27/10/2015 § Leave a comment
“The basis of self-government and freedom requires the development of character and self-restraint.” John F Kennedy
I was talking to a friend recently who is setting up a new company. I suggested she include a clause in the company’s articles of association obliging the director’s to pursue a purpose beyond profit (typically in a company, there is no purpose stated, which means that by default company law says the director should place shareholders’ interests first). She questionned this, suggesting that people running a business are best left free to operate “unencumbered”, in other words to focus on efficiency and growth without having to worry about things like their impact on society or the planet.
This reminded me of something and later on I realised what it was. It was Adam Smith in one of the most often-quoted sections of the Wealth of Nations:
“It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest….he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”
I’ve spent most of my career in business and know how exhilarating it can be to feel free to pursue an idea and not worry too much about the consequences. It’s like being a teenager again. I am also aware that there are plenty of spoilsports in the world who like nothing better than to create rules and constraints that block other people’s activities. There are plenty of good ideas that never get off the ground because they are held back by bureaucracy and excessive caution. So why not let our businesses run free?
In my view it comes down to a question of scale. In the sort of micro-businesses that Adam Smith was talking about, it is generally healthy for the business to pursue “self-interest” i.e. maximising profit. If the local butcher seeks to maximise his profits and fails to care for those around him, he will quickly get negative feedback – he will lose customers, his staff will get upset, his neighbours will complain. He will soon find it is in his self-interest to balance pursuit of profit with caring for those around him. Having minimal restraints allows him to learn rapidly.
With large, modern corporations, on the other hand, it’s quite a different story. These are very powerful creatures. As they grow, they accumulate power and are able to influence the market in ways that favour their interests. They learn how to comply with the letter but not the spirit of the law, they manipulate others through advertising and slick communications, they have friends in high places who can sort things out for them if they go too far. Their scale makes them insensitive, and allows them to disable the checks and balances that operate in all healthy markets. The “invisible hand” stops working.
We are all living with the consequences of this. The environmental destruction, social inequality and financial instability we are experiencing these days is a direct result of insufficient constraints on large corporations. It is not difficult to think of examples of excesses by large businesses across industry sectors, including the media, banking, retailing, pharmaceuticals, auto industry or energy.
Government does little or nothing to stop these excesses. Indeed all shades of government we’ve had over the last 30 years have bought into the ideology that business is at its best when “unencumbered”. That’s why successive governments have shied away from any real reform of the banking industry post-2008. That’s why when directors’ duties were reviewed in the Companies Act 2006, shareholder value remained top of the priorities of a director, with welfare of staff, the community and the planet a distant second.
It’s become clear that governments lack both the will and the ability to effectively to regulate these behemoths. The way forward is for these complex human systems to become self-regulating. This means that they have to adopt internal governance mechanisms that regulate the managers, obliging them to consider the consequences of their actions.
This may sound idealistic but in fact it’s already happening. For example, many large corporations in the mining sector have set up stakeholder councils, so that the board have direct understanding of the major social and environmental issues affecting their decisions. The retailer B&Q established a youth board to dialogue with the main board of directors. Companies are increasingly monitoring social media, seeking to listen more closely to what customers and the community want. Increasingly sophisticated ESG (environmental, social and governance) measures are being developed, pushed by demand from businesses who are seeking new, more holistic measures of success.
More radically, an increasing number of businesses are becoming employee owned or signing up to become B Corps, where they commit to a purpose beyond profit.
To me, this is a matter of maturity. As adolescents, we can kid ourselves that we have no need to take into account the needs or wishes of others. As we grow older, a more mature view takes hold. We realise that joy in life comes not from absolute freedom (an impossibility) but rather from freedom within restraints that are accepted willingly.
It is not wrong to be an adolescent – it’s just an immature phase we go through. Likewise, it’s not wrong to be a company focused primarily on profit. But it’s an immature phase and one that, for all our sakes, we need our large corporations to grow out of.
08/12/2014 § 2 Comments
My wife works in the NHS, the biggest employer in Europe. The NHS, providing free health care to all, has been a remarkable achievement. But there are many signs that pressure is building within the NHS at all levels – staff are unhappy and stressed (in my wife’s team alone, more than a quarter of the staff are absent with long-term sickness), finance is increasingly tight, more and more legal claims are being brought against doctors. Every now and then the system breaks down somewhere and horror stories emerge of badly neglected patients. Politicians are coming under increasing pressure to do something.
I was speaking to Cathy recently, a colleague of Dasha’s, who has worked within the system for more than 30 years, and asked her how she deals with all this. Her response was, in effect, “So long as I have a good team, I don’t mind.” She works in a team of 20 people who provide care in the community and she likes and respects most of the people she works with and that’s enough for her.
Organisations of any reasonable sort of size (let’s say over 30 people) can be crudely divided up into “tops”, “middles” and “bottoms”. At the top are the controllers, pulling the levers of power and hoping that they will get the response they intend further down the organisation. They tend to be strong on left-brain thinking, analysis and planning and they like to feel in control. Since it is pretty much impossible to really ever be in control of an organisation (you can certainly influence it but control it – never!), they are also quite good at pretending to themselves and others that they are in control. You can’t really blame them for this – the owners, the distant people who appoint them, expect them to be in control so they are obliged to pretend. One of the problems with this is that it gets in the way of them realising that they need information from the bottom in order to know what it is they are trying to control. Smart people at the top know that without this information they are worse than useless.
At the bottom we have the doers – people like Cathy. This is often the most satisfying place to work. If you have a good team around you, you can often ignore (most of the time at least) problems in the wider system. Their job is to get the work done within the constraints handed down by those above. They tend not to spend much time thinking ahead, or on strategy or big picture stuff – if they do, it can just get in the way of them doing their work in the moment. Yet they do need information about the big picture, in order that their work makes sense as part of the patchwork, and so that they can coordinate with others at the bottom to avoid duplication or gaps.
Then there are those in the middle – the multi-taskers. They have three critical functions. One is as a communication medium. They facilitate vertical communication, so the tops know what is happening at the bottom and the bottoms know where they fit in the system. Since the tops and the bottoms tend to think differently, they also speak different languages so the middles need to speak both languages. To communicate effectively, they also need to be good at filtering, sifting and distilling information – it is no use to the few at the top if the middles simply relay up all the information from the many at the bottom – the tops will quickly be overloaded. So the middles need to be good at extracting the essence and passing that up, and passing back down whatever comes from on high, translated so it makes sense in the local environment inhabited by the bottoms. Middles also have to be effective in horizontal communications – speaking with other middles to ensure that there is coordination across the organisation.
The second principle function of a middle is to appoint, monitor, supervise, inspire, hold to account, mentor and in general “manage” (there are so many complex and often hidden meanings in that simple word) the bottoms.
The third function of a middle (as indeed of tops and bottoms too) is to monitor, hold to account, and general manage themselves in their own tasks. This may be the hardest and most important of the lot.
Not surprisingly, the supermen and superwomen who work as middles in large organisations tend to get stretched, and the larger and more complex the business, the more stretched they get. It is rare to find a middle who can even do one of these critical and, let’s face it, usually very demanding, functions really well. To expect them to do all three well is fanciful. The way large organisations, whether private or public, tend to deal with this is to add more and more middles into the equation, promoting some of them to supervise the others. This can improve things for a while. After all, as studies have shown, almost any intervention from above can have a short-term positive effect, mainly it seems because those below like to think those at the top are paying attention to them (in one study, lights in a factory were turned up and the result was a measurable improvement in production productivity. At the end of the study, the lights were turned back down again by mistake and productivity improved again!). But since such an approach doesn’t address the fundamental problem, mostly what you get is a bigger wage bill (and the middles cost a lot more than the bottoms, though of course not nearly as much as a top) and often less efficiency, because the system gets more complex the more layers you add. What’s more, the organisation gets filled with professional managers who understand the theories of being a middle better than they understand the actual work of the organisation. This can be okay if they spend a lot of time with the bottoms, but because they have elevated salaries, many of these professionals feel it is beneath their dignity to spend a lot of time with the workers – so they hang about with other equally un-informed middles.
As far as I can work out, this is more or less what’s been happening in the NHS. People like Cathy carry on with their jobs but more and more they get weighed down by the pressure from the middle. I would love it if someone would measure how many managers have been added in the NHS in the last 20 years, as a proportion of the whole, and what the impact on patient care and efficiency (both important measures) has been.
An innocent outsider reading this might begin to wonder “Do we really need the middles?” This previously heretical thought is starting to occur to more and more tops (and indeed to middles and bottoms).
A talk at the RSA couple of weeks ago highlighted one of the most successful examples of taking this idea and pursuing it with rigour. Buurtzorg is a not-for-profit healthcare provider in the Netherlands. There is not a single manager in the place – instead it runs itself as multiple self-organising teams comprising 10 people each, who have broad responsibility for their own finances, scheduling and other key decisions. They do have “coaches” who fulfill the vital communicating function which is normally the responsibility of middles. But these coaches are not managers and they don’t have the power or responsibility that goes with it. Apart from anything else, there are simply not enough coaches for them to be able to pretend to manage anything. Buurtzorg has achieved remarkable success already. The most important indicator is the effects on patient satisfaction, which is far higher than in other organisations performing a similar role in the community. Staff satisfaction is likewise very high. By another measure too, they have been extraordinarily successful – in the space of just 10 years, Buurtzorg has grown from a group of 10 people to an organisation of more than 8,000.
Of course an organisation needs to be adapted to fit its context, and contexts vary massively from country to country, and industry sector to industry sector. So we don’t know how this approach might work, say, the oil sector in Texas, in aerospace in France, in pharmaceuticals in Sweden, or in the transport sector in Japan. But more and more examples are emerging of organisations taking this route to solve the problem of the squeezed middles. W. Gore, Vitsoe, Happy, FAVI, Sun Hydraulics, to name but a few. And this is not to mention open source communities and other on-line (Wikipedia, Flickr) and off-line organisings (Burning Man) that are radically re-thinking the way we organize. I dream that one day this sort of thinking will start to permeate the NHS and other great but troubled institutions.
For this to happen of course, we will also have to answer another question – having dealt with the middles, what you do about the tops? That is a question for another blog post!
13/11/2013 § 5 Comments
– organise – “form into an organic whole” (Oxford Dictionary).
For many years I have been interested in, nay fascinated by, organising and organisations. I feel I have something in common with Sisyphus who, in the Greek legend, was fated to spend eternity rolling a large rock up a mountain, only to watch it roll down again every time he approached the top. Likewise, just when I think I am on the verge of making a profound breakthrough in my understanding, I learn something that humbles me, that makes me realise how little I really know.
I am in good company. Great management writers including Peter Drucker and Charles Handy have acknowledged the awesome complexity of the subject. In the words of Handy: “The meeting of self and others, of individual, or individual institution, and the community, is probably the most complex issue of our time.”
So with that in mind, in all humility, I want to offer up here my integral model of organisational regulation. I call it integral because it draws together multiple ways of looking at organisations, and because it draws on the work of Ken Wilbur, who developed an “integral model” which he shared in his book “A Theory of Everything.” Without further ado, here is my model (click on it to see an expanded view):
The idea is that you can use this model if you want to make sense of, or seek to influence the behaviour of, a group of people. By looking at each quadrant in turn, you can form a picture of the organisation that is multi-dimensional. So for example if you want to understand why the UK banks have been behaving in the way they have, you can start by looking at the top left quadrant. This will lead you to enquire into the values, the inner drivers, of the individuals in the bank and particularly those at the top. Many people never get beyond this enquiry. But we have only just started.
Moving down to the bottom left, you might then enquire into the culture of the bank. What are the shared values, the shared norms? What world view predominates? What does the organisation as a whole consider most important?
In the top right I have placed governance (it is externally visible and it is about relationships between individuals). What rules, procedures and structures are in place? How does the bank make decisions, and how are they implemented? Who is involved? What checks and balances are in place? Who is accountable to whom? How does communication flow within the organisation?
Finally there is the bottom right: relationships with stakeholders, such as its investors, customers, suppliers, society and the planet. What systems does the bank have to engage with stakeholders, to listen to them, to understand their needs, to account to them for its behaviour?
The model can be quite revealing. One of the first things that is apparent is how people tend to get drawn into just one quadrant and disregard the others. People will insist that the banking crisis in 2008 was because of poor leadership. Others will talk only about the prevailing culture in the banks at the time, or about the need for better corporate governance. Our model is a reminder that life is more complex than that, and that we need to pay attention to all the quadrants. There are consultants who build entire careers specialising in leadership, or governance, or stakeholder engagement, or cultural work, and never understand where their part fits in, or even that they are only looking at part.
Using the model, it is possible to make general observations about different types of firms and where they tend to be more developed. Professional practice firms, for example, tend to be well-developed in the top part (the “I) and particularly the top left, leadership, while paying insufficient attention to the culture they create or their relations with their stakeholders, including their junior staff. Cooperatives are strong on “We” – culture and relations with stakeholders. They are much less well-developed in leadership and governance.
In small companies, the left hand side, the “softer” stuff of values, tends to be more significant than the right hand side. Key individuals can make a huge difference to the way the organisation behaves. By contrast in a large plc, the right hand side becomes very significant, particularly the bottom right where the power dynamics between the board, investors, customers, government regulation and wider society come into play.
For those of us with more than an academic interest in the behaviour of organisations, this model can be powerful tool. It can help us to make informed choices about where to intervene in the system. If we want to influence an organisation, should we seek to introduce leadership training? Or is cultural work more pressing, or perhaps some tweaks to the governance? Perhaps all of this is required, plus some attention to stakeholder engagement.
Using a variant of the model, we can even map the state of evolution of the organisation, and chart a course of development:
You don’t have to agree with my labels. You can adopt your own preferred model of what an evolved organisation might look like, drawing on Maslow’s hiearcarchy of needs, or spiral dynamics, or whatever.
I want to add a spiral partly because I like spirals but mainly because it reminds us that each quadrant is closely related to, and interdependent with, the others. Improve the quality of leadership and you are likely to get better governance. Work on the culture and you will enhance stakeholder relations and raise the standard of leadership. And so on.
I will leave you with a couple of beautiful thoughts. Firstly, it doesn’t matter where you are on the spiral, life is about working with what you have and where you are. Secondly, the spiral has no end…
08/03/2012 § 1 Comment
We each see the world in a different way, from our own perspective. Things that are glaringly obvious to some of us are invisible to others. If I look at writing in Chinese it is meaningless squiggles – to someone else it can be the most enlightening thing they have ever read. A botanist can look at a meadow and see 50 different species of plant – to others it just looks like grass.
I was reminded of this truth last week, after I attended an event with the theme “Ownership – the only thing that matters for long term growth? Ownership is one of my themes, as regular readers will know, and it seems to be something of a hot topic at the moment.
Although the event was billed as a forum, it was largely about entertainment and “networking”, the focus of the event being three business celebrities giving their opinions on the theme. The first speaker (a market fundamentalist perhaps?) thought it would be a good thing if there were more competition amongst forms of ownership. The second speaker was adamant that any connection between ownership and growth was insignificant in comparison to the importance of leadership and management.
So far, so unsurprising. But the third speaker managed to both entertain and surprise me. A seasoned business journalist, he was the master of the pithy and witty phrase. He started off by saying he saw an organisation as a biological system rather than a machine. He then, with considerable insight I felt, listed various ownership models and associated behaviour patterns. Partnerships, he observed, are good at maintaining ethical standards because knowing you are personally liable for your colleagues actions means you keep a close eye on him or her. Cooperatives have poor management because the members are not sufficiently involved in the business to hold the management to account, or move them on when they are not working. Ditto with other mutuals (such as building societies and mutual assurance companies). But mutuals do tend to be more resilient than shareholder-owned businesses because they have less incentive to take big risks.
What took me aback was that after all this analysis, which matched much of my own observations, he concluded by saying that he agreed with the previous speaker that leadership and management was far more important than ownership. It seemed to me that this contradicted pretty much everything he had said before. It was certainly inconsistent with a view of an organisation as a biological system. He talked of management as if it was a small group of people who ran the business. Yet in a biological system, management is an emergent property of the system, not a function of one small part. And since ownership is a vital part of the system, it has a major effect on the management. If you want good management then of course you pay attention to who you appoint in key roles, but you also need to set up structures and processes that connect those people with the rest of the organisation and with the outside world, that support them in their work and that hold them to account for their actions and decisions. This is how you get better management over time – by creating a better system.
At first I couldn’t understand why this intelligent observer couldn’t see the contradictions in what he was saying. But in fact this blindness to the system effects in an organisation is, in my experience, quite normal. People see the individuals that their eyes present them with, and don’t see the patterns of behaviour that lie behind, that influence their every thought and action. Society blames the individual (Fred Goodwin, David Cameron, whoever) and ignores the system.
To me this is a classic case of not being able to see the wood from the trees. If you want to understand trees, studying lots of individual trees is a sound approach. But if you want to understand the wood, then as well as studying trees, you need to pay attention to the whole network of relationships between all the elements of the wood; the trees, the birds, mammals, insects, microorganisms, rain, air, and so on. It is called life ☺
I find the rational mind struggles to cope with all this complexity, but the intuition can do this quite effortlessly. So most doctors, schooled ruthlessly to use the rational mind, struggle to understand more holistic approaches such as homeopathy, acupuncture, Chinese medicine and so on. They are focused on the parts, which they can see and touch and feel, rather than the relationships between the parts. Of course you can’t actually see a relationship – you have to intuit it. This is why, in a time and a society where rational thinking is still the dominant way of engaging with life, I get blank looks or denials when I tell people that if we want to see different behaviour in business or in society as a whole, we need to look at the system. For me it is obvious but most people don’’t seem to see the relationships and hence are not aware a system even exists. One of these left brain types once famously said “There is no such thing as society”. She just couldn’t see it.
But then, seeing the world as a set of relationships is just one way of seeing the world. It’s my way. What’s yours?
05/10/2011 § Leave a comment
“Things are neither good nor bad but thinking makes them so”. William Shakespeare, Macbeth
In his speech to the Labour party conference last Tuesday Ed Miliband proposed, in essence, that companies be labelled as “good” or “bad” and taxed and regulated accordingly.
You can see where the thinking comes from – it is pretty much how our foreign policy works. If you are considered “good” (e.g. Kazakhstan, which allows our bombers to use it airfields) then you can get away with murdering your citizens. If you are considered “bad” (think Iran or, in the case of the US, Cuba) then you will be punished no matter how you behave. At one time Iraq under Saddam Hussein was considered good – we trained their soldiers, accepted their investments and traded with them. Then they became “bad” (i.e. stopped doing what they were told) and so we bombed them.
Maybe the next step will be to apply this thinking in the criminal justice system. We won’t wait until people have committed a crime – we will simply label some people “good” and others “bad” and tax and punish them accordingly. That seems fair.
But enough fun. There is of course a serious point that currently the state is failing in its function of holding corporations to account for their actions. Ed Miliband is to be applauded for daring to say this, even if his way of saying it lacks sophistication.
There is growing awareness of this problem and its links to the existential global crises we face (such as economic volatility, environmental crisis, resource shortage and social fragmentation). But it seems no one is quite sure what to do about it. Since I am not shy, I am going to have a go at making sense of the problem.
It might help to start with a metaphor. Large businesses often remind me of overgrown teenagers. They’re always growing, they are insensitive to their effect on those around them, they can do a lot of damage to themselves and others, and they’re eating us out of house and home! They are not necessarily acting maliciously, with intent – they are simply unconscious.
Fortunately most teenagers grow out of this phase. They reach adulthood and start to behave more responsibly, more sensitively. Yet corporations don’t – they seem to be trapped in a state of eternal adolescence. This is because, unlike teenagers they are not structured for learning and self-regulation – it wasn’t in the original design brief.
Think how humans are designed for responsible behaviour and moderation. When they are tired they take a rest, when they have eaten enough their stomachs tell them so, they are sensitive to others and their surroundings through their senses, they have a conscience to tell them when they are going wrong and ultimately they can be locked up if they exceed the normal boundaries or do outrageous things.
The corporation, by contrast, although made up of human beings is not structured like a human and doesn’t behave like a human. It has no conscience to tell it when it is doing wrong, no stomach to tell it when it is full, no limbs to get tired, no body to put in jail. It has no physical location so it can be all over the world simultaneously. It can grow without limit, having no sense of appropriate size.
If the corporation is a human then it is, as Joel Bakan put it in his book “The Corporation”, a pathological one. Generally a healthy human being pursues profit as a means to an end – to feed his or her family, to provide warmth and shelter and, once those needs are covered, to exercise creativity or whatever. A human who pursues wealth as a highest value becomes like Fagin or Scrooge and is generally shunned by society. By contrast, corporations are expected to obsessively pursue growth and profit. Executives who do this are rewarded with more money, even when they fail (think Fred Goodwin).
Part of the problem is that corporations are not free agents. They don’t have the freedom to take their own decisions since they are in servitude to their masters, the shareholders. Like slavery this is an immoral, unsustainable, inherently abusive relationship , one in which the master has power but no responsibility. The relationship itself overrides the slave’s natural behaviour – his fear of the master is greater than his conscience or his tiredness, and he does everything he can to maximise profits for his master’s benefit.
This is a teenager who is apprenticed to a miser and who lives in constant fear that his master will come and call him to account – where’s my money! And no matter how much he gives his master he knows it won’t be enough. Next year the master will want more.
By the way this is not to judge the people who make up the corporations, not even the board or the shareholders. The system is bigger than them. What I am trying to describe are emergent properties of the system.
If we are to improve these teenagers’ behaviour, it is no use labelling them, or trying to use the blunt instrument of external regulation. There is work in many diverse fields (e.g., Elinor Ostrom in management of commons resources, and many scientists in the field of complexity) that shows the inherent superiority of self-regulation rather than external regulation.
Rather, we have to engage with these individuals and seek to educate them, and we have to re-wire their brains, re-structure their bodies and re-adjust the way they relate to the wider world. There is lots that can be done by activists, within and outside the corporations, to help bring this about, but ultimately the game-changing action will be at government level, with the introduction of new laws.
These are the measures I would prescribe to deal with these unruly citizens:
– Ensure that the board is appointed by a range of stakeholders, not just one elite grouping of investors. We cannot reasonably expect a board of a company to serve society when it is appointed solely by representatives of shareholders. They will naturally favour the interests of those to whom they are beholden for their jobs.
– Change the fiduciary duties of directors so that they are required to balance the interests of all stakeholders, rather than prioritising the interests of one interest group.
– Ensure that the company has an effective, semi-autonomous conscience. In legal theory the company secretary is the conscience of the organisation, but the secretary is appointed by the board or the CEO and cannot be considered autonomous. Like the board he or she must be appointed directly by the stakeholders.
Of course these are just the headline changes and there is lots of detail that would have to be sorted out. I am available for consultation on implementation 🙂
I have no doubt that our society is not ready to make such radical changes. Not just yet. They are too controversial and would be attacked from all sides because, fundamentally, I am questioning property rights, one of the corner stones of our legal system. But I have a feeling that as we go deeper into the economic crisis we will start to understand that we need to think radically if we really want change. We will start to understand that it is by placing economic interests first that we have caused this crisis.
And if Ed Miliband were to propose such measures, I might even vote for him!
11/07/2011 § Leave a comment
I didn’t post a blog last week – I wasn’t happy with what I wrote and didn’t find time to write anything else. Instead you might like to read this – a post I wrote for the Ellen MacArthur Foundation.
16/06/2011 § 2 Comments
“Exactly. That’s what’s been happening here for the past ten thousand years: You’ve been doing what you damn well please with the world. And of course you mean to go right on doing what you damn well please with it, because the whole damn thing belongs to you.” Daniel Quinn
Years ago Dasha and I moved into a rented flat in London. It was tiny, with just one bedroom, but had a gorgeous mature garden 100 foot long. I looked forward to working in it, cultivating the soil and planting things, weeding, pruning the shrubs, sowing annuals. Yet as it turned out, I didn’t do any of these things. The grass grew long, the shrubs grew untamed, along with the weeds. I enjoyed spending time in the garden but wasn’t motivated to improve it.
After a year we moved into a small house that we had bought, which also had a garden. This time I had no motivational problems – over the next few years we transformed that garden from a patch of unkempt grass, overgrown laurel trees and old patio to a beautiful, fertile, colourful haven.
The main difference between these two situations is the sense of ownership I felt in the house. In the flat, I knew we were only there temporarily and felt that if I put work in, I wouldn’t get it back. I also knew that I couldn’t make all the changes I would like – it belonged to someone else and they might not approve. In the house, by contrast, I had freedom to do what I wanted (subject to negotiation with Dasha), the knowledge that I would be there for a decent period of time and so could see the results of my efforts over time, and the incentive that a beautiful garden would create value. We would get pleasure from spending time in it and it would increase the value of the property when we came to sell. And so it proved.
For those of us interested in having a healthy relationship with Mother Earth, this sense of ownership is something we want to cultivate. The pillaging of our Earth’s resources and the degradation of our ecosystems would surely cease if we remembered that this is our home for the long term.
Yet much of what is commonly termed “ownership” in our society is simply a license to exploit, carrying rights but precious few responsibilities. This is most extreme in the case of shareholder ownership, which carries power but no legal responsibility. What sort of ownership is that? Our laws are there, it seems, primarily to protect the powerful from any sort of accountability. If we are lucky, an enlightened “owner” will care for what he or she owns. If we are not, the law sits idly by.
We need a far more mature version of ownership – ownership based on love and freedom, not on fear and control.
Funnily enough, we can see a model, of a sort, in the development of the role of the Queen over the years in property law. In strict legal theory the Queen (or to be precise the Crown, which in effect means the state) owns all the land in the UK. We simply have a temporary license to occupy it with her permission. In feudal times this gave the king or queen huge power. Over the years however, as a result of a series of freedom struggles not so different from what has been going on in north Africa this year, we have been liberated. We now hold our land free from interference from the Crown (“freehold”) and this is backed up by the law. Of course the Queen is still there, but her role is now largely symbolic.
Is this the future of shareholder ownership? At the moment shareholders retain ownership of their capital and “lease” it to the board and staff to make profit from. The shareholders then sit at a distance and collect the surplus profits. They can fire the board if there is insufficient surplus. This places considerable pressure on the board to maximize profit above anything else – after all, for many people the first thing on their list of things to do each morning is “Keep my job”, which means keep the shareholders happy. Hence we get this remorseless drive towards growth at almost any cost. We would get very different, more responsible, behaviour if shareholders power were diluted, allowing a universal suffrage where a cross-section of society appoint the directors.
As I write all this down it sounds terribly sensible (to me at least!). Yet to question the nature of ownership in our society is a revolutionary act. It is to risk being called a communist or worse.
Yet as I have tried to show, I strongly believe in ownership and the positive behaviours that can accompany it – responsibility, caring, taking a long-term approach. It is just that they’re not generally associated with shareholder ownership, and certainly not on the stock market, where remote speculators exchange shares like playthings.
I don’t mean to tar all shareholders or businesses with the same brush. There are business people who act like long-term owners. But far too many are acting like temporary tenants – once this piece of land has been exploited, they’ll move on. Only there is nowhere else to move to. Whoops….