What’s a Corporation to Do? Choose the Right Core Ideology.
How do we make the transformation to a better form of capitalism? The devil – or God, depending on your perspective – is in the details and these “What’s a . . . to Do?” blog posts provide those details. For you, there’s nothing to it but to do it.
Jim Collins has gifted the corporate world with two bestselling books, Good to Great and Built to Last. The concept of “core ideology” is one of the four key ideas that emerged from the built-to-last research that is supported by the good-to-great research and is the extra dimension that helps elevate a company to the elite state of enduring great company. Core ideology points to the principles and grand vision—never perfectly followed but always answering the question of why the company exists and inspiring its people over the generations. A company’s core ideology comprises and instills its core values and core purpose. As defined by the research, core values are the essential and enduring tenets and core purpose is the fundamental reason for being, beyond just making money.
Image Credit: Jim Collins
Important things are worth repeating and restating in different ways, so they stand a better chance of being understood by all ears. The core purpose of an enduring great company—beginning with its conceptual days as a start-up—is its fundamental reason for being beyond just making money. One more time, a different way, with a direct quote. “Enduring great companies don’t exist merely to deliver returns to shareholders. Indeed, in a truly great company, profits and cash flow become like blood and water to a healthy body: They are absolutely essential for life, but they are not the very point of life” (emphasis in original).
Collins reports that one of the most paradoxical findings from Built to Last is that while core values are essential for enduring greatness, greatness and profitability don’t seem to depend on what those core values are. One does not have to fear lack of profitability when designing and creating a company that benefits as many stakeholders as possible. Stated another way, core ideology does not have to include maximizing shareholder value in order to realize profit or increase shareholder value.
In our view these important research findings and examples—that profitability doesn’t depend on what the core values are, and choosing to benefit as many stakeholders as possible can provide for exceptional profitability—begs a critical question. “Shouldn’t founders and leaders choose a core ideology that creates an enduring great company—a profitable company that sustains benefit for as many stakeholders as possible—over a core ideology that merely seeks to maximize shareholder profit on a quarterly basis?” The short answer is, “Yes.” The slightly longer answer is, “Yes, and the unified ethical decision-making model is a powerful tool by which to develop a sustainable core ideology.”
That is the first and among the most crucial corporate action items we offer at Better Capitalism: that one can confidently design and run an enduring great company for the benefit of as many stakeholders as possible and also be profitable. One simply chooses to make the decision to step back from following the historic status quo of maximizing shareholder value and move in a more enlightened direction. Yes, it's really that simple.
What to Do Corporate Action Items:
Choose a core ideology that comprises core values and purpose beyond just making money.
Write and explain your core ideology, which includes benefits for as many stakeholders as possible.
Embed your core ideology in your business or strategic plans. Draft and implement strategies, plans, and policies that support your core ideology. This becomes the DNA of your culture.
Become grounded in and never waiver from your core ideology, which cultivates a company culture that circles back to inform and support your core ideology. Culture dominates and beats strategies, plans, and policies every time.
Integrating your lived culture and official policies based on core ideology provides you the desirable both/and rather than the more mediocre either/or.
As you implement these action items, we'd love to hear from you. And if you have other items, especially items you're willing to share with our readers, we'd love to hear from you.
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