Tony Blair has always believed in mutuality. Speaking in Singapore in 1996, he said, ‘We need to build a relationship of trust not just within a firm but within society. By trust, I mean the recognition of a mutual purpose for which we all work, and in which we all benefit.’
Then, as Prime Minister of the UK, he applied this principle to the business of governing. But he now believes that his Third Way concept, and the belief in mutuality which underpinned it, has far wider implications for the corporate world. First of all, he says, ‘in the same way that my concept had the state as fulfilling an empowering or strategic role, and not necessarily having to deliver all services, you could have the same approach within a corporate organisation’.
“The skills that make the company a great company with a solid profit line are also the skills they can bring to social and philanthropic ends”
Sometimes, he argues, his model of a smaller, more enabling government can work for business. ‘Some companies can come to resemble government bureaucracy, which is not very sensible. It’s incredibly important that companies keep their creativity and ability to adapt but if they can do that, with the quality of the people and the reach that large organisations have, they can do immense things’.
More significantly, however, he believes that in the same way that the Third Way in government broke down the ‘traditional battle be- tween state and private sector’, in business it can attack ‘what was originally a rigid demarcation between management and labour’. This is being replaced by ‘a way of working that is less hierarchical and more willing to take on the ideas and input of the staff’. There is, Mr Blair explains, ‘a read across to a more mutual way of running a company’.
But can this shift towards mutuality go as far as the triple bottom line that companies such as Mars are now considering? ‘It’s a completely realistic goal provided you understand that the first part of the bottom line has to be achieved. If the company is not selling a good product, no matter how good your social or environmental policies, they are not going to save you.’
However, increasingly he believes that mutuality makes hard business sense. ‘If companies want to have the right sentiment amongst consumers and they want to attract quality people, my experience of running my own business and my foundations is that it is important for the people who come and work for you that the company is about more than the bottom line profit’.
But companies must never forget the bottom line, not least because ‘the skills that make the company a great company with a solid profit line are also the skills they can bring to social and philanthropic ends. Sometimes what you come across either with individual philanthropists or with companies engaged in corporate social responsibility is that in their day job they are tough minded, inventive and creative. Then they come to philanthropy and they become all sort of floppy and gooey and not hard headed’.
Mr Blair, whose legendary understanding of voters delivered three successive general election victories, believes that the corporate world can no longer afford to ignore the requirement for a social licence to operate. He believes that ‘people have accepted that the essential nature of the capitalist system is correct and necessary but are therefore expecting a degree of responsible behaviour and social awareness that wasn’t the case 20 years ago’.
He also has an interesting take on the credit crunch, arguing that it has increased social demands on companies, but that although ‘there were individuals who behaved extremely irresponsibly, the essential problem was there were financial instruments being created that people didn’t fully understand, not just among individual practitioners but amongst governments and regulators as well. It’s slightly heretical to say this, but when you have a terrible crisis like the pension crisis in the 80s in the UK, if you’re not careful you produce a set of regulatory frameworks designed to solve the last crisis. Crises very rarely reproduce themselves in precisely the same way.’ The market, he feels, didn’t fundamentally fail.
Mutuality, he says, is if anything even more significant for firms operating in less developed nations. ‘A lot of the work I do now is in emerging market countries. We’ve probably got teams on the ground in roughly twenty different countries around the world. All of them are desperate to attract investment. It’s so important that it’s the right quality. There’s an enormous opportunity and responsibility on big corporate players when they come into a country’. He explains: ‘I wouldn’t advise any company in the resource or commodity sector to arrive in a country with anything other than a very well worked out plan to put social and environmental perspectives alongside the bottom line, and I’d argue that from a business perspective’.
Mr Blair sees both sides of the equation. ‘One of the first pieces of advice I give to the presidents or prime ministers I work with is to get the best of the corporate sector and bring them alongside you. But as countries develop, it moves beyond the leadership. If you take a country like China, as the economy develops and you get these companies that become very large, there is now a lot of pressure from within China, from local people and not just the political system, for companies to operate in a socially – and environmentally-responsible way’.
He accepts that it’s tough to be among the best if you are accountable to stock markets with short time horizons. ‘I don’t know what the answer is but I hear from multinational companies that quarterly accounting can be to the long-term detriment of the company, in particular where they are investing long-term in research and development and you need to take a ten or fifteen year view’. It’s a problem exacerbated by ‘activists who get into a company – they are not always wrong, but it can be about extracting short term value’. Family businesses, of course, are immune from some of these pressures, and Mr Blair ‘can’t imagine that many of them would want to swap their structure for something else’.
However, even the stock market is beginning to understand that companies with only the pursuit of profit at their core are not necessarily good investments, and one of the reasons for this is the information explosion. As Mr Blair says: ‘the availability of information is a revolutionary phenomenon, politically and in corporate life. You can see this in the rows over whether companies are paying tax or not, these can very quickly spiral into major problems, where if consumers have any choice they are inclined to exercise it. As a result of social media you get a multiplying effect, as waves of opinion reach tsunami force level very quickly and they can be incredibly destabilising for companies. The consequences of a consumer revolt could be devastating’.
“One of the first pieces of advice I give to the presidents or prime ministers I work with is to get the best of the corporate sector and bring them alongside you”
If in another life Tony Blair had gone into business rather than politics, what sort of business would it have been? ‘I would have wanted to build my own company, something global, with a product that enables or empowers people or provides them with opportunity. I’d want to have a visible impact on people’s lives’. In the mutual world that Mr Blair envisages, that impact could be delivered just as easily by a businessman as a politician.