3 Comments for Firms of Endearment: How World-Class Companies Profit from Passion and Purpose

• 1. Heller  |  December 27th, 2009 at 8:39 am

  Firms of Endearment is a critical, insightful and inspiring piece of work. One of the major contributions of this book (and there are many) focuses on the impact that employees and stakeholders have on the success of an enterprise. Many in business say how important their people are, yet it is more often than not that facts prove otherwise. When employees and leaders come to the workplace with their “hearts connected to the brains”, their creativity, productivity and performance quality is exponentially greater than those who come just to do a job. People build companies – they always have, they always will. Firms that endear their people will win. Hat’s Off to David Wolfe, Rajendra Sisodia, and Jagdish Sheth. You have enlightened many. – Sharon P. Whiteley, CEO, ThirdAge Inc.

• 2. Twila  |  December 27th, 2009 at 10:08 am

  This book outlines a possible shift in the way people are thinking about their roles and purpose within the companies they work. Basically people are seeking more ‘meaning’ from their work and as a result companies are changing their basic assumptions and approaches in the field of people management.

  The authors assert that changes in demographics, consumer knowledge and an ageing population (which is working longer) is moderating the effects of Hard Capitalism, which favoured shareholders, and introducing a more egalitarian form of Capitalism which favours all stake holders.

  The theory is highly seductive and desirable, but the book did not provide any strong evidence to support these claims. They provide plenty of stories and examples to illustrate the theory in action, but it should not be presented as supporting evidence without considering those organisations that also have these ‘Enlightened’ traits but were nevertheless unsuccessful.

  In addition it is not clear which form of employee policy comes first, could it be that only when a company is successful can it treat its employees better with higher wages and enlightened thinking? or will higher wages and an enlightened policy make a company successful?

  This book provides a theory which you wish were true, but wishing does not make it so.

• 3. Frye  |  December 27th, 2009 at 12:33 pm

  What is a Firm of Endearment? The authors argue that their example companies share a common set of core values, policies, and operating attributes which include:

  1. aligning the interests of all stakeholder groups (customers, employees, partners, investors, and society) rather than seeking profit optimization

  2. below-average executive compensation

  3. open-door policies

  4. employee compensation and benefits are above average for their industry

  5. above-average employee training

  6. empower employees to satisfy customers

  7. hire employees who are passionate about the company’s purpose

  8. humanize customer and employee experiences

  9. enjoy below-average marketing costs

  10. honor the spirit as well as the letter of laws

  11. focus on corporate culture as a competitive advantage

  12. are often innovative in their industries

  Companies identified include extensive examples drawn from Commerce Bank, Container Store, Costco, Harley-Davidson, Honda, IDEO, IKEA, jetBlue, Johnson & Johnson, Jordan’s Furniture, New Balance, Patagonia, Southwest Airlines, Starbucks, Timberland, Toyota, Trader Joe’s, UPS, Wegmans, and Whole Foods.

  These companies are often contrasted with Wal-Mart and the Good to Great Companies identified by Jim Collins in 2001 in terms of stock price growth.

  The authors argue that there is a new level of consciousness emerging that rewards those who do good while doing well. The implication is that all firms should shift to stakeholder optimization and the cultural values identified in the example companies.

  While they don’t make this argument, it’s clear that the authors have identified many of the mindsets that lead a company to seek optimizing results for all stakeholders.

  Before you assume total cause and effect, I would like to raise some issues not fully addressed in the book:

  1. This is an after-the-fact evaluation. As such, (like Good to Great), we may mostly be seeing what the leaders are proud of . . . rather than what caused their success. For example, Southwest’s success is focused on their corporate culture. But the company also has a better business model than almost any other airline (Ryanair’s is better) and does a better job of fuel cost hedging than any other U.S. airline. Those factors aren’t mentioned.

  2. These companies are almost all in consumer products or services. A class of socially conscious consumers has sprung up who look hard for such firms. It’s not clear that OEM and industrial buyers have evolved their preferences nearly to the same extent. So many of the lessons may only apply consumer goods and services (except for those validated by Gallup for having a motivated and effective group of people working for you).

  3. Almost all of these firms are highly effective business model innovators who have gained enormous advantages over competitors who seldom innovate their business models. As a result, they can afford practices that may or may not pay off in profit without incurring any negative reaction. The next business model innovation will pay for the cost.

  I was surprised that this book didn’t look at the study I made from 1992-2001 that identified continuing business model innovation as the single best factor for explaining high levels of corporate performance (see The Ultimate Competitive Advantage). The books share some examples in common (including Jordan’s Furniture and Timberland), but many of FoE’s examples are also superior business model innovators (Amazon, BMW, CarMax, Caterpillar, Container Store, Costco, eBay, Google, Harley-Davidson, IDEO, IKEA, jetBlue, Patagonia, Starbucks, Trader Joe’s, UPS, Wegmans, and Whole Food).

  4. It often pays better to serve stakeholder interests than to ignore them. Why? Because ignoring stakeholders often burdens both the company and the stakeholder with costs and experiences that neither want. This economic case for stakeholder focus isn’t fully developed outside of the customer arena.

  5. The book emphasizes sustainability, but much of that argument is built around companies disappearing from the Fortune 500 (something that happens whenever a merger happens . . . which doesn’t mean that the organization goes away, just the corporate headquarters in most cases). In the research of my students on environmental sustainability (see Hiroshi Fukushi’s work, A Strategic Approach to the Environmentally Sustainable Business, for example), it’s apparent that making the environment cleaner than when you touched it is economically advantaged in most situations. The idea of sustainability is based on the outmoded notion of not doing too much damage rather than finding profits in making the world better than you found it.

  But it’s a good book that creates more questions than it answers. This one will probably stimulate some more careful thinking in the area of where seeking to be more considerate of others is going to create better results as well as better sleep.

Leave a Comment for Firms of Endearment: How World-Class Companies Profit from Passion and Purpose

Trackback this post  |  Subscribe to the comments via RSS Feed