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The importance of compassion in business

10 Jun 2020

Written by Simon Rogerson

A time for optimism

I came downstairs the other morning to find my eldest daughter’s A-Level Business Studies revision book on the table. I’m not sure why, but as I ate my breakfast, I opened the book and facing me on page one was the question, ‘why do companies exist?’ Initially I thought this was a relatively profound question and the answer would be found more in philosophy than business, but sadly not. The answer was somewhat predictably that a company ‘exists to make a profit for its shareholders’.

If this is the way we’re teaching young people to think about business, it’s not surprising the world’s in such a mess. Now, don’t misinterpret this comment. Profit can be a good thing. Without profit, a business ultimately won’t survive. My issue, however, is that I think business has gone too far in one direction. Profit has now become the sole driving force behind almost every business decision and this is having an impact on the way we’re building businesses.  

Short termism

According to research by Microsoft, the average attention span of a human has reduced dramatically over the last few decades. It’s now eight seconds; marginally less than a goldfish. As living proof of this, try watching television with a teenager. They’ll cite BBC, ITV and Sky as, in their opinion, “TV for old people”. Teenagers are the very by-product of consumption, rapidly flicking between Netflix and YouTube, switching every few minutes as soon as a programme loses their attention.

The investment world has followed suit. The average holding period for an investment in 1959 was eight years. Today it’s eight months. Businesses (and management teams) are being judged on what they can achieve over a 240-day period. That, in my view, is in direct conflict with the very concept of asking a management team to build a great business. By default, we’re asking them to measure their success through cost savings or efficiency gains. This may well work for a few years but is not always sustainable and can often end badly. The point is, if we continue as we are, there’s the real risk that we’ll end up breeding a generation of companies so averse to change that they’ll simply opt for sitting on the sidelines watching rather than having a go themselves.        

The other issue with a focus upon profit is the inevitable drive away from humanitarianism and philanthropic pursuit. If shareholder interests are allowed to continue to dominate as they do, the end product will lack cultural diversity and substance. The bottom line will trump everything. Customers, employees and the wider world will all have to wait.

Transparency and change

Thankfully, as a result of society’s uptake of social media, the business landscape is starting to change. The walls previously created by businesses that were built to protect that very image of polish, whilst concealing a darker reality, have been gradually dismantled and replaced with well needed clarity and transparency. Customers can now see not only what a business does but also how they do it. Transparency is forcing business to evolve.

In this world of total transparency, companies have worked out that their values must be genuine. Which is why they’re starting to gauge their success not by how much money they make this quarter or next, but by what their customers, and their employees, are saying about them. They’ve started to take on some reassuringly human qualities.

The Coronavirus catalyst

This welcome shift in behaviour has been further amplified by the Coronavirus crisis. The sheer scale and impact of this global pandemic has made us all, both as individuals and as businesses, question who we are and what we stand for.

In a refreshing development, the business pages are now publishing an increasing number of stories about companies doing what they can to help the world around them. Whether it’s Dyson making ventilators, Burberry using its production line to manufacture protective clothing for the NHS or Unilever donating almost £100 million towards the global fight against covid-19, the evidence is starting to surface. The act of Unilever publicly committing to a more prompt and timely response for paying their small suppliers goes one step further and adds up to what is quite clearly a very human, compassionate and collectively ethical response to the crisis. All very much at odds with the ‘profit comes first’ mantra that the world has come to expect, and quite frankly, not a moment too soon.

Opportunity and optimism

This is all well and good, and so given the chance there’s one further thing I’d like to ask for from the business world. Optimism. Particularly at a time like this when our traditional sources of hope have, by and large, been discredited or lost the influence they once had. There was a time when politicians, economists, religious groups and charities gave us hope and ultimately more reason to be cheerful. The problem is that we no longer believe these people. For too long their actions have been at odds with their words and so people have learned to treat their campaigns as rhetoric.

People start businesses because they believe they can make the world a better place. As statistics prove, starting a business is the very definition of optimism. 90% of entrepreneurs will fail yet thousands of new people still take the plunge every year because they believe they’ll be part of the 10%. Think about this for a minute. If entrepreneurialism were a disease, it would be feared like nothing else. Fortunately, entrepreneurs simply don’t think like that; they are the very embodiment of optimism.

The problem today is that our experiences over the last twenty years or so have meant that our appetite for optimism in the wider world has succumbed to caution. We’ve been conditioned to believe that nothing can or will change. That we should simply accept that doing what we do today, but more efficiently, is progress.

Optimism is what can change this reality. It’s the belief that things can change. That we can be better. Optimism breeds success with the added benefit that those adopting an optimistic mindset will likely be happier and less likely to suffer from mental ill health.

At Octopus, we do what we do because we believe the world can be made better; backing other entrepreneurs, leading the transition to green energy, looking after our customers (and each other) are all proof of this. Optimism is what allows a business to overcome the bumps in the road. Optimism is what connects a business to its employees, to its customers and to the wider world it should be serving.

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