Bringing Business Home


Great expectations

Great expectations

Today’s media environment can be an unforgiving place. They have never been shrinking violets, but Britain’s journalists nowadays pursue bad news with an aggression they can never quite summon for positive stories.

The ratio of good news:bad news stories is at an all-time low (perhaps as much as 1:17, according to the most frequently-quoted statistic) and the overall picture you might gather from the news is of a country and a world in a constant state of doom.

When it comes to business it is clear what leads the news. Scandals, excesses and corporate disasters – of which there have been plenty – occupy the business pages, and are almost invariably the only reason business stories ever make it onto the front page.

The journalists writing the story will say they are simply giving readers what they want.

There is an interesting debate to be had about whether the media lead or follow public opinion, but on this view of changed attitudes to business, they may for once have a point. The anti-business turn taken by the media in many ways reflects a change in how we, as people who read the papers and watch TV, feel about business. The collapse in trust of the banks was the climax of this change, rather than a whole new chapter. And underpinning it all are changed expectations of both public and private sectors over the last 25 years or so.

Back in the 80s, the divide seemed quite clear. We saw the public sector’s role as collecting the taxes needed to provide the health, education and other services we relied on as a country. Because of this, citizens tended to be more appreciative of what they got and more forgiving of failures. We applied different standards, though, to the private sector. Customers expected business to be focused on making money but, because of this, believed they had a right to expect good value and service.

Provided these expectations were met, no one worried too much about the level of their profits.

It is an exaggeration to say the division was as clear cut as public sector good, private sector bad. But there was certainly a large element of public sector selfless and private sector selfish.

In the last 25 years, this divide has disappeared. We now view public services as customers rather than as grateful recipients. Our expectations are higher and our complaints louder. The public services that could once take public support for granted are now under the same pressure to deliver as the private sector.

At the same time, we have become more demanding of business. Milton Friedman’s belief that the only social responsibility of a company was to increase profits now seems to belong to a very different age. Values always mattered in the public sector. Now they matter in the private sector too and businesses, from banks to oil companies, pharma to newspaper groups, have found what happens when the public mood settles around the notion that the values fall short of the carefully crafted image. They are all discovering that once a reputational fall occurs, it is hard to regain the lost reputational capital.

So now instead of huge profit margins bringing praise, they now bring suspicion. There is anger about big bonuses. The demands that businesses demonstrate they care about the environment or human rights or the communities where they operate are no longer fringe concerns but mainstream. The mistakes and greed which led to the global financial crisis have certainly accelerated this change and lack of trust in the private sector. But the shift in attitudes was already well under way.

Both private and public sector have to deal with a harsher and faster media environment which reflects – and to some extent leads – these higher expectations. Twitter and other social media enable instant judgements to be shared widely. What happens in one country now affects how a company is viewed around the world. Corporate reputations which have taken decades to build can be destroyed, or the seeds of such destruction sewn, in hours.

One of the central tenets of New Labour was that there was a strong two-way relationship between social justice and economic efficiency. We argued that one could not be had without the other. It is a truth which remains, if anything, more compelling today than when we were in power. But from their attempts to defend the indefensible, and present policies aimed at dealing with a failing energy market as some kind of return to Marxism, it is apparently not one that all businesses or media yet accept.

Indeed, the reaction to Ed Miliband’s conference speech suggests that some people in business have yet to recognise that economics alone cannot erase people’s sense of fairness. The more nuanced reaction of government ministers suggests the politicians are ahead of many business voices in understanding the shift described above.

Tempting as it may be, there is no point in businesses complaining that these expectations are unrealistic or the level of scrutiny is unfair. It just is. Companies have to accept this new accountability and recognise that demonstrating, every day, the social value of what you do is now fundamental to long-term strategic success.