Why the powerful are losing their favourite game

by .

No chief executive should need telling this, but the way that companies succeeded in the past offers no model for how they will succeed in the future. It is, after all, the mantra of the financial services industry (many of whose leading lights helped to destroy our economy): Past performance offers no guarantee of future returns.

But there is also something new in the air. And the winds of change aren’t just blowing through our corporate lives – there is a quiet revolution that is changing the entire climate of our wider economy, our civil society and even our family life.

We are being challenged not just to address the way we behave, but to redefine what we are. The pressures on the way we choose to run our economy are not about regulation or whether we lock up a few bankers. They are about our societal identity. They are, if you like, about a way of being, rather than a way of behaving.

This offers a new departure for corporate ethics. To date, these have been defined either by the prescriptive rubrics of demi-god regulators, or by the simple ethics of consequences – “if I do this, that will happen”. We now need to take account of a different ethical system; the ethics of virtue. In other words, we need to define not so much our behaviours as what makes us who we are.

And that means identifying where the primary sources lie of the influences which mould us. Principal among these is the human change that is driven by technology, the universality of our access to information and data and our ability to connect. Our world has never looked like this before and unless we respond adequately we may lose the power to control our destinies.

So corporations and organisations have a choice. They can play by the old rules in a game of diminishing returns. Or they can adapt fast and take the competitive advantage of being leaders.

The environment in which they lead, of course, is changing irrespective of their leadership. This much we know: The internet and social media are driving a shift from the vertical to the horizontal. Organisations are becoming flatter. Innovation and adaptability come from networks, relations, respect and peer-to-peer conversations. Cascaded messaging falls increasingly on the deaf ears of staff and employees, consumers and citizens, who through their access to technology and an end of deference which it took the millennium to complete, can be the producers of the content of their own lives. The people are the agents of their own change – it’s not something that happens to them.

That’s why corporate rules have to be re-written and that’s why no organisation can ‘win’ on the old terms. Sure you can beat the competition back temporarily, but in a world this porous and complex it’s no longer about one army facing another, the tired old metaphor of the mega-mergers of the boom years.

Opposition comes both from within and without. From activists and bloggers outside to whistleblowers and stakeholders inside. You can play whack a mole – but they’ll just keep popping up. Any organisation living by the sword will now die by it. Just look at the Ryanair’s epiphany.

When a campaigning online group such as 38 Degrees has two million members and growing, the effect when they target the powerful and previously unchallenged, from MPs to corporations, is profound.

The response too often amounts to tokenism. Witness the political attempts to keep up through anti-corporate sloganeering, a populism which bears down on energy companies, pay-day loan-sharks and cigarette companies, the dinosaurs and woolly mammoths of corporate evolution.

Trying to win in the old way guarantees nothing but defeat. And why would you want to win on those terms anyway? Your future depends not on battling the media, consumers and other audiences, but on joining them, leading the journey and bringing them with you. It’s a better place to be – but, in any event, there is no choice. The old road leads nowhere.

And the way to do that is to change not only what you do and how you behave, but how you are. Stop trying to defeat an imaginary enemy, stop building ever more desperate barriers to keep them out. That’s impossible – they are already everywhere in an indefensible, asymmetrical terrain.

Instead we must engage, listen and build a new consensus that works for everyone. And the advantages are there to be won – you get to be the good guys and you get to feel good about what you do and how you do it. In the words of one of the bastions of the old world of financial credit, that’s priceless.

And, by the way, you help to sustain your organisation into the future, by harnessing the energy of new ideas. That’s got to be a winner.

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