God 1, Mammon 0

If you stick around long enough, most things will come back into fashion. Until recently, the family-owned firm with a religious ethos would be regarded in fashionable western business schools as vaguely 19th century, conjuring images of earnest Quakers in sober attire, building model villages and fretting over the character of the working man.

Pioneers such as Joseph Rowntree and George Cadbury are known for their philanthropy and their faith; it is often overlooked that they were brilliant businessmen. By the late 20th century and early 21st, good works had been nationalised by the state and philanthropy was seen as dated. The “modern” way of doing business had become secular, orientated around financial data and aggressively rational – or at least, rational-sounding.

The only value was maximising shareholder value, and it was assumed that deviation from this quest would lead only to loss of focus and waste. In recent years, however, the absence of values other than profit maximisation – standardised around the ludicrously short-term indicator of the quarterly return – has been exposed as catastrophically unfit for purpose, in business and economic terms as well as politically and socially.

We now know that amoral business comes at an economic as well as a social cost. Accounting scandals, mis-selling of financial products, Libor-rigging, trading in securitised products that traders themselves did not understand (the list goes on) are practices that have destroyed entire businesses and much shareholder capital, and pitched western economies into an avoidable crisis.

To underline the point, throughout this whole period hundreds, perhaps thousands, of companies run on “old fashioned” principles of honest conduct with customers, provision of good careers for loyal staff and managing for the long term, are left standing. Many are thriving. Mutually owned savings institutions that were derided for opting out of the high-growth, aggressive selling bandwagon of the 1990s and early 2000s have quietly outlived their trendier rivals – for example, in the UK the Nationwide Building Society has eclipsed Northern Rock, which collapsed when the credit crunch caused its lending model to implode. 

Belief system
Not all such resilient institutions have a religious ethos, but a striking number do. And those that do not tend to have strong ethical values, in many cases laid down by a charismatic founder. For example, WL Gore, manufacturer of Gore-Tex, is not overtly faith-based, but its principles of fairness, teamwork, honesty and long-term stewardship are enshrined in a section called What We Believe on its website. Similarly, Whole Foods, founded by John Mackey, has seven “core values” that include commitments to inter-dependence
and sustainability.

The British family-run manufacturer JCB, one of the few to avoid a crisis of industrial relations in the troubled 1960s and 1970s, was founded by Cyril Bamford, a hard-working teetotal Catholic who rewarded his loyal staff generously and was influenced by Quaker businessmen like John Cadbury.

An irony to emerge from the recent post mortems of that approach to management – which emphasised measurement by quarterly returns and a bid to extinguish “soft” items such as faith, values, respect and trust – is that it is not rational at all: it became a quasi-religious cult and its principles articles of faith.

Ancient truths
Much of this is a rediscovery of ancient truths, rather than a genuinely new trend. The lesson of hubris that became painfully apparent following the Masters of the Universe’s failed attempts to measure and control market behaviour and company performance is an ancient lesson that recurs in many great religious and philosophical works since antiquity: the Garden of Eden, Icarus’ flight, and so on.

And just as the western economies are losing their authority, the same is happening to the dominant business models. Emerging economies are built to a significant degree on the contribution of family-owned businesses, many with a long-term and faith-based ethos, like some of the more resilient family firms in the west. 
Their strategic objectives often contain goals that sound hopelessly abstract and ill-directed to the utilitarian western mind.

For example, at a conference in 2012 of 800 global family firms, a client from an Arabic state presented their owner’s pledge. It began with “Serve God”. This firm has around €9 billion in revenues and over 130,000 employees. It is by no means a fundamentalist organisation; it also cites religious freedom as a core value. 

Another very large family firm in Asia has as its mission: “To create profit and improve the betterment of human kind at the same time.” This family adopts principles of Buddhism, Taoism and Confucianism. 

Values for money
These and other examples are to be featured in a book due out this year, called The Spiritual Business Handbook. It seeks to portray how faith is often an integral part of business success; not as a mere means to an end but rather reflecting the reality that a business will always have a social impact, and a spiritual one, if spirituality is defined broadly to encompass a wider sense of purpose than merely earning money. This can generate a strong engagement among staff and loyal customers. An understanding of the company as being a community with values is a fundamentally different perspective from assuming it is akin to a machine that maximises returns.

After centuries of developing nations learning from the west on technology and business, we may be entering a historic shift. There could be, whisper it, some things that the west can learn from emerging markets; not only about the dangers of hubris and irrational exuberance, but the values and company structures that are able to generate wealth in a sustainable and principled way.

The faith-based family business is not small, unimportant or illogical, and it certainly has a future as well as a past. It actually can be a vivid and helpful role model for post-crisis firms that are seeking to escape the hubris, short-termism and amorality that created the economic crisis. There is much to learn from how the most effective faith-based family firms operate; for those who work in them, and possibly even more so for those who do not.