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Why Responsibility Is the Emerging Competitive Edge

22/04/2014 16:45 BST | Updated 22/06/2014 10:59 BST

The businesses I like know they have a social responsibility to the people around them. Customers, non-customers, staff, everyone their business could possibly impact.

Businesses with that sense of responsibility have integrity, and as Warren Buffett is often quoted:

"Somebody once said that 'in looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if you don't have the first, the other two will kill you.'"

You think about it; it's true. If you hire somebody without [integrity], you really want them to be dumb and lazy.

If it's true for people, it's true for companies. Devoid of integrity but energetic and clever. Too clever? That's Enron isn't it? It's some of the banks. It's probably quite a lot of businesses we know.

Responsibility is a mandatory for business - and it's about being mindful. Mindful of others feelings, experiences, ambitions and hopes. Mindful to avoid upsetting them. Mindful to make them happy.

Mindful of the things that are important to them.

Anyway, I was thinking about my own sense of responsibility (and hopefully integrity) in the context of my business interests and thought I'd explore some of the thinking behind the things I get up to and why I do them.

For example, I didn't get involved in the High Street campaign to get brownie points with government or to meet lots of big retailers (and it certainly wasn't to ingratiate myself with the national press or the MPs on the Select Committee).

I saw a decline that was and is, vital to the health of our communities and felt I couldn't stand by and watch the corrosion get any worse.

I was mindful of the impact boarded up shops have on communities - who couldn't be in my line of work where I'm out and about looking at retailers on most days? That's when I read a 1961 book by Jane Jacobs - an activist in the US who was passionate about communities and saw their demise. She brilliantly prophesied everything that's happened to the American cities and what I feared could happen here:

"The trust of a great city street is formed over time from many, many little public sidewalk contacts. It grows out of people stopping by at the bar for a beer, getting advice from the grocer and giving advice to the newsstand man, comparing opinions with other customers at the bakery and nodding hello to the two boys drinking pop on the stoop, hearing about a job from the hardware man and borrowing a dollar from the druggist.

Most of it is ostensibly utterly trivial, but the sum is not trivial at all. The sum of such casual, public contact at the local level - most of it fortuitous, most of it associated with errands - is a feeling for the public identity of people, a web of public respect and trust, and a resource in time of personal or neighbourhood need..."

Making my point rather vividly, a retailer in one of the pilots said to a senior government official a couple of weeks ago "before the Portas Pilot, if I'd fired a gun in our high street I wouldn't have hit a soul, now it would be a very dangerous thing to do".

The high street is a huge task and we're only just starting to see some improvements and a lot of that is to do with general economic recovery and I feel a bit more optimistic with the good news stories I hear.

Back to what responsibility means for businesses.

My thought here is that the majority of businesses I know are pre-occupied by value. All the time reaching for the magic formula of value - price divided by quality.

Constantly on a hamster wheel of creating value for themselves, and perceiving themselves to be offering value for customers.

My view is that this is often misguided because it's done with a short-term mind-set with value only being measured in £££s.

I think we should instead be thinking about values for money.

Because now and in the future customers will want to transact with companies that share their values and not just distribute or create value.

Values are already a significant factor in driving purchasing decisions and that will increase significantly because in an increasingly connected world, with companies of all sizes under scrutiny, what your values are and how you live up to them are in the public domain.

I'm saying that consumerism should be far more than just buying things. It should be about how we buy, where we buy, why we buy.

Consumerism is also about what we do with what we buy and what we do with it after we no longer need it.

Businesses and people - all of us have to be clear on the consequences of our consumption. As a society we've gone from manufacturing in Europe, to China, India and now people are looking to Africa for cheaper and cheaper ways to satisfy our insatiable desire for new things. We've probably run out of places to make things cheaper and cheaper and the human costs mount - as the dreadful collapse of the Rana Plaza factory showed - and sadly it won't be the last.

We need to reimagine all of this because we will be driven down the road of sustainability by necessity.

Responsible businesses have already got this.

Howies make a jacket that has a place to write the name of the new owner as it gets handed down. Clever marketing because it's remarkable (I just told you about it), it demonstrates huge confidence in the quality of the product that it will outlast its owners, and it underlines their strong sustainability credentials.

In short it gives people a reason to prefer it to other choices.

TOMS shoes is one of the fastest growing global shoe brand, originally from California. It stands for Tomorrows Shoes. They started as an embedded giving brand. For every pair bought in the developed world they would give away an identical pair free in the developing world.

They've just got in to coffee and they will do good because responsibility is the core of their business.

I did the Kinky Knickers project to prove a point.

That we could be responsible and bring back jobs to the old industrial areas of the UK and make a quality product.

We did it in a modest way but we provided quite a few jobs and lots of training - we gave people a chance.

But suppose the big guys did it. Supposing M&S realised their leading ladies could be actually making the garments in factories they create up and down the country?

I can hear people shouting about pricing and margins, shareholder value, reliability of supply and all the rest right now. But it would be a responsible thing for them to do.

And that would be the best chance of regaining any competitive advantage over the people who are leaping past them now - John Lewis, House of Fraser, Next.

And here's a thing.

As much as I'd love it if M&S leveraged a load of money and started making things here again, I know it would be a huge undertaking.

But if your business is relatively small, then the responsible thing to do is also an achievable thing for you to do. The beauty of SMEs is that often they can turn their business model on a penny - and I'm suggesting that doing it this way gives an enormous competitive advantage over every rival.

It gives you an opportunity to demonstrate that you're mindful. If you do it right it gives people a reason to like you and prefer you.

Look at Ian Maclean of John Smedley or James Eden of Private White VC for examples of brands that are doing the responsible thing, manufacturing in the UK and running super successful businesses with brands that command a premium.

To take another example of responsibility - we've found a way of combining a good thing to do with an interesting and clever thing to do. We launched Mary's Living and Giving shops several years ago. Now there are 12 with big plans for more. The premium charity shop's run by Save the Children.

I got involved for two reasons:

As a businesswoman - I saw an opportunity to re-imagine a category. A category that had painted itself into a fairly naff corner of the retail world. I realised there was no respect for the goods and the people behind them. So people who had lovely clothes they just didn't have a use for would dispose of them any other way than the charity shop because they couldn't bear to see their Anya Hindmarch bag in the window with a 50p swing ticket.

At a social level - all parts of community win. The shops have become a great place for people who want to do a bit of work but don't need a full time or well paid job, they are a great place to buy fabulous items at very reasonable prices and they are community hang-outs.

Living and Giving makes money, has a pure heart and most of all does good.

We're encouraging the habit of both pay it back but also pay it forward - do unexpected and generous things for people with no hope of return and see what happens.

Don't throw quality items away, find new uses for them, let other people use them - a bit like the Howies example or Mary's Living and Giving - make it sexy to be sustainable.

So - to sum up...

Be mindful.

Think about Values for money as a mantra for your business and how you can do good and be sustainable.

And most of all, do all of this to become more competitive and to help your business to thrive.