A strategy for succeeding as a business while doing well by your employees.
has studied companies who invest in building long-term social value, and he says they offer some key lessons for other firms.
You’ll also learn how they manage the short-term pressures from Wall Street analysts and investors through storytelling that emphasizes long-term results.in October 2011—in the wake of the Great Recession. Market conditions have shifted since it was released, but the insights in this conversation are still relevant.
So for example, these firms invest a tremendous amount in building both human and social capital. Which means that they are very careful about hiring, and then they create a culture that motivates people and keeps them attached to the firm and so on. And one of the ways they’re able to maintain the human capital and social capital they build is to prevent doing some bad things in downturns. For example, they generally do not have large amounts of debt.
MIKE BEER: Sure. Sure. in. The book, we talk about one of the key disciplines they have is what we called forging a strategic identity.
The firms that are not higher ambition firms approach the problem as saying, my job is to satisfy shareholders. That’s where it stops. the firms that we’re talking about, the leaders we’re talking about, have a multi-stakeholder view. They understand that they have to serve the community, the customer, the employee, and the investor.
MIKE BEER: Well, as I say, it starts, first of all, with the perspective. And what they do is they tell Wall Street the long story, not the short story. Tell the right story to Wall Street, and in most cases that story actually does sell. Most Wall Street analysts understand that long story and are willing to tell that story to the potential investors.
And they keep working with those stakeholders, including by the way the community, to try to create a win-win proposition for everyone. And they’ve taken on a higher purpose of serving the community, of doing good in the community. They’ve enrolled their customers and their suppliers. And that gives people a great deal of meaning.
The other way is to begin to use that movement and other forces to try to change elements in the context in which business operates. So i think, for example, we need to rethink some public policy, particularly around the areas of investing and long term and short term investing. We’ve become a speculative society. Investing is out and speculation has been in. And that’s a problem.
The word integrity means honesty, but the most important honesty is integration. Integration between elements of the firm, finance, marketing, human resource, for example. And integration between who you are and what you’re doing. And that requires an honest, open conversation and transparency about who we really are and how we function.
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