There seems to be a growing resistance to the idea of measuring business success with the traditional yardsticks. Instead a new era of valuing companies according to the authenticity of their values or how they do business is gaining in momentum.
At the Global Entrepreneurship Congress in Liverpool earlier this week, Sir Richard Branson was seeking to inspire would-be entrepreneurs by explaining that the success of Virgin was about passion and changing the experience of the consumer (rather than just being a bit better than incumbents). But, then, we have come to expect that from him.
The master salesman has always positioned himself as the little guy battling the giant, most successfully in his contest with British Airways. Although it is well known that Virgin is a supremely professional business staffed by highly capable people who are as driven as anybody else, Branson’s casual appearance helps foster the idea that Virgin is still a little upstart.
That Virgin has – no doubt to the surprise of a few – stood the test of time is testament to the ability of Branson and those close to him to continue to engender the need for passion and a sense of purpose in all the group’s activities. And its enduring success and appeal as a brand (consumers will choose it in a variety of sectors because they know what it stands for) is perhaps part of the explanation that the sort of language the founder uses is no longer the preserve of start-ups.
More business with a ‘purpose’. On the same day that Branson was sharing (in his typically unpolished manner) his experiences with an arena audience in Liverpool, a highly experienced (and smoothly measured) communications specialist was talking to a small group in a room at the London headquarters of the Institute of Directors. As chairman of Bell Pottinger, Kevin Murray has access to the senior executives of some of the biggest and best-known companies in the world, and interviews with many of them form the basis of his book “The Language of Leaders” (Kogan Page). The title is probably deliberately misleading, since the overall message is that leadership these days (if it ever was) is not about big speeches and stirring words. It is about inspiring teams through encouraging them to believe in what they are doing, to feel that there is a bigger purpose. To coin a phrase, actions speak louder than words.
Murray cheerfully admitted that as a consultant he inevitably had a model for achieving the mix of skills that were required for success in a business world where leaders were under scrutiny like never before – and under ever greater pressure to succeed. At the heart of this model is the notion of authenticity – or, as Murray puts it, “being yourself, better”.
To be fair, such views have been espoused for some time. LRN, a consultancy that featured in our “Ones To Watch” survey earlier this year, has spent nearly two decades helping companies build cultures that “do it right” and inspire principled performance within their workforces. Founder Dov Seidman says his approach was widely dismissed several years ago. But now – in what he calls the “era of behaviour” – the world seems to be catching up. His new book “How” makes clear that increasingly it’s not what we do but how we do it that counts. And President Bill Clinton says in the foreword to it that the approach holds the key to solving many of the global issues facing his successors in government. “Our mission must be to create a global community of shared responsibilities, shared benefits, and shared values. This new focus will require all of us to think about the how,” he writes.
Companies that really mean it. Similar themes have been explored by the authors of the book “Higher Ambition” (see our post of 30 September “36 CEOs Set To Shape The Companies Of Tomorrow”). So what is going on? Partly, of course, it is a response to the financial crisis that is still hanging over the whole business world. All this talk of “responsible capitalism” is making business leaders at least talk about how business as a whole and individual companies go about their work. And the more thoughtful realise that there will probably never be a return to how things were. Thanks to such developments as social media, corporate social responsibility will not be able to be as superficial as it was when originally introduced. In this world of transparency and when people all over the world have greater choice about whom to do business with than ever before, the chances are that leaders and organisations that “really mean it” will do better in the long run than those that don’t.
In a week that has seen a Goldman Sachs banker use a newspaper article to announce his resignation and attack his employers’ culture we could just be witnessing the dawn of a new era. Of course, many bankers become disillusioned and quietly walk away to become respectable members of society in other walks of life. But the decision of Greg Smith to describe the “decline in the firm’s moral fibre” – particularly putting its clients’ interests behind its own – as the “single most serious threat to its long-run survival” is something different. Even though William Cohan, author of a well-received book about the bank, suggested in a “Financial Times” article on 15 March that the bank had long abandoned the principles it sought to convince the world it lived by there is a sense that this is a defining moment.
Seidman points out that the financial crisis “has revealed that we’re more inter-connected than we thought”. What is not so clear is the depth of those connections. Are they superficial or deeper? For the connections to really work, shared values are needed, he argues. And once that happens a new type of company begins to emerge that competes in different ways to its predecessors. He points to Apple and Facebook as examples of businesses that thrive by allowing others to do things, such as develop applications and marketing links. They are taking advantage of the interdependent world to create ecologies around themselves, he says.
Seidman and his colleagues at LRN have developed a diagnostic tool for analysing corporate behaviours that they claim goes beyond the pulse taking of most such tests to provide a true picture of what is happening. They say the metrics show that culture as a conscious long-term strategy can be the key to differentiation and success in the coming years. The consultancy’s research indicates that, although only 3 per cent of organisations are what they would call values-based, such organisations deliver five times the normal level of new idea adoption, three times the level of innovation and double the amount of satisfied customers, financial performance, reputational value and employee satisfaction. Such findings, says Seidman, prove “we can create value from values”.
The move towards humanity – what some trend watchers have identified as “flawsome” – in many organisations’ marketing efforts is seen by Seidman as a step in the right direction. It might appear to be superficial at first, but marketing tends to be a harbinger of what is coming – and so he is encouraged by such developments.
But nor does he pretend that there is not still a long way to go. But at least there appears to be growing agreement about the direction in which to head.