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Speech to Parnell Rotary

Parnell Rotary

12 July 2017


Thank you for the opportunity to meet with you today and thank you for the good work which I know from experience Rotary does in many areas of society in all parts of the world. It is common for people to overlook the everyday activity of what some call, somewhat awkwardly, “civil society” but it is this activity which is the both the binding element and the creative element of what makes us humanity. So my genuine thanks for what you do here.

I did not get a topic for my talk today – given open season I guess. This has its dangers but I have taken the open agenda as an opportunity for some observations which are not intended to reflect the position of the various businesses with which I am involved. The views are mine alone.

Inevitably these views are about business – that is how I spend my time and while not everyone thinks that business is fun that is certainly how I experience it. Warren Buffet describes himself as “tap dancing to work” and while I do not have that dexterity I certainly walk or drive there with daily enthusiasm. I am very fortunate to have a set of board roles which is forever stimulating.

Most of what we experience today happens through a business. Even social agencies seek to fit a model of business to consumer. The model is adopted in the operations of marae, church and club. So how we conduct business impacts very widely and deeply. If our model is extractive or exploitative we will all bear the downsides of that. Equally if our model is value creative, transparent and inclusive then the benefits will flow.

Many of you will have seen the comments made recently by Bruce Plested the Mainfreight founder in which Bruce lambasted politicians and electors for our failure to address severe social issues such as relative poverty and housing conditions. I regard Bruce as a genuine business leader and as a mate dating back to the time when I represented the unions in his business. One important insight I learned from Bruce then was that it was possible for the owner and operator of a business to be closer and more aligned to the interests of the employees than the union official. Most importantly that this identity could not be assumed but had to be re-created day by day. It was not obvious to all, but the way Mainfreight operated did create that relationship and I suspect, though I no longer have any direct knowledge, that this principle has carried through into the now global business and is one important element of its success.

So I see Bruce lecturing us as well founded. His views are consistent with the way the business operates as is the “books in homes” project which is closely aligned with the business. There is much to applaud in his recent statements, and in my view he has earned the right to use his business position to express them – I hope politicians take heed. His wisdom is worth more than any cash donation.

I am more the hired help than founder of the businesses I work in so I could not claim the equivalent moral or economic position as Bruce – less high ground to stand on even though I support his views. Today I am more inclined to share some broad thoughts about business and how it operates as a social good in itself. I have heard it said that objectively Bill Gates, despite actively giving away his vast fortune, will have contributed more through the foundation of Microsoft itself than through his philanthropy. It might not seem like that when something crashes on your computer but I can see the point. You can do a lot of good by doing good things well in your business.

We all know that business can do harm. Business can exploit employees and suppliers, it can destroy and pollute natural resources, it can cheat consumers. This is why societies have imposed restrictions on business across a wide range of outcomes of this kind. There will always be debate about whether such restrictions are excessive or too lax. What is not really open for debate is that such restrictions, where imposed, must be well considered and consistent (unlike a French rugby referee). I think that we have got better at the process of regulation but that politicians are still a danger of imposing knee jerk regulations which have negative consequences. It would be very preferable to have a consistent and transparent process for assessing any new regulation in advance in terms of its positive and negative impacts and for automatic review of the regulation in practice to ensure that it is providing the intended benefits and not imposing avoidable negative costs. At present this process is ad hoc and overall economic management would be improved with such a process.

But it should not be all up to the state. Business should not be the naughty boy in the class being continually called into line. The modern business can and in the main does provide a more positive role model than that. Businesses are comprised of people, and it is people who make the decisions about what to do and not to do – not the mechanical demands of capital or that other abstraction the “market”. This means that ethical questions and business are inseparable. It is common these days for businesses, especially public companies, to publish policies or rules that we follow. I think that the most important aspect of these is the ethical content – what are the personal guidelines and values of those leading the business. It is helpful if the board and management do not simply adopt and file these, but test ourselves against them and revisit them often. We should be prepared to be challenged on them by stakeholders and increasingly we are – just this week by Simplicity founder Sam Stubbs on diversity issues for example.

One of these important ethics is to make a return on investment. There is not a lot of good in having pristine principles and collapsing. Sustainability includes being able to sustain the business assuming that its economics are sound. Closing a business is not a sign of weakness or failure – it is a recognition of economic reality. If operated in proper manner no blame or shame should arise. Birth and death are inseparable in business as in life itself. A wider community recognition of this would be healthy.

Of course not all business is conducted ethically. We have been lax in many cases in recognising good health and safety practice and only repeated tragedy and eventually regulation has made us behave better. Having recognised that it is very encouraging to see the very genuine application of better practices by management and staff at all levels in most business which one now sees. The blind eye, once turned, is now a keen eye for error and we will all be the better for it.

I think the same is true with regard to environmental sustainability. One could not deny that business, which could have recognised the issues and implemented solutions itself, has been dragged to a much better position by a few leaders of foresight and a wider strong community sentiment on such issues. But my perception now is that the many improved practices, projects and reporting on sustainability is a genuine and enthusiastic one again at all levels in much of business. This will help greatly in improving our future. We are and should be accountable for the full impact of our activities. Right now we can be marked as “improving, could do better”.

It is the case that business is being challenged across a wide range. This week I saw respected business commentator Brian Gaynor expressing concern at the costs of “red tape” compliance. It is good to recognise that compliance costs are real costs, and that the imposition of costs which do not have benefits which exceed them is to be avoided. But my view is that running a business in New Zealand is not disproportionately difficult to other comparable economies and that this is a side issue for most.

Generational change and the higher levels of information transparency which we now have are an important part of the increased challenge to the ethical operation of business. It is not that people today are better than in previous generations but science, education and technology have made understanding of these issues much more graphic and immediate than in the past. We may not be better but we are more aware and this awareness applies to us all whether as business leaders, employees, consumers or citizens. Business has no choice other than to embrace this positively.

I also want to make the point today that business is a good thing not just because it is the mechanism by which we generate the goods and services we want (not a bad little contribution) but is also in itself a positive process. It can be done badly or it can be done well. If the latter, work in a business can be one of the most satisfying parts of life. I think we should all strive to make it that way.

After all, within a business:

We apply skills we have learned from our life until now and receive reciprocal reward from that;

We combine our activity with other people and our environment, re-creating ourselves and being rewarded by the interaction with others in delivering an outcome be it product or service;

We meet the desires of other people, and spread our communication with others, in a mutual process which is in itself rewarding.

If this sounds almost spiritual, it is because it is spiritual. We may abstract to units of production like FTEs but the reality of any business is that far more is happening than is captured in the Profit and Loss and Balance Sheet. If the abstract unit is all that a business has it will wither and die. It is the people and how they relate to other people that make it work. If you think of your business simply as an Automatic Teller Machine I assure you one day it will stop spitting out money.

Whether it be employee engagement, health and safety procedure, diversity in practice or other holistic aspects of how a business works this approach to business is not inconsistent with profitability. Quite the opposite, the research on business performance strongly underpins the view that everyone gains from having this approach.

Now I do not pretend that I am good or a leader in this view of business. As the comedian Peter Cook put it “I have learned from my mistakes and I am pretty sure that I can repeat them exactly”. I am pretty old, any day the great Steve Hansen in the sky could decide that fresh legs would be useful and send the shepherds crook for me. I learned about unionism from a pretty tough school – Pat Kelly, Ken Douglas, Bill Andersen; about business from an equally tough school – Ron Brierley, Alan Gibbs, Trevor Farmer; about politics from an equally tough school – Rob Muldoon, Roger Douglas, Helen Clark. So I am pretty much old school. But I can see how the world has changed and is changing, and appreciate the challenges for business to be the best it can be. Looking around the businesses I am involved in at the skills, enthusiasm and ethical standards of the younger people I am excited about what business can do. We older people must foster and enable that future. “Get out of the new world if you can’t lend a hand” as Dylan put it.

My perception is that as generations pass the dominant themes pass with them. My parents and grandparents were generations where the dominant themes were what the historian WB Sutch labelled “the quest for security”. My generation coming of age in the 1960s and 1970s has illustrated a new dominant theme which I think of as “the quest for identity” in which expressions of gender diversity, sexual orientation, Maori identity, non-nuclear policy were (much as many may not like to think of it) at one with the removal of economic restrictions and regulations. My perception is that the generation coming of age now is adopting a new dominant theme which I perceive as “the quest for authenticity” which has strong social values and ethics at its core. It’s a big challenge and builds on what has gone before.

So these thoughts I share today are not an admonition to you nor to other business so much as they are an aide memoire to me. We all get so caught up in handling the everyday issues in front of us that we can lose sight of the principles which we would like to think we meet. It is not intentional, but it just happens unless we apply our minds to those principles. It is a fair bet that if we don’t do so then someone else will (and they may be a harsher judge). We need to set some regular reminders for ourselves to think about the ethics we wish to have and to assess how we are going. We are what we do, not what we once thought we were or what we wrote on a piece of paper.

Maybe it is as simple as having a bit of Rotary in our mind each day!

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