Commentary - Making money is NOT a purpose. It is an outcome.

By Mitch Fine  

File 1965For the first time in the history of life on our planet, a species has the ability to collectively choose whether we will succeed and thrive, or create our own destruction. A new way of thinking and behaving will be necessary for humanity to learn to live in harmony with the Earth and with each other. Rather than scrapping the dominant systems that comprise our societies, we offer the possibility that by combining the best parts of them, humans can create a truly sustainable way of living.
 
Corporations are the dominant institution of our time. They have evolved to pervade nearly every aspect of our lives. But a basic, philosophical distinction that should govern corporations has been overlooked. And that distinction is this:
 
Making money is NOT a purpose. It is an outcome.
 
Most corporations fail because they confuse this outcome with their purpose. Others invent a purpose that is not authentic and does not inspire stakeholders to adapt and innovate in order to deal with our most pressing global issues. A small but growing number of corporations do get it right though. And by focusing on a purpose that is not about making money, these organizations not only make a significant difference in issues of sustainability, but also are far more profitable than their contemporaries.
 
Not coincidentally, John Mackey, the Founder of Whole Foods Market, has spoken eloquently of this paradox by comparing a corporation whose purpose is to make money, with a person, whose purpose is to “be happy”. Mackey explains that the pursuit of happiness as a purpose for one’s life generally creates the opposite outcome. Happiness as an end in itself is essentially narcissism, which is not a trait that generates much happiness. Instead, for most people, happiness is the outcome of a life that is based on meaningful relationships with others, or a powerful sense of vision and purpose that results in the pursuit of meaningful goals and action.
 
Whole Foods Market is a strong example of this phenomenon. In 1985, Whole Foods Market created its "Declaration of Interdependence", which emphasizes a stakeholder philosophy. Walter Robb, Whole Foods Market co-President, details the company's core values: "The deepest core of Whole Foods, the heartbeat, if you will, is this mission, this stakeholder philosophy: customers first, then team members, balanced with what’s good for other stakeholders, such as shareholders, vendors, the community, and the environment. If I put our mission in simple terms, it would be, No. 1, to change the way the world eats, and No. 2, to create a workplace based on love and respect. We believe business should meet the needs of all the stakeholders, as opposed to operating it for shareholders."
 
CEO John Mackey describes how the stakeholder philosophy combines with capitalism: "We've always been unique in that we have a stakeholder philosophy, and it continues to guide us," Mackey says. "The beauty, in my opinion, of capitalism is that it has a harmony of interests. All these stakeholders are important. It is important that the owners and workers cooperate together to provide value for the customer. That's what all business is about, and I'd say that's a beautiful thing."  When the company was founded, its purpose was not to make money but to focus on serving the needs of its customers in a unique and meaningful way, while consistently treating employees better than any of their competition, and serving the needs of the community and the environment.  In sticking with this purpose,  Whole Foods has provided shareholders with best-in-class performance. Indeed, there is no other company in the sector, and very few in the world, that have provided investment returns of 2,500% over the past two decades.
 
Whole Foods Market is not a perfect company and they are not necessarily the epitome' of Progressive Capitalism. But at a core level, the company has gotten its priorities right and the results are clear.  If we are to solve the problems that we are faced with and create a world where we live in harmony with nature and with each other, corporations are going to have to "get it" about their purpose.

The Progressive Capitalist is a educational and advocacy website dedicated to the proposition that a sustainable future is only possible if we can combine "Doing the profitable thing" with "Doing the right thing".  The Progressive Capitalist Facebook Page


 

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customer service as company goal

Submitted by Green Realist (not verified) on Thu, 08/04/2011 - 9:05am.
I appreciate companies that emphasize serving their customers, which is why I enjoy shopping (or browsing) at Nordstrom rather than at Sears, but I find the prices at Sears to be more compatible with my budget. This presents me with a dilemma: do I pay the higher price to reward Nordstrom for its customer service? Or do I consider my personal budget and make a decision based on that? As long as customers are budget-driven, companies will mirror their emphasis on costs and benefits rather than "feel good" and "green" considerations.

Goals and Strategies

Submitted by Green Realist on Tue, 07/26/2011 - 9:39am.
I have no quarrel with CEOs who implore us to believe that stakeholders are one big happy family of shareholders, employees, and customers. David Packard’s “H-P Way” took this line. Such comments can be motivational to employees who might rather work for a respected “good guy” company, and indeed even to customers who like to shop at up-market stores where the employees have health care benefits and nice budgets to tout their corporation’s beneficence to society. And “social investing” obviously has its stockholder adherents too. But is Whole Foods a moral examplar? Only to those who can afford it. I can buy peanut butter, crackers, dishwasher liquid, and even wine at less than half the price at Wal-Mart or any number of other stores. People of modest incomes—who God must have loved since he made so many of us—may feel that Wal-Mart or the local “99 cent store” is our moral lodestar. Starbucks wastes no opportunity to tell us about its recycled paper cups and environmentally-grown coffee beans, and this is all fine. But some of us don’t want to spend $2 or more for a cup of coffee when McDonald’s or Dunkin Donuts has it for half the price. Or we can buy Folgers Dark Roast and make our own “cuppa joe” for pennies. I hope this is morally ok. Is it possible that all that corporate goodness and purity is priced into the chi-chi brands’ high prices? What indeed is the price of the polished corporate halo? We could go on with other examples of corporate goodness, all bought and paid for by the customer. But let’s not be too cynical. Good for companies who want to stand for high-minded values and do well by touting they are doing good! But let’s remember two things. First, companies need not apologize for saying that it’s just good business and profits are indeed the firm’s central goal. Second, let’s never forget that business has a core economic function, which is to serve human wants and needs efficiently, keeping costs and prices low for impecunious customers who need to stretch our dollars as far as possible. If people want to pay for altruism, there is happily a market for that. It can be good business to trumpet to the world that you are altruistic—and to actually show generous instincts. In fact, some employees may be less inclined to unionize a “good guy” employer. These, let us not forget, are all good bottom-line strategies. Idealism and a good sermon are motivational to many if not most. But make sure your 401(k) is invested in companies whose CEOs are looking out for the shareholders, whatever else they may say they are doing. If the CEO is spending most of his time raising money for the Symphony, or the Boys and Girls Club, or the Cancer fund, sell the stock and find a CEO who knows what his job is and is looking out for your retirement.

Your Comment

Submitted by Anonymous on Tue, 08/02/2011 - 1:51am.
Green Realist, First off, thank you for your well thought out and written response to my commentary. I mentioned near the end of my article that Whole Foods is not the ultimate in sustainability; they operate in a business that is infamous for waste and the whole idea of any modern supermarket is unsustainable, no matter how hard Whole Foods tries. The point that you bring up, which is that Whole Foods and Starbucks, to name a few, represent a "green elitist" movement is entirely accurate. To me, this is the biggest knock against Whole Foods. And training consumers to expect to pay more for healthy and sustainable choices is a path that we need to seriously take a look at. Personally, I try to do my part by pricing my services lower than what my mainstream competitors charge. I believe that this makes me not only a better choice because I offer custom and specialized work, while pricing it in a way that everyday people, like you and I, can afford. The hidden truth behind sustainability is that it is often cheaper to make a sustainable decision, if you include all of the costs that our markets does such a wonderful job of hiding. If the true cost of providing products and services in a non-sustainable way was reflected in the marketplace, the sustainable option would be cheaper nine time out of ten. But we are not quite there yet; corporations are the ultimate masters at passing on "external" costs to society and governments. By some estimates, the top 500 companies in the U.S. "externalize" the true cost of their operations to the tune of TRILLIONS of dollars. These true costs include things like resources which are depleted, water that is wasted and rendered un-usable by contamination with chemicals, the cost of carbon emissions which are changing the climate, and so much more. My most sincere hope is that businesses stop trying to be philanthropic and choose to operate sustainably not only because it is the right thing to do, but because it creates true business value, such as improved competitive positioning and more profitability. I also maintain that pursuit of profit for its own sake is a mistake. Corporations that are going to be here in the long run will have to have a vision and a purpose that inspires customers, employees, and communities. In doing so, they will be much more likely to provide the shareholders wit the profits that they seek. Best Wishes, Mitch Fine "The Progressive Capitalist"

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