ON PRINCIPLES, VALUE, AND THE CORPORATE SOUL
The success of your Company in recent years has been all the more poignant as it occurred amid the continuing backdrop of scandal and turmoil in corporate America. Like you, each time I see a headline or news report on the escapades of a former public company executive, I wonder how these individuals lost their way and ended up where they did.
Being an optimist, I believe that most of these executives probably began their careers with ethical intentions and the desire to do the right thing for their shareholders as they pursued their own success. Somewhere along the way, while pursuing the perfectly legitimate goals of growth, profit and personal success, they took the wrong path. This path led them to make decisions which destroyed not only their reputations, but also the wealth of their shareholders. The transgressions that led to their downfall were probably small at first, perhaps even well-intentioned. They may have said to themselves, “we’ll do this one little thing, just this one time, to make our month, quarter or year, and then we’ll get it back next quarter. The shareholders will be better off.” Whatever that “one little thing” was probably made perfect sense to them because, after all, it was in the pursuit of growth and profit. Isn’t that what shareholders want? Unfortunately, these one-time decisions turned into multiple decisions that became trends. Ultimately, these executives awoke one day to, unexpectedly, find themselves in a world of trouble because they had actually performed to the terrible detriment of their shareholders.
I believe the vast majority of corporate executives and companies in America work very hard to do the right thing and to serve their shareholders. How then, do some of these executives wind up harming their shareholders? Good question. I’m sure there are lots of answers to this question and I’m also sure that I don’t know all of the answers. But I do think that part of the answer is in defining your core values and the principles you will follow in operating your business. It is also knowing whom you serve and, to some extent, identifying the sole or driving force behind your company. Don’t get me wrong, pursuing growth and profit are fundamental objectives of any business and a primary way to measure the success of an organization and its management. But if a company doesn’t know why it exists, who it serves and what its values are, a myopic focus on short-term growth and profits may lead to significant problems.
On the other hand, if an organization does know its reason to exist, then both employees and management can be motivated by a larger purpose beyond just short-term growth and profit. In general, I believe that companies with a larger purpose tend to stay on track. They tend to resist doing what is trendy or acting in an improper manner. Their focus is clear and they are generally committed to achieving their goals. Since this corporate focus can’t be taken for granted, it’s worth examining how it comes about in the first place. Is it magic, epiphany, or just common sense that some companies have focus and others do not?
