14 Sep The Business Friend: Rise of the Firms of Endearment
“All things being equal, people will do business with a friend; all things being unequal, people will still do business with a friend.” Thoughts from Mark McCormack, founder of IMG and the inspiration for Tom Cruise’s Jerry Maguire.
Words spoken years ago but words that today might have finally found the potency of expression that they deserve. Welcome to the era of the business friend, the firms of endearment.
Businesses that are characterised by the goal of doing well by doing good. Firms where the relationship between profit and purpose is to complement not divide. Where good business is as much about what you stand for as what you sell.
It might well be that from this growing band of companies the lifeline to modern capitalism is being thrown. And it is one that it must catch if it is to have the future that we need.
Consumers couldn’t care less if 74% of the worlds brands dropped dead tomorrow*. That’s a damning indictment of business as usual and provides an urgent message that companies need to think about their futures with a good deal urgency.
Plenty of that on display at the London Stock Exchange this morning. I chaired a great session led by the President of Robert Kennedy Human Rights, Kerry Kennedy and the Founder of Ella’s Kitchen and Paddy’s Bathroom, Paul Lindley.
Both are believers that the best days for capitalism could be the years ahead. Both are keen advocates that business can be a force for good in society. Theirs is a case that becomes ever more compelling as more commercial leaders make the link between successful firms and making a positive impact.
Of course, that case is far from won. In 1970 Nobel laureate economist Milton Friedman said, “the social responsibility of business is to increase its profits.” And that people who thought otherwise ‘revealed a suicidal impulse.’
Of course the risk of suicide falls firmly in the camp of unfettered capitalism if it sees the pursuit of profit at all costs as the only goal it has. And while I would certainly make the case that a primary characteristic of a business is to make money, I would also say that its ability to do so is immensely enhanced if it focuses on doing the right thing.
A good example came to light this morning. The oft forgot but salutary tale of Benetton. I am a child of the 1980s and anyone who grew up then could not fail to be awe inspired by the rise of an Italian family business into a global commercial rock star.
Who could forget the appeal of the ‘United Colours of Benetton’ – the promise of a better and more united world. But who could also forget that promise undone by the tragic revelation of its working practices with suppliers in Bangladesh. The race to the bottom on price turned out to be a very high price to pay for a business that has lost so much of its earlier lustre.
In the U.S. today a new band of businesses are becoming increasingly known as the ‘firms of endearment.’ The likes of Whole Foods and Salesforce are its leading lights and of course they have a message that is active, optimistic and uncompromising. Businesses where creating friendships with stakeholders, from shareholders to teams, are a guiding goal.
B Lab UK’s James Perry and FTSE’s Mark Makepeace joined Kerry and Paul today at the London Stock Exchange. Later this month B Corp launches in the UK to spotlight and accredit the growing power of business to solve social and environmental problems.
On Saturday night I gave the leadership lecture at the Alumni dinner at the London School of Economics. Fortuitously I sat next to one of the founding team of the clothes brand, Patagonia.
It’s a business that Nick and I covered in our book MISSION: How The Best in Business Break Through. And Patagonia has a message that I shared at the event today.
That everything we do pollutes.
And because of that we need to think differently because our actions can make a difference both positively and negatively.
Kerry’s father was, of course, Robert F Kennedy who once said “Few will have the greatness to bend history itself; but each of us can work to change a small portion of events, and in the total of all those acts will be written the history of this generation.”
That is why friendship in business matters. It is a first step to take. A first step in making a difference.
* Havas Meaningful Brands Index 2015