Firms of Endearment

Published by Wharton School, one of the world's top-rated business schools, this book offers a business model for the 21st century, based on the notion that we are entering an 'Age of Transcendence' where organisations embrace the social transformation of capitalism. Where most studies of success start with financial performance and work backwards, this book starts with human performance and works forwards.

Radically rethinking what makes large corporations successful, the authors claim that increasingly today's most successful organisations are those that deliver emotional, experiential and social value - not just profits.

Shareholders vs Stakeholders

The Stakeholder Relationship Management business model is not new, yet there remains a perception of dichotomy between shareholder value and stakeholder value. It is seen as an either / or scenario, with vigorous arguments put forward by proponents of both schools of thought, usually with a nod in the direction of the other.

Firms of Endearment (FoE) offers a lot of case study evidence that such either/or argument is flawed and that in fact giving careful attention equally to all stakeholders correlates with increased shareholder value.

SPICE

The acronym SPICE is used to represent the five primary stakeholders of an organisation:

• Society - local and broader communities as well as governmental elements and NGOs
• Partners - both upstream and downstream partners, e.g. suppliers, horizontal partners and distributors
• Investors - individual and institutional investors and lenders
• Customers - individual and organisational customers - past, present and future
• Employees - past, current and future employees and their families

A distinguishing core value of an FoE is that it serves all stakeholders equally, without favouring any one over another. One of the biggest "secrets" of FoEs' success is how they become the preferred companies to do business with for every stakeholder group.

The bottom line

The compelling message from the FoE organisations outlined in this book is that shareholders gain more when their interests are aligned closely with the interests of all the other stakeholder groups. In the FoE economic ecosystem, only stakeholders who create long-term value make long-term sense.

The irony of the bottom line here is that focusing on the bottom line alone usually leads to poor bottom line performance!

"As far as the laws of mathematics refer to reality,
they are not certain, and as far as they are certain,
they do not refer to reality"