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Leadership & Business Wisdom

Balancing Three Corporate Dimensions

Shareholder sovereignty is bound to flounder. It is a fair-weather model.

An important task for top management in the next society’s corporation will be to balance the three dimensions of the corporation: as an economic organization, as a human organization, and as an increasingly important social organization. Each of the three models of the corporation developed in the past half-century stressed one of these dimensions and subordinated the other two. The German model of the “social market economy” put the emphasis on the social dimension; the Japanese one, on the human dimension; and the American one, on the economic dimension.

None of the three is adequate on its own. The German model achieved both economic success and social stability, but at the price of high unemployment and dangerous labor-market rigidity. The Japanese model was strikingly successful for many years, but faltered at the first serious challenge; indeed, it was a major obstacle to recovery from Japan’s recession of the 1990s. Shareholder sovereignty is also bound to flounder. It is a fair-weather model that works well only in times of prosperity. Obviously the enterprise can fulfill its human and social functions only if it prospers as a business. But now that knowledge workers are becoming the key employees, a company also needs to be a desirable employer to be successful.

ACTION POINT: Audit your organization’s performance as an economic, human, and social entity. List five areas where it comes up short. Prepare a plan to correct these.

Defining Business Purpose and Mission

What is our business?

Nothing may seem simpler or more obvious than to know what a company’s business is. A steel mill makes steel; a railroad runs trains to carry freight and passengers; an insurance company underwrites fire risks; a bank lends money. Actually, “What is our business?” is almost always a difficult question and the right answer is usually anything but obvious.

A business not defined by the company’s name, statues, or articles of incorporation. It is defined by the want the customer satisfies when she buys a product or a service. To satisfy the customer is the mission and purpose of every business. The question “What is our business?” can, therefore, be answered only by looking at the business from the outside, from the point of view of the customer and market. What the customer sees, thinks, believes, and wants, at any given time, must be accepted by management as an objective fact and must be taken as seriously as the reports of the salesperson, the tests of the engineer, or the figures of the accountant. And management must make a conscious effort to get answers from the customer herself rather than attempt to read her mind.

ACTION POINT: Talk to one customer every day this week. Ask them how they see your company, what they think of it, what kind of company they believe it is and what they want from it. Use this feedback to better define your company’s mission.

Each day of our lives we make deposits in the memory banks of our children.

Charles R. Swindoll

Agriculture is not crop production as popular belief holds – it’s the production of food and fiber from the world’s land and waters. Without agriculture it is not possible to have a city, stock market, banks, university, church or army. Agriculture is the foundation of civilization and any stable economy.

Allan Savory

The financial crisis of 2008 was not caused by investment banks betting against the housing market in 2007. It was caused by the fact that too few investors – including all of the big investment banks – bet too heavily on the housing market in the years before 2007.

James Surowiecki

This nation is like a spring freshet; it overruns its banks and destroys all who are in its path.

Sitting Bull

Central banks don’t have divine wisdom. They try to do the best analysis they can and must be prepared to stand or fall by the quality of that analysis.

Mary Kay Ash

Like many other banks and finance companies, Green Tree used a process called securitization to resell its home loans to outside investors. Green Tree grouped thousands of these small loans into a pool worth hundreds of millions of dollars.

Alex Berenson

 

I remember Tyra Banks giving me encouraging advice during my first Victoria’s Secret commercial shoot. I was so nervous, and she told me to just relax and be confident – that made me feel very comfortable.

Adriana Lima

But if you want to continue to be slaves of the banks and pay the cost of your own slavery, then let bankers continue to create money and control credit.

Josiah Stamp

At its core, bitcoin is a smart currency designed by very forward-thinking engineers. It eliminates the need for banks, gets rid of credit card fees, currency exchange fees, money transfer fees, and reduces the need for lawyers in transitions… all good things.

Peter Diamandis

Nobody had a credit card when I was a kid. No one had credit card debt. But these big companies and banks wanted to know how to get more money out of people – get them charging things.

Michael Moore

Banks were once places to hold money and were very careful in lending to finance families as they built a future – bought homes, bought cars, took out student loans.

Elizabeth Warren

In several sections, both natural in the banks of the Mississippi and its numerous arms, and where artificial canals had been cut, I observed erect stumps of trees, with their roots attached, buried in strata at different heights, one over the other.

Charles Lyell

I have always been afraid of banks.

Andrew Jackson

Investment banking has, in recent years, resembled a casino, and the massive scale of gambling losses has dragged down traditional business and retail lending activities as banks try to rebuild their balance sheets. This was one aspect of modern financial liberalisation that had dire consequences.

Vince Cable

Governance is complex, difficult, and on the whole, thankless – why ever should the Bright Young Things leave the management of their hotels, newspapers, banks, TV channels and corporations to join, like fleas on a behemoth, the government? Wherein lies the difference between the two worlds?

Upamanyu Chatterjee

Wall Street, the banks, and corporate America, has been able to call the shots here. They control our members of Congress and they get what they want.

Michael Moore

Having contemplated this admirable grove, I proceeded towards the shrubberies on the banks of the river, and though it was now late in December, the aromatic groves appeared in full bloom.

William Bartram

Banks properly established and conducted are highly useful to the business of the country, and will doubtless continue to exist in the States so long as they conform to their laws and are found to be safe and beneficial.

Martin Van Buren

We need to increase the transparency of shadow banking markets so that authorities can monitor for signs of excessive leverage and unstable maturity transformation outside regulated banks.

Janet Yellen

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