What would you say if you learned that everything you learned in business school is wrong? Not just wrong, in fact, but fundamentally and fatally flawed, rotten to the proverbial core? How would that knowledge change how you function as a business leader?
These fascinating questions were featured during The Aspen Institute Presents, a new PBS series featuring leading entrepreneurs, politician, and thought leaders discussing philosophical questions and practical challenges. The segment that really captured our attention centered on the premise that increasing shareholder value is the most important thing to any corporation, and the accuracy of that premise.
As proponents of a more humanistic approach to business, this is the type of conversation we want to see happening in every business class, everywhere. As expert after expert reported (and you can watch the entire segment here), organizations that focus too relentlessly on shareholder value as the only meaningful metric consistently fail. They’re less profitable and enjoy a shorter organizational lifespan than organizations that consider shareholder value only one of a number of relevant factors that go into determining overall profitability.
The Proven Value of A Humanistic Approach
This is consistent with what we’ve learned through our own research into Cult Brands. Dominant organizations are those organizations that clearly and concrete demonstrate their devotion to the greater good. Shifting the company’s viewpoint from a narrow focus on the immediate bottom line to a longer range, more global perspective that takes social and environmental concerns into account yields significant results in terms of customer loyalty and ongoing organizational profitability.
Don’t get us wrong. Making money is important. But it’s not the only important thing. Even in commodities industries, today’s consumer is expecting more and more from the brands they do business with. Organizational transparency and community involvement are more important than they’ve ever been. It’s especially important that a brand’s internal values be in alignment with customer expectations.
Starbucks CEO Howard Schultz has been a vocal proponent of this concept, and he shares some of the reasoning behind his philosophy here. The message that the mighty chain rose up in response to a need for community and a place to connect is one we’ve heard before, but it’s one we need to hear again and again. It is by understanding on a deep and fundamental level the needs and psychological hungers of the marketplace that we can best create products, services, and especially brands that succeed.
Starbucks maintains an enviable place in the market because Schultz views all of his decisions through a humanistic lens, asking himself if his employees would be proud of and happy to implement the decision he makes, and if he’s acting in terms of the greater good. We’ve seen the chain make some great moves along this line, such as sourcing all of the chain’s mugs from a domestic producer rather than a cheaper Chinese source. Sacrificing some measure of immediate profitability to do the right thing has proven to be a profitable model for Starbucks. It’s a replicable model that begins by understanding who your customers are and what they want the most from your brand.