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The High-Purpose Company
The TRULY Responsible (and Highly Profitable) Firms That Are Changing Business Now
By Christine Arena HarperCollins Publishers, Inc.
Copyright © 2007 Christine Arena
All right reserved.
Chapter One
Passing the Litmus Test
Why on earth would you settle for creating something mediocre that does little more than make money, when you can create something outstanding that makes a lasting contribution as well?
--Jim Collins, Built to Last
When author Jim Collins asked the question quoted above to his readers in the author's note of his best-selling paperback Built to Last in 2002, he perhaps unknowingly cut to the heart of the corporate responsibility debate and nailed the one thing that businesspeople need to know about it. The firms featured in his book are unique in a variety of ways. But the single variable that enables them to succeed, as Collins so eloquently noted, is worthiness.
The companies featured in Built to Last are worthy of lasting. They endure because without them, society would be worse off. These businesses grew invaluable to people because each stands for a purpose that is greater than the products it sells or the money it generates for shareholders. Each embodies something that is meaningful, substantive, and necessary. Whatever that particular something is, it drives most everything the Built to Last companies do and will do over decades, perhaps even centuries to come. For instance,Walt Disney's purpose of "using our imagination to bring happiness to millions" transformed that company from a rinky-dink cartoon maker into an entertainment monolith.1 Though the world has changed drastically since the company's purpose was first identified, "using our imagination to bring happiness to millions" never tires. It continues to sustain the Walt Disney Company and to inspire it to inspire others. Conversely, lacking its clear sense of purpose, this and other companies that Collins highlights would have difficulty competing in the marketplace. They would, in a real sense, be crippled--utterly drained of creative life force--without it.
The distinction that Collins makes presents a litmus test of sorts which, when applied to the bewildering universe of corporate responsibility, helps to draw a tidy line in the sand. Although many companies claim to be dedicated to a purpose that serves the common good, surprisingly few of those companies actually absorb and reflect that purpose the way Disney has, especially during its formative years.
For instance, consider the juxtaposition between the words and actions of some oil companies that commandingly pose as leaders in the environmental arena. Several of the world's largest oil firms wage multimillion-dollar advertising campaigns designed to promote their support of energy conservation and renewable sources of energy. Meanwhile, in these same companies, business and growth strategies rely primarily on increased oil demand, supply, and control. Theoretically, widespread energy conservation or a widespread shift to alternative sources of energy would mean a diminished need for their most profitable product. Thus, without substantially investing in renewable sources of energy or in technologies that promote energy conservation, such companies leave a gap between their words and their actions. Not only could they just as easily survive without their decreed purpose, they actually benefit by undermining it. They have no vested interest in their cause, no business incentive to serve their purpose. Therefore, their extravagant language tends not to be enough to convince savvy stakeholders--thus creating backlash--while the money they do spend on "environmental" campaigns generates little in the way of a triple bottom-line return. Such companies fail the litmus test and also miss out on a great opportunity to make substantive environmental progress. While these companies may present a charitable facade to the public, they do not approach this particular aspect of corporate responsibility authentically. Chapter 2 of this book is filled with examples of such companies and provides a thorough explanation of why such companies fail the test, where they go wrong, and how they might approach these issues more constructively.
The litmus test: is purpose invaluable to the company?
At the opposite end of the spectrum are High-Purpose Companies. High-Purpose Companies are driven by purpose to the extent where purpose becomes a dominant force for corporate performance and development. In such companies, the concept of a higher purpose--of somehow serving society or protecting the environment--is so integral to the fabric of the organization that if you removed that thread, the company would start to unravel. Without their higher purpose, these firms would have difficulty competing in the marketplace, or even surviving.
High-Purpose Companies exist to serve the kinds of fundamental human needs that corporate responsibility advocates take so seriously, such as the need to stop environmental degradation; to end poverty; to promote equality; or to create health, security, happiness, and peace of mind. In contrast with the superficial needs catered to by so many other companies, the needs serviced by High-Purpose Companies tend to be deeply rooted throughout society. Thus, they are substantial enough to spur innovation and nourish the business over time.
General Electric's higher purpose of "providing imaginative answers to [the] mounting challenges to our ecosystem" or, "ecomagination,"2 resulted not just in lip service, but in the creation of a revised corporate vision, which led to the development of environmentally friendly advanced materials, profitable new products, and major infrastructure and operational changes that are still under way. On the product front alone, ecomagination exists in the form of things ranging from energy-saving dishwashers to compact fluorescent lighting and fuel-efficient jet engines. So far, ecomagination products and services have generated $10 billion in revenue for GE. They are expected to generate $20 billion in revenue by 2010. Therefore, GE CEO Jeffrey Immelt doesn't regard ecomagination as a philanthropic endeavor any more than his shareholders do. But he is serious about environmentalism. "We're launching ecomagination not because it's trendy or moral, but because it will accelerate our growth and make us more competitive."3 Green, Immelt concluded, is green. The company made the necessary connection. The more ingeniously GE goes about "providing imaginative answers to the mounting challenges to our ecosystem," the more precious it becomes to society and the better it performs overall. If GE were to suddenly abandon ecomagination, its . . .
Continues...
Excerpted from The High-Purpose Company by Christine Arena Copyright © 2007 by Christine Arena. Excerpted by permission.
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