Is capitalism dead? No - it just needs a reboot.

What will the business world look like over the next ten years? This is the question I was invited to answer this month when I spoke at think tank Tomorrow's Company's annual parliamentary reception.

I'd like to share my thoughts on the subject with you here.

***

Now, I’m not going to pretend I can boil down the future of capitalism into a ten-minute speech.

What I will share with you – from my own experience as Chief Executive of Sage, the UK’s largest tech company, and from years in businesses big and small – are three fundamental ways I think business is changing, and how we must respond to these changes.

The first is that our workforce is changing, and so the way that we keep them motivated must change.

The second is that – driven by that change in people – the connection between business and the community must change.

And finally, that the pace of technological change is accelerating every day, and that as businesses, we must seize the opportunity this presents.

I’m going to tell you why we should be very hopeful indeed about the future of business – a future of compassionate capitalism, where business is seen as a force for good.

But first – let’s remind ourselves of the state of play.

Ten years on from the financial crash and the number of media headlines proclaiming that capitalism is dead grows each year. Our Prime Minister stood up at the Conservative Party Conference and vowed to intervene to fix our ‘broken markets’. Indeed, conflicting views of what the future of capitalism should be dominated the entire conference of our most staunchly pro-business party.

Business has become the go-to punching bag. And in a way, it isn’t difficult to see why, is it?

Living standards are not rising. Wages have not kept up with inflation. Productivity remains the million-dollar question that we are struggling to fix. A recent report conducted by Sage into small business productivity found a very uneven landscape: businesses in the most productive local authority in the UK were a massive 26 times more productive than those in the least. This isn’t a level playing field.

But does all this mean that capitalism is broken? No. It just needs a reboot. A complete software upgrade.

We must rethink our responsibilities as businesses, and the role we have to play in the world.

Let’s start with our responsibility to our people, and to keep up with their changing needs.

For the first time in history, there are five generations working alongside each other today. At Sage we have 270 apprentices. This creates an amazing dynamic where you have 16-year-olds fresh out of school working alongside people who were born in the 50s.

If we kept doing business the same way without listening to younger generations, then we would become irrelevant. They are the future, and have brilliant ideas – so let’s listen.

We did a study last year into what motivates millennial entrepreneurs around the world. The most interesting finding was that 62% said they see a business staying true to its values as more important than making a profit. This generation is demanding that businesses do more; expecting us to feel responsible for creating good in the world.

Now, I’m not suggesting that the idea that businesses should do good started with millennials. Britain has a rich heritage of this from leaders like Joseph Rowntree, Cadbury’s and Unilever. But when this generational shift is combined with the growing disenchantment around capitalism, we come to a tipping point where corporations start losing relevance and can no longer afford to operate in a vacuum.

This takes us to my second point: in the current climate, businesses must take more responsibility for our communities than ever.

We must take up our share of the mantle– we must be truly compassionate capitalists.

Over the past decade or so – driven by inspirational leaders like Bill Gates and Marc Benioff – we’ve seen a shift where we’ve stopped talking about ‘CSR programs’; about corporate philanthropy as a back-room project. Giving back is now part of a business’ fundamental purpose. And at a time when most Western governments are saddled with a debt mountain, the role of businesses as wealth creators is more important than ever.

Let me tell you what that looks like in practice at Sage, through Sage Foundation.

Founded in 2015, Sage Foundation’s mission is to short-circuit inequality in our communities, by building a workforce fit for tomorrow. It operates on a model we call 2+2+2: we give 2% of cashflow, 2% of our colleagues’ time, and 2 software licenses every year to causes that matter to us. We aim to build more routes into education, work and entrepreneurship for three groups in particular: young people, women and military servicemen & women.

So how do we step into our communities and get every one of our colleagues to feel connected to our mission? We empower our colleagues to spend five days volunteering each year. That goes from our front-line sales colleagues, up to me. Even our board directors are engaged. I’m very proud to share that over the last year, we gave tens of thousands of colleague volunteer days and over $1 million in grants to help over 80 small charities to grow.

To us, this isn’t just the right way to do business – it’s the only way.

So that’s the second big shift. Corporate philanthropy is no longer perceived by many as a box-ticking exercise: it’s become a core part of why we exist.

Now my last point: the pace of technological change is staggering, and shows no sign of slowing down. As businesses, we must choose how we respond.

For people of my generation, the change we have seen in our lifetime is inconceivable to people like Sage’s 16-year-old apprentices that I told you about earlier.

I got my first mobile phone in 1987 and it was a massive brick. Fast-forward 30 years and we’re looking at a totally different picture:

90% of the world's data has been created in the last 12 months.

In three years, it is estimated there will be six billion smartphone users on the planet.

Now my favourite one: collectively, humans have watched Adam Sandler on Netflix for longer than civilization has existed.

Technology is the great connecter. The great leveller. The way to make information and education ubiquitous. Mobile-first technology and artificial intelligence have the power to democratise entire industries – ones that were previously shut off to those in poorer communities, isolated by a lack of infrastructure.

But it must exist to serve the whole of society, not just those who are fortunate enough to have access to it.

So as artificial intelligence enters the mainstream, I see two big responsibilities here for us:

First, technology companies, governments and educators must work together to make AI as accessible as possible; not just to those who are lucky enough to go to schools with great IT suites. That’s why Sage is piloting a program called Botcamp, an AI training course for disadvantaged young people who have no previous experience in coding.

And secondly – we must make sure that we are creating AI ethically and responsibly. That means creating it with diverse teams; holding it to account just as we would humans; and creating more jobs than AI replaces. Sage has created a set of guidelines called The Ethics of Code, and we’d love more businesses to sign up to it.

If we do these things, then technology will be the business world’s best ally in our efforts to change the world over the next decade.

So – I’m going to wrap up, but let’s quickly revisit that headline – ‘is capitalism dead’? My answer, of course, is no. We are watching a new dawn.

We need to stop being embarrassed by the word ‘capitalism’. Our politicians need to recognise that businesses have a huge amount of power to do good in the world. As governments nurse their public finance deficit, it is businesses who can fill the gap they leave.

We must stand up and be counted as proud ‘Compassionate Capitalists’ – who are influenced by the next generation; who are driven to give back to our communities; who use technology as a force for good.

That’s how capitalism not only survives but thrives, into the next decade and beyond, to create a better world for all. Thank you.