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Real Responsible Capitalism Requires Liberation, Not Restraint

Posted: 27/03/2012 23:55

There is little all party leaders agree on. But this year, the whole political elite seem obsessed with some form of "responsible capitalism."

After the fallout from the failure of free market economics, politicians dream that responsible capitalists will rescue our country from recession, solve our unemployment problems and make Britain a feel good nation.

But while politicians may have adopted the responsibility agenda, and interpreted it in their own ways, this has lead to heightened confusion about what responsible capitalism really means.

And, so far, any attempts at a definition have focused on big business. However, what applies to companies listed on the stock market and employing scores of staff doesn't always apply to small and medium sized businesses - the engine rooms of the economy, as the prime minister calls them.

For a start, core to the politicians' view of responsible capitalism is restraint, interpreted to mean stripping the bankers of their bonuses and stopping fat cats sat at the top of companies from raking in excessive salaries.

But restraint is an anti-entrepreneurial concept. Instead, for small and medium sized businesses, we should focus any definition of responsibility on a theory of liberation.

There are three main aspects to liberation in an entrepreneur's business: individuals, decisions and customers.

By liberating individual employees on the ground, by offering them a stake in the business and giving them a true voice in the company, businesses will find they have a motivated, valued and engaged workforce. And liberated workforces deliver excellent results - far exceeding those you might expect from a competitor operating to a standard business model.

Liberating decision making means entrepreneurs take decisions because they make good business sense, not because they have been imposed by regulators, a 'CSR' strategy or shareholder action. That's why at my company, The Clean Space Partnership, we introduced a 'single bin' recycling concept - it improves client service and is better for the environment. And it's why Ocado introduced 'green delivery slots', because it reduces their costs and is cheaper for the consumer - as well as being good for the planet.

Finally, responsible entrepreneurs liberate their customers to communicate - either with their voice or with their feet - which aspect of 'responsibility' it is they value. And when those customers have had their say, businesses must listen or risk failure. The reward for businesses that do listen comes through improvements that they know the market wants and therefore will buy.

So while operating in an ethical, sustainable and environmentally-friendly is of course a nice thing for a company to do, responsibility is really about so much more than this.

Responsible entrepreneurialism, as defined by the liberation agenda, can make a real difference to individuals, business decisions, customers and, ultimately, profits. Liberating employees and customers will also lead to growth, and that growth will cause the concept of responsibility to spread naturally. As small business owners, we can be pioneers of this approach to help shape a future form of capitalism where healthy profits and social value go hand in hand.

So, given that there are 4.5m small and medium size businesses in Britain, surely politicians should talk less about responsible capitalism and focus more on encouraging more liberation among entrepreneurs?

 

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