Spring 2009: Sustainability & Social Responsibility

Social responsibility and sustainability are becoming more than just buzzwords. Business is changing, and it’s not business as usual anymore.

In this issue of the Baylor Business Review, we discuss the role of business sustainability and corporate social responsibility in our society today. You will be introduced to several alumni who truly understand what it means to be servant leaders, as well as current students looking to make a difference.

The Center for Nonprofit Leadership and Service has been established at Hankamer. This new center conducts research and also offers degree tracks for students interested in future work with nonprofits.

We remember a special supporter of the business school, the late Harry Chavanne, whose legacy continues to provide an endowed chair position at Hankamer: The Chavanne Chair of Christian Ethics in Business. We place a heavy emphasis on ethics in our curriculum as we cultivate students to be impactful business leaders.

We are proudly celebrating our 50^th anniversary as an AACSB accredited business school. The opportunity to provide an outstanding education to past, present and future generations is only possible with the work of our faculty, staff, students and supporters of Hankamer. And we are looking forward to what the next 50 years will bring.

Terry S. Maness
Dean, Hankamer School of Business

 

 

Baylor Business Review, Spring 2009

Why and How Companies Launch Sustainability Programs

by Eric Krell

Ask a dozen executives what corporate sustainability means, and chances are they will deliver 12 different definitions. Some will talk about regulatory compliance and risk management.

Some will describe cost reductions. Others will mention somewhat hazy measures, such as carbon neutrality, or more tangible metrics, such as energy efficiency improvement and revenue per sustainable product. A few will give skeptical shrugs. A handful of executives, including GE Chairman and CEO Jeff Immelt, will light up as they discuss profits, recruiting and retention benefits and other net gains.

“There is a green lining among the current economic storm clouds and GE customers and investors are benefiting,” Immelt asserts when discussing the “ecomagination” program his company introduced in 2005. “Cleaner innovation and technology resonate in the marketplace, while we slash our own energy and water costs and emissions, further strengthening GE’s competitive position and the advantage GE offers to its customers.”

The company’s ecomagination products and services – offerings that range from combustion systems to nuclear reactors to compact fluorescent light bulbs – generated $17 billion for the company in 2008, a 21 percent increase over 2007 ecomagination revenue.

Nicholas Eisenberger is managing principal with GreenOrder (an LRN Company), a sustainability consulting firm that has worked with a number of Fortune 500 companies including GE on its ecomagination business. “Sustainability has been a somewhat elusive topic,” Eisenberger notes. “It means different things to different people in different contexts.” That said, he believes that the recent focus on the environmental dimensions of sustainability among U.S. companies is starting to give way to a broader understanding – and application – of the concept. In this broader context, corporate sustainability is integrated with corporate strategy at the highest level.

“It’s a matter of asking questions such as, ‘How can we use sustainability as a source of value creation and innovation to thrive over the long term?'” Eisenberger notes. “That approach is very real and is where some of the most exciting action is today.”

Executive teams at Wal-Mart, BP, Dupont, Dow Chemical, Owens Corning, Home Depot, Deloitte & Touche, 3M and a host of other Fortune 500 companies that have made significant commitments to corporate sustainability strategies would agree. Understanding the nature of those strategies and the advantages they are designed to deliver requires an understanding of corporate sustainability development in the U.S. as well as why and how companies launch and design their sustainability programs.

From Silent Spring to CFLs and Beyond

The need to comply with environmental regulations that first appeared in the U.S. in the 1970s initially launched many early corporate sustainability programs, which often went by a different name, including environmental health and safety (EHS). In some cases, sustainability programs grew out of philanthropy (later called “citizenship”) programs.

Over time, the scope of some “pure-compliance” programs broadened to take a more active approach to risk management. Besides adhering to regulations, these programs also sought to limit the risk of lawsuits and other costs that could arise due to environmental or social missteps. In the 1980s leading sustainability programs, particularly those within manufacturing companies, spotted another opportunity to limit costs: by reducing the amount of materials that their products required and the amount of waste that their manufacturing processes produced. During the same decade, the United Nations convened the Brundtland Commission, which produced this (still) widely cited definition: “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

A few years later, in the 1990s, the corporate citizenship movement and “corporate social responsibility” (CSR) gained momentum. The idea of a “triple bottom line,” which includes people (social issues), process (economic progress) and planet (environmental issues) also emerged.

Many Fortune 500 companies, including IBM and GE, began changing their practices while vying to top the “100 Best Corporate Citizens” list published annually by Business Ethics magazine. High placement on the list conferred marketing opportunities, reputation/brand clout and recruiting and retention benefits to companies – as Green Mountain Coffee Roasters (#1, in 2007), Advanced Micro Devices (#2), Nike (#3), Motorola (#4) and Intel (#5) can attest to. More companies also began to publish annual sustainability reports as a means to communicating their sustainability activities to stakeholders.

About eight years ago, another phase in corporate sustainability’s progression emerged. “A signature event was BP [British Petroleum] saying, ‘We’re no longer BP, we’re ‘Beyond Petroleum,'” Eisenberger points out. Shortly thereafter, GE launched ecomagination, which signaled that the global conglomerate believed there was a major business opportunity in producing the least-polluting and most efficient products in its markets.

GE is far from the only large company deriving tangible benefits from sustainability initiatives. Wal-Mart’s internal energy efficiency programs, which include green building and design approaches, are complemented by supply chain efforts through which the retailer’s shipping container reductions have resulted in annual savings of 1,000 barrels of oil (and more than $2 million in cost savings).

Companies like Nestle Waters and Dial Corporation have reduced some of their products’ packaging materials by 15 percent to 40 percent, delivering significant cost reductions. As part of its ongoing effort to become “the greenest technology company on the planet,” Dell recently pronounced itself “carbon neutral.” Deloitte & Touche LLP has reported that it gains recruiting and retention benefits, particularly among younger talent, from its sustainability program, which both fosters greater energy efficiency within the services firm and helps client companies develop and advance their own sustainability practices and innovations.

Strategic DNA

Although many different drivers – including regulatory requirements (and/or regulatory violations), cost-reduction objectives, brand-enhancement objectives, the need for continued access to scarce natural resources or even the introduction of a new CEO – motivate companies to launch full-fledged sustainability programs, and “customer demand marks the most common sustainability trigger point among companies with formal initiatives,” noted Lisa Walker, a senior client partner for Korn/Ferry International who leads the talent management firm’s sustainability initiative.

Walker notes that customer demand often originates in a single business unit, which responds independently to the demand for sustainability products (e.g., compact fluorescent light bulbs), services (e.g., green home/business audits designed to lower energy bills) or even internal processes (e.g., manufacturing water bottles using less plastic). Customer demand for sustainability occurs in other business units as well, and these business units also respond independently.

Soon thereafter, Walker explains, “The company’s CEO or another senior-level executive recognizes that the grassroots demand for sustainability is occurring faster and broader. Continuing to respond in a disparate manner to this growing demand creates operational inefficiencies. The CEO then creates an umbrella organization to formalize and centralize the company’s sustainability message and effort.” (see “Four Steps to Sustainability”)

Once companies pull the trigger, they turn their focus to strategy.

The primary strategic challenge is “figuring out how you get sustainability into the DNA of your corporate structure,” notes Andrea Moffat, director of corporate programs for Ceres, a national network of investors, environmental organizations and other public interest groups working with companies and investors to address sustainability challenges. Anita Roper, the sustainability director of Alcoa, agrees: sustainability “has to be part of the DNA of the company,” Roper told Corporate Board Member magazine last year.

“This is not just about marketing or creating a green silo,” Eisenberger also asserts. “It has to be embedded in the organizational DNA, and it’s ultimately about customer and product and what you do in the marketplace. Sustainability that does not have an anchor in a business case or a strategic imperative – well, we say that ‘sustainability for its own sake is not sustainable.'”

Seeking CSOs and Business Skills

Structures and staffing considerations follow. Increasingly, this process includes appointing a chief sustainability officer (CSO). More than one-quarter of Fortune 500 companies now have a CSO or similar title.

What qualities do companies want their CSOs to possess? Credibility appears most important – even more so than specific sustainability expertise.

“We tend to recommend that it is more important for a CSO to have real business experience, P&L experience, ideally in that company or industry than environmental experience,” says Eisenberger. “They need to have that credibility ™ we strongly recommend that [the CSO] should be a senior person with real relationships inside the company who has the credibility of having delivered value to the company – or in the company’s industry – in the past.”

Moffat agrees. “They have to understand sustainability issues, but it’s really critical that they understand how their company works in terms of actual business,” she notes. “They need to make sure they’re lighting all the fires, really engaging people and getting them to be innovative around sustainability so that it becomes integrated. That’s their main job.”

A glimpse at CSO appointments in recent years reflects a wide range of background expertise. Roper worked for the International Council on Mining and Metals before joining Alcoa. DuPont CSO Linda Fisher previously worked for the Environmental Protection Agency. Last year, Mitsubishi International Corporation gave the CEO of its North America operations, Ryoichi Ueda, the dual role of CEO and CSO, which a company spokesperson says “signals the rise in the importance of environmental and social considerations to management.” Other companies, including 3M and Home Depot, hire veteran executives from within the company to head their sustainability functions.

Since most sustainability functions tend to be lean and highly virtual (i.e., staff are scattered throughout many locations), Walker says the position requires a results orientation, functional depth and interpersonal agility.

“As CSOs shape and define policy and practices, they must develop and communicate a specific point of view regarding where and how the sustainability program can improve operational efficiencies and increase profits,” reports Walker, the co-author of a report titled “Why, And How, Companies Create Sustainability Programs and Appoint Chief Sustainability Officers.” “An ability to clearly define and promote the goals and benefits of the sustainability program is mandatory.”

Walker also notes that CSOs should possess “leadership fortitude” and “exceptional verbal communication skills to transfer the message and the results” of the company’s sustainability strategy and initiatives.

An Illustrative Debate

Reporting the results represents one of the current challenges corporate sustainability programs can encounter. For example, Dell’s claim of carbon neutrality drew an investigative response by The Wall Street Journal, which published a nearly 2,500-word article on the topic under the headline, “Green Goal of Carbon Neutrality Hits Limit.”

The article took Dell to task for the way it measured its carbon footprint, noting that the company did not take into account the emissions produced by suppliers and consumers involved in making, purchasing and using Dell products. However, Dell never claimed its measure was designed to cover supplier and customer emissions. Dell’s director of environmental health and safety acknowledged to the Journal that there are skeptics of carbon neutrality and added, “Instead of using that as an excuse for inaction, we’ve said, ‘There’s a lot you can do.'”

The debate, and the column inches the newspaper dedicated to it, reflects the emerging nature and importance of corporate sustainability. Standards and measurements already exist (the Global Reporting Institute (GRI) offers comprehensive guidelines); more are needed.

Despite these growing pains, it is difficult to argue that the notion of corporate sustainability has passed a tipping point, one that promises to take sustainability beyond its traditional connotations. Just as BP redefined itself as being “beyond petroleum,” the corporate sustainability movement seems poised to move beyond its recent near-exclusive focus on the environment.

“Sustainability can be about much more than our response to a crisis: It is an opportunity; it is a set of behaviors integrated into an organization’s culture,” notes Dov Seidman, founder, chairman and chief executive of LRN, a company that helps businesses develop ethical corporate cultures and inspire principled performance.

Seidman, who also authored HOW: Why HOW We Do Anything Means Everything™in Business (and in Life) (Wiley, 2007), believes that behavior is emerging as the most valuable and renewable opportunity for companies to differentiate themselves from competitors “because unlike previous sources of power, behavior is both infinite and unique.”

Companies that incorporate broadly defined sustainability objectives into their strategies seek to compete on the basis of their sustainability capabilities – what Pulitzer Prize winner Thomas Friedman describes as “outgreening” in his book Hot, Flat and Crowded: Why We Need a Green Revolution and How it Can Renew America (Farrar, Straus and Giroux, 2008).

Outgreening, Seidman asserts, is really a form of “outbehaving” the competition.

“By shifting an organization’s mindset to outgreening, business leaders think in a long-term view that simultaneously stimulates innovation (and value) in the short-term while preserving long-term legacy (and value) over the long term,” Seidman explains. “Individuals, business leaders, companies and countries that adopt that definition today will outgreen the competition tomorrow by embracing a strategy of outbehaving that interprets sustainability in its broadest sense: to create a world in which we can thrive while pursuing human endeavor for generations to come. Sustainability is about much more than our relationship with the environment; it’s about our relationship with ourselves, our communities and our institutions.”

Companies that embrace the more holistic understanding of sustainability that Seidman describes may discover that their sustainability functions unearth more long-term growth opportunities than competing companies with less sophisticated programs.

If that sounds familiar, it should. Walker compares the current progress of corporate sustainability initiatives with the onset of the total quality management (TQM) movement.

“These early [sustainability] adopters,” she adds, “are poised to profit from corporate sustainability on more than one front – in a similar way that their forward-thinking predecessors succeeded during the quality revolution two decades ago.”

Green CRED

Of all the qualities sustainability practitioners describe as crucial to the success of corporate sustainability programs, none is mentioned more frequently than credibility. A company’s sustainability strategy and the executive responsible for executing it should be credible to the rest of the company above all else. GreenOrder has developed a framework to help companies develop a sustainability strategy that aligns with (and can be integrated into) their unique corporate strategy:

• Credibility: Why should anyone believe us?
• Relevance: How can we leverage green to create value?
• Effective Messaging: How do we translate complex data into compelling messages?
• Differentiation: Do we have unique goals and achievements?

Source: GreenOrder, www.greenorder.com

Four Steps to Sustainability

Customer demand frequently triggers corporate sustainability programs, notes Lisa Walker, a senior client partner for Korn/Ferry International who leads the talent management firm’s sustainability initiative. These are the four steps that typically occur as customer demand transforms into a formal program among mid-sized to large companies:

1. Customer Demand: Customer demand for sustainability products, services and/or processes typically enters company through individual business units.

2. Business Unit Response: Individual business units respond to customer demand independently and soon roll up sustainability initiatives into their individual strategies.

3. Executive “Aha!”: The CEO or another member of the executive team recognizes the push for sustainability in different parts of the business.

4. Sustainability Program: In response, the CEO/executive team creates an umbrella organization and appoints a chief sustainability officer to more effectively manage and leverage disparate sustainability messages and efforts across the enterprise.

Source: “Why, And How, Companies Create Sustainability Programs and appoint Chief Sustainability Officers,” Korn/Ferry International, 2008.

 

 

Baylor Business Review, Spring 2009

by Kristin Todd

The mission of Baylor University is to educate men and women for worldwide leadership and service by integrating academic excellence and Christian commitment within a caring community. In many ways, this mission has helped shape the lives and hearts of these Baylor alumni as they serve others through their work as professionals.

Scott James

Jennifer Hilton Sampson

Major Aatif Sheikh

John Jackson

 

 

Baylor Business Review, Spring 2009

by Kristin Todd

Milton Friedman so famously declared his opinions of it almost 40 years ago. Jeffrey Hollender, current president and chief inspired protagonist of Seventh Generation, takes a different approach to it. Others look to quantitative measures.

When it comes to corporate social responsibility, who’s responsible for what?

In his article, “The Social Responsibility of Business is to Increase its Profits” printed in The New York Times Magazine in 1970, Friedman argues in favor of exactly what the article’s title says. He believed that corporate social responsibility (CSR) was a distraction from the economic fundamentals of a business–maximizing profits and returns to shareholders.

When describing advocates of corporate social responsibility at the time, he writes, “The businessmen believe that they are defending free enterprise when they declaim that business is not concerned ‘merely’ with profit but also with promoting desirable ‘social’ ends; that business has a ‘social conscience’ and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers.

” The “catchwords” Friedman refers to could actually describe some initiatives of Jeffrey Hollender’s company, the nation’s leading brand of household and personal care products that help protect human health and the environment. A passionate advocate for environmental initiatives (he was arrested a few years ago for involvement in a Greenpeace protest), Hollender promotes CSR as a foundation of doing business.

In Seventh Generation’s 2007 Corporate Consciousness Report, Hollender writes of social responsibility by means of business accountability and transparency, not only for his company but also for others. “We are attempting to exert a gravitational pull on companies in our orbit (and beyond) to help them become fully conscious corporate citizens, for whom making profits is a means to the higher end of contributing to the well-being of society and the environment,” he writes. “Greater transparency is just the first step towards taking greater responsibility for the future that all of us are creating.”

From his company’s standpoint, Hollender believes in the importance of openness among stakeholders, employees and the general public. He perceives this as a goal to strive towards, as he writes, “Transparency is a process, not a prophecy. The moment you think you have ‘arrived,’ you have failed. Transparency is not a state of being; it’s an endless process of becoming.”

Hollender, who was named the 2008 Social Entrepreneur CEO of the year by CRO magazine, does admit that his expectations may be lofty. “I don’t know whether the company (Seventh Generation) will ever be sufficiently transparent. It may be an unattainable goal, because society’s expectations of what it means to be transparent are constantly changing.”

While Hollender questions the public’s interpretation of transparency, Friedman questions what entity is actually responsible for being socially responsible. He writes, “What does it mean to say that ‘business’ has responsibilities? Only people can have responsibilities. A corporation is an artificial person and in this sense may have artificial responsibilities, but ‘business’ as a whole cannot be said to have responsibilities, even in this vague sense.”

Aside from semantics, Hollender describes his company’s efforts with social responsibility through transparency as part of a movement with the idealistic potential to be a lasting one.

“What’s true of transparency is likewise true of Seventh Generation’s effort to not only succeed in the marketplace and contribute to society, but to influence others to contribute as well,” he writes. “It’s a challenging, sometimes even bewildering odyssey that tests the spirit and will of each and every one of us.”

While Hollender and Friedman may seem at opposite ends of the spectrum, we then find more quantitative approaches to CSR. David Vogel is a professor at the University of California, Berkeley and author of The Market for Virtue: The Potential and Limits of Corporate Social Responsibility. In an article Vogel wrote for Forbes.com this past October, “CSR Doesn’t Pay,” he takes a look at the bottom line and comparative measures of CSR.

Vogel writes, “The good news is that firms with superior CSR performance have not performed any worse than their less virtuous competitors. But the disappointing news is that neither have they done any better. For most firms, most of the time, CSR is largely irrelevant to their financial performance.”

Vogel gives Starbucks as an example. “Starbucks provides an example of the limited importance of CSR to financial performance,” he writes. “The firm enjoys a strong CSR reputation due to its generous labor policies and its commitment to improve the earnings and environmental practices of coffee growers in developing countries. Yet, since the beginning of 2008, its shares have recently declined nearly 50 percent.”

He goes on to explain that the stock’s performance was due to overexpansion and economic burdens, such as the price of a cup of coffee equaling the price of a gallon of gasoline at the time. He concludes CSR had nothing to do with the stock figures.

With that in mind, can CSR ever be a determinant of business profitability? Vogel says, “To assume that the business environment has fundamentally changed and that we are entering a new world in which CSR has become critical to the success of all or even most firms is misinformed. The market has many virtues, but reconciling corporate goals and public purposes is unfortunately not among them.”

Vogel also brings the factor of consistency to the table. “Few firms are consistently responsible-or irresponsible-across all their business operations.” He does name Patagonia and Seventh Generation as examples of “successful firms for whom CSR has been a core element of their business strategy.”

Vogel reiterates the point that good things don’t always come to those who “do good.” “Managers should try to act more responsibly. But they should not expect the market to necessarily reward them-or punish their less responsible competitors.”

For now, the implementation of CSR is still debatable; however, CSR may ultimately become a means of business competition, weaving itself into the marketplace permanently. As Hollender puts it, “The journey continues…”

 

 

Baylor Business Review, Spring 2009

by Franci Rogers

When Dale Barron was asked about yet another group from Baylor coming to the World Hunger Relief Farm to work on a project, he – as always – happily agreed. But he didn’t really believe there would be much benefit for the farm.

Barron is the director of development for World Hunger Relief, Inc., a Christian organization committed to alleviating hunger through education (like training interns and volunteers at their farm in Elm Mott, Texas) and sustainable development programs (such as community garden projects with Waco schools, organizations and churches).

The farm plays host to several Baylor students from all departments each semester, so Barron wasn’t surprised to hear that students from a new program at the Hankamer School of Business were asking to study the farm.

“What usually happens is students come out to the farm, get their information, write their paper, and maybe we get a copy of the paper,” Barron said. “The projects are always weighted toward the benefit of the student. And that’s OK. They’re well-intentioned, but it takes time away from our work.”

That’s why Barron was so surprised that at the end of the business school’s project, the farm was the benefactor.”This one helped us more than any other student project had in the past,” he said.

The project was a complete study of the operational structures of the farm by a class in Nonprofit Management, led by Charles S. Madden, director of the Baylor Center for Nonprofit Leadership and Service and the Ben H. Williams Professor of Marketing. Ten students (both graduate and undergraduate) participated in the Directed Studies in Marketing course, which focused entirely on the farm.

“We have had students act as consultants on an individual basis in the past,” Madden said, “but we had never run a comprehensive consulting project with a larger group of students.”

The students, who came from a diverse background within the School (Finance, Marketing, Management, Entrepreneurship, etc.), spent the spring 2008 semester studying every aspect of the farm’s business.

“For a project like this to be successful, your organization has to be completely transparent,” Barron said. “You need to give students access to your financial books, databases, board members, donors, everything. And that’s what we did.”

After learning the mission of the farm and the basics of its operation, the Baylor students began to look at the image of the farm. Stephanie Kraemer, who graduated in May 2008 as a Marketing major, said she was on one of the teams who interviewed groups of people connected with the farm. Students asked about the image of the farm among the general public, donors, local churches, mission organizations, volunteers, interns, board members and staff.

“Once you start hearing the same responses over and over, it becomes a great place to start looking for solutions,” Kraemer said.

When asking churches about their image of the farm, for example, students found that church leaders were generally unaware of the mission of the farm and didn’t see its approach to hunger as “direct.” Knowing the perception of the farm among different groups, Kraemer said, gave them a place to start with their marketing plans.

Alex Knight, an Entrepreneurship major who also graduated in May 2008, was part of the student team that studied the farm’s donor management systems.

“The database they were using, which was basically just spreadsheets, had been working for them up to that point,” Knight said, “but after learning the amount of information they had and what they wanted to do with it, we knew they needed to be looking to something bigger that could help them into the future.”

The suggestions made by the team about the technology and information organization were some of the most helpful to the farm, Barron said.

“They gave us a lot of information about donor management that is going to be very useful for us,” he said. “We are also implementing some of their suggestions about the Web site, making it more interactive, so we can do things like take donations and have people sign up for the mailing list on-line.”

The students’ findings and recommendations were presented at the end of the semester in a meeting with the farm’s staff.

“We got to see not only where we have opportunities to grow and improve, but also where our strengths are currently,” Barron said. “It was very helpful to us, and it was a great learning experience for the students.”

Both Kraemer and Knight believe the things they learned as students in the course are helping them in their newly launched careers. “This wasn’t just a case in a book that we studied,” Kraemer said. “It was a real project that we did from beginning to end. It helps to be able to point to that kind of experience.”

Knight feels he uses what he learned from the project in every part of his current sales job with ReadyTalk, a company that specializes in audio and Web conferencing. “Learning the process of consulting is something that helps me with each and every one of my clients. I have to figure out what their needs are before I can recommend something,” he said.

Knight also feels he has a better understanding of the process when his clients are nonprofit organizations. “Having some insight, like knowing how board approval works with nonprofits, makes me something of an insider,” he said, “and that’s invaluable.”

Madden hopes that as the Nonprofit and Development track major develops more fully, this project-centered class will become the capstone study for students.

“One of the great things about the business school is that we’re willing to give away our secrets,” Madden said. “When these nonprofit agencies open their doors to our students, we want to be able to share our knowledge in return. It really is a great trade. We see this as a way to try to build a new generation of leaders in the nonprofit world and beyond.”

 

 

Baylor Business Review, Spring 2009

Dan J. Sanders is the chief executive officer of United Supermarkets L.L.C., the first supermarket chain to win the Better Business Bureau’s National Torch Award for Marketplace Ethics, and the author of the New York Times and USA Today Bestseller Built to Serve. In 2008, along with co-author Galen Walters, he released his second book Equipped to Lead. Sanders spoke twice at the 2008 Dale P. Jones Business Ethics Forum, in conjunction with the Ben H. Williams Distinguished Speaker Series.

I wanted to start by reminding you of a wonderful quote from Dr. Arnold Toynbee, who has since past. When I was a student, I latched on to Toynbee’s teachings because I found it interesting. Here was a man who had spent his entire life studying civilizations. He is noted for a lot of wonderful quotes, such as, “Civilizations tend to die from suicide, not by murder.” But the quote that really resonated with me was this idea that nothing fails like success. In fact, this quote was paraphrased by Toynbee when he was asked to summarize his life’s work. He said, “I can do it in four words: nothing fails like success.”

Now, as a Christian I think about that, and the first thing that says to me is that pride can be a destructive thing. We see it time and time again, particularly in a free market economy with capitalism. We get this notion somehow that we can conquer the world and in doing so, we can actually do terrible destruction because we become consumed with pride. What Toynbee is reminding us of is that when you get consumed by destructive pride, bad things happen. We see it all the time. Look at the front cover of The Wall Street Journal. You start reading about a leader who has done this, that and another thing. And more often than not, at the root of the problem is pride.

Well, the four pillars that I am advocating I believe to be critical to long term success. Now I am not talking about buying a company, dressing it up™ and moving on to the next project. I am talking about a legacy; I am talking about doing something with a business that goes beyond just making money. You see, I don’t believe that the purpose of a business is to make a profit, I believe the purpose of a business is to fill a need. And the degree to which we make a profit is just a commentary of how good of a job we do filling the need. In fact, if I had my way, every organization in America would have the same vision statement, and that vision statement would be this: to serve and enrich the lives of others. That is what we ought to be about in business, and yet too often we get consumed with pride, and the pursuit of the almighty dollar.

I believe the four pillars are this: leadership (and I would say, spirit lifting leadership); culture, which we are beginning to understand more and more about; execution, which we can’t get away from, and then wellness, which is really sort of a new concept for many businesses in America. We haven’t talked about wellness, frankly, as much as we should be talking about wellness.

First of all, on the topic of leadership-we could spend the rest of the day, and probably the rest of the month, talking about the things we have learned either through the school of hard knocks, or Baylor University, or wherever your university was. But here is one thing that I have learned after 30 years, and that is leaders can delegate authority, but they can never delegate responsibility. There are a lot of people out there that have either forgotten this lesson, or they were never taught it to begin with.

You see, we never get away from the responsibility part of it as a leader, we delegate authority to folks to make decisions on our behalf, to carry out projects and so forth, but the responsibility is still ours. If you understand this concept then what it means is you won’t be in the business of hiring warm bodies, you will be in the business of surrounding yourself with people that are competent that have been trained to do what you do if you weren’t there, right? If you don’t believe this, if you don’t buy into it, if you don’t embrace it, you won’t believe in accountability. And one could argue that what we need most in our country today is accountability.

On the subject of culture, my belief is this: the most productive organizational culture promotes a higher purpose. I mentioned earlier that the vision of serving and enriching the lives of others is what a culture ought to be. If you are really serious, a culture ought to be taking individuals, engaging them in a meaningful way, and finding out what their strengths are so that they can find their greatest fulfillment and greatest meaning in your organization. You see, too often in business we treat people like objects. Scripturally, I think it is a big issue. We are taught in scripture that we ought to love people and use objects. But too often in our society where the culture is wrong, we love objects and use people.

We had a lady come to our store with a ham that was clearly bad, and she was very upset with us and was demanding to see the store manager. And of course, the employees were quick to point him out. He is getting ripped stem to stern by this lady, and as she is ripping him, he notices that the ham has a logo on it from a competitor’s store down the street. And as she takes a breath for the second volley he says to her, “M’am, I am sorry you are upset, but this ham came from a competitor down the street. We don’t sell this ham.” She glanced down, saw the logo from the other company and was mortified. Then the store director did something special. He said, “I am sorry you have had a bad day, why don’t you walk with me to the back of the store. You pick out whatever it is you want, and we will get you back on the road as fast as possible, no charge.”

But you know, it is not a story about a bad ham. Good grief, we have been in business 93 years. I am sure we have had our share of bad hams. It is a story about a store director that made a decision that was based on a higher purpose thinking, right? We don’t have a training manual that if someone shows up to the store with a ham from a competitor and it is no good, give them a free ham. Can you imagine trying to write a training manual that had every conceivable situation that might happen inside a store? But what you could say is this: we are here to serve and enrich the lives of others, and if you see an opportunity to do that-do it. You may have some folks down in accounting that are a little upset from time to time-we can’t be giving away hams! Good decision or bad decision? To give away that ham is a great decision; she has been an extension of our marketing department. She has been walking around constantly telling everybody about this free ham. Now on the subject of execution, we can’t get away from that. I am going to say something here that seems contrary to the popular view. Front line employees are more important than bottom line profits. I am not saying profits are a bad thing-I am a capitalist; I love free enterprise. I have had that pay day; I know what that feels like. Front line employees are the key. They are the lifeblood of the organization. My whole premise is that the system is broken because we spend more time talking about the past and not enough time talking about the potential.

Now, if you really want to know what the potential of your team might be or what the potential of your organization might be, how are you going to find that out? Is it going to be by manipulating the numbers back at your mahogany foxhole office? Or is it going to be by putting the front line folks first, and getting right there alongside them asking questions. Because you know what, when you ask people questions you would be amazed what you find out. If you are focusing on your front line people, you will find that the bottom line profits are greater than what they would have been. In other words, don’t accept the fact that you can just get to a number, but ask the more compelling question: if we really engaged our front line people, how much better could the number be?

And then on the subject of wellness, we have got to start thinking differently in this country about work. We spend a lot of hours working. My dad was a 35-year veteran of Amoco. He got up at 4:00 in the morning and was asleep in the chair by 7:00 with National Geographic in his lap. Hard working. I don’t understand why it is that in business today we struggle with this, but for some reason we have this sort of divorced mentality that looking out for the welfare of the people in our business is not profitable. Nurturing their mental wellness, their physical wellness, their spiritual wellness, is a good thing. In our company we have a sabbatical program; you have been there five years, you get four weeks off in addition to all of your other time. In the four weeks, you do not take your PDA, you do not take phone calls, and you don’t correspond from home. You don’t do anything but go someplace- somewhere where there is a purpose.

I think every journey begins with a vision. Whether you call it a mission or a vision doesn’t matter. Vision is critical to long term success, and higher purpose visions are the ones that sustain you. Because in the end, I believe what Max Dupree says: the future can be created, not simply experienced or endured. Don’t you agree with that? I don’t want to simply experience or endure what is going to come down the pike; I want to start creating a different future. I don’t care how many stores Wal-Mart builds or Costco builds or Whole Foods builds, I am not going to simply stand by and experience that or endure it. We are going to go and create ourselves a future, and to do that you need people that understand leadership and culture and execution and wellness.

 

 

Baylor Business Review, Spring 2009