Use the term”sustainable” in a business environment and do not be surprised to find some eyeball rolling. The notion of business sustainability for a few conjures up images of”tree-hugging dirt fans,” as one bumper sticker proclaims. Yet in the long run, sustainability — not growth for growth’s sake — is the perfect model for long-term company and stakeholder success.
When Companies Focus on Growing for Growth’s Sake
Everything you usually see in companies with a excellent idea and strong foundation is an initial phase of rapid expansion. Investors get in on the feeding frenzy and become accustomed to accepting large gains. Growth continues over time, but it eventually levels out for an assortment of natural reasons. Trouble is, the sharks are still hungry.
And the pounding begins. A type of pounding for which many company executives are totally unprepared. The pressure from shareholders — and even in the board of supervisors — develops, and executives start to search for ways to bring back the good old days of big gains and massive profits. They search for ideas that seem good, rather than those that are aligned with their founding principles and what they do consistently well.
The real trouble begins when a company takes liberties with its own principles and competencies. To justify going after a profitable market niche, it’s easy to generalize competencies and principles until they become so fuzzy that any chance appears achievable.
Engineering businesses, as an example, can fall into the trap of thinking they could solve ANY problem — even one outside their core area of experience — since they redefine what they do always well as solving problems. Sorry, people, but the world doesn’t that way. Such a mistake has ruined many a tech company.
Once a company becomes fuzzy about its principles and competencies, bad things happen. Businesses often go out of business due to their desperation to meet investors leads them to venture into markets for which they’re grossly unsuited.
Definitions of Sustainability
A sustainable business is where organizational leaders concentrate on delivering long-term value to all stakeholders. From a stakeholder perspective, sustainability means different things:
Workers: I can count on being employed with a company which has a plan for your future. I am not only contained in that program, I am part of the preparation and implementation procedure. I am not human capital, I am a business partner.
Clients: This company will be around for awhile. I can trust that they will stand by their services and products for the long run. I can create my own plans accordingly.
Investors: This business gives me a long-term reliable return on my investment dollar. I am interested in more than a quick buck — I wish to build my portfolio for many years to come.
Community: This firm is a steward. It is going to do what is right by our community and act with our interests in mind. It will lead to our long-term sustainability, also.
The Importance of Staying on Course
The main thing business founders are able to do is take some time early on to describe what their principles are and what their company does consistently well. A focus on fundamentals and competencies generates the compass that always points toward True North for business sustainability.
We call the Measure Zero effect, and we see it operating in successful companies daily.
As opposed to search for large profits, leaders of sustainable companies take great pains to practice their founding principles and ensure that all stakeholders are aware of what the firm does consistently well. They concentrate on building long-term stakeholder relationships. When the first growth spurt levels off, the company does not discount investors — it works with stakeholders in collaboration to result in the best of long-term possible worlds for everybody involved.
Obviously a change in certain investment practices will need to occur before all companies will work toward sustainability. The lure of big profits isn’t easy to resist. However, by looking to the long term, we could create a business ecosystem that serves the best interests of all stakeholders. And perhaps that’s the best good for each of us.