The Road Out of Isolation: How to achieve balance in an upside down world.
In April 1999 I launched EcoMedia, a business based on the concept that enduring business success was dependent on managing the entire ecosystem in which the organization operated.
I was then CEO of M-Direct Advertising and had struggled with my company’s role in helping our clients be more successful, observing that, at best, our services would increase visibility – and at worst – it would expose the functional flaws of those companies. We could get people to the door of our clients– but we didn’t have any control over the experience a customer would have once they engaged.
Our point of contact was a fulcrum that worked when the plank set upon it was balanced. If the client had done the work to ensure that the products or services they offered were up to – or beyond the expectations of their potential customers – there was a good chance for generating transactional business. And if the experience beyond the initial transactional was favorable and sustainable – it was possible the client could generate a profitable lifetime value for each client we helped drive to their door.
The problem was that the clients businesses were rarely in balance. Either the product wasn’t sufficient, or the sales follow-up was deficient – or the customer service beyond the sale was below customer expectation. We controlled such a slim piece of the customer continuum that our odds of generating real value were constantly challenged.
This posed an ethical dilemma as well as marketing problem for my company. I believed that we needed to promise performance – but could not guarantee outcomes. So to address this challenge we looked for ways to educate companies in order to improve their larger operational balance – in order to improve their sustainable profitability.
Having worked with several multi-national corporations – I noticed that the smaller companies we could have a greater influence on – while perhaps having a potential advantage in terms of entrepreneurial vigor and operational agility – had a significant disadvantage when it came to managing their overall ecosystem.
We defined the ecosystem as a specific range of 7 dynamic relationships that each needed to be kept in some relative state of balance.
These relationships included:
- Customers
- Vendors
- Employees
- Internal Management Systems ( operational controls such as accounting, cash flow, HR compliance, R&D investment, and workflow design)
- Competitors ( the entirety of the industry the company operates as part of)
- Government and Regulatory Agencies
- Community Relations (especially non-customers as neighbors)
These relationships were the companies stakeholders.
Most small businesses focused on the top 3 or 4 vital relationships very well – and had diminishing relationships with the remainder. Big businesses would also prioritize the same key relationships – but always had resources aimed at keeping the entire ecosystem balanced.
Smaller businesses would often reach a point as they grow where they struggle with operational controls – focusing largely on them on an as-necessary basis.
Competitors were mostly viewed as adversaries – and occasionally as opportunities to fine-tune market positioning; government and regulatory matters were mostly a nuisance and a fact of life – and community was something you served in a discretionary manner – mostly, if at all lending to sharing success once it was achieved.
Their ecosystem was largely out of balance. When problems would arise in the relationships that were not fully nurtured or tended to – the problems would typically draw attention or resources from the more vital relationships, increasing the risk of business failure. Internal management systems became generally more robust to keep-up with business growth – rather than in preparation for that growth. Those companies that were built with operational disciplines from the start – often had a leg-up on those that were flying by the seat of their pants – but were no more prepared to balance their stakeholder ecosystem than those who were not.
Our goal was to help entrepreneurs and business leaders address the entirety of the ecosystem by first understanding its existence – and then identifying measures that would incorporate a level of attention to the areas of need within the means of the organization.
Much of the wider-ranging or relationships could be kept in some relative state of balance by simply maintaining awareness and taking care of them as a matter of basic maintenance to prevent breakdowns.
What I hadn’t realized at the time was that this concept of tending to stakeholders to enhance and protect enterprise value was something that Professor Edward Freeman had been advocating since his first book, Strategic Management: A Stakeholder Approach was published in 1984 – some 15 years earlier than our efforts.
Moreover, borrowing from Freeman’s point of view – the structural underpinnings of capitalism as often cited in Adam Smith’s “Wealth of Nations” does not necessarily suggest that business success is a zero-sum game. Business success is measured in the broader value shared among all stakeholders – and business sustainability is ultimately dependent on the balancing of all stakeholder interests. Adam Smith himself spoke to this quality as being a necessity in his earlier work, The Theory of Moral Sentiments – suggesting that what we now refer to as emotional intelligence and our ability to link a sense of purpose to our actions to function conscientiously – points to the inherent humanistic drivers that speak to balancing your business ecosystem by addressing stakeholder value.
The moral imperative supporting the broader view of success has grown into movements like Conscious Capitalism and The Torrey Project. While these may represent fringe-thinking in terms of business theory – the foundation for the need and benefits of driving stakeholder value has powerful traction in the global business community.
My first experience with economic morality was introduced to me in 1990 by Paul Zane Pilzer, an economic advisor in the Reagan Administration – whom was lauded for his business capacity and uncanny ability to simplify theory by WalMart founder Sam Walton. It was Pilzer’s thinking behind creating unlimited economic value and how it ties into shared economic benefit and social justice – that influenced my own thinking about Business Ecosystems.
Recently watching the documentary film, “Fishing With Dynamite” I was reminded of how critical the pursuit of stakeholder value is to the sustainability of not only business entities – but the overall sustainability of life in our communities. As Mackey and Sisodia discuss in Conscious Capitalism – capitalism may very well be the greatest force on earth for advancing civilization and democratizing quality of life as a function of real social justice.
We can achieve deep satisfaction by accomplishing things that are morally on point with our personal values.
Being in service to others – by contributing tangible value that enhances their lives — is an even greater power driving capitalist enterprises – than the pursuit of accumulating personal wealth.
My personal evolution in this area became more focused in my work with CEOs as a peer group Chair. I captured some of this in what I had called, “My Story” – which served as my way of explaining my purpose in working with the leaders of small and medium businesses.
In 2005 I wrote:
I want to tell you about why I do what I do… It’s about recognizing and honoring my heroes.
When I was running my company which was a 75 year old direct mail agency with about 50 employees – half of them unionized – I saw how difficult it was to realize the potential of the company – or the people who worked for me. I also saw how difficult it was to change things and how many companies like mine were really just mediocre or worse – and why my company – like too many, eventually crashed and burned. Beyond feeling it was avoidable – it was tragic not just because of the loss of my personal capital and the future gains I expected to realize – but because of the loss of opportunity to contribute to society in the ways that successful businesses can and do.
I know that successful businesses and really the courageous women and men who lead them have the power, experience and resources to provide for the social, economic and cultural needs of our communities in the ways that government, public policy or politics never have and never will.
Peter Drucker once said that business was the only organ of society that generates a surplus, something that can be used for another purpose such as charity, support of the arts, scientific research and investment in new ventures that make the world we know possible and the ability to create the future.
Evidence of this is everywhere around us. We see the names on libraries, university research facilities, parks and hospital wings – these are our business heroes. And I would bet that more than 80% of contributions made by these heroes are anonymous.
I am looking to help people who want to be heroic leaders. If that’s not interesting to you – I will give you back the rest of the time we were going to spend together…”
It is now fully clear that for quite some time my great worthy cause has been the advancement of Stakeholder Value – and the role of transformational leadership in altering the trajectory of society by standing up to crony-capitalism and forces that pit the short-term and shortsighted interests of maximizing shareholder value against the deeply human draw towards social justice that can be broadly sustained through economic prosperity.
To many of us, the world feels upside down right now. On one hand it feels as though things are moving too quickly – and on the other hand that things are at a stand-still. Many people have suffered through a sense of profound isolation – either from staying at home – or suffering from the economic consequences of the global pandemic that is coursing through our lives.
As business leaders, we know and live with a certain degree of isolation that always exists. While it may be normal it doesn’t mean that it isn’t toxic. The problems we face in the world today are more likely to be solved through cooperation, collaboration and the collective efforts of many. Ideas that are freely exchanged tend to evolve more rapidly into the solutions we need. Escaping the isolation we experience is not only possible -vital.
My goals are to bring together as many like-minded people as possible to advance these interests – and commit to working together to grow as people in order to grow as leaders – and shape our organizations to not only prove what is possible – but make sure people understand that it is truly necessary.
Who would care to join me?
