“The present state of affairs is really a perversion of the proper working of capitalism. It is all wrong to have millionaires before you have ceased to have slums…If we do not find some way of correcting that perversion of capitalism, our society will break down” said Spedan Lewis, the founder of the John Lewis Partnership, the UK’s largest department store group, during a talk on the BBC in the late 1950’s. These words still echo loudly today. There is much that is positive about capitalism and as Spedan Lewis also noted “Capitalism has done enormous good and suits human nature far too well to be given up as long as human nature remains the same. But the perversion has given us too unstable a society.” The industrial revolution changed everything and has brought millions of people out of poverty, delivered education on a mass level and liberated the role of women in society. But there are also perversions that distort the proper workings of capitalism: Perversions like pollution; perversions like the boss who doesn’t respect or treat customers and co-workers well; perversions like soul destroying jobs and working environments; perversions like directors getting paid huge salaries and bonuses while we still have people living in poverty; and, perversions like relentlessly driving suppliers costs down then turning a blind-eye and not caring about the ingredients in your burgers until you get caught out in “the horsemeat scandal”.
Spedan Lewis recognised these perversions and addressed them by creating the John Lewis Partnership (JLP) which he described as a experiment in democratic capitalism. It’s an experiment that has proven hugely successful. Today the John Lewis Partnership is the UK’s most successful retail group. The Partnership’s model is simple. Workers at JLP join as Partners from the get go (JLP does not have employees) and success is shared amongst Partners , suppliers and even customers.
The Partnership model represents the roots of a new form of capitalism that Harvard Business School and strategy guru Prof Michael Porter calls Creating Shared Value (video). The idea of doing business in a manner that benefits society as well as making profits is taking hold and as Spedan Lewis said it’s an idea that “makes work something to live for as well as something to live by. Here may be the new source of working energy of which our country is in such grave need.”
Five reasons why addressing the “perversions of capitalism” will give you a competitive advantage