There are great spirits in business whose behaviour and integrity have been beyond reproach. I did them no justice by falling into the conventional trap of generalisation, collective “trashing” and acknowledging institutions as personae...the same trap the distinguished Alan Greenspan confessed to have fallen into, albeit from a different perspective and with much greater consequences.
In the very article that I questioned the concept of labour as an institution, collective, or resource, I did the same to “capital”, including global and shareholder capital. These concepts have to be evaluated on the same criteria as labour, as “individuals: each with their own cultural background, fears and insecurities, hopes and aspirations, intentions and motives.” In earlier writings, I cautioned against laudable concepts such as “free markets” and “free enterprise” being “systemised” and tainted with a judgemental and ideological brush and with paint that has long passed its “sell-by” date.
I should not have added my few drops to that vile mix. Perhaps, like many, I was seduced by the clamour of perceptions that has eroded public trust in business to record lows in the past few years. So allow me to pay tribute to those who I interacted with and who shaped my views over decades in journalism and consulting. Around many of the most successful ones there was always an air of integrity; they displayed a degree of honesty and an appreciation of higher human values. The importance of this observation only became clear to me years later in doing research for Value through Values. The examples you may seek are fully covered there.
My real epiphany was triggered by Raymond Ackerman, and the way he stood up to the ideologically orchestrated labour unrest in the 80’s at the risk of everything he had worked for over two decades. Before then, having been thoroughly schooled in the merits of the profit motive and profit maximisation, I could not imagine any successful business being driven by anything else. For many years I regarded Ackerman as a brilliant marketer with a knack of generating controversy and publicity – a view that I dare say was shared by other reporters.
But right from the start, Ackerman tore into everything that smacked of disadvantage to the consumer. In this he upset a finely balanced commercial structure involving producers and government, with consumers caught in the middle. Most retailers were comfortable with that high profit margin dispensation. Indeed, the belief at that time was that the most profitable and least risky business to be in was retailing. Consistency in his values-driven approach was evident to all who had anything to do with Raymond Ackerman.
As the years went by and Ackerman’s business grew by leaps and bounds, he turned out to be exactly the kind of entrepreneur that had always confused me: prosperous yet values-driven, possessing a high degree of integrity, and breaking Friedman’s profit maximisation mould.
There are profound lessons in the Ackerman story. He has concluded himself that Pick ‘n Pay would never have survived if at any time, profit was his major concern; if he did not have an external focus; if he had not been driven consistently by the interests of the consumer. His biography is overwhelmingly convincing testimony to this.
Another lesson is that he stood outside the South African “system” of that time which was inward looking, onerous, oppressive, legally constrained and non-competitive. He was neither a product of it, nor party to it. On the contrary, his behaviour changed the system. He reformed the face of commerce more than any other individual, politician, political party, and business interest or business leader. Of course, Ackerman will still have many critics and sceptics. From being one of them in the early days, I am today unashamedly a fan of Raymond Ackerman. It’s not an easy position for a jaundiced ex-hack.
We all have an Ackerman inside of us. All we have to do is to try once, just once, to put another’s interest ahead of our own when we would not normally do so…until it becomes a habit. Observe then how circumstances, systems, structures and dependency on others not only become irrelevant, but how we possess the power to change them. One caveat: “You cannot help men permanently by doing for them what they should be doing for themselves.” – Abraham Lincoln.
It was the impression that such people made on my thinking that led me in the 80’s – before the ethics issue became the hot topic it is today - to champion in my own small way the cause for values-driven business behaviour and to question that most sacred of sacred cows, the accounting system. This is clearly a subject for future treatment and debate. So too will I need to come back to the definition of values. For the time being suffice it to say that they are prescriptions for our behaviour towards others and imply that the interests of the other override the interests of the self.
Raymond Ackerman is by far not the only one. There are many, many more who have understood their businesses as Kellogg did, as being primarily about meaning and adding value to people’s lives. Again, I cite Collins and Porras’s “Built to Last” and “Good to Great” as the definitive studies showing the relatively minor role of the profit motive for great companies.
And this is the model I spoke of last week. Not some grand new manifesto, structure or system, to which the word model does not apply in any case, but a multi-facetted model of behaviour – a way of doing things based on the wisdom of ages, a model that can be applied to any level of economic activity and even our own individual lives. Some of the blocks have been put in place. The first was to question the validity of any economic system that relies on material and immediate self interest as its driver. The understanding that we are all born selfish is palpably wrong as I tried to show in my first article. The second was to question the appropriateness of classical quantitative economics in shaping policies, systems and structures. South African Analyst, Shawn Hagedorn has eloquently argued this case in a Moneyweb article. This underscores the importance of the re-emergence of behavioural economics and the need to have its principles more widely taught, if not made a preferred qualification for the employment of business and other leaders. It certainly has to inform fiscal and monetary policies to a larger extent.
Another block is the need to break away from collective personae, glib assumptions of “factors of production” that get extrapolated to meaningless tapestries and lose touch with the human threads that go into their making. At my iconoclastic best I would submit that Milton Friedman may have known everything about economics, but he knew very little about people apart from some understanding of their base attributes…and then promoting a system appealing to the worst in the human spirit.
The most important one for business is the need to make a clean break from the marriage to the profit motive and the concept of profit maximisation. To this end I want to propose something seemingly outrageous: that we legitimise and de-stigmatise “profiteering”. The standard dictionary definition of “making excessive profits, especially in times of short supply” is meaningless. Price is supposed to move up to encourage supply and who is to say what is “excessive”? Laws against activities such as racketeering, price collusion, corruption and monopolisation are adequate enough to constrain coercive practices. Apart from the current stigma, there is little, if any difference between profit maximisation and profiteering. We must allow the profit focussed to live side by side with the service focussed. The only stipulation should be that they are transparent and honest about their purpose. A profit driven company can with pride take on the mantle of “profiteer” and thereby, according to some, attract a flood of investors wanting to make a quick buck. For some, like mining companies where a customer focus is a minor consideration, profiteering could arguably be a laudable goal. The others, the market and values driven companies will have to make do with the “old fogies” such as Warren Buffet who view their “best holdings as forever.”
We should all be concerned that we are being led inexorably towards authoritarianism unless there are behavioural adjustments to counter the proliferation of negative perceptions. We are perhaps fortunate that while only about half of the respondents to the latest Edelman Trust Barometer trust business to do the right thing, even fewer trust governments to do the right thing.