The 4 most important things I have learnt about the future of business

Here are the big lessons I have learnt from the four books that have been most influential to me in my career in business.

1. Being nice is the best approach to business.

I began my business career with a hang-up that business is a selfish game and that success has to be at the expense or failure of someone else. I believed that people who had succeeded in business had all done so by trampling on others on their way up. I don’t know where this belief came from and I feel kinda embarrassed about it now, but it wasn’t until I read Stephen Covey’s 7 Habits of Highly Effective People back in 2002 that I finally got it. Being nice pays. This book spawned so many business clichés like ‘WIN/WIN‘ and ‘Synergize‘ but a cliché is only a cliché when it has been so over-used that it loses its original meaning, and this book looks deeply at what it means to be a good and principled person. It’s as relevant today as it was when it was first published in 1989. Sounds quaint? Perhaps when a company like Google has a guiding principle of ‘You can make money without being evil’ then perhaps this is still a lesson that many in business still need to learn.

2. Giving power to the people is the ultimate business strategy.

In 2003 when Will left a print-out of this article from Inc magazine on my desk with the words ‘Fucking amazing – READ THIS’ emblazoned on it, I was about to discover the concept of organisational democracy – giving power and freedom to the people in a company instead of controlling them from the top-down. It wasn’t long before we both read Ricardo Semler’s book Maverick – a story about changing Semco, a medium-sized command-and-control company into a large, democratic powerhouse. We implemented many ideas from Semco as we built NixonMcInnes like having open seats for ordinary employees to attend board meetings, voting on company decisions and open book accounting so there are no secrets around anything money-related. Fast forward a decade and organisational democracy is still generally seen as quite extreme, yet more companies are finding democracy is the key to unlocking the potential of their people to drive the entire business forward.

3. The current capitalist system is fundamentally unfit for purpose and doomed. But there is a better way.

In the mid-naughties, I began following economist Umair Haque’s blog. What I will always remember from this time were his posts about the coming economic crisis. He called it the Macropalypse – the collapse of the global macroeconomic system. This was way before mainstream media and most politicians picked up on the crisis and in fact many didn’t see what was inevitable until it actually happened in late 2008. Haque still argues today that the crisis was systemic, not just cyclical and that we have not fixed the underlying causes of failure, merely propped up our failing institutions and systems through enormous debt provided by ordinary people. His thinking is laid out in his book The New Capitalist Manifesto which not only explains the causes of the problem, but sets out a wonderful and optimistic future of a better and sustainable capitalist system, using examples from large companies today like Walmart and Nike who have a very long way to go, but are starting to work towards this future in exciting new ways.

4. Employee ownership is the logical conclusion of democratic business.

When I read David Erdal’s Beyond the Corporation recently I had a sudden realisation that most democratic companies, whilst giving a lot of freedom and power to their people, are actually benevolent dictatorships. This is because the people’s freedom and power is not enshrined as enduring, inalienable rights, as they might be in a country with a democratic constitution. This means that the owners of a business still hold all of the ultimate power and can change the rules of the game on a whim, or sell out to new owners who can revoke their rights. The current situation is deeply engrained in our current economic system where there are business owners who have all of the rights and control, and then employees who are merely rented like machinery in return for a salary, with very few rights. Most of us accept this as ‘the way things are’ but there is no reason why the current system must endure forever, and with employee-owned businesses like John Lewis, Arup, Carl Zeiss and the Mondragon Network offering evidence of the power and success of employee-ownership I believe that this is the future of mainstream business. In fact I have a hunch that it could be a sweetspot between the socialist ideals of a very fair society with workers ‘controlling the means of production’ and capitalism’s promise of innovative, free trade without the need for a large clunky state.

So that’s my list. What are the books that have given you your big lessons in business?

Happy IN work vs. Happy AT work

I had an email from a reader who gave me permission to anonamise it and share:

[After working in sales and feeling something was missing] I moved into the care sector, retrained and was running the company after 3 years. He’s where it differed, there was and still is very little margin in the sector for any financial rewards. Care practitioners are on slightly more than minimum wage and do not have a reasonable fuel allowance. In domestic care they are accountable legally for the care/support they give and must attend quarterly supervision (by law) and have to retrain yearly. They work 24/7 365 on a rota.

Last year I moved to a new company and had to explain to 300 staff why their duties would expand due to ward closures, their area of travel would increase, but I wasn’t or rather couldn’t pay them any more. They were not happy. As qualified care practitioners, they were on less than staff on supermarkets check-outs.

I had of course checked the budgets, asked the directors for an increase and took another look over the council contract, where I realised that the contract was worth less than the previous year. When I queried this, I was told “carers do it because they care, not for the money“.

How about that for assumption. I handed my notice in soon after…

Classic management screw up, making an assumption about their people ‘they do it because they care, not for the money.’

The huge flaw in that logic is not understanding the difference between being happy IN work and happy AT work. The carers were happy to be IN work in a profession where they had real meaning and improved people’s lives, but it´s impossible to be happy AT work if you’re paid so little that money is a huge, pressing stress and you’re worried sick about paying the bills.

This is all too common in the charity sector where employers believe it’s enough for people to be working for a cause they feel passionate about and so don’t pay people enough or create a good working environment. At best, this is de-motivating, and at worst it makes great people leave and take their talents elsewhere.

Conversely, in many corporate jobs, including sales much of the time, the opposite is true. You get paid really well and have a nice comfortable life so you feel happy AT work but if you feel like you’re just being paid in order to make even more money for shareholders then there’s very little to make you happy IN work. And again this can cause great people to lack motivation or leave.

The key therefore is to create organisations with a very clear, higher purpose that people believe in and want to be a part of, and to ensure that you pay people enough to take money off the table as an issue so that they can focus on work. Once these base level needs are met you can then work up to higher levels of human satisfaction through recognition, social belonging and mastery of their craft which will take their motivation and performance to soaring heights.

Building a team from the bottom up

I’m working on a business plan for a new venture at the moment which I’m hoping to get going next year once I’m settled back in the UK (disclaimer: all plans are subject to change, especially whilst I’m still travelling!) I will make the plan publicly available for comment soon (the anti-non-disclosure-agreement) but I can tell you now that it includes setting up a large cafe/restaurant.

I’ve got a fair bit of entrepreneurial experience, but the hospitality business is completely new to me. So I figured that the first team member I need to get on board is a restaurant manager. Then I got to thinking, I wonder if you could run a restaurant without a manager at all and instead share the responsibilities with everyone working there. It would be unusual (I think) for a large restaurant and you would need to carefully implement some democratic systems and processes to make sure that the place runs smoothly, but I think it could be do-able.

My next thought was that to build a new team, instead of starting with the traditional approach and recruiting a manger first who then hires the rest of the team, how about hiring some junior employees first then working with them on the business plan (after all, they will be in the front line of actually delivering it and I’m sure will have some brilliant idea of their own too.) Then together with them you could talk about the management responsibilities and see if they could be effectively distributed. And if not, then the employees could hire their own manager. Not as their boss, but as an equal, just with a different set of responsibilities.

I think the benefits of this could be enormous. The employees would see that they really are the most important people in delivering the service to customers. They’re not just working ‘for’ a manager who has the real responsibility. And who knows how it might lead to a better team and customer experience if all front-line staff share the responsibilities and power of a manager.

What do you think? I would particularly like to hear from anyone who has worked in a restaurant but all views are welcome.