To the outsider, business must largely look like much of a muchness. With the odd exception, such as Anita Roddick's cosmetics group the Body Shop or the premium ice-cream maker Ben and Jerry's, it is generally assumed that business is motivated by profits alone.
While events such as constant downsizings and takeovers regularly offer evidence in support of this view, the truth is a little different. The past several years have seen a lot of inward thinking on the part of companies of all sorts and sizes. What began as isolated critiques on ways of doing business has become a wide-ranging reassessment of the fundamental principles upon which commerce is based. And at the centre of all this is the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA), which several years ago sponsored a project looking at "Tomorrow's Company".
This two-year project was headed by Mark Goyder, who has since gone on to be director of The Centre for Tomorrow's Company, which was set up to capitalise on the work of and interest generated by the initiative, and author of a just published book Living Tomorrow's Company (Gower, pounds 25). Tonight he will be leading a debate at the RSA with the aim of promoting further the ideas that he and others have been developing over much of this decade.
At the heart of the thinking espoused by Mr Goyder is the "inclusive approach". For many, this has become synonymous with the concept of "stakeholders", or those who - in addition to shareholders - have an interest in a business, be they employees, customers or just members of the general community rather than those with a direct interest in the financial success of the organisation. But revolutionary as this is for some traditionalists, Mr Goyder points out in his book that the inclusive approach goes somewhat further.
"It is an outlook which helps people in a company or any organisation to define what it stands for, what its goals are, who and what could help or hinder the achievement of those goals. That, in turn, enables the people managing the organisation to judge what to encourage and what to measure, in order to achieve the best results," he says.
The concept, which was developed by the 25 companies that participated in the Tomorrow's Company inquiry, is - as Mr Goyder stresses - "quite simple". But it is demanding. "Each company has to work out for itself what it has to do to succeed and what needs to be measured. This means taking the trouble to understand the needs of each business partner and then meeting these needs in a balanced way."
More specifically, there are five essential stages - define purpose and values, review key relationships, define success, measure and communicate performance and reward and reinforce. It is all obvious enough, but as Mr Goyder adds, "most companies miss getting the obvious things right".
This is because they assume all sorts of things, from people knowing what their goals are to knowing that what they have always measured will be appropriate for the future. Indeed, focus on the bottom line has consistently been found to be one of the most illusory of management tools. Many companies have missed opportunities and increased their risks through "excessive reliance on inherited success measures". According to the book, more than a third of companies that topped the profitability league tables between 1979 and 1989 had collapsed by 1990.
Clearly, leadership - of a very special kind - is needed to steer organisations away from the traps that have historically caught them. But what evidence does Mr Goyder see for organisations genuinely becoming enthused about this way of doing business?
"Already in the short time since the Centre for Tomorrow's Company was formed in 1996, we have learned the value of a forum which allows leaders to fuel their restlessness and to indulge their thirst for new ideas," he says, adding that the organisation is, for example, working to encourage the investment community to look at different methods of analysis and keen to get business school students thinking about the principles underlying lasting success.
The participating companies in the Tomorrow's Company inquiry, which include the likes of IBM, Blue Circle, Cable & Wireless and NatWest, have not always been able to live up to every aspect of the inclusive approach. But Mr Goyder insists that he sees signs of the thinking catching hold. It is there in the atmosphere of certain organisations - the way the receptionist treats you like a guest, the way in which employees talk animatedly about the organisation. In short, it is expressed in the "extra spirit, competence and self-belief".
Such businesses have escaped from the overly simplistic view of human motivation traditionally espoused by economists to realise that "business is about three-dimensional man, with a richer range of motivations and desires than rational economic man".Reuse content