Why should anyone buy from you?

9

Living-room leadership

‘Living-room leadership’ is the spark that lights the way to

a re-establishment of trust in business. Brands committing

to a mission that uses their resources to help solve serious

issues deserve to win trust.

World War II created a schism in trust that reverberated across the world

and dictated the landscape until the end of the Cold War. Swarthmore

psychologist and author of The Paradox of Choice Barry Schwartz (2005)

says, ‘the secret to happiness is . . . low expectations.’ World War II painfully

and tragically reset expectations and set them low.

The brightness of the ideals and innovation that eventually came in the

1950s emerged from the darkness of a previous decade where 70 million

people perished. The Welfare State in Britain, the realignment of interests

in Europe and Asia, industrial and domestic innovation in the USA, were

great achievements, giving the world a fundamentally more positive and

stable outlook. Standards of living improved in an economy powered by

consumption and it felt good. There was even the visceral comparison

with communism to show just how well capitalism was doing. The baby

boomer generation and its children grew up in a world of seemingly

endless resources and possibilities.

Despite the inevitable booms and busts, the industrial unrest of the 1970s and

the individualism of the 1980s, these post-war decades were times when the

global order seemed set and the stable path to prosperity and growth was

never-ending. Trust and hope for the future was high. Of course there were

incidents of low trust, impeached presidents, global crises, wars, business

collapses, but, fundamentally, the system didn’t need to be questioned.

The world is dierent now. We live in a system and world that looks and

feels unsure of itself and this is unsettling. The ‘matrix’ that we created

150 WHY SHOULD ANYONE BUY FROM YOU?

to support a high-growth, high-consumption

economic model is crumbling. The twenty-rst

century has started with more questions than

answers.

The twentieth century saw America becoming

the global superpower, with economic and

cultural dominance. We now look to the South

and East, with their very dierent cultural and economic models. These

fast-growing economies see the direct benets of employment, increasing

quality, prosperity coming from the rise of commerce, while, in the West,

most people don’t remember why we need to encourage business and

why we create markets to support these enterprises.

Business in the West is seen as for the scoundrels, the fat cats, those

looking to feather their own nests. Rather than being a source of equality

and rising standards of living for all, business is now seen as a source

of inequality. Bankers, as the top ‘predators’ in this system, blindly and

conspicuously continue to dole out millions to their sta in bonuses,

which reinforces this perception.

Business has become unbalanced. Stakeholders have been forgotten in

deference to the almighty shareholder. Nothing has been more important

for the leadership of businesses over the past 30 years than an almost

maniacal focus on the markets and their short-term demands. These

demands and those of institutional or short-term shareholders, such

as hedge funds, allow great businesses rich in social capital and trust

to be sold to the highest bidder. Britain with its commitment to free

markets without trade restrictions, now has virtually none of the brands

or businesses that made it great. Cadbury sold

to Kraft, Wedgwood in the hands of private

equity rm KPS Capital Partners of New

York or Tomkins, the global engineering and

manufacturing company founded in 1925 now

owned by Onex, the Canadian private equity

rm, are just a few examples. Stakeholders,

the ‘matrix’ that

we created to

support a high-

growth, high-

consumption

economic model

is crumbling

Britain . . . now

has virtually

none of the

brands or

businesses that

made it great