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The 10 Things Wrong With Business Today

22/02/2012 14:14 | Updated 21 April 2012

Chris Bones takes us through the top ten ailments of modern business. His book 'The Cult of the Leader: A Manifesto for More Authentic Business' (Wiley, £18.99) was winner of the CMI Management Book of the Year award

1. It has few active champions thanks in part to the antics of some of those at the top of global firms over their remuneration and in part to the lack of reinforcing important values in decision-making. The list of poor business decisions in the last five years alone is pretty impressive. This is a tragedy. Businesses are the only real source of growth, jobs and taxation receipts (directly and indirectly through taxes paid by their employees) to support public services and both public and private pensions. It's time big business in particular put its house in order and business generally reconnected with the rest of us in society. Without a successful private sector we will be poorer all round. The next nine points outline what needs to be put right to get us onside. After all we are their customers, their employees, their shareholders and members of the communities in which they operate.

2. The bigger they get, the less they think about their customers. If they do think about us its as sources of additional income and margin not as people who they need to serve and satisfy. More of us would stick with a great company and worry less about getting the lowest price if they delivered what we wanted.

3. The smaller they are the less they are prepared to invest in their people or take on potential over immediate skills. There is a worrying lack of willingness to take on people who don't fit perfectly into whatever skill set is required. This is creating a huge pool of unemployed young people and equally of those much older whist having the bizarre effect of creating skills shortages and rising wage bills driving up the cost of employment.

4. Those at the top of big business are paid way in excess of the actual value of their contribution. 30 years ago a UK CEO would earn 30-40 times more than the lowest paid. Today it's over 100 times: nothing has changed over that time in either job to justify a tripling of that ratio.

5. Public companies have lost touch with the real long term interests of their shareholders and now respond to the short term priorities of fund managers who are looking to fuel their own bonus scheme returns. If you want an example go no further than Kraft's acquisition of Cadbury with the huge costs incurred and consequent loss of jobs.

6. The obsession with 'talent' has created a focus on small elites with the skills and abilities of the mass of employees being undervalued and underappreciated. Internal development and promotion is no longer a priority for many.

7. The obsession with efficiency has driven a lowest common denominator standardization into many business sectors, especially retailing. Just look at the high street: where is the diversity of offer that reflects the diversity of the customer they serve? The high street will die because online retailers have worked out that diversity of offer is the key to success, not because of the costs to hire or the desire to take cars out of city centres.

8. All businesses need to adopt and enforce the highest possible ethical and environmental standards. Many tell us they have them, far fewer act on them. Where they do, they can create value. Standards don't require high prices, they require leadership commitment and action.

9. Business needs to educate the community in what they do, how they do it and the value it creates. Too few people really understand the process of wealth creation, investment and profitability. Profits are a good thing: it's what you put them into that defines whether or not you are a good business.

10. Business needs to demand better education from schools and universities. Stop teaching HR, marketing and media studies. Start teaching people to think, apply critical analysis and to understand the world in which they will lead and grow businesses themselves so they do so with the interest of everyone at heart, not just themselves.

Chris is the founding partner of Good Growth a strategic consultancy focused on rebuilding the focus of business to customers. Current clients include blue chip companies in retail, digital, media and consulting. He is also Dean Emeritus of Henley Business School and professor of Creativity and Leadership at Manchester Business School.