How to Run a Marxist Business Within Capitalism [Full Video]
Webmart was founded 21 years ago by Simon Biltcliffe on the principles of Marxism within capitalism.
How to Run a Marxist Business Within Capitalism [Full Video]
I run a Marxist-capitalist business, which I’ll explain a little bit more about in the two lots of ten minutes I’ve got to speak. I’m going to share some of the inside track on how create a very different culture, a very different business — and funnily enough COOK, one of our larger clients, was put together because of our ethics.
So, all of a sudden I got introduced to Ed, Rosie’s brother, and we hit it off. You’ve got alignment and all of a sudden things happen.
The reason I make a big thing about coming from Yorkshire is that it gives me a comparative advantage against anybody who is from the South, and the reason for that is simple. In a world where people have to work together to get maximum commercial value, it is run on trust. The beauty of coming from Yorkshire is that I trust everybody on the first meeting, I don’t wait to prove or test their trustworthiness.
From day one I will trust them and thereafter they will either be trustworthy or not. So, immediately I’ve got a bigger network of people I trust and with reciprocity people, I have people who trust me back. Now, somebody is going to screw you over, they’re going to do it sooner or later anyway, so I just cut out all the pre-work that you’ve got to do to get to the bottom of who’s trustworthy and -luckily- 90% of people are.
So, it gives me an opportunity to share stuff and, as they say, the more you give the more you get. The more you give with absolutely zero expectation of anything back in return then the more people will [freely] share with you what they’re thinking. If you’re very clear on what you’re about then you’ll find the right kind of people will spend a lot of time helping you, and in a world where there is infinite amount of competition I think that one of the key comparative advantages every business has these days is in that you have to be able to out-collaborate people, not out-compete.
So, our entire business is about creating value for everybody throughout the supply chain: clients and suppliers alike. It’s all built on trust because trust is the most efficient way of working… ever. There is no better way. There is no faster way. There is no more efficient way for you to run any organisation than through trust. So you do everything to promote it and that equals transparency, and you make sure you do what it says on the tin otherwise people won’t trust you. So, that’s why being from Barnsley, which is a very straightforward part of Yorkshire, is important.
So, what I’d like to do is save you, immediately, £25,000.
I went to Harvard to do an innovation course, which was interesting, but the only thing I got out of that, other than common sense, was that if you want to go into a creative meeting to get insight then you’ve got to go in with your mind open. Suspend your preconceived ideas of what the outcome of that meeting is going to be, because otherwise all you do is have a straight line of sight: you go in knowing what you’re going to be saying, so you spend every bit of interaction trying to make sure that what you thought was going to happen happens. So you have a very narrow focus.
If you’re looking at creating unique value, it is rarely where everyone else is going. So the oxymoron of Marxism and Capitalism working together is something that does take a little bit to get your head around, but if you have a look around you’ll actually find that it works with everybody for everybody, gives everybody an opportunity to be the best version they can be of themselves and that’s what I’m going to share with you today.
I was brought up and went to university in the time of The Miner’s Strike, where the Thatcher government decided to crush the unions and shut down all the coal fields. Thirty years on from this Barnsley is just getting back to the GDP of what it was in 1984, it’s multi-generational unemployment and other problems. It made you open your mind to the fact that with many things in life you’ve got a choice with what you do with it — power, money — and it actually opens your mind as well to other things you see in the world that we cannot take for granted — it’s just the way it is, but it doesn’t have to be. Things like creating value unequally, or having an increasing amount of inequality in the world.
If you look at the FTSE 200… I think at the time of Thatcher, the average CEO was earning 25 times the earnings of the base salary of the worker — it is now 300 times… the same metric. So, we may feel everything has been democratised, but the inequality absolutely hasn’t. You’ve got vested interest throughout the establishment and these insecure overachievers who’ve typically gone to public schools where they have a rarified view of life and can’t relate to others, hence they bring their mates in. So you’ve got massive disenfranchising and the pool of talent that you’ve got within the political process leads to these… arseholes… in power, who have no idea what they are doing because they cannot relate to the average person.
There’s a lot of shortcuts for the environment; people will rape the environment to make more cash for no particular reason and — you’re all very enlightened people because otherwise you wouldn’t be here — but, many people who you work alongside with, or for, aren’t like that and look for the lowest common denominator. Everything [for them] is a cost rather than a benefit. This is the kind of world that we’re living in, which is why we end up with the kind of world that we have.
The truth of the matter is that we’ve all been living a false lie, which is a bit of a shame, because if you take a look at this, this is the global index of spending in the developed world. When you’re young you have little and then you spend more money and end up with more stuff… and the global zenith of spending is 48 [years old] and thereafter you generally have the stuff that you want, and you have the house that you want, and you gradually spend less, you downsize.
There is also a corollary to this which is the global index of happiness from the economists. You start very happy and then you get less happy once you get children or a job with responsibility, you feel that burden coming down on you. Then somewhere about age 50 you start to think, “Well I am what I am. I know me. I’m happy with this and I don’t actually need any more.” The weight comes off your shoulders.
Unfortunately, in the post Second World War capitalist society that we all live in, we’ve been sold a pup, because there is an inverse relationship between how much stuff you have and how happy you are… and we’ve been sitting there, working avidly to get more stuff thinking that makes us happier when actually it doesn’t.
Now don’t get me wrong, poverty isn’t great, but having too much isn’t great either. You see these people, and they get paranoid, and they worry about people who are only after you for your money, and you lose your link with community.
Joe Ratner, I do some speaking with him, the guy was a complete arsehole in the 1980s and he lost a billion pounds of his own money by saying in the IOD conference that his product (jewellery) was shit, and as a consequence he lost everything. I was just having a chat with him in Sweden and, he’s a really nice bloke now, he said, “The worst thing was when you’ve got all that stuff your wrapped around, people who only want to know you because of what of you’ve got, rather than what you are.”
At the time he had three private jets and two private helicopters and he said, “I didn’t even know what season it was, let alone what day of the week it was.” This is the bubble that these politicians and these titans of business are in. They get removed from the humanity of it because they’ve got this thing that ‘more is better’, but actually enough is better. If you look at nature, nothing in nature grows on forever and we’re a part of nature. You work out what is your enough, and that is what typically happens.
So once you’ve got that awareness all of a sudden it kind of makes sense, and the people that you’re trying to recruit into your business, the younger people, the talent you need in your business… they aren’t going to have to go through this because we were on this step ladder to get more and more, because we believed that was an expectation. Their not there, so, they know enough is a lot less than we had so they don’t have to have the burden, so they only want to work at a place they want to work.
This is where purpose and having the kind of environment you’ve been talking about today is really important because you cannot out pay Google and people like that. We had a guy that came with us for an internship — Cambridge mathematician, nice bloke. He was offered, straight out of university, by Google, £100,000 a year and he didn’t take it because he got offered more somewhere else. So, just, leave those ones. But, you can out-compete them in other areas, quality of life types of things. So, these are the important things to attract the talent into your business.
So I thought, “what should I do?” Instead of creating a revolution, which is actually very destructive and not really that good, have an evolution — because we are in a continuum. If you understand history then you will realise that nothing is the same always, it changes, it morphs.
So I started up Webmart and we’ve done alright. We’ve been going for 21 years now, made a profit every year, never borrowed any money — rather like Rosie — and that gives you freedom. If you borrow money then that comes with rules, and rules narrow your focus on what you can do, they give you timelines and stop you from being creative. So, you reinvest your own money to create the changes that you wish to see within your organisation and run it the way you want.
It [Webmart] pays a lot more tax, we’re very tax efficient for society. We’re really dreadful if you want to look at individual gain, because it all goes through payroll. We don’t do any cleverness, because that actually pays for the stuff that really does matter in the world. Which is security, freedom, NHS, etc.
We pay people more than the average. We’ve donated quite a lot to charity (which is the unearned income we get from the bank et cetera) and we’ve won a lot of awards while being carbon positive. We’ve got our own oxygen farm, 166 acres, it’s our own little Centre Parcs in Scotland in a place called Caldingham, where everyone within the business can have a week with family. Just to chill out and spend a bit of time. But, obviously, at the same time it’s woodland, so it creates all of the offsetting that we could ever possibly need.
That’s the yellow shed of wonderment which is a rather interesting place, where we all work out of, we’ve got three offices — Barnsley, East Kilbride and Bicester — and it’s a place where people… we want them to be creative, and, they are creative.
So, onto the how.
How we do it, is — the first rule that we all know in business is, if you can’t measure it you can’t manage it. The trouble is, if you only look at the financial aspect of it, you’re looking mono-dimensionally, and as the old adage goes, “To the man with the hammer the whole world is a nail”, because you just batter at one thing. Everything else is just subsidiary to that.
Well, at Webmart we don’t.
We measure three things: the Intellectual, Emotional and Financial return of the business. Because if you measure those three things at a business level, you’re maximising your comparative advantage, you’re enjoying it and you’re making a full return on your labour employed. You’re ensuring you’ve got that balance in it.
Intellectual is first, and I’ll explain how we measure that later, then Emotional and Financial.. And this is powered, right in the middle, by those core values of trust and transparency. If you get those two right then everything works. If you haven’t got that then you’re screwed, because nobody will want to work with you. So, the more trustworthy you can be, the more transparent you can be, which is the easier way of doing it, and it’s cheaper! If you’ve only got one version you don’t have to keep all those different levels of information within it.
At an individual level this is what it means: If I can be an employer that maximises what you’re good at (Intellectual), what you love doing (Emotional) and pays well (Financial), then to be honest, you aren’t going to want to go anywhere else.
I’ve got loads of mates, and I’m sure you have too — I’m 52 — who are here (doing what they’re good at, and what pays well). Rich, but bored. And they’re at 52 going “oh my fucking god, what did I do? What did I do for the last 30 years?” They’re typically accountants, and they followed the professional classes that their mums and dads said were very good roles, and because their heart and soul wasn’t in it, but they got money, they thought that that was enough – and it isn’t for young people, they want the three.
And this is where, if you think of a business as a bag of people (because that’s all it is, there’s no need to look into it more than that – there’s no such thing as a business, it’s a bag of people in a place), then, by doing that, you get the best competitive advantage you can as a business.
Just have a think and discuss: “How do you maximise the IEF return of your employees/colleagues within your business, and how could you change it?” or look afresh at doing that as part of your value proposition to your employees?
This is the intellectual return. All of these things are really important. Running through from the top; Technology is massively important because it is an enabler. It allows them to be the most productive version of them they can be in our world. If you look at productivity gaps we’re a very productive business because we use technology wherever, it is difficult and painful but it is so important. Every business whether you like to think you are or not, is a tech business without that you’re at a comparative disadvantage whether you’re client acquisition, retention, development, supply chain optimisation, innovation.
One of the things I do is go around to see other companies, that’s where the camper van comes in. I went to see BMW and I asked the head of procurement what percentage of the innovation within BMW do they reckon comes from their supply chain. It was 80% plus supply chain, or equally — when you get it wrong as Volkswagen did — it can destroy quite a lot of values.
So if you wanted to engage people, to get innovation, to get the intellectual value within your organisation then you must crowd source as much as you can from your suppliers but give them as much technology as they want. It’s relatively cheap [when considered] relative to the brains that you’re buying. Understand their life, don’t look at people as a unit of productivity. Understand the person behind them, one of the things I’ve always said is ‘a cap of 50 people in the business’, I don’t want any more otherwise I wouldn’t know them… you can’t know them.
So, for me it’s important to know the people up and down the business because then you can react appropriately to their life and make sure that they really do feel a sense of belonging. This is emotional, but also intellectual. If people feel they’ve got the best use of their time then you can morph the role to that person because there are no hard and fast barriers to sectors, industries or roles within a business. The better fit you get for their talent the better they are and happier they are at doing their job.
Maximise their opportunities not their problems. Don’t give the best people in your organisation the biggest problems to solve because that is under-utilising them. Give them the biggest opportunities, innovation by definition — according to HMRC — is anything that has a high degree of uncertainty at the end. So you will want the brightest people to be dealing with those kind of things, that is how you get innovation within whatever business you are doing. If you give them problems then you know what the outcome is — hopefully, no problem. It helps you as a leader, because you’re shovelling your shit onto them, but it doesn’t help them bring the business forward which is really important.
Understand who you want to recruit. We want the right kind of people. We’ve got a strong recruitment policy with Skype interviews for everybody to start with, psychometric team interviews and then I’ll interview them last before they come on. Then when they come in they have a review after three months, everybody anonymously ranks them for capability within their job. Their ability, spirit and attitude, they have to get through that after three months, then the same again at six months. So we measure how fit they are for the business and that role before they get in, but you’re crowd sourcing that validation. You can blag an interview but you can’t blag three months and if you’re three months in and still blagging then you’ll never get through six months.
More mentoring less managing: Invert the management structure. So, I’m at the bottom, I’m there to support the top managers who are there to support the team leaders, then the front-line employee team. The beauty of this kind of inverse is that you’re mentoring not managing, it’s not top-down — it’s bottom-up. So mentoring goes up and innovation goes down. Innovation is sitting in the middle between customers, clients and front-line employees. I don’t know what we need to improve, they do. There’s more of them out there, so all innovation comes from the front-line team, validated by the team leaders and the managers and then actioned on a two week sprint. So, every two weeks we’re innovating and improving and it is this interface here which is most important to improve your product.
As a leader I have what I call my DIY MBA, because I don’t want to do an MBA course, I don’t think they’re relevant to be brutally honest. So I take time to go out and see other people, to read about things — at the moment I’m looking at artificial intelligence and bitcoin, I’m looking to do neural networks. Half a day every week is booked in, the only thing that is static in my diary, is my DIY MBA on a Tuesday morning. That gives me the space to think, because a lot of leaders are doing all the time, they’re not thinking, they don’t have the chance. They feel they have to sell to get space back in their life to do the things that they want to do and I said to them, all you have to do is put a diary point in every week and put “private”, nobody can move it, it stays there and it happens. There are so many things you need to learn about these days if you want to lead a business effectively, getting that space in your busy working week is really, really important.
Maximise the emotional return. Obviously the things we talked about before — give trust and empowerment to people, make every role meaningful. Again having that sense of purpose is really important. Transparency, having one version of the truth.
Every week I show a video to the team which is a five minute video just explaining what is happening in the business and how I get the narrative of what I’m doing is in the inbox. If I think it’s relevant to the video I just drag it into a folder called vidcast and I do a five minute video. It’s human, it’s free. I’m a tight northerner so I do that video wherever I can. But, you can stream it, everybody can see it — four o’clock on a Friday — and it makes it easier to communicate with everybody.
Make work both fun and hard. There’s no reason for people to be bored, make sure they are constantly challenged, make sure they understand what success looks like, but do it while building fun. Most companies have reports which are exception reports: when things go wrong you get a report. At the same time you develop those, develop an ‘exceptional’ report, where it captures, with the same amount of rigour, things going right. Those are the triggers that allow you to say thank you. You can try, whenever you’re in the same room as somebody, to say thank you, but if you haven’t got the process right and systemically you haven’t got those triggers in there then it’s really difficult. Especially when you have three offices. I can’t physically see everybody to say thank you, but you can if you’ve got it as a thing.
So I do lots of video notes, there’s a little app called Workflow and it will do a little video. The feedback you get is fantastic and you just email it out. It’s much better than anything else because it adds that human dimension — don’t use emails. Think of emails as Facebook, you only ever give a thumbs up. Whenever you give a thumbs down through email people get right upset. I’m trying desperately to get better and only send positives through that. For anything else I do face to face or a voice message because then you’ve got the tone.
My role in the hierarchy of needs is to go as far as this team, and that’s where process comes in so that you can achieve all of those things with your process. It means that everybody else is spending their time up here, because that’s the comparative advantage of whatever it is that you’re wanting to do. My responsibility is to make Webmart the most enjoyable place and financially stable. Everytime money comes into the bank [something in the office] makes a noise, we get our big screens showing how much has just gone into the bank, it makes people feel secure.
This is where process is important. It is what you do with that process, you can do that to be sure that people get appreciation, get accomplishment, opportunity and recognition. If it’s not recognised then it doesn’t count. Everybody else must being as creative a version of themselves as they can be because that is their competitive advantage for your organisation, and therefore where their future lies.
Lastly financial. Financial is very important because the truth of the matter is that, having everything is pointless and nobody cares. Nobody will ever care about what you do for yourself, the only thing that matters is what you do for other people. So, if you can work out how you can maximise the financial value you deliver to people then it really does turbo-charge the business going forward. Bear in mind that we were a print management business, and are now a marketing business; print has been through a cyclical and structural decline over many years and yet we’ve still managed to make a profit though all of that, and are now broadening our reach with partner suppliers to deliver full service marketing. It give people an opportunity to invest more in their training, et cetera, going forward.
If you think about the top people in a world where collaboration is most important, who’s going to share with those people at the top? Because [the top row] they’re going to look after number one. People who we do care about are those that do things for other people, not for their own self aggrandisement and if you think about competition being destructive and collaboration being positive… if you’ve got the traits of the people on the top then you will not win because someone will try to do you over because you would do them over. If, however, you’ve got the traits on the bottom then you will always win in this world.
So this is our Marxist capitalism. We use capitalism to create profit, and Marxist principles of redistribution of wealth to share it out. This is our distribution, we call it the sexy scheme, the senior executive incentive scheme and everybody within the business after two years is in it. After two years we know by then they’re a great person to have, they’ve shown creativity et cetera. The dotted line is the retained profits so between 0 and 400,000 is retained profits which is why we’ve got the remarkably dull net worth as a business which goes at a 45 degree angle and it goes up by that amount every year. Between £400,000 and £1,000,000 profit half goes to the team and half goes to me. Above a £1,000,000 100% goes to the team so the growth of the business is entirely down to them and delivered to them because we’ve got enough for me and then enough for them to maximise their return. Basically, the surplus goes into a pot and then it gets divided and everybody gets the same percentage of their base salary because whether it is 80% or 20% it has the same impact on people’s lives.
The truth of the matter is if you want to be the most selfish person [that] you can be then give as much as you possibly can everyday, to everybody, because you can get as many people as you possibly can trying to help you forever. Every day, in my inbox, I have people giving me a competitive advantage, never asked for but they will always do it because you’ve helped them not expecting anything. So, the more you give the more you get out of life on those three levels. It is an amazing, powerful force to help you deliver an exceptional return for everybody who’s around you.
So that’s Marxist capitalism. The fact of the matter is you have a choice how you run a business, you don’t have to run like the professionals say to, or the textbooks say. You can look at the big things, purposeful things and show, as an exemplar, that there are ways of achieving this. As Gandhi says, “You must be the change you wish to be in world.” If you look at the people who were radicals back in the day… we now say, “Well these were the right things to do.” Back in the contemporary way people accepted slavery all the way through, that wrongs were just the way it is. But, it does take people time — and business can be that force for good if it chooses to be. So, what are you waiting for? On your Marx, get set, go.
This is the last question: What changes are you going to make to your ‘little slice of heaven’ aka work?
What you’ll hear in this video:
- Why Simon trusts people from day one, without waiting to see if they are trustworthy first (1:16)
- The actual relationship between how much stuff you have and how happy you are – and why your organisation should focus on creating a place that people want to work at, rather than trying to out-compete on salary (8:20)
- About Webmart – how they have never borrowed money, pay more tax, and are carbon-positive (13:23)
- How Webmart measures the Intellectual, Emotional and Financial return of the business, and ensures that their staff feel happy and fulfilled (15:13)
- How to measure and maximise the Intellectual return: maximising technology, understanding staff life goals, maximise the opportunities, invert the management structure, take time out, mentor, and understand who you want to recruit (18:32)
- How to measure and maximise the Emotional return: trust and be trustworthy, make every role meaningful, transparency rules, understand the whole person, and make work fun and hard! (25:45)
- How to maximise the financial return – and how Webmart use capitalism to create profit and Marxist principles of redistribution of wealth to share it out (29:47)
Resources and related content:
- Simon’s presentation slides – click here to view (on Prezi – external site)
- Short on time? Click here to watch the two-minute clip from Simon’s talk
- The Happy Manifesto by Henry Stewart – click here to get your free eBook, full of great ideas for creating a happy workplace
- Click here to watch more videos from the 2017 Happy Workplaces CEO Conference
- 10 Ideas for Taking Time at Work to Reflect – a blog by Henry Stewart about the importance of reflection and ways to find time to do it
- Two of the Most Important Words in Your Vocabulary – a blog by Claire Lickman about the importance of saying ‘thank you’ and some ideas with creative ways to show your gratitude
- Recruit for Attitude, Train for Skill in Practice at UNIT9 – Valentina Culatti explains how UNIT9 ensures they hire the right kind of people, by looking for attitude
Happy's next conference: 2019 Happy Workplaces CEO Conference
24th October at Happy's HQ in London.
Hear from Bruce Daisley, EMEA Vice President of Twitter, host of the podcast Eat Sleep Work Repeat and best-selling author of The Joy of Work. Other speakers include Gill Arupke of the Social Interest Group, Donald Wibberly of Cougar and Katharine Horler OBE of Adviza. This event is strictly for Chief Executives and Managing Directors.