fbpx
Home / Venture  / How social enterprises could combat short-termism in business

How social enterprises could combat short-termism in business

As a big fan of the Brontë sisters and their writing, I’m often to be found hunting eBay for Bronte memorabilia Just the other week I splurged out and bought a full set of Bronte novels printed in 1890. When the books arrived, and I took a look, and smelled the 130-year-old pages, I got to thinking about longevity and the business world. You see Charlotte, Emily and Anne Brontë, despite growing up in isolation, created works that, quite literally, changed the face of literature and society. Their legacy not only extended beyond their Yorkshire village of Haworth and its cold Parsonage where they grew up, but spread its tentacles across time and place, to the point where, 150 years later, their novels can be read in almost any language.

Lately I’ve been spending a bit of time with some different Maori businesses and have been learning Maori perspectives about enterprise. It seems that business, in the Maori perspective, is about building something for the long term and creating endeavours that will be multi-generational in nature. Rather than extracting maximum short-term value, and thereby making money today at the expense of tomorrow, Maori business seeks to think on a systems-level.

Globally there are many examples of this longer-term approach towards business. English furniture makers were well known historically for going into the forest to pick the particular oak tree that was ready for felling – these craftspeople were well aware that the tree they were about to use was planted by their forbears, in an act of commitment and respect for the future. Similarly, these same craftspeople would spend time planting oak trees that only their grandchildren, or great grandchildren, would be able to use. 

Fast forward to today and not only have we left behind this multi-generational approach towards business, but we’ve moved to a hyper-accelerated model where the business lifecycle is apparently measured not in generations but in years. And this sort of short-term view extends across many aspects of business life.

Look to the US, where listed companies are driven entirely by quarterly earnings and, more specifically, Wall Street’s reaction to said earning. We have the bizarre situation where, even if a company reports good earnings, Wall Street might respond badly thus sending the only thing that matters, the company’s stock price, plummeting. 

Perhaps even more critically, we have the truly weird occurrence where corporate leaders are entirely unable to invest in securing their future – even if you’re operating in a sector which is prime for disruption, stockholder pressure means that investing time and resource into new initiatives comes a very distant second to eking out yet another quarter of positive performance.

Sadly, it also encourages bad behaviour in which companies use accounting sleight of hand to make the numbers look better. In extreme cases this results in fraud and massive train wrecks like we saw with Enron. But even in less serious (and, less obviously illegal) cases, we often see sales teams scrambling in the last week of the month to meet their quotas or businesses deferring expenditure by a week to try and pad quarterly books.

All of which gives the accountants hours of fun and entertainment devising ever more complex dodges, but which adds nothing to the true net value the business is generating. Contrast this with our apocryphal English furniture maker who plants trees with full knowledge that she will never see them grow beyond head-height.

Now of course my more revolutionary friends would, at this point in the argument, start quoting from Karl Marx’ Das Kapital, saying that this is a direct result of a capitalistic (read: extractive) economic system which is fundamentally flawed. Indeed, I’ve quoted Marx on occasion and have enjoyed riling up my Tory friends and earning “indeed comrade” comments from my more left-leaning buddies.

But maybe there’s another way – maybe we can reconcile doing well (in the way our economic system defines it, i.e. revenue generated) with doing good. Today there’s an entire class of organizations aiming for this holy grail. Social Enterprises, as the name implies, spend their time chasing impact beyond only economic: looking to generate social and environmental outcomes. While it’s a sexy new take on business, Social Enterprise is simply a reflection on previous models – the “buy one give one” model, whereby purchase of an item also acquires a similar item for an under privileged individual, is simply a modern take on my English furniture maker example. And organization pushing hard to deliver educational and equity outcomes are just another take on Maori business approaches of old.

So next time you’re perusing the business pages, have a think about longevity and the impact of your favourite business beyond simply their economic footprint. Take a moment to consider how the Brontë sisters’ works have impacted beyond place and time. Somehow, I think that under the cold stones of the Haworth Church where they’re buried, those brilliant, albeit slightly odd sisters are quietly chuckling that their very personal writing, is now some of the most impactful words in the English language.

Ben Kepes is a business leader based in North Canterbury. When he’s not serving on numerous boards, he’s obsessing over Brontë literature.

Review overview