Saturday, July 13, 2013

Shooting for the moon.

This past week was an interesting one for me as I met with a handful of entrepreneurs with different businesses all in what we typically would call the Startup Phase, despite being in different stages within that phase.   The commonality between them all is that each entrepreneur spent time trying to articulate, or perhaps justify, why they were not solely focused on the bottom line (as they similarly described it).

I get it.  Many people are not all about money.  Most of us have a softer side and want to build that into our businesses.  We want to do good in the world.  We want happy employees.  We want to leave a non-financial legacy to our kids as well.

This morning I opened up an accounting publication to find an article discussing this same topic.  The feature was essentially debating whether executives should be primarily focused on creating shareholder value or stakeholder value.  It goes on to talk about corporate social responsibility, employee engagement, and customer delight as being themes that speak to stakeholder value.  I've read so many of these articles that try to position this 'softer side of business' as being in opposition to creating shareholder value.

I completely disagree with this philosophy.  The two are not in opposition at all.  It is the narrow view that shareholder value is purely a short-term metric that is problematic.  To believe that shareholder value and stakeholder value do not live in harmony is to limit the potential for sustainable greatness, and creates a divide that will cost the organization substantial sums for both sides of the debate.

My message to entrepreneurs who are defining their business goals, reach for the moon.  Believe you can create a business that has 100% alignment between shareholder and stakeholder returns.  Understand that there will be an uncomprimised payoff to both sides so long as you set reasonable expectations with respect to the timelines.  To ignore the softer side of business may mean more profit in the short term, but not in the long haul.  To consider the softer side an exception to business that need not follow an ROI will compromise your business potential.  Accept the two can and should live in harmony, and make sure your clients and employees fully appreciate your holistic approach to business.

Challenges will arise, it will be a constant balancing act to keep both sides in harmony.  But you should boldly shoot for the moon.  Because even if you do not reach your destination you'll end up among the stars.