This week, I interviewed Brian Bacon, the head of international consultancy the Oxford Leadership Academy. Bacon has a client list that includes Ford, Ericsson, Coca-Cola, BP, Horwath International, Barclays, Unilever, McDonald's, Sandvik, GE, Fortis, Pharmacia, SAAB, British Aerospace and Volvo.

During the interview, he told me that business leaders are discovering that they have no choice but to change. In a world in which consumers are better educated and more plugged in than ever before, business chieftains are learning to deal with stakeholders ranging from non-government organizations (NGOs) to assorted pressure groups and activists. And that means they will have to become much more politically savvy.

SOX FIRST: Why are these changes happening?

BACON: The consumers are better educated, more plugged in than ever before and they're voting with their wallets. Businesses that act badly get punished . You see it in cases like McDonalds in 2002 when there was a backlash against them. If you talk about everything being driven by the pursuit of pleasure or the avoidance of pain, the early stages for business is to avoid the pain. I however have a view that that's not going to be enough. Companies who are seen by the public to be simply jumping on to the bandwagon and sponsoring a social cause, it backfires on them and it can do them a lot of damage.

SOX FIRST: But what makes a business aware that it's backing a cause for the right reason? What are the warning signs that it's jumping on a bandwagon?

BACON: It comes back to the whole subject of leadership.Norman Scharzkopf said leadership was a potent combination of strategy and character but if you have to be without one, be without strategy. Ultimately this comes back to the character and the values of the business and the leadership.

SOX FIRST: What's your view about corporate social responsibility then?

BACON: I have been one of the first pioneers of corporate social responsibility, and yet I have never really advocated that as a practice area because I believe ultimately that these things only work when they are part of the mission of the business. It has got to be embraced by the board, by the management, it's got to come from the top, it comes from their DNA and their basic intention.

SOX FIRST:But there's a problem here. Companies like GE are being hailed as environmental leaders but people seem to have forgotten the way that company polluted the Hudson River with PCBs. And BP claims it's gone beyond petroleum but it remains one of the biggest producers of crude oil on the planet. How do you reconcile these tensions

BACON:You have to take a longer term view. This is like building a ship while it is till at sea. It would be all very well to stop everything and overhaul it and start all over again, but there's going to be legacy. It will take time, there's going to be a transition and there will be parts of it where there will be a lag. What I am concerned about is the basic intention. If the intention of the management and the intention of either any of these initiatives is simply to exploit an opportunity, that it's just a marketing tactic, then not only is it not the right thing to do, it will also be treated cynically and will be exposed. My point is around the intention of business and the intention of management to genuinely be part of the solution. They can't do it all and they should not attempt to do it all but they should do what they are able to do and play a role in society in which they accept a share of the responsibility for the whole.

SOX FIRST:That's easier said than done, isn't it?

BACON: Well, it's something that has never really been in the mentality of business. Now the facts of the matter are that business is so pervasive, it's the most powerful institution within our civilization now and the largest, most dominant institution in any civilization has to accept responsibility for the whole, just as the Church did in the days of the Holy Roman Empire. It's not the first time that we have faced a major transition and a major change, but it is the first time that a major institution is one that has never had any sense of responsibility for anyone but itself.

SOX FIRST: So what are the major changes you see ahead for business?

BACON: I see it playing a much more collaborative role in social issues than what it has traditionally done. We will see more collaboration by different kinds of relationships with government and also the Third sector. We are already seeing evidence of a great deal of innovation taking place around such matters as social exclusion. Take a look at Europe and the way in which the European Union is tackling the problems of the underclass that have no technological skill and confidence. These are collaborations with business, trade unions and the Third sector.

SOX FIRST: But that places business in the invidious position where the managers have to act like politicians trying to accommodate conflicting interests. And managers aren't trained to do that. They're hired to improve customer service and the share price.

BACON: Well, I think they had better get used to it. Let's just accept the fact that business has a big impact on society and that it has got to start owning up to and fulfilling that responsibility. Now that is going to change the the character, the education and the style of leadership in the future.

SOX FIRST: Are you saying business leaders of the future will be more politically astute, more like politicians?

BACON: If you look at best practice in business education, it's far more rounded than what it was 15 to 20 years ago. People are being skilled in the arts of diplomacy. It's a similar sort of training to what you would get as a diplomat. You can't just be someone who is going to go after the numbers and think thats going to be the type of leadership that's required to carry the organization forward in the future.

SOX FIRST: That means business leaders will have to be much more skilled dealing with NGOs like Greenpeace.

BACON: The potential impact of NGOs and what they can do to a corporation and an industry should never be underestimated. It's a one trillion dollar industry, if the NGO sector was a country, it would be the seventh biggest economy in the world. Companies that go up against World Wildlife Fund and Amnesty International better know what they are doing and they better know how to manage these stakeholders. They need to be able to deal with politics, they need to be able to deal with all kinds of different players. The character, the style of the business leaders of the future will be very different to what it's been in the past.

SOX FIRST:When do you see that happening?

BACON: We are seeing it emerge now. Things happen very quickly in business. You are going to see the next big shift around business in the next three to five years simply because the margin between winning and losing is so narrow.

SOX FIRST:How much will the economy drive these changes?

BACON:We are on the brink of some significant collapse. We have been riding an extraordinary wave of economic boom for so long. We don't see any signals that indicate things will change but I certainly believe the growth we have come to appreciate now, I don't believe that it is sustainable and once you do see a significant downturn in the global economy, the cracks in the system are going to show.

SOX FIRST: Are you predicting economic downturn?

BACON:I think there is going to be a calamitous period when growth goes off the boil and out of that chaos you will see new social forms. Out of that, you will see a lot of experimentation with new forms and structures. There will be more localized political structures and governance structures and different forms of co-operation. There will be greater homogeneity more between communities, the business sector, and Government.