published on Monday June 11, 2007 in The Miami Herald
Firms that do good often do the very best
By pursuing paths that match their stakeholders' values and beliefs, companies can establish powerful and profitable connections.
BY RICHARD PACHTER
Firms of Endearment: How World-Class Companies Profit from Passion and Purpose. Rajendra Sisodia, David Wolfe, Jagdish Sheth. Wharton School Publishing. 320 pages.
Every year, a company I know in an unglamorous but profitable industry participates in a large trade event to show off their products and services in a huge exhibition hall in a different faraway city.
These affairs can be quite expensive. In addition to schlepping ''key people'' halfway across the country, putting them up in a nice hotel, feeding them, wining and entertaining customers and handing out assorted tchotckes, the company pays through the nose to dress up its exhibit space, have access to electricity, furniture, fixtures, etc. Among this firm's annual costs for the two- or three-day affair is a hefty five-figure tab for carpeting, which is then cleaned and rented again by someone else at the next event.
A few years back, the company's marketing director and events manager had an epiphany while brainstorming: They purchased the carpeting wholesale from a company in the convention city, then donated it to a local community organization. They now do this for every exhibition, I recently learned.
Not only is the cost less, but now there is also an actual benefit derived from the expenditure (beyond whatever new business the company might attract). In their own small way, they make the world a better place. And they are not shy about letting their customers know how smart and altruistic they are, which is not necessarily a bad thing; it tells their stakeholders that they're good guys -- as they indeed are.
In the introduction to this book, organizational consultant Warren Bennis cites an anecdote wherein Timberland CEO Jeff Swartz was transformed by a visit to a teen halfway house. The upside of this heartwarming story is that Swartz decided his company would be a force for good. Profit and productivity would not be abandoned or relegated to a secondary role, but, henceforth, Timberland would strive to have a positive impact on others wherever possible while doing business.
Authors Sisodia, Wolfe and Sheth discuss a variety of similarly motivated companies in diverse industries like banking, groceries, airlines, online retail and others that are attempting, like the firm that donates their annual convention carpet, to do well while doing good.
It is not just a matter of charity or generosity. The trio cites firms, including Costco, eBay, UPS, Honda and JetBlue, that value all of their stakeholders -- employees, vendors, customers and the public in general -- and seek to take these people's interests into account while pursuing the company's business goals. Consequently, these organizations have, by their actions, established strong emotional ties with the aforementioned stakeholders. In times of corporate avarice, this emphasis on operational morality is especially powerful, and profitable, too. According to the authors, the 17 ''Firms of Endearment'' cited have outperformed the S&P 500 by a ratio of 9-to-1 over the past 10 years.
With the competition increasingly focusing on cost, firms that bring more value to the mix, often in intangible ways, may have found the best method of transcending the limitations of conventional marketing. By establishing themselves as worthwhile -- and worthy -- businesses, they create strong and enduring connections with those who share -- and live -- similar values.
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