“..... a consequence of greed and irresponsibility on the part of some.”

President Barack Obama, Inaugural Address, 20 Jan 2009

Minutes after taking the Presidential Oath, these are the words that Barack Obama delivered to the world, as part of his explanation for why the US economy had been so “badly weakened”. Whether we are talking about the US or UK economies, the analysis is accurate.

The banking sector in the UK has almost been bought to its knees. Royal Bank of Scotland - to name but one of the banks in strife, is now 70% owned by the British government. The “greed and irresponsibility” of that company’s executives and directors, the worst offending of whom seems to be Sir Fred Goodwin its former CEO, has driven this business to the point where it had to be rescued by Britain’s taxpayers. Citizens right across Britain’s socioeconomic spectrum will now shoulder the real costs of these bankers’ greed-fueled errors and will probably continue to do so for many years to come.

Greed sits at the heart of capitalism in its purest form. In the film ‘Wall Street’ the character Gordon Gecko professed that “Greed is good”, as if it was an immutable law of physics. The events of the last few months have dramatically demonstrated that greed left unchecked and unrestrained cannot in anyway be described as positive thing for any economy, nor any civilised and societally responsible nation.

Communism has been shown by history to be an abject failure. Despite its weaknesses and flaws, capitalism in the broadest sense, works. But what we have seen recently is a clear need for a moderated capitalism, with societal responsibility somehow baked into its centre. A form of capitalism with controls to prevent the pursuit of excess driving entire economies to the point of near collapse.

As I write, the World Economic Forum is in full swing in Davos, Switzerland. Politicians, academics and business leaders at the Forum are debating whether capitalism is in fact bankrupt. They’re debating what it means for capitalism, if the banks in nations like the UK are nationalised. Would that act - something that the UK is close to doing, actually spell the end for capitalism and the free-market model?

It sounds like a cliche, but we have entered a new era in world economic history. Leaders within government and particularly within business, across the US, UK and other nations must grasp some of the responsibility to preserve the basic nature of our societies. This will require more visionary leadership and leadership that thinks beyond “standard reactions”, actions that in time might be seen as simplistic and inappropriate for the era we have entered.

Profit and commercial viability still need to be considered as businesses look to manage their own way through the difficult conditions of the coming months. Reducing operating costs may be expediently achieved by a quick raft of redundancies, but it ignores the societal consequences of the action.

In the current climate, both within key nations like the UK and US but also globally, each individual business is not just making adjustments to deal with changes in its own trading conditions, peculiar to its own industry or line of business. Every business making adjustments is doing so in an incrementally contributory way, the sum of which will affect whole communities and the economic and social health of whole nations. The need for new thinking in how businesses adjust is now critical.

The business leaders who consider other options, such as reduced hours or staff salary cuts to achieve the same level of operating cost reduction, are the sort of leaders who are thinking beyond the pure numbers, beyond the conventional mindset of business management. In some cases an alternative approach such as this will be viable and in some cases it genuinely will not be.

The challenge for business leaders in the first instance is to accept that “other options” need to be at least considered. Our economies and societies will take longer to recover whilst individualism at a personal and company level continues to dominate and if approaches are used that are more self-serving than societally cognitive and responsible. This is in itself stretching what most people would regard as the model most of the modern world has operated under for the last 20 years. Many would also suggest that what I am in fact advocating is communism.

The benefits of a more considered approach to the management of businesses, of employees and of commercial entities’ role in society will also flow through to brands and their ultimate success. Brands and branded entities that think beyond the short term, that act in a societal responsible way, that take approaches that are innovative rather than cliched to deal with the difficult economic and commercial conditions, will have positive attributes attached to their brand DNA. Our societies will remember those entities. Those brands and those leaders of businesses who show vision, compassion, resolve and intelligence in finding a way to manage their enterprises, whilst at the same time thinking about the society within which they operate, will receive their just rewards in time.

The information age will ensure that brands and businesses worthy of our long term loyalty and support, will be talked about. Similarly those brands and businesses that have failed to recognise the new era of business we are entering and the need for a more societally responsible approach will have the spotlight cast upon them via news media, via Facebook, via YouTube, via peer to peer email, via conversations in the supermarkets and outside schools and sports grounds. The long term success of many brands and many businesses will be determined not by the economic conditions five years from now, but by the way they behave now.