survival – Escondido Framework

Advice from someone with “the heart of a luvvie and the mind of a suit”

John Tusa is an eminent former broadcaster, managing director of the BBC World Service, and managing director of the Barbican Centre. He is a veteran of a variety of boards of cultural organisations and proud of being described as possessing “the heart of a luvvie and the mind of a suit”. He has written an account of his experience of governance that should be on the reading list of everyone either occupying or contemplating appointment to a board. His experience may be drawn from not-for-profit organisations in arts, broadcasting and education, but it is as applicable to boards in the private and public sectors as it is to the third sector. As he remarks in the introduction to “On Board”[1]:

“It is sometimes assumed that boards in the business world are totally different from those in the not-for-profit sector. This is far less true than might first appear. Both kinds of board choose their chair and chief executive, both decide how they appoint colleagues, how they sell to or serve their public, their customers or their audiences; both are responsible for brand, communication and reputation; both supervise the internal health of the organization. Of course, one deals with profit, the other does not. But while ‘not for profits’ are not businesses, they must be ‘business-like in the way s they manage their resources.”

While Tusa does not have direct experience of private sector boards himself, he has sat on boards with plenty of people with this experience, notably Kenneth Dayton, founder of the Target retail chain in the US and Tusa’s chair at American Public Radio, who pointed out to him that “governance in the not-for-profit sector is absolutely identical to governance in the for-profit sector”, besides which that it can also be a lot more complex.

Tusa builds his account of governance around his experience on the boards of the National Portrait Gallery[2], American Public Radio, English National Opera[3], the British Musuem, English National Opera, Wigmore Hall, the University of the Arts London and the Clore Leadership Programme, each of which merit a chapter reflecting interviews with fellow board members, executives and other stakeholders. Tantalisingly, he also alludes to other experiences, such as his time as President of Wolfson College, Cambridge, but without the same detail. Most of these organisations faced major challenges during his time with them, some potentially threatening to their existence. His accounts of how the boards weathered their storms and his candour about the mistakes made along the way are pulled together with a short section ending each chapter drawing out his reflections on what he learned from each experience and provide a rich seam of learning not only for people joining boards for the first time but also for those with many board appointments already on the CV.

This book should be read for the lessons Tusa draws out at the end of each chapter. Board members would do well to reflect on each, and whether they are applicable to their organisations. But “On Board” can also be read for more: it provides anyone who has observed the ups and downs of some of Britain’s leading cultural institutions of what went on around the board room table. As someone with strong ties to the Isle of Portland, I was suitably scandalised by the failure twenty years ago to use Portland Stone for the Great Court development at the British Museum. Tusa’s first career was as journalist and tells a good story, about this debacle and much more besides, as well providing a required text for chairs, directors and trustees.

[1] John Tusa, On Board (London: Bloomsbury 2020)

[2] His chair at NPG was Owen Chadwick, from whom I took my first lessons in chairing. Chadwick was Regius Professor of History at Cambridge University and a masterful chair of the faculty Joint Academic Committee, on which I sat as first year undergraduate (along with Diane Abbott, whose approach to faculty politics was considerably more radical than than the one she adopted later in her career as a leading member of the Labour Party in the House of Commons).

[3] I have a small gripe. John Tusa, having studied history at Cambridge, should know better than to suggest (in the context of ENO which, despite a catalogue of errors made by the board in the 1990s, managed to survive, an achievement that he observes “should not be underestimated”) that it was the French politician Talleyrand who said of his part in the French Revolution “I survived”. Far from just surviving, Talleyrand’s extraordinary achievement was to serve just about every government in France between 1780 and 1834, from the Ancien Regime, through every stage of the Revolution, the Napoleonic Empire, the Bourbon Restoration and the Orleanist “July Monarchy”. It was not Talleyrand, but Emmanuel-Joseph Sieyès, usually known as the abbé Sieyès, a chief political theorist of the French Revolution, who is reputed to have said in answer to a question about what he did during The Terror of 1793-94: “J’ai vécu”

Shifting the dial on purposeful business: what can we learn from crises, past and present, in solving the problems of people and planet?

The fifth and final session of the British Academy Future of the Corporation – Purpose Summit was a disappointment after some of the high points of the earlier sessions, but was rescued by an inspiring closing contribution from Mohamed Amersi, whose Amersi Foundation is one of the principal sponsors of the Future of the Corporation programme.

The essential shortcoming of the session was that it failed to address its intended subject or answer the question set in its title. I was left with the impression that, particularly with the backdrop of the Covid-19 pandemic, the organisers felt that they would be failing to notice the elephant taking up most of the room if they didn’t address business purpose in times of crisis. As keynote speaker, Mark Carney tried to combine his experience as a central banker through the financial crisis and its aftermath with his appointment as UN Special Envoy for Climate Action and Finance. He made the case for a strategic reset to deliver “Net Zero” to address climate change, argued for corporations to be required to disclose how they contribute towards reducing carbon emissions, but did not manage to articulate how this relates corporate purpose. In Escondido Framework terms, the appetite of investors and consumers to do business with organisations that are addressing climate change and the restrictions and/or incentives provided by governments reduce carbon emissions shape the market interfaces of the firm, and the interest of the firm in its own sustainability should encourage it to behave sustainably, but they don’t change the corporate purpose.

Following Carney’s contribution, the session moved onto a panel discussion. As CEO of SSE, an electricity utility, Alistair Phillips-Davies had an easy job relating the changes made to his company’s corporate purpose in relation to the climate crisis. He further argued that clarity of corporate purpose helped everyone in his company respond appropriately to the current Covid-19 crisis, albeit that this sounded like a general statement about how it was good for the company’s reputation to be seen to behave responsibly when this latest crisis hit. The session then wandered, as it seemed unclear whether the discussion should be about how companies respond to crises, in particular whether they should be holistic and strategic or driven by short term financial optimisation, or whether companies should become principals in addressing the crises themselves, which seemed to be the line adopted by Ngaire Wood of the Blatavnik School.

I was left frustrated as Colin Mayer tried to sum up both this discussion and the material covered over the three days of the summit, ultimately feeling that we were left with a laundry list rather than an understanding of purpose, and that this final session had left the impression that the purpose of the organisation had been reduced to steering the organisation through the crisis. This may be consistent with the thesis that an organisation can be viewed as an organism whose purpose is to survive, but it falls short of the Escondido Framework understanding the purpose of the organisation is to create value for society than cannot be created through a set of atomised transactions.

Mohamed Amersi was given a few minutes to wrap up the summit and, for me, saved the day. He referred back to the 1850 charter of his family’s business which stated its duty to its “superior creator”, suppliers, those served [ie customers], the state, shareholders, surroundings and society. He described the challenges we face today as planetary sustainability, inequity and technology. He spoke of modern society by way of an analogy with an apartment block containing a flooded basement, crowded middle floors and a growing penthouse, but with a broken elevator. He despaired of top-down organisations in which no-one is actually in control and argued that is up to everyone to act – “If not you, who? If not now, when?”

Lessons for capitalism from the East India Company

William Dalrymple has helped people who don’t have the time to wade through 576 pages (or perhaps already have backlog of doorstep sized items of reading matter on the bedside table already) by writing an extended article on the subject of his new book about the East India Company in the FT. However, it is a compelling article and means that I may add “The Anarchy: the Relentless Rise of the East India Company” to my list for Santa this Christmas.

This is a company of superlatives, starting out as a joint stock company operating under charter arising from a petition by entrepreneurs and investors to Elizabeth I, growing to become an empire with 60 million subjects, its own army of 200,000 men , accounting for half of the trade of the leading trading nation. It’s global impact was enormous, from the fears about its reach – as well as its role in the tea trade – that contributed to the revolution in the Thirteen Colonies, to the part it played in the Opium Wars. Microsoft, Amazon, Google, Apple and before them the oil majors – they were clearly nothing to this behemoth.

Dalrymple brings out in the his article the complex relationship of the Company to British state, from its original charter, through the continuing lobbying into government, the corruption in the relationships between the Company and the establishment (for example, in 1693 shelling out £1,200 a year to prominent MPs, described by Dalrymple as the first corporate lobbying scandal), and the final demise of the Company in the wake of the Indian Rebellion.

Dalrymple’s article has the effect of drawing attention to is the inadequacy of conventional theory, both “Microeconomics 101” and the Theory of the Firm, to describe one of the greatest commercial entities the world has ever known. Some of things at work are the complex interfaces with the British state and its politicians, and also its deployment of its own naval operations (envisaged in its original charter) and an army to deliver a return to its joint stock holders, as well creating an entity became transformed into the biggest single component of Britain’s empire.

As I write this, I think he has done the job with his teaser article to promote the book. Perhaps I should ignore the size of the unread pile by my bed and add “The Anarchy” to the letter to the bloke with the reindeer and sleigh.

Purposeful finance – in ancient Ephesus

I have always been interested in long lasting institutions. I attended Corpus Christi College, Cambridge, established by the city’s townspeople in the aftermath of the Great Plague, and lived for a year in a room in its Old Court, built in the 1350s. There was something very special about occupying a room that had seen young men* engaged in the same endeavour for over 600 years. A few years later, living in west London, I relished the occasions driving when I found myself behind removal vans owed by the local branch (sadly since renamed because the branding confused the locals) of the Aberdeen Shore Porters Society, that proclaimed its foundation in 1498.

Esra Turk wrote a fascinating article in the FT on 20 August about an even longer lasting institution, a bank rather than a college or a logistics business, albeit one that was abolished 1600 years ago by a Roman emperor, a Christian intent on stamping out pagan beliefs. The Artemision was one of the earliest known banks, operating within the great temple of Artemis (as known to the Greeks, or Diana to the Romans) at Ephesus, one of the seven wonders of the ancient world. Its origins were as a place to deposit wealth under the protection of the deity and predate Croesus, the first ruler to issue gold coinage, and man synonymous with great wealth and an early depositor in the Artemision.

Turk recounts how the Artemision developed to become more than just a safe deposit facility for the mega rich to evolve “into a much more sophisticated regional and international financial institution, operating not only as a reserve and depository bank, but also undertaking fiduciary and mortgage business. The accumulation of earnings and reserves were of such magnitude that it became known as the Bank of Asia”.

What was the behind its success and its longevity? As every pre-digital retailer will tell you, the first was location – Ephesus was the central junction of the ancient world. But beyond that, Turk spells out three great strengths: purpose, leadership and a clear view of risk.

Regarding purpose, Turk observes, its “sophisticated banking functions were always carried out in the sacred service of a goddess with a strong ethical code. Similarly, banks today need a guiding purpose that looks beyond financial performance and provides a clear and sustainable ethical framework”. It may be a stretch, but is there anything in the waxing and waning of some of high street financial institutions in the UK to link the points at which they have exhibited most resilience and placed themselves at great risk to the strength or weakness of their links to heritage of their Quaker and Non-conformist founders?

Regarding leadership, Turk tells us its “governance was characterised by high levels of personal and collective accountability, trust and connection to the society in which it operated”. Leadership was initially jointly vested in the high priest and priestess of the temple and later in the sole charge of a high priestess. Turk wryly describes this as “an experiment not much emulated in the subsequent 16 centuries, but perhaps worth revisiting”. Not so much the 30% Club as the 100% Club. Gender may have played its part, but I think Turk’s core message is that accountability and trust embodied in the priesthood and accountability to the deity was key to the longevity of the bank.

Regarding the clear of view of risk, Turks suggests that bank was a model of prudence and caution, deploying its own capital as well as the funds of its depositors, and restricted itself to low risk lending because the money help under the goddess’s protection had to remain inviolable. No sub-prime activity in the Artemision!

*Corpus Christi only started admitting women undergraduates in the 1980s