Frank Olsson, former international banking leader and current NZ Europe Business Council President and Auckland-based Swedish Honorary Consul, writes that when you create real value for real people profitability follows.
I recently wrote a book called Learning to dance – Corporate style about how to humanise business and get more out of life. It is the sum of my work experience as a senior manager in different organisations in five countries.
In the book I present 52 chapters/ideas on how to create a winning culture. It is not very complicated. To a large extent it comes down to understanding that small human acts and signs of appreciation to those around you can work magic.
A winning dish is not only about good product and cooking, it requires the right condiments to reach Michelin star status. To go beyond satisfaction and functionality, we need to find new combinations between qualities of the heart and of the mind. Looking ahead, progress will be much about new combinations and seeing work as satisfying and fulfilling rather than a means for generating income to pay bills.
For at least 30 years there has been a discussion about whether corporate purpose is about generating shareholder wealth only or whether it should also incorporate stakeholder value. This, I believe, is a false dichotomy.
Just as shareholder wealth and customer service are not opposites or trade-offs, similarly shareholder focus and good stakeholder relations are not opposites. It is not rocket science to grasp that they are mutually enhancing.
Corporate activity often allows too much influence for CFOs and financial reporting. Getting the numbers in order is not a purpose but rather an indication that things are progressing well.
The real lift of any human activity requires vision, optimism, stamina and enthusiasm. And these qualities are not subdivisions of accounting! Neither are they the domain of finance or CFOs but of enlightened, enthusiastic and community-inclusive leadership.
Much of my professional background is in banking and finance. It is now obvious to all that pursuing too narrow a goal of profitability is not the way to secure long term success. In aggregate, banks globally have now paid in the order of a trillion dollars in fines for wrong doing and perhaps as much again in market cap losses due to sub-optimising their actions and resources.
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Staying on side in terms of the general public and the community at large is absolutely vital for retaining your licence to operate and make money. There is room for improvement in this context with our major banks, both regionally and also globally. Anyone who does not contextualise high profitability with generating value for customers and the general public is very vulnerable, as we have seen.
Perhaps Australian big banks are now worth up to 25 percent less than they could have been with a different mix of focus on financial returns and community alignment. That represents a huge potential gap and a depletion of share-holder value in the quest of narrow and short-term profitability.
Corporate culture, purpose and community alignment will not on their own achieve corporate success. But I am convinced that getting these things right will enhance both profitability and sustainability.
Research presented in Harvard Business Review suggests that people working in companies with a good culture are better paid and generate more profits for owners than other companies with lesser quality cultures. Having read all HBR issues for the past 16 years, I conclude that a major theme for its articles is about creating meaning and a good corporate culture.
A starting point for this cultural uplift is to focus on adding value to staff, to customers, to partners and to the general public. Just as happiness will ensue when you do the right thing to others, profitability will be enhanced when you create real value for real people without too much focus on shareholders. The healthy way to generate sustainable success is the win-win formula realised by passionately helping others succeed.