it should, it's just a really interesting cultural insight into that sense of ownership.
which I hadn't really thought about before either.
[00:41:05] Yes, that's absolutely right. That, we've been so ingrained with this notion that there is. One purpose of business and only one purpose of business to make money. That it's very hard for people to envisage that business could really be doing anything different from that.
And that's why, it's important to put, the nature of business, both in a longer historical context and to understand that the origins of business and in particular, the corporation, we're in a very. Different contexts, namely, to, deliver public benefits. and furthermore, to put it in a wider, global context to understand that the objectives behind businesses in different parts of the world are also very different, from what we presume it to be today, in the U K.
[00:42:03] Yeah. And thinking about the role of technology that technology might play in the future of the corporation, what, what do you see it paying? What, how do you see it? Working?
[00:42:16] Technology, to my mind, is the absolute linchpin for delivering the positive outcomes, that I've been talking about. And that, let me come back to the example of.
Energy companies as being a way of solving the energy problems of the world. Now what more, what potentially makes that a, a realistic proposition is technological shifts.
[00:42:46] And we've already been observing that happening in large order with, renewables. Now becoming. Commercially viable in a way in which only a few years ago they were not.
And ultimately, what is going to solve our energy problems is further technical technological innovations that reduce the costs of producing renewable energy, in relation to any other forms of energy from wind solar fusion, et cetera. and what is absolutely critical, at, at, at this stage is that, sufficient resources are given to
the, investment in research and development that is needed to accelerate the delivery of those new forms of, innovation in, in energy. And that, that, that is where a lot of the focus of both the public and the private sector needs to be over the, over the coming years. We need the equivalent of the Marshall plan that we had, in the post second world war period to
rejuvenate the, broken and destroyed economies of Europe, focused on, similar rallying, of countries around the world to solve our energy problems and find those technological innovations, to, to, to make it a reality. So, so those are the real positive benefits, that technology, can potentially deliver.
But we also have to be aware of the potential risks associated with technology in terms of the, the negative, as well as the positive contributions it can make. And the area where people talk a lot about this is in terms of future of work and the way in which. Machines are likely to, substitute for, employment and labor, in, in many areas.
Now done appropriately, technology, can be used to, really enhance, our livelihoods, including, in relation to artificial intelligence and the future of work. but one, if, if, if those innovations are driven. Solely by or predominantly by profit driven companies, then we need to be seriously concerned about whether or not they are thinking about the implementation of those technologies in the right way that's going to deliver real benefits for society and avoid those problems.
[00:45:23] Yeah, definitely. And I think. A huge, huge part of this is that technol technology companies need to be held to the same accountability. So with massive tech innovation, you get massive tech waste. So even through two year phone contracts where you are encouraged to kind of get rid of your phone every couple of years, there's a huge amount of waste involved in that, not just through the physical hardware, but time costs, carbon, as well as.
You know, sweatshop working as well. which really, really does need to be bought into the forefront of how we access the news. Technology because I think we're, we're starting to see ourselves as a society move into this mindset of it's disposable and it really shouldn't be seen like that, but one of the really positive outcomes as well from technology that I think sits alongside what you were saying around really shifting and innovating new ways of doing things, is the technology is one of the rare sectors that can really level the playing field.
So anyone and everyone can have access to becoming a developer with, and as technology is scaled, it's become cheaper and cheaper to do so. And I think that's one of the real, hopeful that it's a real insight of hope that I find in technologies like this, this can be something that gives everyone an equal opportunity to, to have an impact and to build a business.
[00:46:49] Yeah, absolutely, absolutely. Right. And then illustration of that is the way in which, social media social networking can operate. Now that's had, in many respects, quite a bad press, over the last few years. And it's a good illustration of what I've been talking about in terms of technology potentially being extremely beneficial in terms of connect, but also having a significant negative side effects that companies need to take responsibility for.
And not just, essentially track, try to ignore, but what. What, what that technology allows to happen is to, give people the access to the ability to influence what's going on in a way in which was inconceivable, until relatively recently, and to really hold . companies to account, for, for, for what they do in two senses, one of which is, the ability to use social media as a way of, rallying people to express their views, about, the actions that companies are taking, but also to provide them with the information.
So one of the, one of the aspects that's going to transform. behavior of firms, over the next few years is the way in which we'll be able to see the provenance of . Products to understand, how they've been produced, who's been producing them, what sort of conditions people are working in when they've been producing those goods.
The extent to which their environmental, detriments that have caused by that production process. One will be able to go into a shop and basically access that information instantaneously before, one makes. , a purchase decision. And so it's really going to be a way of being us in so many different respects.
[00:48:45] Yeah. I couldn't agree more. I think it does. It does make me really hopeful for this huge shift. And in terms of kind of what you want to happen next and what you think needs to happen next. What, what would you say the biggest call to arms is? What do you think needs to happen for, for tangible change.
[00:49:06] What's required at this stage is a, is a global recognition of the potential to change the world that we're living in through changing the nature of the, one of the most important enterprises and in our lives, namely business. And that that call to arms is not just a call to the directors of companies, to make the changes, but a call to arms of all of us as, employees, as customers, as communities, as investors, to recognize that we can really influence, the process and the speed of that change, and to hold companies more to account.
for the way in which they're operating. We need to recognize that by shifting the, the nature of how we see firms from, having a purpose of just producing money and profits to one of solving problems is a realistic proposition, not just pie in the sky or, or, or wishful thinking. It is something that is, is, is a real, potential
way of reconceptualizing business, in, in the 21st century. and we need to all be pushing for a business to do that, for, investors to support them in doing that. and for governments to, enable the policies and the laws, that are required to encourage, companies to do that. So it's really up to all of us, to bring about these changes.
[00:50:41] Yeah, I couldn't agree more. And I think that's a perfect note to end on. Thank you so much for your time today. it's been great speaking to you.
[00:50:49] Well, thank you very much. I've enjoyed it a great deal. So thank you very much indeed.
Image taken from the 2019 report
Principles for Purposeful Business,