Broadening Your Purpose (adapted from Firms of Endearment by Rajendra Sisodia et al)

Are there any companies in existence that have broadened their purpose beyond the creation of shareholder wealth—to actually work toward the larger good?  The authors of Firms of Endearment answer enthusiastically, “Yes!”

For example, Timberland CEO Jeffrey Swartz says his company’s primary mission is to “make the world a better place.”  It seems that a few years ago Mr. Swartz “accepted a friend’s invitation to spend half a day in a teen halfway house.  His friend promised him that his life would never be the same.”  When asked by a troubled teen, “What do you do?”  Mr. Swartz responded, “I’m responsible for the global execution of strategy.”  Then Mr. Swartz asked the teen what he did.  The teen replied, “I work at getting well.”  Swartz later admitted that the teen’s answer “trumped his own answer.” 

Some might complain that Mr. Swartz will shortchange his company’s stockholders by aspiring to such a grandiose vision.  However, Timberland’s stock has risen nearly 800 percent from 1996 – 2006.  Mr. Swartz joins a growing list of successful business professionals who seek to do good by all who encounter their companies—including customer, employees, partners, communities and shareholders. 

In Firms of Endearment, the authors are challenging organizations of all sizes to reorganize and become “vehicles of service to every stakeholder group.”   To make that challenge more personal, ask yourself this question:

“How are we going to make this company an instrument of service to society even as we fulfill our obligation to build shareholder wealth?”

Do people enjoy interacting with my company?  Do they enjoy working with or for the company, buying from it, investing in it, and having it as a neighbor?

What words come to mind when the authors think of a “Firm of Endearment?”  Words like: affection, love, joy, authenticity, empathy, compassion, and soulfulness.    These firms actually endear themselves to stakeholders by “bringing the interests of all stakeholders groups into strategic alignment.”

From “share of wallet” to “share of heart”

Firms of Endearment have moved well past the “share of wallet” philosophy.  They strive for “share of heart.”  Think about it.  Earn a share of the customer’s heart and you don’t need to worry about share of wallet.  And how about employees?  Endear yourself to your employees and see what happens to quality and productivity.

I wonder if there would be a different reaction to establishing a Wal-Mart store in the neighborhood if Wal-Mart had worked hard over the years to endear the company to surrounding communities. 

The authors make this argument: ”Providing that sound management is in place (no amount of moral correctness can save a badly managed company), endearing companies tend to be enduring companies.” 

Firms of Endearment tend to operate with a distinctive set of core values, policies and operating procedures.  For example: 

·        They actively align the interests of all stakeholder groups, not just balance them.

·        Their executive salaries are relatively modest.

·        They operate at the executive level with an open-door policy.

·        Their employee compensation and benefits are significantly greater than the standard for the company’s category.

·        They devote considerably more time than their competitors to employee training.

·        Their employee turnover is far lower than the industry average.

·        They empower employees to make sure customers leave a transaction experience fully satisfied.

·        They make a conscious effort to hire people who are passionate about the company and its products.

·        They project a genuine passion for customers.

·        Their marketing costs are much lower than those of their industry peers, while customer satisfaction and retention are much higher.

·        They consider their corporate culture to be their greatest asset and primary source of competitive advantage. 

Is There Anything New Under the Sun?

King Solomon stated in the book of Ecclesiastes that “No, there really isn’t anything new under the sun.”  And some would say that Firms of Endearment are doing nothing more than what Scripture would tell us to do in the marketplace—to focus on relationships and do “everything to the glory of God.” 

It is very satisfying to see that the world at large is beginning to see the Wisdom of the Ages. 

Let’s get back to your company.  Are you still wrestling with the “share of wallet” mentality?  Or is the LORD leading you to adopting His philosophy of “doing business on purpose?” 

Keith 

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