Back in 2004, I set up Sustainnovation with the tagline “helping business see the bigger picture and the longer term”. I was frustrated by short-term thinking and a failure to consider all stakeholders in a business. Business to me was simply a way of organising efficiently to meet a need that we couldn’t meet as individuals. Need and Organisation had a depth and breadth that was missing from most of the businesses I was seeing.
I created a more holistic business model based on relationships, where sustainability values and sustainable value expressed the underlining rationale for a business operating and thriving.
To understand this thinking, it is worth asking the question of why we, as humans, form groups. Beyond being social creatures, there are just some things we simply can’t do individually. Moving from a subsistence to a market-based economy created an ability for us to specialize in those things that we could do better than others. This might be due to access to resources, skills, natural talent, motivation or a past immediate need. Grouping together provided scale and efficiency.
So what can business achieve? Anything that a group of people put their collective hearts and minds to. However, business needs a compelling purpose, the ability to organise resources and deliver value back to stakeholders.
“Starting with the end in mind” was one of my key learnings from Stephen Covey’s “7 Habits of Highly Effective People”. Henry Ford said “Business must be run at a profit, else it will die. But when anyone tries to run a business solely for profit … then also the business must die, for it no longer has a reason for existence”.
Many businesses fall into the trap of creating a vision or purpose focused on the organisation. It will be framed in terms of market share, revenue and/or profitability. All important, as Henry Ford notes, but hardly the stuff that will create a compelling, emotional connection with your suppliers, customers, employees and wider community.
My preference is to define yourself by the value you provide not what you do or make. Try to get as close to a fundamental human need as possible (love, shelter, health, sanitation, family, mobility, personal security, fulfilment). Not only will this provide an emotional connection with your stakeholders, it positions you in a secure market, will help you think more openly and creatively, and will facilitate alignment across your various corporate initiatives.
If I define myself as a building products company that wants to grow revenue by 15% per annum, does it get your pulse racing? If I simply re-focus to consider my purpose to be about creating shelter for all, how does this affect your energy? What effect might this have on stimlating creativity in your business? What about loyalty and discretionary effort? At this point, I’m still making building products but this might change as I organise ideas, energy and resources to create shelter for all.
Another key learning from Stephen Covey’s “7 Habits of Highly Effective People” is Synergize. Gathering energy around a compelling purpose negates the need for trade-offs, most often described in the triple bottom line – economic, environmental and social. An inclusive purpose helpfully re-connects market and community for us, allowing us to creatively collaborate to meet the needs and value required by all stakeholders.
A key step in organising resources involves aligning with people and organisations who share your purpose, mapping these stakeholders to understand their needs, talents and interests, and ensuring that they are deployed where they will most add energy and value.
Delivering Value Again and Again
Obviously in this type of business, you don’t see others on a transaction basis. It is all about building long-term relationships. Consider a convenience store with an average transaction of $5. How are those customers treated? Let’s expand the view a bit. If we say that each customer spends $5 a day and the average person lives in the community for 7 years, on these rough numbers, each relationship is now directly worth $12,775 on a $5 a day transaction. How important is customer service now? What buying influence do these people have on their networks? How can you empower your teams to seek to add value at every opportunity?
A business has the best chance of success when people want to see it succeed. If you can measure and grow this loyalty and energy, you create “relationship capital”, a powerful competitive advantage.
Consider creating regular mutual value statements to understand the strength of each of your relationships. How can you build the capability of your stakeholders? How do you understand needs? How do you measure relationships? How do you build and measure mutual value? How do you keep doing this over the long term?
This approach unifies and (over) simplifies the areas of social enterprise, employee engagement, sustainability, customer engagement, corporate social responsibility, innovation and leadership. A business can achieve absolutely everything with a compelling purpose, organisational energy and delivery of mutual value. All you need is a fresh look.