Remember Jack and the Beanstalk? Jack climbs the beanstalk, discovers the goose that lays the golden eggs, steals the goose, and escapes from the Giant who owns the goose. I bring this up because I think of companies a bit like organizations that manage geese. Each company has a service or product to sell. They make money when people want to buy what they produce. They manage the goose well and they will get lots of golden eggs from customers who pay them. If they stop producing what customers want, they stop getting so many golden eggs (see examples like Sears, Blockbuster Video, etc.).
But there’s more than just keeping the customers happy. Keep the geese happy and the customers will want to buy them. Keep the people happy who feed the geese and sell them, and the geese will stay fat and the customers will walk away with smiles on their faces to return another day. This is all pretty obvious, right? And yet it isn’t.
Recently a group of big companies made a lot of news by declaring that they were going to manage their companies not just for the benefit of shareholders but also recognizing the importance of employees, communities, and the environment, among other things. There is a sort of sacred mantra in the business world that companies should be managed exclusively to the benefit of shareholders. I’m a bit confused as to how these ideas are incongruent.
It seems to me that shareholders want companies to be successful, make money, and be around for a long time to keep making more money. In other words, to be good managers of the geese. If a company pollutes the river, they’re going to end up hurting the geese – and ultimately, their employees, their customers, and their reputation. The same goes for how they treat employees, and all other aspects of their business.
I think it comes down to perspective. Are geese, employees, the land, etc., a cost or an asset? I believe good companies that last a long time see them as assets and do a good job managing them over time.
If you’re interested in talking about companies that manage their assets well, or how companies should be managed, let us know. We’re always up for a good discussion about the companies we’ve found that manage in a socially responsible way.