Unlimiting The Company

Time to recycle the UK’s Companies Acts

Buried deep within Kate Raworth’s seminal work, Doughnut Economics, you’ll find a brief anecdote illustrating barriers to creative regenerative design. Regenerative design is all about making things or systems that have both a current and a future purpose. Circular economists often say, ‘made to be made again’.

This very natural evolutionary concept is blindingly obvious. Look in the mirror. Regenerative Design is staring you in the face. But much of our economic activity is unnatural. We ‘take, make and waste’ and keep on taking and making (and making waste) as if resources are inexhaustible.

Kate Raworth references a pioneer of Regenerative Design. For the best part of the last 40 years the approach to innovation adopted by Janine Benyus has focused around biomimicry – the emulation of evolved solutions found in the natural world.

While collaborating with a large commercial land developer on designs for renovating the suburb of a major city, she proposed constructing buildings whose biomimetic living walls would sequester carbon dioxide, release oxygen and filter the surrounding air. The developer’s first response? ‘But why should I provide clean air for the rest of the city?’ (Raworth K (2017) Doughnut Economics p. 227.)

Resistance to circular economy concepts can take many forms but in Kate’s small anecdote you’ll find the first and highest hurdle: mindsets frozen in the glaring headlights of so-called Free Markets — a very odd name for an intellectual prison.

Kate observes that the developer’s question comes as no great surprise. The dominant assumption in contemporary capitalism is that the entire purpose of enterprise is creation of financial value for shareholders — a focus that falls way short of the spirit, if not the law, of the Companies Act and directors’ responsibilities.

Since the 1980’s, progressive ‘fincialisation’ and ‘Shareholder Value’ seems to have ‘swept the board’ to the detriment of any great concern to create wider Stakeholder Value. There remain, however, some survivors of ‘demutualisation’ and even a resurgence of interest in co-ops, employee partnerships and other benefit societies. But despite these inspired initiatives, conventional capitalism’s privatisation chickens are most definitely ruling the roost.

Unintended Consequences

Constraining innovation and limiting long-term thinking were probably not the intended consequences of any 1980’s wish for ‘freedom from red tape’. It is now almost impossible to rebottle the devil just at a time when the wider world is waking up to the climate crisis — the ultimate demonstration of short-term thinking.

Countless communities ‘left behind’ now realise they should never have allowed the UK’s central government to take over their reins. Understanding local priorities or nuanced needs was never Whitehall’s core competency. That weakness was at least recognised back in 2007 with Gordon Brown’s Treasury paper on subnational growth but action was soon overtaken by cries of woe from bubble bursting bankers.

The UK has long been in an enviable position. Amongst our greatest assets has been our long-term investment in the European Union. Unfortunately successive UK governments have never really cared to comprehend ‘subsidiarity’– the principle of not taking away control. Disempowerment is the exact opposite of this core EU principle. Arguing that white is black is a tactic designed to cover the cracks of incompetence and neglect on the domestic front.

Now, with a long-neglected homegrown pile of priority problems, it should be a massive advantage to have continent-wide thinkers focused on essential responses to the climate emergency — assuming (and this is a very big IF) we now put the freed-up air-time to good local purpose.

Thanks to the pioneering energies of Ellen MacArthur ‘s Foundation, the UK is, arguably, the European leader for intellectual investment in circular economy concepts — largely achieved in spite of conventional commerce. With the possibility of our political air-time refocused on our priority domestic problems there would be a good case for rethinking our Companies Acts and their market regulation. This time around the responsibilities of directors could not only be clarified but also re-regulated to fully embrace stakeholders — redesigning enterprise models to be evolutionary.

Unlimited Companies

Evolutionary Enterprise offers a rich field for innovation. Companies have always needed to adapt to changing contexts but now we have the opportunity to place adaptation at the centre — no longer being constrained by increasingly irrelevant objectives but having a duty — a response-ability — to be aware of, and attend to, the priorities of a wide range of stakeholders.

Much of that innovation will take us further down the path that already provides the UK with a trade surplus — the transformation towards services. Far too much of our old company law is rooted in manufacturing and now needs a complete overhaul for the regenerative service design era. The analogue world’s ‘limitation of liabilities’ is far less relevant for an era of regenerative response-ability.

Economic Evolution

Once we had a predominantly agrarian economy with relatively small-scale manufacturing.

The Industrial Revolution was all about making things — and making them at scale.

The Quality Revolution ensured that we made things that really worked– a field that evolved fast after World War II with leadership by Japan.

The Connected Revolution then had us making things that worked but also worked with other things — complex integrated systems.

But evolution evolves — with application

The systems focus on complex integrated things is now switching to the uses we make of things. The Regenerative Revolution will ensure that the primary uses we make of our assets — the things we make/that work/with other things — will feed future uses.

Where once we bought light bulbs, now we can buy lighting (the bulbs remain owned by their source maker) and the lighting can also re-create energy. Waste is not just minimized — the entire concept of waste should waste away. Why build a wall that is only a wall? Why not build a wall that works to improve air quality . . . in turn to improve community wellbeing . . . in turn to keep us (our planet and all who sail in her) alive?

Efficiency and Deficiency are close cousins

The sciences, the innovations and creative arts to achieve increasingly useful purposes might happen spontaneously but some of us clearly need encouragement: we sometimes still need permission to do different things differently and the re-regulation of companies will be an education. That is why we need urgently to review and renew the Companies Acts — un-limit the limited and infuse businesses with wider purpose.

The current commanders of commerce (‘Fossilised Fishhooks’, said Jennings) will not undertake that essential reformation. It will, however, be driven by today’s schoolchildren — the Greta’s of this world — waking up to the urgent need for the Regenerative Revolution.

In the same way as today’s F1 racing car is not a finished product — merely the prototype for the next race — go look in the mirror to get a rough idea of what your next generation might be like — and the company they’ll keep. Improvement guaranteed.