Mark Goyder is a senior advisor to the Board Intelligence Think Tank. He’s the founder of Tomorrow’s Company and co-author with Ong Boon Hwee of Entrusted: Stewardship for Responsible Wealth Creation, published by World Scientific in 2020.
Last week BBC Radio 4 hosted a discussion about capitalism between three authors — the Financial Times’s Martin Wolf, US Senator Bernie Sanders, and economist Kate Raworth, whose contribution to an earlier broadcast I commented on here.
None of these three participants spoke positively about what I would see as one vital building block in capitalism: the entrepreneurial spirit.
Bernie Sanders allowed some place in the economy for the privately owned “Mom-and-Pop store”, but beyond that saw capitalism as a system driven by greed. Martin Wolf came closer, describing the decentralised markets through which capitalism allowed “independent actors” to pursue profits.
Kate Raworth defined capitalism as an economic system that prioritises delivering profits for the owners of wealth, be they shareholders, landlords or moneylenders. This exclusive focus on finance “systematically puts a squeeze on everything else that we value”.
None of the three mentioned the extraordinary journey made by so many entrepreneurs — often migrants — who start with nothing but create an enduring business by sheer willpower, and energy, and commercial flair. People like the Sieffs (Marks & Spencer), the Eu family in Eu Yan Sang (Malaysia), or the Tatas in India.
Once a business has been founded by these single-minded people, it may grow fast but will only endure if the owners, directors, and leaders maintain that same energy and focus.
Listening to both Raworth and Sanders, one would be forgiven for thinking that the corporate giants who bestride our world would be entrenched forever. The recent decline and fall of General Electric (GE) — for long the USA’s most-admired company — reminds us how quickly dominance can be dissipated by complacency, bad judgement, and, especially, by the loss of entrepreneurial drive.
In his history of the company, William D Cohan tells us that by 2009 the firm was under growing pressure. It had lost its AAA credit rating and its share price was in decline. To ease the pressure on him, CEO Jeff Immelt agreed to sell NBC to Comcast. Here is what Steve Burke, CEO of Comcast found after doing an audit of all the businesses he had inherited as a result of the purchase: “Of the ten categories of business Burke discovered that 8 out of the 10 were in either the third or fourth quartile of performance.”
He quickly ascertained, he said, that “The incentive at NBC wasn’t to make money. The game was to keep GE . . . happy. So the game became telling a story as opposed to running businesses.”
After completing the purchase, Burke described the changes he made which quadrupled the value of the business:
“It was a complete cultural change and we got everyone focused on . . . Think[ing] like an owner, not a renter . . . GE encouraged people to think like a renter, because they would move people around so quickly and they would do all this mumbo jumbo.”
~ William Cohan, “Power Failure — The Rise and Fall of General Electric”, Allen Lane, 2002, p 543)
How does one get young people to approach their working lives thinking like an owner? For the last two years, Tomorrow’s Company has been working on this problem, starting with undergraduates but extending our work from 2022 to engage with 15-year-olds in the classroom.
My colleague Jon Maguire has been leading a pilot programme at a school in the East Midlands and told me recently:
“When we first explained the scope of our project, we were met with twenty-three pairs of wide eyes and an eery, nervous silence. There seemed to be a chasm between our projected outcomes and the reality that sat before us. Six weeks later, we are seeing a growth in confidence as they become more comfortable in each other’s presence, but mostly I believe we’re seeing these changes because the students are being treated like young adults at the beginning of their careers instead of older children at the end of secondary education.
Our sessions provide the students with new skills, tools and techniques, and then the opportunity to put them into practice through project-based activities. Initially, some of the sessions stuttered as students came to terms with a new way of learning — moving away from learning by rote towards more self-directed learning with coaching and support.
Students are beginning to identify their own strengths and weaknesses, and identifying complementary skill sets among their peers. When tackling the weekly challenges, they look less to the facilitators for the answers and instead look within their team. They can relish their successes, and look for positives when they are helped to reflect on their failures.
At this point, our students are ‘owning’ their own learning, ‘owning’ their weaknesses, ‘owning’ their successes, and learning the key skills to take ownership of their futures.”
Capitalism displays many faults — among them greed, distortion, financialisation, inequality, and short-termism. Against these, let us continue to celebrate and perpetuate its advantages — above all, that entrepreneurial spirit, which carried through in the best enterprises manifests itself as “thinking like an owner”. Deal with the greed but don’t destroy the creativity and sense of personal responsibility.