Business – why the toothless debate?

By Vincenzo Rampulla / @VMRampulla

The big beasts were on the prowl yesterday, both Lord Mandelson and Ken Clarke were taking part in a debate at the British Chamber of Commerce’s annual conference, which was being spun as the precursor to the election debates. But don’t worry, from the Guardian’s take on the debate it doesn’t look like any of us missed much for not being there.

That’s a shame. Whilst both the Conservatives and Labour are keen to make this election about the economy – and there’s no doubt it should be an important part of the election – it seems strange that the spotlight on business should only shine on the public sector and the financial sector. I’m going to put my neck out and say this: when we talk about nurturing innovation in business why aren’t we supporting more diversity in business structures too?

The prevailing attitude is that the private sector can look after itself; that everything is OK as long as profits and share price are healthy. But the private sector isn’t as efficient or as innovative as it likes to think. We should be bolder and more imaginative right now in thinking about how we encourage better and smarter businesses.

Shockingly, one profit report caused a whole workforce to cheer last week: John Lewis’. It’s shocking because I cannot imagine that happening in any of the FTSE250 companies – surely it can’t be good for business. John Lewis has bucked the trend throughout the recession. Their healthy profit and satisfied employees led to the Guardian aksing the question “Why aren’t more companies like John Lewis?” The mutual/co-op model has had a good airing when it comes to local authorities looking to innovate and grow the services they provide But why is the orthodoxy of traditionalist company models in the private sector not challenged more?

Secondly, it isn’t as if the government hasn’t already got a foundation to build on. The work of the Office of the Third Sector to nurture and spread alternative business models – like social enterprises – is often overlooked. Yet they are designed to achieve real public benefit, bring together communities and create profit for investment. Is it wrong to want whoever wins the election to be interested in seeing where this could lead?

Take the idea of a triple bottom line, one that sees profit as a blend of financial, social and environment success – surely it’s one that is attractive to Labour and the rest of the country. I’m sure Mandelson would be even at least “relatively relaxed” about companies that benefit communities and turn healthy profits that were shared out more equitably.

We’re at a moment where we can be radical about this. It sounds overly ‘leftie’ but if the concentration of wealth and profit in society is damaging then why not look at how we spread the ownership of wealth more widely? The staff at John Lewis got an extra 8 weeks’ wages because their company made a profit – not because of the largesse of their bosses – because they ‘partners’ in the company. We should be looking at that kind of stakeholdier attitude, rather than falling down the trap of talking about shareholding.

The idea that owning ordinary shares in a business is the same as having a stake in what a business does is – for most people – a myth. And for business it is becoming a joke. That is why the Tories’ big idea for the sale of shares in the nationalised banks was a flop. Let’s be bold and look at how we can give people real stakes in business; stakes in business they work for and actually care about succeeding.

How? Well, the state is an enormous purchasing power – we should use that for a start. We could explicitly favour, through Government contracts, companies can compete to provide triple bottom line value for money. That could mean, for instance, that we only contract companies who pay their workforces a living wage and explicitly favour business structures that share out profits more equitably throughout their workforces. We could value companies who invest financial profit into communities and embed processes that benefit the environment. It isn’t going to work for every company but let’s be unashamed about it – there’s nothing wrong in saying that we want John Lewis quality rather than Tesco’s ‘best value’.

And why not look at business incentives for startups that have alternative business models or embed employee profit sharing schemes right from the start?

It’s hyperbole to talk about a possible ‘revolution in business’ – but there should at least be the debate.