Can Your Business Survive on a Handshake?

Good businesses are ethical businesses. A business model that relies on trickery is doomed to fail.” – Charlie Munger, Wesco Financial Corporation Annual Meeting, 2009

I am blessed as part of my work to regularly moderate executive team strategic planning and group sessions for companies and organizations that have been around for a long time, including:

    •    One of the oldest continuously operated hospitals in the Western United States, founded in 1887 and whose Board Chair is one of the most famous investors in the world.

    •    One of the largest commercial collections agencies in California, boasting of more than 20% of Fortune 500 companies as their clients, and now entering its 85th year.

    •    A Michigan – based, automotive tool supply company that this year will celebrate its 70th anniversary and whose founders trace collaborations back to Walter Chrysler and other giants of the car business.

    •    One of the United Kingdom’s largest multi retailer voucher and prepaid gift card companies (2015 revenues US$ 420 million+), that this year will celebrate its 50th year in business.

While these organizations compete in vastly different industries and cultures there is within them all a common “longevity core” that has allowed them to navigate, pivot, and win through various and multiple storms and dramatic shifts in their markets where the vast majority of their competition have not.

And always when I moderate these kinds of sessions, and ask executives to share the “Whys” of their companies, what they stood for when founded and how that meaning has evolved over time what comes often to mind is the theme of one of the greatest and most under-rated business books of all time – Arie de Geus’ The Living Company.

In it, the author shares a lifetime of research and study as to why some companies and organizations “live…through the upheaval of change and competition over the long haul.

As de Geus’ so eloquently writes:

The idea of a living company isn’t just a semantic or academic issue. It has enormous practical, day-to-day implications for managers. It means that, in a world that changes massively, many times…you need to involve people in the continued development of the company. The amount that people care, trust, and engage themselves at work has not only a direct effect on the bottom line, but the most direct effect, of any factor, on your company’s expected lifespan. The fact that many managers ignore this imperative is one of the great tragedies of our times.

This inspirational and almost idealistic point may seem contestable in our age so dominated by tech high-flyers (to say nothing of the tenor of the current political campaign!) that seem to have gained their prominence through such a powerful combination of IP prowess, network effect, and first-mover advantage that really any company culture and any collection of reasonably talented individuals could run them well.

For a short time, maybe yes.

But to sustain themselves over periods measured in decades, to transition leadership and management through generations require a robust, flexible, and truly “living” culture.

And that in turn requires something we don’t talk enough about in business nearly enough – leadership.

The kind of leadership that once was the obvious expectation for persons granted the blessing and privilege of being at the head of an organization of any size.

The type of leadership that does not sacrifice the long-term for the sake of the short-term.

The type leadership whose goal is not “an exit,” but rather a contribution – to shareholders, to employees, to customer, to community.

Leadership that knows that a handshake and one’s word is a better and more appropriate form of agreement between gentlemen and gentlewomen than a contract can ever be.

And leadership that recognizes that to survive and prosper through multiple generations is both an amazing accomplishment, and a charge to keep.
The charge to not only match the good and hard work of those that have gone before us.

But given the opportunities afforded by our technological and global age, to far exceed them.

In growth and profits, absolutely.

But, in character, principle, and doing the right thing too.

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