To be of service is to become bigger than the way we normally see ourselves. Our attention shifts. We set aside our preoccupation with ourselves and turn our focus outwards, towards others.
Being of service through a business is really no different. We expand our sense of the firm beyond the narrow interests of our shareholders and employees, and turn our gaze outwards to the many people with a stake in the impact our work has in the world.
Value is what attracts and retains customers and employees. It's also what attracts and maintains relationships with investors, suppliers, distributors and other stakeholders who are critical to the firm's success over time. A business that does not create value will eventually fail.
Mission is the real reason companies exist in the first place; it's what brings meaning to the value-creation process. While it is true that companies need to make a profit in order to survive, that's not the same as saying that a firm exists in order to make money. Money is a means to an end - not an end in itself.
When we lose this perspective, we are bound for disappointment. Paul was right: money can't buy me love -- or happiness for that matter. And while that's true for individuals, it's fair to ask whether it's necessarily true for organizations: is a sense of purpose - beyond just making money -- actually good for business?
Those in the Northeast will be familiar with the supermarket chain, Market Basket a family-run business that for years has operated in service to its customers, employees and other stakeholders. After decades of feuding with each other, one of the founder's grandsons just recently wrestled control from another grandson who had long led the company's stakeholder-friendly approach. Now employees, customers and other stakeholders are organizing a very public resistance to his ouster. It's a sad, yet inspiring, story of stakeholders taking a stand for a better vision of what business can be.
One important fact in this story is just how profitable Market Basket was with its stakeholder-centric approach to business:
"The company generates $4.2 billion to $4.6 billion in revenue, which amounts to about $60 million per store, Korschun said. Hannaford, a competing grocery chain, has revenue of about $3 billion but twice as many stores, so it makes only about $16 million per store."
-- LA Times
This company, this company that customers and employees are now sticking their necks out for, built tremendous stakeholder loyalty through its approach to business. It's mission appears to have been much more than simply making money. Market Basket was focused on serving its stakeholders, and, in the process, it made a lot of money.
This seeming paradox isn't some fluke. Authors Raj Sisodia, Jag Sheth and David B. Wolfe have shown in their book, Firms of Endearment, that stakeholder-centric firms like Market Basket - firms like Costco, Google, Patagonia, REI, Southwest, UPS and Whole Foods - have financial returns that performed fourteen times better than the S&P 500. They even beat Jim Collins' high-performing "Good to Great" companies by a factor of nine.
So yes, being of service can actually be very good for the financial health of companies. But financial health isn't the only measure that matters.
Research shows that employees at companies with a strong sense of purpose are more likely to believe their firms are doing well across a wide variety of measure than employees in firms without that sense of purpose. This confidence in the firm is a powerful magnet when it comes to attracting high-performing employees.
More than that though, when companies learn to wield profits in service to more meaningful ends, they can do amazing things. By harnessing the economic engine of a paying customer base, these firms can have a huge societal and ecological impact, and that's what gets me so excited about social enterprises and initiatives like the benefit corporation and B Corporations.
There is one more consideration on this question of service and mission in business. Business is the primary engine shaping how we design, build and use technology. The code that shapes our technologies of tomorrow is the code that runs our businesses of today. In a world that will soon give rise to powerful artificial intelligence and robotics, our assumptions about the purpose of business suddenly become extremely important. Do we build machines perfectly designed for making money above all other objectives, or do we design them for a higher purpose?
The choice is ours.
Market Basket image by moroccanmary