Too busy to read this? Listen to Julie on SoundCloud instead. She’ll soon put you to sleep…
This morning, I’ve been pondering the nature of business (as you do). Prompted, for the most part, by the recent news that the UK energy providers are raking in the profits (up by 733% we’re told) and Vodafone are paying just £1,400 tax on profits of £3.5bn*.
It’s no wonder that some people hate business. It feels lately that every newspaper we open, radio or TV we turn on, or blog we read, regales us with stories of corporate greed, hidden profits and backroom deals.
But — and it’s a big but — we risk confusing the vehicle with the driver.
Don’t blame the driver
We wouldn’t say that every Rolls Royce, by nature of being a Rolls Royce, was badly driven; or that every Mini is perfectly driven, simply because it’s a Mini. We know that the driver’s in charge. We understand that where he or she steers, the vehicle follows.
It’s the same with business, of course. It’s the people in charge — the CEO, the managing director, the board — who drive the vehicle, who are responsible for the decisions, the activities, the deals done, the money made and, ultimately, what happens to the profits. It’s they who decide where the money goes and who ends up richer. It’s not the fault of the business itself.
I’ve even had public sector people say to me that social enterprises are better businesses. No, they’re not. At least, not by dint of being a social enterprise. Just because something has a social aim, doesn’t stop the management team taking big salaries or wasting the income. Nor does a director of a limited company have to be greedy. Nor does a sole trader have to be hardworking but unfocused. You get the picture.
We were worlds apart
I once had an unusually heated disagreement with a dear friend. We’d both had a long day and were relaxing over a glass of wine. He’s always worked in public sector and, as we sat there we got talking about the differences between his day and mine. He had little understanding of the pressure of running a small business, of the direct relationship between effort and reward. He’d always had a (very generous) salary in his bank account at the end of the month, as well as six weeks’ paid holiday, no matter whether he’d done a great job, or an average job.
My day had been a particularly tough one (and one that all business owners will recognise). A very large contract had just fallen through at the last minute, despite weeks of meetings and negotiation. As I talked and tried to explain the effect on my business, my friend just didn’t get it. I said (probably unwisely, on reflection!): ‘You don’t understand. That’s my revenue. I needed the money to pay my staff and my suppliers.’
His face changed. He turned quite red and suddenly — and violently — exploded: ‘Well, business is all about greed. All you’re after is money, at anyone’s expense!’ I was really taken aback. I hadn’t realised he felt this way. In reality, he couldn’t have been more wrong. In all my years of business I’d broken my neck to do the right thing by my staff, my suppliers, my customers. Indeed, I’d sometimes lost profits to keep my suppliers in the UK. I felt hurt and really offended that he would group me with greedy, self-serving people whose only concern was profit.
And another thing…
‘Business isn’t greedy, how can it be? It’s inanimate!’, I replied. ‘It’s the people running those businesses you should be blaming. I’ve seen public sector organisations run by shiftless, lazy people who do only the minimum; voluntary organisations with senior management on ridiculous salaries; and small businesses run by ethical, highly moral people who care deeply about the people they serve and the people they employ.
‘The only group I can’t comment about is corporates. I’ve never been employed by one and have only set foot in those who became my customers, or our sponsors. Can you honestly tell me’, I said to him, ‘that you’ve never seen greed, or laziness, or downright theft even, in public sector?’
He looked at me. Taken aback by my own vehemence, I suspect.
‘I think you’re confusing business with the people who run them’, I said (a little too smugly perhaps?).
My black eye healed surprisingly quickly…