Have we learned our lesson? For a while it seemed Corporate America had forgotten a primary economic law: He who serves the consumer best, profits most. Basic? Perhaps. But no less powerful despite our sophistication, and no less relevant at this point in history.
As evidenced in the recent global recession, many major corporations attempted to inverse the order of this law, putting profits before consumers. “Maximizing shareholder wealth” replaced a deeper sense of purpose and meaning as the source of creativity and innovation thereby hindering an organization’s ability to achieve lasting success. This myopic focus led companies to take shortcuts at the expense of the consumer in order to temporarily maximize profits. Then the bottom fell out, and a great cynicism set in.
Society’s perception of business and success has been jaded as a result of businesses turning away from a solid “value-based” system to a “what’s-in-it-for-me” system — and in the process we have sacrificed the fundamental truth that business and success are all about connecting. The better we connect with our team, the better our team will perform. The better we connect with our customers, the more of them we’ll have and the more profitable we’ll be. That’s good business. That’s what America needs to return to — a nation of value because we create value.
As small business owners we have an advantage over big businesses because we can swiftly choose to rededicate ourselves and our organizations to a meaningful purpose through our work in a way that more effectively connects us with our team and customers.
In their book Built To Last: Successful Habits of Visionary Companies, coauthors Jim Collins and Gerry Porras published the results of an intensive six-year research project where they studied truly exceptional, enduring companies from their very beginnings to the present day in comparison to other good and comparable companies that had the same potential, but didn’t exactly measure up. Throughout the entire process, they kept asking, “What makes the truly exceptional companies different from other companies?”
What they found was that organizations with a strong sense of purpose and values, and which nurture a culture based on “pragmatic idealism” — one that honors both high ideals and pragmatic self-interest — ultimately and significantly outperform their competitors over the long haul. According to the authors, “A detailed pair-by-pair analysis showed that the visionary companies have generally been more ideologically-driven and less purely profit-driven than the comparison companies in seventeen out of eighteen pairs.”
If companies like Disney, Wal-Mart, 3M, and Sony – some of the most profitable companies of the last century — have been able to equate their businesses with a sense of purpose and meaning and mission, why couldn’t we do the same for our businesses?
Companies with a purpose beyond maximizing shareholder wealth dare to look beyond standard processes and output alone toward deeper rooted “core competencies” and “core products” that are what truly distinguish them from among their competitors and upon which end-products are ultimately built.
Take Apple, for example. In a CNN Money interview just before his death, the late Steve Jobs admitted, “We don’t do market research. We don’t hire consultants... When we created the iTunes Music Store, we did that because we thought it would be great to be able to buy music electronically, not because we had plans to redefine the music industry. I mean, it just seemed like writing on the wall, that eventually all music would be distributed electronically.” When asked what drives Apple, Jobs answered, “Our DNA is as a consumer company — for that individual customer who’s voting thumbs up or thumbs down. That’s who we think about. And we think that our job is to take responsibility for the complete user experience. And if it’s not up to par, it’s our fault, plain and simple.” I like that answer better than “maximizing shareholder wealth”.
By the way, in 2012, Apple reportedly achieved a market cap of about 4 percent of the entire gross domestic product of the United States, and about 1 percent of global GDP. Not bad for a company that doesn’t do market research or hire consultants.
Manny García-Tuñón is president of Lemartec, an international design-build firm based in Miami. www.mgtunon.com