An Enlightened 2021 and Beyond

This time last year I was finalising plans for a conference which took place on March 9th. “Undaunted: How successful Leaders Face Up to Wicked Problems and Avoid Predictable Surprises” was the title. Back then I had had no idea what Covid was. I had never heard the word, and I doubt anyone reading this had.

On the day of the conference, we were aware of the outbreak in China, and fears of a possible global pandemic were becoming real. No flights had yet been suspended, but they were imminent and one of our speakers cancelled fearing he would have problems getting back to New York. 

Another speaker, Bryce Hoffman, had arrived a couple of days earlier from San Francisco. As he was about to take the stage at the conference, he got a text alert saying the New York Stock Exchange had suspended trading because the market had been in free-fall. It was not until March 23rd the first UK lockdown began, but I think ours was the last conference held at the Royal Society of Arts as venues began a self-imposed a lockdown.

The conference was offered by the Strategic Management Forum which I founded a few years ago. Early into the lockdown, I started to reflect on what I may need, or want, to change. About that time people also started talking about the next “new normal” and “building back better”. Not much was said about what either phrase was supposed to mean, and that remains the case. But the phrases did suggest an appetite for change and no desire to return to the old normal.

A crisis often opens up an “Overton Window”, named after Joseph Overton, a public policy expert. It refers to how open or closed a range of policies a politician can recommend might be, without appearing too extreme given the climate of public opinion at that time.

In my view, the concept is useful in contemplating the likely acceptance of any new idea given changes in the climate of public opinion. And a crisis tends to open up the range of possibilities and increase the chance of change. More people are willing to think the unthinkable, or at least question orthodox thinking and consider alternatives.

Even before the pandemic, dissatisfaction with the old normal was evident. The global banking crisis and the Great Recession had already opened the Overton Window. Confidence in business, capitalism, mainstream political parties, and governments were already very low. But rather than giving rise to progressive alternatives, the opportunity was seized by populists, nationalists and the far-right in many countries.

The orthodox ideas that created such dissatisfaction with “the system” came from the neoliberal economists and their belief in the power of the free market. It provided the basis of the political ideology which has prevailed for over four decades. And it was reflected in the dominant ideas about the purpose of business. The Friedman Doctrine advanced by economist Milton Friedman argues a firm's main responsibility is to its shareholders. This shareholder primacy approach views shareholders as the only group to which the firm is socially responsible. As such, the goal of the firm has been viewed as maximizing returns to shareholders.

This orthodox view is now widely discredited, even by its former supporters. But it is still the primary ideology driving many business practices. This thinking was coupled with the analogy of the enterprise as a machine, and with the obsession management theory and practise has had with the performance, efficiency, and costs of operating that machine.

Based on a recognition of the rising levels of dissatisfaction with these ideas after the last economic crisis, I had considered writing the Enlightened Enterprise Manifesto. Palgrave Macmillan has offered to publish it. But I did not get around to it then. I was not sure the Overton Window had opened wide enough.

The last crisis was very different in nature to the one we now face. Today’s crisis is much more global, and its impact will be felt in every part of the economy. Last time there was no talk of a “new normal” or “building back better”. Nor was the crisis made worse by other factors such as Brexit and the damage done by governments led by populists. For these reasons, I think the Overton Window will be wide-open as we go through 2021. Now is the right time to put forward a vision for a better approach to enterprise – the next evolution of Capitalism.

Capitalism has already evolved through many forms and can be seen in different forms in various countries and parts of the world. In the right form, I firmly believe it remains the best way to create sustainable widely shared prosperity - prosperity measured in terms of wellbeing and human flourishing. But I am equally certain capitalism in its current form is fundamentally flawed.

The form of capitalism I advocate is one I have been calling Valueism. It focuses on capitalism’s contribution to prosperity measured in terms of wellbeing and human flourishing. And it recognises the importance of the social contract between enterprise and society.

Several years ago, I visited Saltaire, a Victorian model village established in 1851 by Sir Titus Salt, a leading industrialist in the Yorkshire woollen industry. Salt moved his business to the site by the Leeds and Liverpool Canal and the railway. Like a number of other leading industrialists with a strong sense of values, he believed that by creating an environment where people could lead healthy, virtuous, godly lives, he was doing God's work.

Salt, and other members of non-conformist religious groups such as the Puritans, Calvinists and Quakers, were central figures in the Enlightenment Movement and leading pioneers of the first and second Industrial Revolutions (the latter sometimes called the American Industrial Revolution). Their differing beliefs shared many common threads. All were driven by strong values, ethics, and virtues in pursuit of their goal, the creation of heaven on earth.

Their enterprise was directed to achieving sustainable widely shared prosperity in the form of human flourishing and wellbeing. Their industry, their philanthropy, and their demands for reform and improvement in the human condition (the emancipation of women, ending of slavery, rights for workers, the provision of education and healthcare etc) – all were central to what we might now call their “purpose”.

They represented a very small percentage of the population, but they dominated industry. They were extremely successful businesspeople in many industrial and economic sectors including banking. They were also very wealthy capitalists, and they created a very wealthy country. They did not achieve this by focusing on maximising profits and shareholder value. Their values drove their behaviour which led to value creation. Profits were a byproduct, not the goal. 

These insights led me to write an article “From Values to Value: The Only Sustainable Business Model”, and ultimately to coining the term Valueism. It describes “values-driven value-creation”. When I described the idea to him, Martin Wolf, Chief Economics Correspondent at the Financial Times, he said he thought I was describing “the next evolution of capitalism”.

Wolf was precisely right, as he often is. But this next evolution, inspired by people like Sir Titus Salt, has even deeper roots. Sustainable widely shared prosperity defined in terms of human flourishing and wellbeing relates to the pursuit of what Aristotle (384–322 BC) called eudaimonia, the highest human good. 

The values related to eudaimonia, to the enlightenment, and the pursuit of heaven on earth, are not the values associated with the current dominant form of capitalism. Friedman’s view of capitalism is the antithesis of the views shared by the capitalists that generated the greatest improvements in the human condition that man has ever achieved.

During 2021, I will write the Enlightened Enterprise Manifesto. Before then I will launch the Enlightened Enterprise Academy, which I have been designing whilst the Overton Window has been opening. And the Strategic Management Forum will be one of several forums to create global communities of interest among those who wish to help realise a more enlightened approach to enterprise. I know there are many of us. I have already read many progressive ideas. The Academy and its forums will be platforms for the promotion of them.

Improving the human condition should be the goal of all enterprise. Achieving the United Nations Sustainable Development Goals is a necessary but insufficient step. Despite their limited ambition, they, like the Millennium Development Goals, will not be achieved. And, more than seventy years after almost every nation in the world ratified the Human Rights Convention, few in the world will have the benefit of what should be theirs by right.

The challenges we face may seem daunting, but the challenges to improving the human condition must have seemed even more daunting to the eighteenth-century pioneers of the earlier Enlightenment Movement and the first and second industrial revolutions. For these reasons I believe we need to revisit the values that inspired them as we create a new enlightenment movement. So, I plan to launch three major inquiries inspired by the work of Adam Smith.

Adam Smith (1723-1790) was a leading figure in the first Enlightenment Movement. His first book, The Theory of Moral Sentiments (1759) spoke of morals, virtues, ethics, and values. He suggested it must be read before the reader approached his second book, An Inquiry into the Nature and Causes of the Wealth of Nations (1776). Most people know of his later work. Few have read it. And many who say they did either misread or deliberately misinterpreted it to support their own philosophies.

Both books by Smith provide insights into the thinking of the leading figures of the Enlightenment Movement. And may other books have been written about their values and their characters, which sparked the Industrial revolution. In contemplating the need for a new enlightenment, I have been reading many of these works.

My reading has led me to conclude that we would benefit greatly from a large scale, open and global inquiry, to develop a “Twenty-First Century Theory of Moral Sentiments”.

At the heart of Smith’s works is his theory of value. It was replaced by the market price theory of value – a change that generated great criticism, captured in Oscar Wilde’s famous quote about knowing the price of everything and the value of nothing. Such sentiments have been echoed in complaints about the use of Gross Domestic Product (GDP) as a measure of the prosperity of nations. And in her recent book The Value of Everything, Mariana Muzzucato makes the case for a debate about the theory of value. Our second inquiry will therefore aim to establish a “Twenty-First Century Theory of Value”.

These first two inquiries will inform the third, “An Inquiry into the Nature and Causes of the Prosperity of Nations”. I replace Adam Smith’s use of the word wealth with prosperity because in Smith’s day wealth referred to wellbeing and human flourishing. Only recently has it come to mean material or financial wealth. Prosperity, being defined in terms of wellbeing and human flourishing, is, therefore, more appropriate, I believe.

The value of the three inquiries will come from the much-needed debates they will generate, debates that will result in the creation of the new enlightenment movement, I hope. I also hope they will help ensure enterprise is once again driven by values in the pursuit of value creation - improvements in the human condition. In the process, I hope our goal might also be creating heaven on earth – sustainability and human rights for all being just necessary steps on the journey, not the goal.

My final hope is that this will ensure the next evolution of capitalism is driven by those who share these beliefs and goals. That they are willing to invest their energy in enterprises designed to realise the vision.

This is a massive challenge. I am well aware of that. But of what use is pursuing anything less? For those wondering what “build back better” and a what a “better new normal” might mean, I hope the Enlightened Enterprise Academy will start to provide some answers and offer some of the means.

Let 2021 be the year to start directing our attention, energy, resources, and technology to the generatation of massive improvements in the human condition. And let us ensure these improvements are sustainable and widely shared.

In the next few articles, I will explain the Enlightened Enterprise Academy’s plans for 2021, introducing each of the programs of events and initiatives. They include the inquiries, several forums, courses, a conference, and new publications. I will also explain how you might engage in the academy and benefit from it. In the meantime, you can already reserve places for our free online events in January