On economics, business and reputation

They say money makes the world go round but I don’t think that is true. Money is the oil that facilitates transactions, not the fuel that drives the engine, nor the destination. No business can operate without the support of the people it needs to do its thing. People make the world go round, not money.

It feels to me like the traditional economic model ie paying-workers-to-make-stuff-creates-wealth-and-spending-power-for-those-workers-to-buy-other-stuff (aka ‘money makes the world go round’) is no longer fit for purpose.

The economist and writer Kate Raworth captures the big picture well in her doughnut economics model. She points out that the traditional economic money-based model fails to account for the finite resources of the earth, or the massive human resources involved in unpaid, sharing and collaborative work. She frames human activity within a social foundation that protects human rights for all and planetary environmental boundaries.

The trouble is that profit has been the one-dimensional language of business for so long that the money-money-money approach is deeply embedded into the business psyche and it is hard to let go. Meanwhile, the world is moving on and businesses are getting out of step with the people they serve. Customers, employees, suppliers, partners and neighbours increasingly expect more from the commercial organisations they buy from, work for, work with and live near.

As a result, cracks and gaps are showing up all over the place as businesses scrabble to cope with the fallout from their actions on emissions, workers’ rights, resources, supply chain management and tax. Reputations built on years of profitable trading are being eroded, or in some cases, crumbling away in a matter of weeks.

In this context, business is required to step up to a greater level of responsibility and to find a new, sustainable approach to go with it. That means thinking differently, behaving differently and communicating differently. Just look at leaders like Unilever and Kingfisher to see brands that are transforming the way they operate, or challengers like Patagonia, MUD Jeans and Snact to see innovative new business models in action.

In business, reputation is built on what you do. How you make your money, not how much you make or what you do with it when you have got it. Reputation is about doing business well and responsibly for the long-term benefit of people and planet as well as profit. To manage reputation effectively business leaders need to understand stakeholders' expectations, take responsibility for their activities and articulate their vision with clarity and integrity.

If you’d like to talk further about managing and communicating the reputation of your business please contact me for a chat. I’d love to hear from you.


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