Society Needs Business

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Every society needs a well-functioning business community from the smallest sole trader to the largest multinational corporation.  All levels of business have something to offer society as a whole, but they can only operate in society’s interests if given the right guidelines to work within.  The focus must be on entrepreneurial startups and small or medium businesses that account for the majority of job creation and sustainability.[1] They also account for the majority of strong business innovation.[2] Any government that claims to support business, but fails to direct the majority of resources to this sector, is fundamentally failing to achieve their goals.[3]

This isn’t to say that corporations have been an entirely destructive force on society.  They have also served to provide the impetus behind bringing the global population together in trading empires.  They have funded the spread of internet access globally that has helped the new era of global revolts endlessly.  They have broken down national walls and made it possible for an individual to run a multinational business – look at the sellers on eBay, Etsy, Amazon and a million other business sites if you think that is an exaggeration.  They have produced a global monetary system that allows fortunes to traverse the globe in milliseconds.   These were all necessary steps to enable the people to take their place as entrepreneurs in a global marketplace. The age of the corporation must give way to the age of the collaboration.

Business Collaboration

There have been numerous shared business spaces created in cities around the world to foster small business collaboration.  Organizations like Hub Australia form a part of a global network of similar spaces in forty cities across five continents.[4]  These were created to encourage and enable collaboration between otherwise disconnected businesses.  This increases the chance of meeting the people you need to progress your own ideas as well as helping other people progress theirs.  This global, collaborative economy of entrepreneurs is the way of the future.  This is exactly the system we need to encourage to break the stranglehold of corporate greed.

Benefit Corporations

The advent of ‘benefit corporations’, B-corps, also shows a different approach to the problem by redefining the aim of corporations.  This represents a conscious move from being solely focused on generating profit for shareholders to instead aspiring to do no harm and provide benefit everybody along the pathway to turning a profit.[5]   Essentially B-corporations espouse the need for triple bottom line accounting in all businesses; people, planet and profit. This changes the nature of the organization from a focused psychopath chasing only profits, to an entity functioning within, and as an integral part of, a bigger community.  This would teach the child-like modern corporations to grow up and learn to share.  This kind of mature social behavior would represent a powerful change in the general operation of business.  This also creates some self-regulation by these entities whereby they will report each other to the certifying group since they understand that failure to do so will result in a break of trust with the consumer that ultimately hurts them all.  A new part of business competition will be keeping wholly within the B-corporation definition, lest your competitors report you to the regulating body.

Cooperatives and Mutuals

“They represent a more socially responsible form of business enterprise because their focus is not on maximising profits for other investors, but on maximising benefits through the provision of goods or services to members. The members may be in a particular geographical community or they may simply have a common business or social interest.” (Cooperatives in Australia – A Manual)[6]

There are a large number of cooperative businesses operating in Australia with huge success; around 1800 cooperatives and 108 mutual banking organizations.  Around 79% of Australians are a member of some kind of cooperative or mutual organization, which explains why they collectively generate almost $18 billion a year in revenue.[7]  Well known cooperatives include Automobile clubs (eg, RACV, RACQ) and agricultural societies (eg, Murray Goulburn Cooperative, Dairy Farmers Milk Cooperative).[8]

The primary attractiveness of this kind of business structure is that the customer is also the owner investor.  This means that profits produced by the organization are used purely to benefit the members.  There are no external shareholders with a purely capital interest.  They have been used to create a large body to represent the common interests of a group to provide greater bargaining power; like a union but actually operating the business.  They are also used in small businesses as a worker’s cooperative to provide greater incentive for individual workers to contribute to the success of the operation, as they will directly receive a share in the profits.  Sometimes this has operated in a mixed mode whereby workers are given shares in the company as a part of their packages as well as opening shareholding to external investors with a purely capital interest.[9]

One of the more famous global worker’s co-operatives is W.L Gore and Associates, the creators of the Gore-Tex material.  Not only do all employees share in profits, but they operate in a ‘lattice’ organizational structure.  This means that there are no bosses or hierarchy and everyone is an equal associate.[10]  Leadership comes naturally as people align to follow different individuals based on their ability to guide a team in delivering results.  The result has been they have one of the very lowest staff turnovers of any company and have featured in the Fortune magazine annual ‘100 best companies to work for’ since 1984.

In early 2014 new national laws agreed to in 2012 began to take affect across Australian states to provide a standard, national legal framework for cooperatives.  Historically these organizations were registered and operated on a state by state basis, making it difficult to run larger organizations with national memberships of common interest.[11]  This new recognition will make this an even more powerful force for promoting socially responsible business.

 

[1] http://www.innovation.gov.au/smallbusiness/keyfacts/Pages/smallbusinessdatacard.aspx

[2] http://www.innovation.gov.au/smallbusiness/keyfacts/Documents/AustralianSmallBusinessKeyStatisticsAndAnalysis.pdf

[3] http://www.smartcompany.com.au/finance/tax/30370-government-cuts-r-d-tax-break-for-big-business-to-provide–1-billion-boost-to-smes.html

[4] http://hubaustralia.com/about-us/global-hub-network/

[5] http://www.bcorporation.net/what-are-b-corps/the-b-corp-declaration

[6] http://www.rdamnc.org.au/wp-content/uploads/Coop_Manual_FINAL.pdf

[7] http://bccm.coop/downloads/sector-at-a-glance.pdf

[8] http://www.australia.coop/ca/images/Top100August2012.pdf

[9] http://www.employeeownership.com.au/employee-ownership/

[10] http://www.gore.com/en_xx/aboutus/culture/index.html

[11] http://www.abc.net.au/news/2014-03-05/co-operative-law-business-structure/5299992


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