Should we trust in the role of US dollars as the measure of corporate success, that is. If not to optimize return on investment, what is the role of private enterprise in society? Or, as some politicians suggest, should we enter the world of no-margin business with private spending redirected to public interests versus shareholder value?
The financial industry serves its useful purpose of financing revolutionary companies that change the world, but just as most other businesses, they’ve forgotten that, because for the MBAs that run these institutions it’s solely about shareholder value, i.e. making money. If we think like that, then we may have begun to drift away from the deeper meaning of life’s purpose. This perception, that business and governments are all about personal money, is a cancer infecting society because so many of us have come to think that’s how they’re supposed to act. We cannot create a better society if everybody’s actions are strictly based on his or her own short term self-interest.
At the same time, it is also a fatal flaw to think that those who achieve significant success are obligated to provide equally high living standards for those less fortunate or less motivated members of society.
It’s sobering to realize that almost every institution in America has lost the trust of our citizens. It’s the rare exception — in fact I challenge you to think of one that still has a high degree of trust. We don’t trust business or government. Businesses have a 19% approval rating – statistically equal to that of Congress. We don’t trust the educational system. We don’t trust institutional religion due to wide spread scandals. We don’t trust the health-care system. We don’t trust the judicial system.
Trust is at an all-time low in America. We don’t trust journalists. Even the military is being questioned because of the absence of weapons of mass destruction in Iraq and length of the wars there and in Afghanistan. Every part of the system has got to rediscover its higher purpose.
As I mature in business, a euphemism for getting old, I know I believed maximizing return on invested capital was the key if not the sole driver of business decisions. Now I question that life long held proposition. As in my December blog Lone Ranger: Never Take Off The Mask we now have technology to be voyeurs on individual behaviors to optimize advertising and communication on a mass level down to the unique level of one. But is this healthy or an invasion of privacy? Is privacy even meaningful anymore? If there is no privacy, does trust even matter?
Yes it does. Leaders of complex businesses who make decisions under stress need to be mindful of their values and the core values of all stakeholders, and be responsible for all results and consequences. On the other hand, no-margin businesses cannot attract capital for growth and become vulnerable to swings in revenue, setting the terms of their own demise.
Tomasz Tunguz wrote a fun blog: “How to Optimize Every Decision in Your Life and Accomplish Nothng”. Essentially, we can optimize every single decision but sub-optimize the whole of life unless we are guided by core beliefs. Starting with concepts like mission, vision and values along with brand strategies, companies can optimize every decision on its own merit by following an “In God We Trust” mentality but not fulfill meaningful purpose unless we trust in such greater purpose.