Profit's Not the Only Thing. Businesses Driven By Values Succeed in the Long Run.
No business, large or small, can survive long-term without making money. However, companies that focus exclusively on this can end up squeezing customers for every penny without making any effort to add value.
This is what happened, for instance, when banks, intent on boosting profits, sold products to customers who didn’t need them and who often were already under pressure. Another example is when companies reduce their product size or content in an effort to cut costs, but leave the price unchanged, somehow expecting it won’t be noticed. This kind of short-term thinking benefits no-one in the long-term. Instead, it's increasingly important that entrepreneurs look to create businesses driven by values rather than profit.
The 70,000 businesses in Britain and the hundreds of thousands in the U.S. that call themselves social enterprises are already doing this by mixing profit with a determination to benefit society and tackle social issues through what they do. I believe this is a concept that needs to be incorporated into mainstream businesses too -- big and small -- because this isn't some trendy egalitarian concept but something that makes sound commercial sense. And it isn't a new idea.
Look to Japan, where you'll find more than 20,000 companies that are more than 100 years old, with a handful over 1,000 years old. Among them is what is probably the oldest in the world -- the Nissiyama Onsen Keiunkan hotel, founded in 705. And what is one of the keys to their longevity? According to Professor Makoto Kanda from Meiji Gakuin University in Japan, who has studied these long-lived companies for decades, it’s their central belief in something more than simply making a profit. Consequently, they are able to adapt to changing conditions without being distracted by chasing short-term money.
So bringing other values into your business, far from weakening your business, will strengthen it -- especially given the growing public mistrust in many companies, which are seen as increasingly out of touch by their one-time customers. Nearly three-quarters of those questioned in Havas’ annual Meaningful Brands survey said they wouldn't care if over 70 percent of the brands they used disappeared from their life altogether. When consumers are more than happy to switch allegiance and buy from smaller unknown companies they feel are better aligned with their values, where does that leave companies who have spent decades trying to convince us all that their often ordinary products are best?
Companies need to start thinking differently about how they operate in a fast changing world. And some are. With sales of $35 billion, based on cutting edge technology, you would think that electric car company Tesla would jealously protect its intellectual property from others. Not a bit of it.
Instead, Tesla made it available to the wider market. And this wasn't commercial naivety. The company knew that if its innovative technology helped other manufacturers, then as an industry they would move forward faster together and the market would expand sooner. If Tesla had kept its intellectual property cards close to its chest, almost certainly it would have enjoyed greater short-term profits, but this approach was to the long-term benefit of all.
Making their companies more value driven is something that I believe all entrepreneurs need to aspire to. So, whether you are a small or big business, how can you embed your values into it?
1. Decide what your core values are.
It may seem obvious, but if you don't spend time working out the things that matter most to you, you won't be able to reflect them in your business. If you're not sure what your values are, look for clues in your beliefs and actions. For instance, what causes do you stand up for, and what are the attitudes and behaviors you won’t tolerate in your business or your interactions with others?
2. Look for values alignment.
Are your values as an individual being reflected in your brand and your business? Find others who share your values to collaborate and create partnerships with. This will give you valuable support and help you succeed in building the kind of world you believe and want to live in.
3. Communicate your values clearly and effectively.
Promote your core values to customers, making sure these are a natural component of your offering. Be transparent and ethical and let your products and services speak for themselves, with each being a practical demonstration of what you stand for. As the saying goes, "actions speak louder than words."
4. Let your values attract your team.
Wear your values on your sleeve when recruiting. This way you are more likely to attract the right people, who share your values and with whom you can generate productive synergies. This will make your business easier to run and also ensure that those values are being consistently applied throughout your business and in all that you do.
Remember, everything you do in business has an impact, good or bad, on yourself and on others, so making sure you have a value-driven business is one way in which to live and build a worthwhile long-term legacy.