By Gideon Rosenblatt on March 20, 2013
It’s a critical question, because the answer shapes everything you do at work. Our view here on the Vital Edge is that businesses don’t just exist to maximize returns for shareholders. While money is important, it not as an end in itself so much as a means to some greater purpose. Peter Drucker said it well:
No financial man will ever understand business because financial people think a company makes money. A company makes shoes, and no financial man understands that. They think money is real. Shoes are real. Money is an end result.
What’s more, this commitment to something bigger – to a mission – can be a vital source of competitive advantage
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The perspective you’ll find here on the Vital Edge spans that of business and society. We cover ideas that will help you run a business, while also making space to understand the impact these ideas have on society.
This dual perspective also relates to the way we think about organizational mission. Sometimes, when we talk about a corporate mission, we’re talking about shoes. At other times, we’re talking about sustainability or creating economic opportunity. This is the difference between customer mission and social mission.
The truly great companies know how to build business models that serve a social mission through serving a customer mission. And though we’ll cover all kinds of business missions here on the Vital Edge, it’s this kind of mission synergy that we care most about when we say that a firm is a “mission driven business.”
Business Programs Our World
The way we program business also programs our economy. Our personal and professional interactions with businesses have a huge impact on our lives, our relationships, our societal institutions, and the planet itself.
When businesses push their operating costs outside the firm to increase dividends or the price of the stock, they dump their problems on society. An oil spill here, a predatory bank charge there, and slowly but surely the drive to maximize returns for shareholders sucks value out of the company and away from the stakeholders who are most important to its long-term success. Do that on a large enough scale, and you eventually get yourself into a heap of trouble as a society.
Transforming business so as to reverse these negative societal impacts is absolutely critical. But that’s not where the biggest opportunities lie. No, the real promise is in harnessing entrepreneurial energy and technological innovation of business to actually solve our biggest societal and ecological challenges.
Before attempting to tackle these tough challenges though, we need to be absolutely clear about one thing: customers are the primary focus of any business. Without customers, there is no flow of cash to fuel any ongoing investment in promising solutions to our toughest societal problems.
Customer expectations grow in response to business competition over time. Advantages that once served as a differentiator to customers eventually lose their edge as they get copied by competitors and simply absorbed into the ongoing cost of business.
Sometimes the competitive field itself shifts, and customer expectations evolve into a new paradigm. The rise of customer satisfaction is an example. Just a few decades ago, innovative companies used customer satisfaction as a way to stand out in the market. Today, it’s the companies that don’t excel in customer satisfaction that stand out in the market – and not in a good way.
We seem to now be in the midst of a new shift in business competition – a shift from a focus on customer satisfaction to customer success.
Delivering on customer success means shifting perspective to more fully appreciate the ways that customers actually partner with business when they use their products and services. This shift in perspective gets to the heart of the customer mission.
When a drill manufacturer sees its goal as helping customers create holes rather than simply selling drills, it moves towards greater alignment with the goals of its customers. It helps the company’s management see that they cannot achieve their mission without enabling customers to achieve theirs. This focus on customer mission brings a wonderful clarity to product and service design and to the way the firm markets itself.
When customers, in turn, see the company’s drill as the best way to create the holes they need in order to accomplish their own goals, they experience a subtle, yet powerful, sense of partnership with the company around that drill. You can think of it as a kind of dance to the music of shared mission.
This shift to a deeper partnering with customers is already well underway with technology companies like Twitter, Facebook and Google, who rely on users to actually build their services. Without our tweeting, there is no Twitter. This shift goes by many names, such as the prosumer movement, user-contributed content, and the growing interest in co-creation. Here on the Vital Edge, we talk about as turning businesses into “contribution platforms” – optimized for aggregating contributions from all stakeholders.
Part of the impetus for this shift comes from new communications technologies that fundamentally transform the kinds of collaborations now possible between people inside and outside the firm. The tech sector is further along in this shift, but they are far from alone. You can see it in the way today’s rising stars, such as Whole Foods, describe their relationships with customers:
“Customers are the lifeblood of our business and we are interdependent on each other.”
A focus on customer mission helps a business and its customers hone in on their shared sense of purpose. This deep alignment of goals also hints at a deeper level of service that’s baked into the company’s offerings:
Every product and every service has a quintessence, or “fifth element,” connecting to its deeper sense of purpose – its customer mission.
Let’s say that the quintessence of a manufacturer’s drill is to “fasten materials together.” That’s the customer mission that’s baked into the product. The mission is not to sell drills or to make money; it’s not even to create holes. The real customer mission is to fasten materials as part of some bigger set of objectives that the customer has. The customer can’t fulfill that mission without the company’s drill and the company can’t fill that mission without the customer’s drilling.
Tomorrow’s market leaders will see their products and services as merely the means to fulfilling a customer mission. They will see their value creation processes through a more expansive perspective centered around the critical role of the customer in fulfilling their mission.
It’s one thing when customers feel a sense of partnership with a company around goals that serves their own personal needs. It’s quite another when that shared purpose also serves something bigger. This is the power of engagement through social purpose, and it’s the heart of social enterprise.
Let’s say, for example, that in addition to its customer mission of fastening materials, that drill manufacturer also cares about a broader societal purpose of affordable housing. It could give philanthropic support to nonprofit organizations working on this issue, but the company can also go much deeper by using its own people and resources to serve that mission. It could, for example, connect its distributors and customers with affordable housing groups with programs that put its tools – and people who really know how to use them – to work in building affordable housing.
When a company designs its products and services to minimize the harmful consequences of their use, it helps reduce the number of people whose interests run counter to those of the company. More importantly though:
When a business serves customers in ways that create societal value, the number of people with a stake in its success grows exponentially.
In our modern, networked society, growing the web of people with a stake in your company’s future is one of the most powerful things you can do for your business.
Societal purpose doesn’t just grow the number of organizations and people with a stake in the firm’s future though. It also deepens the firm’s impact on everyone involved in it’s work.
Companies that know how to tap our desire to do work that matters connect with us on a deeper level. They don’t just engage our desire to make money. They engage our desire to make a difference. We humans are funny creatures. Motivated by a longing to matter, we often go well beyond the call of duty for a calling that rings louder than the clang of the stock market opening bell. Sure money matters, but it pales in comparison to the power of purpose when it comes to really engaging people in the work of a firm. This is the heart of the mission driven business, and a major focus on the Vital Edge.
Tomorrow’s market leaders will be those companies that build the best synergy between customer missions and societal missions. They’ll know how to design their offerings and business models so that by fulfilling their customer mission, they simultaneously fulfill a societal mission. Think of a customer buying a new pair of Levi’s jeans that are partially made out of recycled plastic bottles. Nice pants – and an even nicer impact on the planet.
Here’s a mental image to better grasp this connection between customer mission and societal mission. It involves pool. Serving a customer mission is like hitting the white cue ball with your cue stick. Societal missions are like the stripes and solids – the balls you’re trying to hit with your cue ball. As a business, you can’t directly shoot the colored balls: that kind of direct service to mission is what philanthropically-sponsored non-profits organizations do. No, as a business, you need to work through your customers to not only generate a stream of ongoing reinvestment back into your solutions, but also to spread the positive impact. Someone needs to actually wear those plastic bottle pants!
What we’re talking about is extending the firm’s ‘contribution platform’ so that it doesn’t just enable contributions of economic value, but societal value as well. Tomorrow’s leaders will be those firms that know how to build business models that simultaneously enable both kinds of contributions.
It’s just a matter of lining up the shot.
(good for sharing)
|1) Money is a means to a greater mission – not an end in itself.|
|2) The mission driven business has a customer mission and a societal mission.|
|3) Business competition is evolving from customer satisfaction to customer success.|
|4) Companies fulfill their customer mission when customers achieve their broader goals through partnering with the company’s products and services.|
|5) Products and services have a quintessence that connects them to the deeper purpose they fulfill for customers – the customer mission.|
|6) The mission driven business uses its products and services to fulfill a societal mission through social enterprise.|
|7) Tapping our desire for deeper purpose grows the networks of people with a stake in the success of a business and engages them on a much deeper level.|
|8) The ultimate expression of the mission driven business builds deep synergy between customer mission and societal mission.|