LESSON 4. Know Why You Exist
Most private corporations think they exist only to make profits. As vital as profits may be to exist, it’s important for companies to consider where those profits come from and how they are created. The answer lies with the various stakeholders whose interests and needs the firm must satisfy if it is going to earn their loyalty and support. Let’s start with customers. Unless an organization is able to “trade” with its customers, to meet and exceed their needs on a 24/7 basis, those customers will fly into the arms of the competition and in a while it will cease to exist. Yet research shows that fewer than 5% of private sector firms and almost no not-for-profits proactively anticipate customer needs or work diligently and proactively to solve their problems. To survive, companies need to embrace this perspective.
Employees are the next major, and most important, stakeholder group, and yet its amazing how most companies do not recognize their own workers as such. Most managers don’t ask their employees about job satisfaction or work environment because, incredibly, they fear the conversation will mean having to pay them higher wages, despite countless studies showing that money is a low priority for most employees. For employees, what matters most is respect, recognition, social interaction, and the absence of boredom. Yet many firms fail to “engage” with their employees in this manner.
The third most important stakeholder is society. Much-admired General Electric CEO Jack Welch stated long ago that the secret of survival was for firms “to make products of the highest quality and offer them to customers at the lowest price while acting in an environmentally responsible and sensitive manner.” He’s right. Those who respond first to the demands of their stakeholders have such a superior marketplace advantage that they will actually make it almost impossible for their competitors to catch up.