A few years later, however, Procter and Gamble decided to prioritise short-term profitability and high shareholder returns instead. Cuts were made and the internal structure began to erode. Short-term behaviour was rewarded more than long-term behaviour, and the focus on personal responsibility diminished almost entirely. The result was a company that could no longer serve the customer as it once had, and the trust alluded to previously was lost.
This period served as an epoch of elucidation for Greg, a series of events that brought into focus what a business must do if it is to succeed. The need for a clear mission statement with the customer at its core was obvious. “Companies that focus on higher purpose and mission are more likely to perform better than those that focus on profitability.” The way to ensure that this would remain, that the company would not eventually alter it to concentrate on profitability instead, lay with the shareholders: “The shareholders must be able to think in a long-term context,” he argues, “only then will the business be able to do right by them by doing right by the customer and by the staff.”
Create a culture of entrepreneurship, the Octopus way
1998 saw Greg part ways with Procter and Gamble to concentrate on his entrepreneurial career.Over the next decade or so, he would found, manage, and work for a number of organisations across various sectors. This experience furthered both his understanding of business, and his preference for entrepreneurial settings over their corporate counterparts.
Inconsistencies in certain aspects of the corporate structure quickly became apparent. For one, the ‘series of controls’ that were typical of such structures would often make operations rigid and difficult to navigate: “The traditional structure jeopardised companies because they were unable to respond to changes in the market and in technology.” Being slow to respond to external shifts can be fatal for a business because an inability to adapt will often see them left by the wayside. Rivals who can react more quickly will surpass them, and the business will ultimately fail.
Over the years, Greg’s distaste for the corporate model continued to grow, with an increasing number of undesirable effects becoming obvious to him. The environments that the structure would cultivate were claustrophobic. Managers would battle with rules of compliance more often than making progress with their work, and the workforce as a whole would shy away from taking responsibility for their decisions. Companies that employed the corporate model, “were causing themselves existential threat” by constraining the potential of their workforce.
How, then, can one implement a corporate structure, particularly in an organisation as large as Octopus Energy, in which entrepreneurialism can thrive? Well, Greg admits that it isn’t easy, but it is possible. For him, it’s about, “creating a culture where people take personal responsibility.” Employees need to feel empowered to make their own decisions, to take risks, and to be accountable for the consequences, good or bad, that follow. For this to work, it is crucial to introduce a system that reviews decisions made by employees based on merit. It must consider if a decision worked, if it failed, what was good about it, and what could be done better next time. This model allows your team to, “recognise their mistakes and learn from them,” so that they might develop into individuals who can assess and manage risk more effectively in the future.