Building Powerful Organizations

Powerful organizations drive sustainable growth—healthy growth that lasts. But how does an organization become powerful, and what does power really mean?

We love to list and rank the powerful. My friend Stefan Swanepoel just released a list of the 200 most powerful people in U.S. real estate. Other lists include the world’s most powerful people, the world’s most powerful brands, and the world’s most powerful countries.

But you won’t find many lists or ranking criteria for powerful companies or organizations. Instead, companies measure other attributes, like the world’s largest companies and the world’s most admired companies.

There are three reasons why rankers have stayed away from attempting to list and rank truly powerful organizations.

First, there is confusion around the definition of power. Too often the word power is used as a synonym for authority or the ability to control a market. In fact, powerful entities are more accurately defined by the exceptional and ever-increasing levels of ability, influence, and energy that enable that authority or (perceived) control.

Second, power is often confused with the prerequisites for power created when management builds effective, integrated strategies in six areas—customer, competition, financial capital, cost, community, and climate. Each strategy must include specific plans and measurable objectives. While critical to establish a powerful organization, successful strategies in each of these areas simply create the conditions for true power.

Finally and most critically, the core of an organization’s power is solely found in its people, and their ability, influence, and energy. As Jim Collins offered in his book Good To Great, “First who, then what.”

The ability to assess or measure the human capital in any organization continues to be the limiting factor in ranking powerful organizations in the world.

So, how do organizations become powerful?

Leaders build strategies and deploy plans in the six areas above AND the following areas below:

Measure and improve employee engagement; ensure diversity and gender-balanced leadership; consistently assess, improve, and expand employee “hard and soft” skillsets; add new skillsets when necessary; align team members around a values-based vision for the future; and build a change-adaptive culture to meet accelerating changes in market needs tied to management’s strategic decisions.

Those organizations that come closest to these targets are the most powerful organizations.

There is no limit on organizational power because there is no limit on the power of human capital.

Building powerful organizations is what I do.

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How Business Can Restore America’s Greatness – Part 4 of 4

Part 4 – A Business Plan for America*

Bill Knudsen was president of General Motors and knew that only business could prepare America for victory in World War II. He understood the role of business in facing global challenges and restoring America’s greatness. That kind of business-led effort is needed again, but to unlock it, CEOs need the story that enables such bold action while delivering real growth.

That story is looking us in the face. Today, the challenges are different but the threat to our country and to the world is arguable every bit as dire:

  • Three billion people are pounding on the gates of the global economy.
  • Climate change and ecosystem depletion are degrading Earth’s carrying capacity and disrupting human communities, with the high potential for much greater disruption to come.
  • Income inequality is accelerating, resulting in social unrest.
  • And global infrastructure, systems, and supply chains are fragile and prone to shock and disruption.

As we ricochet from crisis to crisis, the country is not fixing the fundamentals while international order is unwinding, and Americans are getting increasingly concerned, impatient, and angry.

It’s time for action.

In The New Grand Strategy: Restoring America’s Prosperity, Security, and Sustainability in the 21st Century, authors Mark Mykleby, Patrick Doherty, and Joel Makower tell the story of this strategic moment in which business must lead.

Bottom line, the authors lay out a clear “prosperity formula” rooted in historical precedent: Demand + CapitalStranded Assets = New Growth Scenario. Looking at the fundamentals of today’s economy, they detail massive demand for new products and services, huge amounts of private sector capital available, and substantial assets where innovative thinking can avoid value destruction and unlock sustainable wealth potential.

It’s already started.

In the book, the authors point to specific examples of success stories in which alignment of business, social, and environmental priorities is generating triple bottom-line returns (for people, profit, planet) today, including companies ranging from Walmart and Steelcase to Panera Bread, Target, and US Steel. They also cite the statistic that 84% of CEO’s in a recent survey believe that business has to execute a “step change in ambition and action” through “innovating new systems, markets and structures.”

But more needs to be done, and now.

Quarterly analysts and uncertainly are often cited as reasons for avoiding large-scale, decisive change. But in February 2016, Laurence D. Fink, CEO of BlackRock, the world’s largest asset manager with $5.5 trillion under management, wrote to the CEOs of the Fortune 500 whose revenue of $12.5 trillion equate to 66% of U.S. GDP. Mr. Fink’s message: “The effects of the short-termist phenomenon are troubling . . . for our broader economy,” and he asked each company for their strategy for long-term, sustainable growth.

Fink’s dire reality—no real growth on the horizon—is the real driver that CEOs need to focus on. And by saying he’ll protect CEOs who develop sound strategies for long-term growth, Fink takes away the excuse for inaction. But CEOs need a framework in which all their individual strategies are reinforcing.

They need a Business Plan for America. That’s what The New Grand Strategy delivers.

Their proposal identifies 10 sectors of our economy that are developing new business models, each a part of this new story. Together, they form the new economic ecosystem we need, drawing not on government subsidies but on historic pools of pent up demand.

Oil & Gas

  • New business model: Natural Gas Bridge & Advanced Materials
  • Story: From Burning to Building

Transportation

  • New business model: Multimodal Mobility Systems
  • Story: From Vehicles to Mobility

Real Estate & Infrastructure

  • New business model: Walkable Communities
  • Story: From Sprawl to Smart Growth

Farming

  • New business model: Regenerative Agriculture
  • Story: From Depletive to Regenerative

Natural Resources

  • New business model: Ecosystem Service Markets
  • Story: From Extraction to Stewardship

Electricity

  • New business model: Distributed Renewables
  • Story: From Centralized Combustion to Distributed Renewables

Telecom/Mobile

  • New business model: Gigabit Networks & Internet of Things
  • Story: From Megabits and Phones to Gigabits and Sensors

Retail

  • New Business Model: Small Footprint & e-Commerce
  • Story: From Big Box to Bricks & Clicks

Manufacturing

  • New business model: Distributed Production
  • Story: From Outsourcing to Advanced Manufacturing

Health Care

  • New Business Model: Team-Based Wellness
  • Story: From Hospitalization to Primary Care

Importantly, in each sector the authors show us how companies can align their immediate economic self-interests with our mutual long-term interest of generational and environmental well-being. They show us how companies can do well by doing good. Add it all up, and it puts capital back to work and America back to work, all solving the greatest challenges facing our nation and our planet.

Perhaps most importantly, by being rooted in real demand, the story of this success need not be delayed by government bureaucracy. The economy won’t change because of elegantly-designed policy but by a practical web of contracts large and small that create lasting value.

And as Bill Knudsen knew first, contracts are more powerful than regulations in solving the global challenges of today.

 

 

*This blog series is intended to prompt readers to fully explore The New Grand Strategy, a book I believe is one of the most important books available to any CEO. All content in this blog series is adapted from The New Grand Strategy: Restoring America’s Prosperity, Security, and Sustainability in the 21st Century with permission from authors Mark Mykleby, Patrick Doherty, and Joel Makower. Mr. Mykleby and Mr. Doherty currently serve as co-directors at the Strategic Innovation Lab (SIL) at Case Western Reserve University, as part of The Fowler Center for Business as an Agent of World Benefit. Full disclosure: I proudly serve as a strategic advisor to the SIL.

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Sustainability Needs Leaders Motivated by a Compelling Purpose

Rick Miller featured in GreenBiz.com:

In business school, the classmates who stood out fell into three categories: investors; combiners; and entrepreneurs. Visionary investors could see what capital owners needed and when they needed it. Visionary combiners could see the efficiencies possible through unexpected mergers and acquisitions. And visionary entrepreneurs could see a market earlier than anyone else, and create a new category to go after it.

To thrive today, CEOs need all three skills plus one more: They need to give purpose to their employees and to their business model.

My friend, legendary agency founder Roy Spence, wrote the book on purpose a few years back. His core concept is still spot on: “It’s not what you sell, it’s what you stand for.” At the time, purpose was found within the category, such as BMW’s focus on creating the “ultimate driving machine.” But today, a visionary purpose is increasingly tied to solving an intertwined pair of global problems.

In other words, it’s no longer enough to be best in class. Today, best in class means best for the planet and the people as well as best for profit. Tesla illustrates this ideal perfectly. Volkswagen illustrates the opposite. Walmart is executing what may be perhaps the most dramatic 180-degree turn, from a company that accelerated social and environmental depletion to one that champions sustainability and employee engagement. Walmart is boosting wages and exiting the supercenter footprint that gave it such unparalleled economies of scale.

For CEOs, two issues are causing the biggest consternation as we move into 2017: climate change; and sustainable, long-term growth. Just last year, CEOs from more than 400 of the world’s largest companies urged world leaders to adopt aggressive climate targets in the Paris Conference of Parties. Two months later, Larry Fink, CEO of BlackRock, the world’s largest asset manager, wrote a chairman’s letter asking every Fortune 500 CEO to send him a strategy for sustainable, long-term growth.

Waiting on Washington

Not too many CEOs got A’s on Fink’s homework assignment. Understandably, CEOs are finding it impossible to chart a long-term growth strategy when all the incentives in the system are pointing in the opposite direction. Instead, CEOs have been waiting for Washington to create the level playing field in which climate change and long-term growth can be addressed. Those CEOs are happy to lend their name to a campaign just as long as they can get on with the business of business.

Except the 2016 election delivered a roadblock. At the risk of understatement, the new power in Washington is not focused on climate change nor on long-term growth — yet.

So CEOs need a plan B. This week a group of chiefs are gathering at the World Economic Forum Annual Meeting in Davos, Switzerland, to talk about climate change against the backsliding signaled by the new U.S. president. From where I sit, they, and hundreds of others, need to rise to the occasion. In doing so, there is no better role model than Bill Knudsen.

Knudsen was CEO of General Motors in the perilous years before America entered World War II. He recognized two things: the unavoidable threat of the day, fascism; and that as Henry Ford’s former mass production wizard, Knudsen himself had unique talents the nation would need to defeat two wealthy industrial enemies. Before Congress had the nerve to act, Knudsen started to re-organize American industry, giving FDR the term “arsenal of democracy.” Knudsen gave business new purpose.

For some CEOs, taking a stand is already in their DNA. Groups such as The B Team, Focusing Capital on the Long Term and the World Business Council for Sustainable Development have been grinding away for years.

But at the dawning of 2017, sustainable growth has taken on new urgency. CEOs no longer can set aside some corporate social responsibility funds to support incremental advocacy efforts. Now the CEOs — and the big institutional clients of Fink — have to roll up their sleeves and figure out how to design and implement a new grand strategy for sustainable growth that addresses people, planet and profits.

The business case for strategic leadership is a no-brainer. For the United States, “The New Grand Strategy,” by GreenBiz Executive Editor Joel Makower and co-authors Mark Mykleby and Patrick Doherty, lays out a pragmatic strategy for extraordinary growth. Overseas, the Business & Sustainable Development Commission’s new report does the same. The challenge lies in transitioning to the new economics of sustainable, long-term growth without help from government.

As CEOs know, the problem never has been about finding the right ideas. It’s all about leadership motivated by a compelling purpose. The purpose is now clear. We just need some Knudsens.

 

source

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How Business Can Restore America’s Greatness – Part 1 of 4

Part 1 – Introduction*

Bill Knudsen was president of General Motors when he decided that only business could prepare for America’s victory in World War II. He understood the role of business in restoring America’s greatness. With our country facing forces on several fronts that could have forever changed our democratic republic, thankfully Bill Knudsen stepped up.

As Arthur Herman noted in his 2012 book, Freedom’s Forge: How American Business Produced Victory in World War II: “If the country was going to make itself seriously ready for war, neither the politicians nor the generals nor the admirals were willing to take the lead. American business and industry would have to figure it out on their own.”

Today, forces on multiple fronts again threaten our way of life domestically and around the world. This time the four antagonists are the rapid economic inclusion of three billion people, climate change and the depletion of our natural capital, the contained depression supporting income inequality, and the crumbling infrastructure at the foundation of our worldwide economy.

Taken together, these four fused and interlocking dilemmas comprise the global challenge of our time. It will require focused and determined leadership. Today, only America possesses the capacity, weight, and cultural wherewithal to lead change of this magnitude.

And once again, American business and industry need to figure it out. But how?

In The New Grand Strategy: Restoring America’s Prosperity, Security, and Sustainability in the 21st Century, authors Mark Mykleby, Patrick Doherty, and Joel Makower answer that question.

Specifically, the book offers lucidity about a viable path forward based on proven and important historical precedent. They outline a clear “prosperity formula” for business leaders to follow, including where the money will come from to fund the strategy.

Importantly, the authors also provide a new framing of full spectrum sustainability and what’s required to achieve sustainable growth. They offer a view that the old concept of sustainability as green (only) is problematic. Too many Americans associate sustainability with the notion of sacrifice in the name of Mother Earth, rather than how we might align our immediate self-interests of personal well-being with our long-term interest of generational and environmental well-being. The New Grand Strategy shows us how companies can do well by doing good.

The book outlines current success stories in which alignment of business, social, and environmental priorities is generating triple bottom-line returns (for people, profit, planet). Companies ranging from Bank of America and BASF to Cisco, Dow, and Ford are demonstrating the path forward. Many more examples are offered.

In the three blogs that follow this introduction, we will review the case offered in The New Grand Strategy:

In summary, this blog series is intended to prompt readers to fully explore The New Grand Strategy as what I believe to be one of the most important books of our time.

The world needs the next set of Bill Knudsens to step up, and we need them to do it now.

 

 

*All content in this blog series is adapted from The New Grand Strategy: Restoring America’s Prosperity, Security, and Sustainability in the 21st Century with permission from authors Mark Mykleby, Patrick Doherty, and Joel Makower. Mr. Mykleby and Mr. Doherty currently serve as co-directors at the Strategic Innovation Lab (SIL) at Case Western Reserve University, as part of The Fowler Center for Business as an Agent of World Benefit. Full disclosure: I proudly serve as a strategic advisor to the SIL.

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What Could a Gymnastics Coach Teach Business Leaders about Sustainable Growth?

One of the biggest stories in the 2016 Summer Olympic Games in Rio is the dominance of the U.S. women gymnasts. In addition to capturing gold for team performance and gold and silver for top individual awards, many believe that program members who did not qualify for the U.S. team would have medaled in Rio if the U.S. team had been given more slots.

As the national team coordinator for the U.S. women’s gymnastics program since 2001, Márta Károlyi has built a program that evolved a team from not winning a team gold until 1996 to being the envy of the world.

As coordinator, Márta has overseen all aspects of the women’s national team, ranging from, among other duties, selecting the athletes for competitions to making specific recommendations about what routines are performed. As a result, they have captured the team title at the last two Olympics, and American women have won the individual all-around at the last four Summer Games.

The sustainable growth of the U.S. women’s gymnastics program could have as much to do with how Márta runs the program as what she does as coordinator. And I believe business leaders could learn a lot from her approach.

Specifically, in my view, Márta Károlyi runs her programs with i3k—intelligence, intensity, integrity, and kindness. And according to some sources, that last element has made a big difference.

When Márta  and her husband Béla defected to the United States from Romania in 1981, they came with a reputation as successful gymnastic program builders. Aspiring athletes were drawn to their Houston gym, which turned out excellent gymnasts. Márta and Béla were named as U.S. coaches for the 1996 Olympic Games, and the team delivered the country’s first team gold medal.

Poor team performance between 1997 and 1999 led USA Gymnastics to hire Béla as national team coordinator, but rumors of his severe treatment of athletes surfaced. A poor U.S. showing in the 2000 Games prompted the replacement of Béla with Márta  as national team coordinator.

By many accounts, Márta continued previous practices of hard work, high expectations, and no tolerance for shortcuts (e.g. illegal substances), but she also smartly brought innovation to the training regimen, allowing gymnasts to train independently while convening monthly in her Houston gym. She also brought a softer and more flexible approach to dealing with the athletes and their trainers.

According to The Washington Times, “Gold medal winner Simone Biles needed support on an emotional level, and her coach, Aimee Boorman, said Márta’s ability to be both demanding and flexible was critical to Biles’ success.”

And while Márta ’s “look of fierce concentration is most familiar to fans of the sport,” according to the Times, “Away from the floor, it gives way to a friendly smile and talk about cooking, family and travel as she walks through the family’s rustic home in the Sam Houston National Forest.”

It appears that a little kindness when added to the mix has brought Márta closer to her athletes and stronger, sustainable success for the program.

The results have been nothing short of amazing. And as Márta retires at the end of the Rio Olympics, U.S. Women’s gymnastics is on solid footing atop the world.

Well done Márta.

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10 Reasons to Be All-In at Work

Surveys indicate that more than 70% of workers are not fully engaged at work. You may be one of them. This pervasive problem costs business billions and often costs employees their health. The culprit most often cited? The boss. Survey after survey places the blame for poor engagement on supervisors who don’t know how to effectively lead employees.

But how can this be? Particularly when there is a nearly endless supply of readily available leadership podcasts, blogs, courses, and other training material? One source cites the 1.5 trillion books and articles written on the subject in just the last 10 years. The problem stems from a lack of effective material that does more than supply information. Leaders at ALL levels need information that helps them apply concepts to drive engagement.

If you are one of the millions of workers who don’t have a boss who gets it, what do you do? Consider following the All-In Roadmap to increase not only your engagement but also the engagement of everyone around you.

Here’s why. The All-In Roadmap is:

  • Simple – five key focus areas make it easy to apply the Roadmap.
  • Flexible – the Roadmap changes as you and your needs change.
  • Practical – case studies help you apply the five key focus areas to your own situations.
  • Applicable to companies of all sizes – from startups to multinationals, the Roadmap works.
  • Trans-industrial – the Roadmap works for product or service businesses, non-profits, or government.
  • Research-based – road tested and backed by research, the Roadmap is well supported.
  • A professional and personal tool – the Roadmap works in every area of your life.
  • Resilient during tough times – the Roadmap is proven even in market crashes and war zones.
  • Result-driven – the Roadmap has been used to triple the growth rate of million and billion dollar organizations.
  • FREE – you can sign up for the All-In Roadmap here.

Using the All-In Roadmap will help you and those around you engage, and drive sustainable growth.

What do you have to lose, other than the excuse that your boss is keeping you from being your very best?

It’s time to be All-In!

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The Future of Business

The future of business, simply put, is making the future its business. And where better to look toward the future than to the business schools currently training our future leaders? Those of us looking for confidence in the future can take comfort in the great work being done by the worldwide network of PRME (Principles for Responsible Management Education) colleges and universities established in 2007 by the United Nations.

The idea to create PRME was officially introduced by the UN’s Global Compact Office at the Global Forum “Business as an Agent of World Benefit” at Case Western Reserve University, where I serve as a Strategic Advisor, in October 2006.

PRME’s mission is to “inspire and champion responsible management education, research, and thought leadership globally.” The Six Principles of PRME, inspired by internationally accepted values, are:

  • Purpose – working toward an inclusive and sustainable global economy
  • Values – global social responsibility
  • Method – creation of educational frameworks, materials, processes, and environments
  • Research – researching the role, dynamics, and impact of corporations in the creation of sustainable social, environmental, and economic value.
  • Partnership – exploring jointly effective approaches to challenges faced by corporations in meeting social and environmental responsibilities
  • Dialogue – facilitating dialogue between all interested parties and stakeholders

Sustainable growth is the only way forward for business today. Being Chief means making choices that move business in this direction. PRME is on the cutting edge of integrating sustainable business standards from the ground up—beginning with tomorrow’s leaders. More than 600 leading business schools and management-related academic institutions from over 80 countries comprise the PRME, many of which are also a part of the Association to Advance Collegiate Schools of Business (AACSB), the “longest serving global association dedicated to advancing management education worldwide.”

In addition to Case Western, U.S. PRME members include leading business schools ranging from Bentley, Cornell, Notre Dame, and Texas A&M to University of California Berkeley as well as strong international representation ranging from Auckland University in New Zealand, Bangalore University in India, Cheung Kong University in China, and INSEAD in France.

Organizations such as PRME and AACSB are directing the future of business toward sustainable growth, and not a moment too soon.

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What Makes Chief Lars Sørensen #1 Worldwide?

In a recent Harvard Business Review article Chief Executive Officer Lars Sørensen at Novo Nordisk was selected as the best performing CEO in the world. Why?

The simple answer is truly sustainable growth—and ranking methodology.

The ranking was based on a brand new HBR rating criteria that attempted to balance sustained financial performance (weighted at 80%) with a mix of environmental, social, and governance (ESG) measurements (weighted at 20%) for the first time. While many other publications offer CEO scorecards, ESG factors are typically left out of such rankings.

In the article Sørensen notes the true linkage between these factors, “Corporate social responsibility is nothing but maximizing the value of your company over a long period. In the long term, social and environmental issues become financial issues.”

While many could argue for a higher ESG weighting, simply adding a 20% factor had a big impact on several notable CEO’s.

For example, in 2014 Amazon CEO Jeff Bezos earned the #1 ranking on this same list when HBR excluded ESG factors and used a solely financially oriented mix of total shareholder return and changes in market capitalization. This year, Jeff dropped to #87. Others were not as impacted.

Notably, John Chambers at CISCO made a small move from #3 in 2014 to #2 in 2015. And this year’s superstar Lars Sørensen moved to the top from his #6 position last year. That’s quite a jump.

This well-conceived and developed article serves the business community well in offering a fresh report card methodology for consideration.

The key points to take away have less to do with who ranks where and more to do with changing the definition of what success looks like.

To those who would prefer to continue using solely a short term financial report card, Sørensen offers the last word, “The business of business is business—but with a long-term perspective.”

Disclaimer: As a type-1 diabetic, Novo Nordisk products keep me alive. But my admiration for Lars goes beyond my personal need to my belief that with an ESG focus Novo Nordisk will help all of us thrive in generations to come.

In my view, Lars Sørensen will remain at the top of the rankings independent of the methodology chosen.

He is a true Chief.

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HR Skills: Critical for Entry Level Managers to CEOs

There are many routes to the CEO suite, but human resource jobs are often discounted as “not the proper path.” Change may be coming though, and sooner than you think.

Did you see December’s Harvard Business Review article, titled “Why HR Chiefs Make Great CEOs—Really”? The piece focuses on research conducted by Ellie Filler and Dave Ulrich. They analyzed similarities between top performers with Chief titles. The bottom line? The best performing Chief Human Resource Officers displayed traits most similar to those of successful CEOs, more so than high performing CFOs, CMOs, or CIOs. In fact, only Chief Operating Officers, whose roles and responsibilities often overlap with CEOs, displayed higher similarities.

It’s important to recognize the critical skillsets that human resource jobs enable employees to develop: namely, managing human capital to strengthen a company. Leaders at all levels must make HR a primary focus if they want to build a team that can generate sustainable growth.

For any company to succeed, it is critical to attract and retain the right talent. Companies need to organize, compensate, and build a change-adaptive culture. While the CHRO leads these efforts for a company, these keys are the responsibility of Chiefs at all levels, independent of their job titles.

Premier organizations like The Conference Board regularly report on CEO views of top global business priorities. Their 2015 survey results are due in March, but most expect last year’s top five CEO concerns to stick:

  1. Human capital
  2. Customer relationships
  3. Innovation
  4. Operational excellence
  5. Corporate brand and reputation

With Gartner reporting that over 85% of the U.S. workforce is not fully engaged (at a cost of $370B annually), the top priorities for every manager needs to include a focus on human capital and employee engagement.

The Harvard Business Review indicates that companies will increasingly look to executives with HR experience as CEO candidates, following path finders like Mary Barra, the current CEO at General Motors. Hopefully that’s true. But even a powerful CEO can’t fix engagement issues by him or herself.

All companies need to emphasize the human capital element of every manager’s job to increase the success of the organization. Integrating HR assignments as part of the development plans for future leaders is part of the solution.

The bottom line: HR skills are critical at every level to the success of any company—really.

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A New Definition of Sustainable Success

My dad once said that any baseball player can have a good season, but it takes a different kind of focus to be great throughout his entire career. The goal of any athlete should be sustained excellence, Dad said. He also taught me that in business, the same rule applied.

As a career HR professional, Dad taught me that focusing on employees is the key to sustainable success and growth for a business. When markets shift and customers’ needs change while technology enables new solutions, it’s a company’s employees who design, develop, and deliver the services and products that keep customers happy and attract new ones. I learned the key was to create cultures where employees would bring their best to work each day. Employees who fully engage enable companies to thrive, year after year.

When I went to business school, professors helped me expand my notion of sustainable success. They indicated the focus for sustainability should include the shareowner. I learned it’s a company’s shareowners that provide the capital necessary to run and build a business. Shareowners who can count on consistent, long-term growth will likely see improving stock prices and increases in dividends. In turn, capital will continue to flow to the company to fuel growth over time.

During my first job at Sperry Corporation, my notion of sustainable success expanded yet again. In sales, it became crystal clear that a company’s focus should always be the customer. It’s a customer who decides if a company is successful by making a buying decision. Companies must work hard to earn customer loyalty. While a satisfied customer might seek a slightly better product feature or better price from a competitor, loyal customers won’t. Building loyal customer relationships enables a company to enjoy sustained success, quarter after quarter.

More recently, my understanding of what sustainable success truly means expanded again when I learned about the four questions former CEO Sam Palmisano used when he ran IBM. The first three were in line with what I had learned about employees, shareowners, and customers:

1. Why would someone work for you?
2. Why would someone invest their money with you?
3. Why would someone spend their money with you—what is unique about you?

But the fourth question caused me to expand my thinking again:

4. Why would society allow you to operate in their region?

This last question caused me to shift my thinking in two ways. First, it expanded my recognition of the impact of an organization and got me thinking about what measurable outcomes are required to claim success within a specific community. We had employee engagement surveys, customer satisfaction analyses, and enough financial reporting to choke a horse. But being a good corporate citizen in the community includes more than an occasional philanthropic donation for social good or caring for the environment beyond simply not polluting. Sam’s fourth question requires more than a “do no immediate harm” approach; it requires a “make it better” solution.

Second, this new question also shifted my perspective about time. Unlike the first three questions that had an unspoken time frame of “quarter to quarter” or “year to year,” this question shifted my thinking from the short term to the truly long term. Thinking in terms of “decade to decade” or “century to century,” such that it could continue indefinitely, is clearly a new bar.

Taken together, this expanded view of inclusion along with a completely new view of accountability over time forms a new definition of sustainable success. Those companies that deliver truly sustainable growth are focused on all constituencies and a true long-term perspective. Companies that earn employee engagement, deliver shareowner value, create customer loyalty, and operate as conscious members of the community are accountable for the sustainable prosperity for this and future generations.

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