02 Oct Forget about pendulum swings.
What we are experiencing is a SeeSaw!
We are lifted by news that the Business Roundtable CEOS are redefining the purpose of a corporation to go beyond shareholder value to include customer, employee, supplier, and community value.
Then hit the ground when stories of new startups leaders and investors personally profit at the expense of their customers, employees, suppliers, and communities.
Some say these innovators are just doing what their predecessor capitalists did to succeed.
Ford did not disrupt the buggy whip industry by giving cars away for free.
Ford did pay his employees well enough to be able to afford the car they made.
Most importantly, Ford did not achieve market share by buying competitors. He competed by making better cars.
Leaders who start businesses by doing the right thing are far more common than those who start businesses by exploiting others.
Once established, there’s a lot to lose. Thats when decision start involving trade-offs. Some may survive a bit longer by cashing in on “good will” (not the accounting kind, the real thing). But eventually “what goes around comes around.” That’s why so many Fortune 500 companies of 30 years ago aren’t around anymore.
Artificially growing fast by discounting, buying competitors, accelerates the need to make trade offs.
When GOOGLE overtook YAHOO, it was because they offered better search results, untarnished by advertising dollars. When investors wanted their returns, GOOGLE forgot about being a better search engine and started being a better advertising engine.
When FACEBOOK overtook MYSPACE, it was the only private social network. When investors wanted their returns, they flipped the default to public – without disclosing it, making the customer bait to attract the bigger fish, advertisers.
Both of these products were better than competitors when they started. But they didn’t have a business model to support a better product. It was more important to investors to scale fast than discover what the market would pay.
That is why the Business Roundtable has re-defined the purpose of the corporation. Not to give away profits to compensate for trade-offs made, but to grow business by doing the right thing in the first place.
Profit growth is more sustainable when decisions are made with peripheral vision, awareness of how it will impact customers, employees, suppliers, and community.
All the leaders who believe this also have experienced how hard it is, in this business culture, to convince their staff to get off the seesaw and collaborate with others to expand their horizon from focusing on the day to day grind.