If you knew a replacement part would add an extra 90¢ in costs and yield only a dime in warranty savings, would you authorize use of the more expensive part?
Probably not. Managers would crunch the business case and find the spending increase unjustified.
But suppose you knew the additional cost would prevent costly accidents and even save lives.
Would your decision be different?
I’m sure a character-based leader would decide to go with the more expensive part. Why?
Because a character-based leader knows the business of business is business and practices that by watching the bottom line AND doing the right thing.
What’s happening with GM’s ignition switch issue fills me with horror and fascination. GM folks crunched the numbers in 2005 and made the business decision not to fix the problem because it “would take too long and cost too much money.” GM is but the latest in a long string of companies making economic-driven decisions that ignore societal impacts. Think Toyota, Lehman Brothers, Halliburton, Exxon.
There are those who passionately say the sole responsibility of business is making money. If this is so, must it mean that there’s no room for ethics, honor, and compassion? That the size of annual earnings or stock price increase is the only measure of success? That if the focus is on the numbers then values must get lost in the shuffle?
Why must it be one or the other?
Why can’t be it both? Both numbers and values, earnings and integrity, profits and principles.
Institutional logic holds that companies are more than instruments for generating money; they are also vehicles for accomplishing societal purposes and for providing meaningful livelihoods for those who work in them. ~Rosabeth Moss Kanter
There’s no doubt managing these dueling, tension-filled dualities is challenging work, but isn’t that what character-based leaders do? What say you?
Jane, thank you so much for saying this. I simply don’t “get” the passionate stand around “the sole responsibility of business is making money.” I’m going to go so far as to say it is a complete cop out.
I run into people who say “show me the proof.” Prove to me that we can have “numbers and values, earnings and integrity, profits and principle,” as you say so well.
John Mackey of Whole Food Markets can demonstrate this is doable, as well as Casey Sheahan of Patagonia. Raj Sisodia, author of “Firms of Endearment: How World-Class Companies Profit from Passion and Purpose” expounded on it in an entire book. He and John Mackey and many others have founded a movement called, “Conscious Capitalism.”
No, the concepts are not new, but the good news is that, now more than ever, we do have more visible (character-based) leaders who are willing to shout from the rooftops that we can do better.
Thanks for putting this out there, Jane, and commenting on it in the context of current events.
Mary — I hope that Mackey’s “Conscious Capitalism” does catch on in a wider assortment of industries like manufacturing, etc. The current issues at GM and now Toyota would be great opportunities for those organizations to take a broader view – and definition – of success…expanding it beyond simply the bottom line.
Glad you’re banging the drum with me!
Jane, you would think the “best of both” worlds would be so easy to pursue. But alas the bottom line becomes the bottom line for most. I believe the pressure to drive numbers has intensified, and it’s up to character-based leaders in all levels, including shareholders and board members, to change the course of thought.
The buzzword “sustainability” also means financially, but what about the long-term “sustainability” of being blessed by the ethics, character, and engagement of the entire organization and those they serve? That can be measured in dollars as well, if they want. But the benefit of doing the right thing should be the greater goal.
Character based leaders know how to live in integrity even when the dollars aren’t flowing. Those who can’t won’t be at peace, even if they generate great profits and dividends. Legacy outlasts the ledger.
A great piece, Jane! Thank you so much!
Paul — Your line, “legacy outlasts the ledger” would be a good, no great, title for a b-school class on doing things right as well as doing the right things to “change the course of thought” as you so eloquently phrase it. In far too many cases (in my opinion!), what CEOs, society, Wall Street, etc. value is skewed to rewarding the economics to the exclusion of all else. But that’s also what they are rewarded for.
Here’s the character-based leaders shining the light…delighted you’re one of them!