If an enterprise regards profit as its only goal of existence, it is generally impossible to obtain long-term and considerable profits; if the enterprise has no profit, then it has no conditions to achieve any other goals. This is the so-called “goal and profit” paradox. But good companies prove that they can create financial value through indirect methods such as creating emotional value, experience value, and social value while “doing good”, and obtain stable and substantial profits.
Starbucks founder Howard Schultz’s two books “Pour Heart” and “All the Way Forward” have far-reaching influence. Schultz specifically wrote about his blue-collar father in the book. His father worked as a truck driver, workshop worker, and taxi driver. He never made $20,000 a year, so he couldn’t afford to own his own house. Schultz grew up in a low-rent housing in Brooklyn, New York. Schultz’s father broke his ankle due to work, which resulted in no income for his family, and his father had no medical insurance and no compensation for work-related injuries. Schultz recalled: “He had no savings, no pension, and worst of all, he never got the dignity and meaning of life from his work.”
The tragic experience of his father made the young Schultz unforgettable about the company’s inability to make employees and people-oriented. After starting Starbucks successfully and becoming a business leader, Schultz provided medical insurance to all employees (including part-time employees) and provided stock options to employees for the first time. “The respect we give to warehousemen and newbies who are just entering the door can only be enjoyed by senior managers in many companies.”
Schultz wrote profoundly: There are still many people in the business world who have not realized that labor and management are not playing a zero-sum game. Treating employees kindly does not mean increased costs and reduced profits, but a powerful stimulant, which enables the company to reach a height that is far impossible with the leader’s personal ability… When employees are confident and dignified, Will contribute more: for the company, for the family, for the world.
The example of Starbucks represents the first stage of a good enterprise, that is, human dignity, freedom, mutual assistance, creativity and other good community spirits are stimulated in an enterprise.
Nobel Laureate in Economics Milton Friedman once said: “An enterprise has only one social responsibility, that is, to use its resources to engage in activities aimed at increasing profits, as long as it abides by the rules of the game.” Friedman denounced. Those entrepreneurs who care about employees, communities and the environment oppose entrepreneurs who regard providing employment opportunities, eliminating unfair treatment, and avoiding environmental pollution as their own responsibilities. In his view, the sole purpose of an enterprise is to maximize profits. For decades, this view has had a huge impact on global entrepreneurs.
This is actually quite an absurd assertion. Companies need profits to survive, but they believe that the purpose of their existence is profit. This is a secret exchange of concepts, like “people must eat to live”, but it cannot be said that “the meaning and purpose of life is to eat”.
Why are so many entrepreneurs “knowingly committing crimes” and especially advocating this thesis? Because this thesis can cover up many unspeakable behaviors, it is a fig leaf for entrepreneurs to avoid inner torture, avoid value choices, and avoid judgments of right and wrong.
Jack Welch once put forward his views on Friedman’s thesis: “On the surface,’shareholder value is the stupidest idea in the world. Shareholder value is the result, not the strategy. Your employees, customers, and product talents Is your main support.”
The second stage of a good company is to break the myth of “maximizing shareholders’ interests” and shift from “maximizing shareholders’ interests” to “symbiosis with stakeholders.”
for example. One day in 1981, when only one store of Whole Foods was born for 8 months, the city of Austin where it was located suffered heavy rain. Whole Foods was inundated by floods caused by heavy rains. All equipment and inventory were destroyed, and the loss was close to 400,000 US dollars. .
“We have no savings, no insurance, no inventory. We are bankrupt.” This is the conclusion of John McGee, the co-founder of Whole Foods Supermarket, for his business. However, when McGee and the employees witnessed the horror of the supermarket being flooded with tears in their eyes, dozens of customers came to the supermarket. Wearing work clothes and tools, they said to McGee sincerely: “Friends, come on! Everyone starts to work, clean up here, and let this supermarket open again. We won’t sit back and watch this supermarket just close down like this. ”
In the following weeks, wave after wave of customers came to help repair Whole Foods. McGee felt the love from customers and decided to reopen. Employees work regardless of remuneration, and their salaries are paid later. Other stakeholders followed up: Dozens of suppliers continued to supply and allowed credit; the bank provided additional loans… All the main stakeholders—customers, employees, suppliers, and investors, did not Participate hesitantly and support Whole Foods.
Later, McGee built Whole Foods into the nation’s largest natural food retail brand, with an annual turnover of nearly 20 billion U.S. dollars. What he practiced is the concept of “Symbiosis with Stakeholders”. The story of Whole Foods Supermarket tells us: The symbiosis of enterprises and stakeholders can not only bring unique competitiveness to enterprises, but also enable enterprises to lead the entire ecological chain to become better together.
The 50th World Economic Forum Davos Annual Meeting in 2020 released a new version of the “Davos Declaration”, once again embracing the “stakeholder theory” put forward half a century ago, advocating that companies should not only serve shareholders, but also serve customers, Employees, communities and society as a whole.
Why is “stakeholder theory”? Forum Chairman Schwab put forward three reasons: It is imperative to implement the concept of environmentally sustainable development; the new generation of consumers is no longer willing to work, invest or purchase products for companies that only pursue maximum shareholder value but lack social values; More and more corporate executives and investors gradually understand that whether they can achieve long-term success is actually closely related to the success of customers, employees, and suppliers.