tag:blogger.com,1999:blog-49276571851239934112024-03-14T01:13:51.698-07:00jackhaffeyJackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.comBlogger28125tag:blogger.com,1999:blog-4927657185123993411.post-69644048825913664632023-08-08T20:34:00.000-07:002023-08-08T20:34:16.470-07:00Profit Capitalism and/or Stakeholder Capitalism (SC): The 250 Year Conundrum - Solved!<p><br /></p><span style="font-size: 18.6667px;"><b><u>Introduction.</u></b> </span><div><span style="font-size: 18.6667px;">It is long past time for stakeholder capitalism (SC) to be correctly defined, taught and practiced. It is also time for the dominant profit as sole purpose capitalism model to become part of SC, important but not dominant.</span></div><div><span style="font-size: 18.6667px;"> </span></div><div><span style="font-size: 18.6667px;"><b><u>The Challenge.</u></b></span></div><div><span style="font-size: 18.6667px;">The years since about 1970 have witnessed many attempts to have SC replace Professor Milton Friedman's profit-as-sole-purpose capitalism. Virtually if not literally all have failed though. The failure is in part caused by incomplete and poorly explained, understood or otherwise flawed SC proposals. It also has failed because many of its critics say that it is a plot by progressives to take profit from companies and distribute them to their causes, a political criticism, or that it is just a public relations ploy.</span><span style="font-size: 18.6667px;"> </span><span style="font-size: 18.6667px;"> </span></div><div><span style="font-size: 18.6667px;">There have also been opportunity costs under profit capitalism, both through failure to create full value through a better model and through measurable value and wealth destruction. This opportunity cost must end. </span></div><div><span style="font-size: 18.6667px;"><br /></span></div><div><span style="font-size: 18.6667px;">This narrative presents the ultimately best capitalism model going forward. And, it is only through SC, correctly defined, taught and implemented - practiced day in and day out - that it will happen.</span></div><div><p class="MsoNormal"><span style="font-size: 14pt;">For
companies, economies, societies and nations where profit-focused capitalism is the dominant
economic model, the benefits over the years are obvious. While there have been
and are a few different variations on the core profit model, capitalism has indeed been the best economic system catalyst for value creation when compared to
socialism. It is one of the best ideas ever conceived for people everywhere.</span></p><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 105%;">The
dominant core capitalism model, especially since about 1970 or so, has been the
Milton Friedman profit-as-sole-purpose model. It was and is characterized as
the model that Professor Adam Smith intended in his seminal writings in the
late 1700s. The value created over these last 50 years through the profit model
is evidence that makes capitalism be properly acclaimed as one of the best
ideas ever created for humanity.</span></p><p class="MsoNormal"><span style="font-size: 14pt;"> </span><span style="font-size: 14pt;">At the same time, the last 50 years have
produced systemic business decision behavior that harmed corporations and
their stakeholder groups, and instances of economy-wide value destruction. The Enron
implosion and the 2007-’08 great recession are cases in point. It is</span><span style="font-size: 18.6667px;"> the </span><span style="font-size: 18.6667px;">narrow focus on profit</span><span style="font-size: 14pt;"> that Friedman dogmatically proclaimed that is at the heart of the
behavior that caused these and other value destruction instances over the
period. So, t</span><span style="font-size: 14pt; line-height: 19.6px;">he tragedy is that virtually all variations of SC offered over the last 50 + years have not been correctly defined and again, as importantly, critics of SC virtually always accuse proponents of SC of having ulterior motives, claiming that SC will result in long term (and short term) financial harm to the company (the organization). </span><span style="font-size: 14pt;">Wrong on all counts when SC is correctly presented and practiced.</span></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 105%;">This paper presents
the model that truly follows Professor Smith’s teaching. Adam Smith wrote about two main subjects, the Theory of Moral sentiments and The
Wealth of Nations. As a moral philosopher and an economist, it is natural that
his beliefs would come together in his world view. The resolution of the conundrum
we are dealing with follows, and Professor Adam Smith would agree with it.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 105%;">That is, we can do even better than we have using the Friedman model.</span></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 105%;">We have been
underliving our economic lives, sub-optimizing the long-term achievable wealth
and value creation for companies (organizations), economies, nations, people
and peoples everywhere.</span><o:p></o:p></p>
<p class="MsoNormal"><b><u><span style="font-size: 14.0pt; line-height: 105%;">The
Conundrum and The Solution.</span></u></b><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 105%;">Stakeholder
capitalism,</span><span style="font-size: 14pt;"> SC, correctly defined, taught and practiced, is compatible with profit-focused capitalism (it incorporates it). It can and will raise every
organization that adopts it to a higher long-term value and wealth creation</span><span style="font-size: 14pt;"> </span><u style="font-size: 14pt;">level</u><span style="font-size: 14pt;"> than has the Friedman et al profit-as-sole-purpose model. </span></p><p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 105%;">This outcome for the company (any organization) is a direct function of optimizing the long-term value the company provides to each of its six (6) primary stakeholder groups (PSGs), explained below.</span></p><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 105%;">To reiterate for emphasis before explaining our SC paradigm: We as societies and nations, not to mention economies, companies and business
in general have been and are underliving our lives. Opportunity costs over the
last half century have been great – both in terms of uncreated value and wealth
and in terms of value and wealth destruction (again, think 2007-’08 great
recession, Enron, VW, Boeing and so many other examples of avoidable harm)
directly caused by managers, leaders and cultures all wrapped up in the profit
model!</span></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 105%;">If it is as
straight forward as finding the correct definition of SC, teaching it and
practicing it to raise capitalism to its highest long-term value and wealth
creating level, why hasn’t it been done already?</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 105%;">It has not
been done before precisely because of <b><u>the conundrum</u></b>: SC has been
considered an <u>either-or “alternative”</u> to the Friedman profit or
shareholder model of capitalism. The Friedman profit model or dogma really is
the narrowest way to define the value expectations of the investor stakeholder
group of a company, an organization. </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 105%;">Just the
opposite of “either-or” is true. <b>T<u>he solution:</u></b> SC is in fact the <u>essential both-and
(solution)</u> paradigm and will optimize the long-term value and wealth
creation of this investor group to its highest level –
along with optimizing the long-term wealth and value creation for each of the
other five (5) primary stakeholder groups (PSGs) of every organization.</span><o:p></o:p></p>
<p class="MsoNormal"><b><u><span style="font-size: 14.0pt; line-height: 105%;">Six
Primary Stakeholder Groups and Providing Optimal Long-Term Value to Each of
Them.</span></u></b><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 105%;">T</span><span style="font-size: 14.0pt; line-height: 105%;">here are precisely six (6) primary
stakeholder groups (PSGs) for every company, every organization. They are
customers, employees, investors, suppliers, communities where the company has a
presence and the general public interest. These are the groups whose lives and existence are significantly affected by every company, every organization.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 105%;">People in
their roles in each of these groups place value on a finite number of things
that a company can provide them. When these valued things are correctly
understood and served by the company, the PSGs will treasure their respective
connections to the company and stay with it – as customers, employees and so
forth through and including the general public interest PSG. It is a straight-forward and even exquisite model.</span><o:p></o:p></p><p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 105%;">The PSG capitalism model also, conceptually and behaviorally puts the lie to the criticism over the years that we can only focus on one objective function. Again, Adam Smith's two main works directly contemplate this PSG model.</span></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 105%;">Readers and
true students of Professor Adam Smith will be, or should be, quick to understand
and agree.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 105%;">Whether
Smith meant his teachings precisely this way or not, he should have. It is intuitively obvious. Professor Friedman’s dogmatic litmus test for excellent company outcomes will only be satisfied if this PSG value optimization purpose is satisfied.
Why? Because it is only by achieving this purpose that the long-term outcome of
maximization of a company’s wealth and value creation can be realized.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 105%;">It is all
both intuitively obvious and in perfect harmony with people acting in
accordance with both their better angels and their enlightened self-interest!</span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 105%;"><b><u>Final
Note.</u></b></span><u><o:p></o:p></u></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 105%; mso-bidi-font-weight: bold;"> We have presented the top-level conceptual PSG model of stakeholder capitalism (SC) in this narrative. The angels are of course always in the details. There are details that every capitalist economy must embrace.</span></p><p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 105%; mso-bidi-font-weight: bold;"> Every business school that decides to teach it (curricula incorporation and faculty expertise) and every business </span><span style="font-size: 18.6667px;">(organization) </span><span style="font-size: 18.6667px;">that decides to adopt it (leadership and cultural commitment)</span><span style="font-size: 14pt; line-height: 105%;"> must become steeped in it for the full long-term and existential transformation to </span><span style="font-size: 18.6667px;">PSG capitalism</span><span style="font-size: 14pt;"> to flourish. </span><span style="font-size: 14pt;"> </span></p><p class="MsoNormal"><span style="font-size: 14pt;"><b><u>So, more to come!</u></b></span></p><p class="MsoNormal"><o:p></o:p></p></div>Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com0tag:blogger.com,1999:blog-4927657185123993411.post-24895049749235952092022-10-18T08:36:00.000-07:002022-10-18T08:36:00.207-07:00The Ultimate Victory for Stakeholder Capitalism<p> </p><p class="MsoNormal"><b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">The Ultimate Victory for Stakeholder Capitalism:<o:p></o:p></span></u></b></p>
<p class="MsoNormal"><b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-spacerun: yes;"> </span>The 50+
year Debate: Shareholder versus Stakeholder Capitalism is Resolved<o:p></o:p></span></u></b></p>
<p class="MsoNormal" style="margin-left: 0.5in;"><b style="mso-bidi-font-weight: normal;"><span style="line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="font-size: medium; mso-spacerun: yes;"> </span><u><span style="font-size: medium;">The Fundamental Mistake of Treating the
Corporation’s Long Term Value and Wealth Creation as Synonymous with the Long Term Value Created
for Shareholders (The Friedman Model)</span><span style="font-size: 12pt;">.</span></u><o:p style="font-size: 12pt;"></o:p></span></b></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">During the last 50 years people have been
discussing the purposes of a corporation in a capitalist economic system. Why? Because
in 1970 Professor Milton Friedman declared increasing profit for shareholders
of corporations as the only purpose of business. His doctrine has been dominant
in capitalist economies ever since. However, others have argued that there are
other distinct groups affected by business and that business has a responsibility
to consider those groups as well.<o:p></o:p></span></p>
<p style="line-height: 106%;"><span face=""Calibri",sans-serif" style="color: #111111; font-size: 14pt; line-height: 106%; mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">One effect on
corporate existence and well-being since the 1970s has been that the
shareholder focus has relegated these other groups to a lower status in terms
of company decision-making, cultures and priorities. This never should have
happened.</span><span face=""Calibri",sans-serif" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="color: #111111; font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">The critical overriding mistake
in the 1970 period was to treat the enterprise (corporation or company,
organization, etc.) as synonymous with the shareholder group from a value
creation standpoint. That is, maximize share price, earnings <span style="mso-spacerun: yes;"> </span>per share (eps), net present value of free
cash flows (npv), etc. for the shareholders and the enterprise’s long term
value and wealth creation will also be maximized. Wrong!<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Before addressing the shareholder-stakeholder debate, a further word
about the dominant Friedman profit model is in order. That is, a bit more about
why there is a debate at all. Why change from the Friedman profit-as-purpose
model for capitalism? After all, it has resulted in significant value creation
in capitalist economies for 50+ years – and continues to this day, even with
the assertion about the “critical overriding mistake.”<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><b style="mso-bidi-font-weight: normal;"><u><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><span style="mso-spacerun: yes;"> </span>Some Examples over the last fifty years of
Value Destruction Directly Caused by the Narrow Friedman Profit-as-Sole-Purpose Model, for Context.<o:p></o:p></span></u></b></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">The
2007-’08 great recession is the largest example of value destruction directly
flowing from the narrow profit model. More than $2 trillion of value
destruction was caused in the United States alone. The Enron implosion, the
WorldCom disaster and many other value destructive examples – the Boeing 737
800 Max problem, the Takata airbags problem and the VW emissions scandal are
direct results of business leaders acting in accordance with the profit model.
In fact and importantly, the tying of leadership compensation to share
performance (a proposal from the mid-1970s in an article by Professors Michael
Jensen and William Meckling that caught on in a pervasive way) is an explicit
mechanism that takes business leaders’ eyes off the consequences to the other
five primary stakeholder groups (PSGs, defined below) in order to produce near
term share price increases and leadership compensation increases. Enough.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p> </o:p></span></p>
<p class="MsoNormal"><b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">The Debate.<o:p></o:p></span></u></b></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">This created a long running and
important debate about the purpose of companies (business) in a capitalist
economy. Broader views that companies must pay attention to other groups too,
like employees, customers, suppliers, etc. in addition to shareholders have
been regularly offered from academia, some business leaders and others. The
debate has been going on for 50+ years. The advocates of the broader vision of
capitalism argue for models that fall generally under the umbrella of
“stakeholder capitalism.” We use “SC” to represent it in the remainder of this
paper.<b style="mso-bidi-font-weight: normal;"><u><o:p></o:p></u></b></span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">So, SC advocates have presented a
number of models for how to create value in addition to profit - value for
other groups, stakeholder groups. Some SC proponents, but not all, have even
identified the six primary stakeholder groups that we present here as most
important. Identifying the primary stakeholder groups of a company is one
critically important step.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">A full model that also explains why and
how a specific SC model can and should become dominant for capitalism to be the
ultimate catalyst for long term value and wealth creation has been missing all
these years.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">We do exactly that in this brief paper
– and we are confident Professor Adam Smith would agree with our model.
Professor Milton Friedman himself would also join in supporting our model. <o:p></o:p></span></p>
<p class="MsoNormal"><b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">First, some criticisms of SC as understood
over this 50 year period.<o:p></o:p></span></u></b></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Just this year, we have two recent
criticisms of SC, criticisms<i style="mso-bidi-font-style: normal;"> </i>from two
respected and widely known American journalists - George Will and Steve Denning.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-spacerun: yes;"> </span>Mr. Will and Mr. Denning have each written
articles in 2022 criticizing SC (Stakeholder Capitalism). Their criticisms are
discussed and dismissed below.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">We then present our model (the ultimately
correct capitalism paradigm). We demonstrate that our model is just what the
world has been waiting for to make the transformative and even existential
change from the narrow but dominant profit-as-sole purpose of business model to
the primary stakeholder group (PSG) model of capitalism – that Adam Smith
really taught and that Milton Friedman would surely support.<o:p></o:p></span></p>
<p class="MsoNormal"><b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-spacerun: yes;"> </span>So, the
Two</span></u></b><u><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"> <b style="mso-bidi-font-weight: normal;">Examples
of Criticism of Stakeholder Capitalism</b>.<o:p></o:p></span></u></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">As explained above, our two highly
respected journalists have recently tried to kill it in articles, using the most
common criticisms. <o:p></o:p></span></p>
<p class="MsoNormal"><b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">George Will</span></u></b><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">, known far and wide, tried to kill it in his
Washington Post opinion piece in its June 22, 2022 issue. <b style="mso-bidi-font-weight: normal;"><u>Steve Denning</u></b>, also a leading writer in many publications
and a frequent contributor in Forbes, tried to kill it in his article in the
January 5, 2022 Forbes issue and in virtually the same piece in an Agile Week
event, on about April 29, 2022. Assertions or beliefs in their articles are
presented here, along with our gentle but absolute dismissal of their opinions:<o:p></o:p></span></p>
<p class="MsoListParagraph" style="line-height: normal; margin-bottom: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -0.25in;"><!--[if !supportLists]--><span style="font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">1.<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">George
Will:</span></u></b><span style="font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"> Mr. Will is concerned that the economic
dynamism in the existing capitalism model will be lost if stakeholder
capitalism ever becomes the dominant model. Quite the contrary: The stakeholder
model presented here will breathe full life into the dynamism of capitalism –
it will be done right, and be more dynamic for right reasons. He also characterizes
SC as a trick of progressives to take the profits from companies in a
capitalist economy, like in the United States, and distribute those profits to
whatever groups express an interest in them or claim they should receive them
because they are affected by the company in some way (that is, the number of
stakeholder groups is unlimited – nonsense). He is so wrong that he does not
deserve a rebuttal. First, SC correctly defined and made actionable is
absolutely apolitical. And, the stakeholder model presented in this paper will
increase the dynamism, not harm it. Also, the notion of an open-ended number of
stakeholder groups is a scare tactic at best and a deep misunderstanding at
worst – Mr. Will’s use<span style="mso-spacerun: yes;"> </span>of the Oxford
Reference definition of stakeholder to the contrary notwithstanding. Finally, he
advises all to “recoil” from this idea. With George Will’s wonderful
credibility as a wise leader on public policy matters, his opinion piece can
result in readers and leaders following his advice, which would be a terrible
outcome on this important SC matter.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; margin: 0in 0in 0in 0.25in;"><span style="font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p> </o:p></span></p>
<p class="MsoListParagraphCxSpFirst" style="line-height: normal; margin-bottom: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -0.25in;"><!--[if !supportLists]--><span style="font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">2.<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><u><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">Steve Denning: </span></u></b><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">Mr. Denning, once an
advocate of a broader definition of the groups a company ought to focus on as
those it significantly affects by its very existence (he was formerly an SC
supporter of sorts), has concluded that the “true North” of a company is, as
Peter Drucker proclaimed in 1954, the customer. Everything the company does is
predicated on creating a customer. Any expansion, he says, to focus on more
than one stakeholder group has almost always resulted in “garbage can
organizations.” In fact and following Drucker’s reasoning, Denning calls the
Friedman shareholder focus “an unacceptable form of institutionalized
selfishness.” Mr. Denning goes on to explain his beliefs about other failings
of both the narrow Friedman shareholder focus and the broad stakeholder focus. He
also believes that “agile” companies, ones that adopt the agile model of
company behavior and culture are the way of the future. As with Mr. Will’s
economic dynamism, the stakeholder model in this paper will put full wind into
the sails of companies that also embrace agile behavior models (in fact, the
PSG capitalism model presented here defines the best and ultimate “North Star”
any organization could have). His assertion about “customer capitalism,” is
quite rational as an alternative to shareholder capitalism, but it is still a
narrow focus on the things valued by just one of the six primary stakeholder
groups of every organization. As explained below, it is the main valued things
of each of the six (6) primary stakeholder groups of every corporation that the
business must know and optimally serve to have the business achieve its own
highest long term value and wealth creation as an outcome of getting capitalism
right – not as its purpose! <b style="mso-bidi-font-weight: normal;"><u><o:p></o:p></u></b></span></p>
<p class="MsoListParagraphCxSpLast"><span style="color: #2a2a2a; font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">Like
George Will and Steve Denning, others have criticized SC over the years, but
virtually all criticisms address the several incomplete – though directionally
correct – attempts to bring SC into a dominant role in capitalist economies.<b style="mso-bidi-font-weight: normal;"><u><o:p></o:p></u></b></span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p> </o:p></span></p>
<p class="MsoNormal"><b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Primary Stakeholder Group (PSG) Capitalism.</span></u></b><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"> <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">While alternative proposals have been
offered, none has yet become dominant. This paper is intended to change that,
once and for all.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Every company has precisely six (6)
primary stakeholder groups (PSGs) – not five or seven or any other number. They
are customers, employees, financial investors, suppliers, communities where the
company has a presence and the general public interest.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Each of these PSGs values certain
things most – because of its role. It wants to receive that value from its
engagement with the company – knowing of course that it (the PSG) must provide
certain specific value to the company in turn. It is a straight forward relationship.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-spacerun: yes;"> </span>For the company though, the
obligation is always to optimize the value it provides to each of its six PSGs,
each relative to the others – not a difficult task, but it requires a
transformational, even existential, change to company mindsets and behavior in
order to become the dominant capitalism model going forward. This adds a
natural complexity to the matter. It is still not difficult. This complexity is
exactly the natural phenomenon that has allowed the Friedman model to do pretty
good for shareholders since the 1970s while a. not providing optimal long term
value for each of the other five PSGs and, b. as a direct result, falling short
of the ultimate value creation opportunity for both the company (the
enterprise) and the economy – and as a result for people and society.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><b style="mso-bidi-font-weight: normal;"><u><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p><span style="text-decoration: none;"> </span></o:p></span></u></b></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><b style="mso-bidi-font-weight: normal;"><u><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">A Summary statement on Primary
Stakeholder Group (PSG) Capitalism.<o:p></o:p></span></u></b></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><span style="mso-spacerun: yes;"> </span>PSG capitalism, unlike virtually all<span style="mso-spacerun: yes;"> </span>other attempts over the years to have
“stakeholder capitalism” become the dominant paradigm practiced in companies
and taught in business schools, is grounded in those things valued by people in
their roles – as listed above - as customers, employees, investors, suppliers,
communities where they have a presence and the general public interest.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">This
paradigm, or model, presents the unassailable truth that the company’s
(enterprise or organization) long term value and wealth maximization outcome is
a direct function of optimizing the value the company provides to each of its
six (6) primary stakeholder groups - not seven (7), not five (5) and certainly
not the unlimited number suggested by George Will. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p> </o:p></span></p>
<p class="MsoNormal"><b style="mso-bidi-font-weight: normal;"><u><span style="color: black; font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-themecolor: text1;">An Important
Word about Company Mindsets.</span></u></b><span style="color: black; font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-themecolor: text1;"> There are two main mindsets that companies
can have - either the good mindset or the bad mindset.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color: black; font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-themecolor: text1;">The
good mindset is long term, outward-focused and value-optimizing for each PSG
relative to each of the others. The bad mindset is short term, inward-focused
and win-lose.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Advocates of stakeholder capitalism over
these last 50 + years have not explained this model well enough (nor perhaps
understood its nuanced reality clearly enough), and advocates for the Friedman shareholder
capitalism profit model have clung to its 1<sup>st</sup> among equals PSG
position over the years – to the long term detriment of all.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><b style="mso-bidi-font-weight: normal;"><u><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">Why focus on what people value
in their “PSG” roles?<o:p></o:p></span></u></b></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">The
implicit assumption underlying Professor Milton Friedman’s teaching that the
sole obligation of a business is to increase its profits for shareholders is
that profit is the one and virtually only thing shareholders value.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">Just
as profit is certainly valued by investors, there are some other things <span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>investors
value. Similarly, customers have a number of things they value and look for
from the business, as do employees, suppliers, the communities where the
business has a presence and, in the largest context, the general public
interest values certain things from a business.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">Here
are indicative and important but not necessarily exhaustive lists of the main
value expectations of each PSG of every business:<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpFirst" style="line-height: normal; margin-bottom: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -0.25in;"><!--[if !supportLists]--><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">1.<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">Customers:</span><b><span style="color: #222222; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"> </span></b><span style="color: #222222; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin;">1. High quality, 2. Reasonable prices,
3. Kindness, 4. Companies that treat their employees well and 5. Companies that
are good citizens.</span><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin-bottom: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -0.25in;"><!--[if !supportLists]--><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">2.<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="color: #222222; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin;"> Employees: 1. Opportunity, 2. Fair compensation, 3. Security, 4.
Opportunity and Challenge to achieve as individuals and teams/groups and 5.
Company conducts itself as a good neighbor, a good citizen.</span><b><span face=""Arial",sans-serif" style="color: #222222; font-size: 14pt;"> </span></b><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin-bottom: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -0.25in;"><!--[if !supportLists]--><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">3.<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="color: #222222; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin;">Suppliers: 1. Fair dealing, 2. Long term partnership opportunity mutually
earned, 3. Great treatment of employees, 4. Positive citizenship conduct of
company and 5. Enjoyable to work with.</span><b><span face=""Arial",sans-serif" style="color: #222222; font-size: 14pt;"> </span></b><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin-bottom: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -0.25in;"><!--[if !supportLists]--><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">4.<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="color: #222222; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin;">Investors: 1. Best value creation from their funds, for any period but
especially over the long term, 2. Positive company participation in
communities, 3. Great company treatment of employees, 4. Great company standing
in society (loved), 5. Gold standard leadership in the company and 6. Full
participation in society.</span><b><span face=""Arial",sans-serif" style="color: #222222; font-size: 14pt;"> </span></b><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin-bottom: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -0.25in;"><!--[if !supportLists]--><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">5.<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="color: #222222; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin;">Communities in which it has a presence: 1. Good citizen in local
communities, 2. Long term participative partner in community well-being, 3.
Great company treatment of its employees, 4. Full company involvement in
environmental and societal stewardship for the long term and 5. Openness.</span><b><span face=""Arial",sans-serif" style="color: #222222; font-size: 14pt;"> </span></b><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoListParagraphCxSpLast" style="line-height: normal; margin-bottom: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -0.25in;"><!--[if !supportLists]--><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">6.<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="color: #222222; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin;">Society (The General Public Interest): 1. Great local and global citizen,
participative and engaged, 2. Great social and environmental steward, long
term, 3. Willing partner and participant with others (including governments) in
serving the public interest and 4. Excellent treatment of its employees,
suppliers and neighbors.</span><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">When
a business has a leadership and culture that recognizes and serves these valued
things for each of its PSGs (the “stakeholder” groups whose lives the business
significantly affects in the present and over the long term), the business will
maximize its own long term value creation and wealth as its ongoing and ultimate
outcome.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">This
is not rocket science. Rather, this is how we live our lives, and business must
go with this reality. They have not yet – although a few are trying and doing
well.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><span style="mso-spacerun: yes;"> </span>Nevertheless, this PSG model of capitalism was
not contemplated by the Friedman model (except through the “invisible hand”
sterile notion that Professor Adam Smith himself did not emphasize). <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">And,
while Professor Peter Drucker did say that “the purpose of a business is to
create and keep a customer,” he said many other things treasured by the
business and economic communities worldwide. Creating and keeping a customer is
best done, the PSG model holds, by knowing and genuinely optimizing the value
it provides to each PSG – now and over time. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><b style="mso-bidi-font-weight: normal;"><u><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">Is There More?<o:p></o:p></span></u></b></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">There
indeed is more, and it is easily deduced but takes explanation at the same time.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><span style="mso-spacerun: yes;"> </span>“Easily deduced” means that it is all based on
the globally ubiquitous virtues (and traits leading to these virtues) treasured
by all people, the globally unalienable rights of all people, a robust
understanding of fiduciary obligations of a business and the essential
importance of ethical behavior by the business at all times.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><span style="mso-spacerun: yes;"> </span>This paper is inviting the reader, and the
business and larger societal community, to consider the better angels of our shared
human nature acted out in the context of the marketplace of buyers and sellers.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">PSG
stakeholder capitalism, adopted and implemented in business schools and in
companies, as briefly explained in this paper, will maximize the likelihood
that long term maximization of the wealth creation of the enterprise and of
entire economies – all societies and peoples – is achieved as the outcome of
PSG capitalism in action. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><b style="mso-bidi-font-weight: normal;"><u><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">Summary.<o:p></o:p></span></u></b></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">This
article, in an all too brief explanation, dogmatically asserts it is the PSG
paradigm of stakeholder capitalism, finally correctly defined and ready to be taught,
implemented and practiced that will optimize long term value for the PSGs of
all companies and will maximize the long-term value and wealth creation of the
company (enterprise, organization) itself as the natural outcome.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0in;"><span style="color: #2a2a2a; font-size: 14pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">Business
leaders, business schools and all who participate in providing free market
capitalism to society should understand, teach and implement the PSG paradigm
of capitalism so that societies (all people and peoples) can receive maximum
long-term value and wealth.<o:p></o:p></span></p>Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com0tag:blogger.com,1999:blog-4927657185123993411.post-17265325212171125412021-09-17T14:55:00.000-07:002021-09-17T14:55:49.171-07:00PSG Stakeholder Capitalism: The Real Existentially Transformative Economic Paradigm.<p> </p><p class="MsoNormal"><b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; line-height: 107%;">Brief Prefatory Comment</span></b><span style="font-size: 14.0pt; line-height: 107%;">: This discussion of stakeholder
capitalism asserts that there is a specific set of characteristics that a
“stakeholder capitalism” model must have to persuasively replace shareholder
capitalism as the dominant model for free enterprise economies. Specifically,
it is necessary to explain what the best model is, why it is best and how it must
be designed and function to make it the ultimately best free market capitalism
paradigm. That case is made here.<o:p></o:p></span></p>
<p class="MsoNormal"><b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; line-height: 107%;">Making the Case.</span></u></b><span style="font-size: 14.0pt; line-height: 107%;"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 107%;">This article
explains why stakeholder capitalism, correctly defined, is the best way to
create long term value and wealth for corporations, economies and societies –
local and global. Stakeholder Capitalism, as presented here, applies to all
organizations, including, even if only indirectly, nations and their governance
systems (representative democracy in the United States for example), economic
systems - all organizations.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 107%;">All readers,
after reading and concurring, are invited to respond and to join in taking the
next steps to make this 21<sup>st</sup> century ultimately correct stakeholder
capitalism model dominant, so that long term value and wealth creation for all
organizations, economies and societies is the outcome, locally and globally!<o:p></o:p></span></p>
<p class="MsoNormal"><b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; line-height: 107%;">Professor Adam Smith and His “Stakeholder
Capitalism” Axiom.<o:p></o:p></span></u></b></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 107%;">Professor
Adam Smith, through his two famous books in the last half of the 1700s, presented
an axiom that can – and should - guide societies through their economic and
political systems.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 107%;"><span style="mso-spacerun: yes;"> </span>Many – even most – students of Smith contend
that his focus and thesis was on self-interest only. Most Smith researchers
over the last 250 years have not discussed, and possibly have not understood,
that he really connected self-interest, that of the butcher, baker, brewer et
al to other-interest, that of the buyers and that of those other five (5) groups
significantly affected by the seller. This paper explains this key connection.
While he did not use these words, it is almost self-evident that he gave us
this elegant axiom that connects self-interest and other-interest. Here it is
in brief, and it is discussed in more detail below:</span><span style="color: #222222; font-size: 14.0pt; line-height: 107%; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-hansi-font-family: Calibri;"> <o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: .5in;"><span style="color: #222222; font-size: 14.0pt; line-height: 107%; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-hansi-font-family: Calibri;">Self-interest
value maximization is a direct function of optimization of the value provided
by every organization to each of that organization's primary stakeholder groups
(PSGs) – each relative to the others.</span><b><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; line-height: 107%;"> <o:p></o:p></span></b></p>
<p class="MsoNormal" style="margin-left: .5in;"><span style="color: #222222; font-size: 14.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin;">The “primary stakeholder group”
concept is discussed at length below<b>.<o:p></o:p></b></span></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 107%;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 107%;"><span style="mso-spacerun: yes;"> </span>Unfortunately and in spite of the powerful
advocacy of people like Professors R. Edward Freeman, Klaus Schwab and others
in academia, along with business leaders like Larry Fink, Jamie Dimon, John
Mackey, the 190 + CEO members of the Business Roundtable in the United States
and so many others, Professor Milton Friedman’s profit-as sole-purpose shareholder
capitalism model remains the dominant model in free market (private ownership
of capital) economies.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 107%;"><span style="mso-spacerun: yes;"> </span>Professor Friedman, of the University of
Chicago, proposed this model forcefully in 1970 and it is the way corporations
– and really most organizations – have conducted themselves over the last 50
years. As such, it has been and remains the dominant capitalism model. It is
grounded in a short-term, inward-focused and win-lose mindset – and it has
controlled day-in and day-out business leadership, back office and factory
floor conduct over the last 50 years. It has also been an integral part of
business school education and, of course, the centerpiece of the financial
community part of capitalist economies.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 107%;">The natural
question is straight forward: Why has stakeholder capitalism not caught on? Why
has it not become the dominant model through which companies conduct
themselves, especially over the time since about 1970?<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal;"><b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt;">The Problem in Brief.<o:p></o:p></span></u></b></p>
<p class="MsoNormal" style="line-height: normal;"><span style="font-size: 14.0pt;">The
shortest answer is that we have not persuasively explained and compared this
existentially transformative <u>alternative</u> model to the simple and easy to
understand and narrow shareholder-focused (profit) model.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal;"><span style="font-size: 14.0pt;"><span style="mso-spacerun: yes;"> </span>And, even where we come close and attract
leaders (like the BRT signatories), we have not presented a plain-language explanation
of how to “walk the walk” using the stakeholder model<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal;"><b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt;">The “Short Termism” Role.<o:p></o:p></span></u></b></p>
<p class="MsoNormal" style="line-height: normal;"><span style="font-size: 14.0pt;">The
shareholder profit-focused model largely revolves around the quarterly
financial and operating reports companies must provide to the SEC in the United
States (other capitalist nations have similar short-termism prompting requirements
or protocols). Also a paper and proactively forceful teaching by Professors
Michael Jensen and William Meckling in 1976 put the profit as purpose short
termism-emphasizing model on steroids, with their principal-agent connection of
company leaders to company owners (which they said are the shareholders). Thus,
the 15 to 20 times multiple of CEO compensation to entry level (or even average
employee level) compensation in the 1970s has become a 250 to 300 times
multiple by 2015 or so. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal;"><span style="font-size: 14.0pt;"><span style="mso-spacerun: yes;"> </span>Even though companies do prepare longer term plans
(one, three or five year plans for example), decisions are so often based on
the financial market’s view of the very short term quarterlies and one year
earnings expectations. This is fairly called a perverse incentive when
considering what companies should do to produce best results for all in the
medium and longer term. The Friedman model results in mostly short term
behavior.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal;"><b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt;">Stakeholder Capitalism Itself Owns
Part of the Problem.<o:p></o:p></span></u></b></p>
<p class="MsoNormal" style="line-height: normal;"><span style="font-size: 14.0pt;">For
example, virtually every proponent of stakeholder capitalism has advocated
their own version – and at a minimum have often used different terminology and
different suggestions about what it is and how to act it out – in the corporate
suites, back offices and factory floors.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal;"><span style="font-size: 14.0pt;"><span style="mso-spacerun: yes;"> </span>Even more to the point, details are not provided
for how to act out this existentially critical paradigm (model) for daily,
weekly, quarterly, three year (even 100 year) plans, conduct and cultural
behavior from the boardroom to the boiler room. This letter provides that model
with its details.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal;"><span style="font-size: 14.0pt;"><span style="mso-spacerun: yes;"> </span>Interestingly over the years, some company
leaders say that their companies do consider all stakeholders as they make and
sell their products and services – so what’s the beef? For example, it is
almost a staple comment in the last paragraph in the Chairperson and CEO
letters to shareholders in corporate annual reports to write “our employees are
our most valuable asset.” This talk is weak, and a “bad on us” cop-out<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;">.</i></b></span><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-size: 36.0pt;"> </span></i></b><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-size: 14.0pt;"><o:p></o:p></span></i></b></p>
<p class="MsoNormal" style="line-height: normal;"><b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt;">The Tragedy.<o:p></o:p></span></u></b></p>
<p class="MsoNormal" style="line-height: normal;"><span style="font-size: 14.0pt;">One
tragic consequence of it all over the years has been underperformance of
capitalism since about 1970. To be sure though, this 50 year “opportunity cost”
is partially hidden by reasonably significant value and wealth creation flowing
from the Friedman model over this period.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal;"><span style="font-size: 14.0pt;"><span style="mso-spacerun: yes;"> </span>Nevertheless, examples of underperformance are
many, including several individual company mistakes like those of Enron,
WorldCom, General Electric, Boeing, VW, Takata, etc. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal;"><span style="font-size: 14.0pt;">And,
the 2007-’08 great recession, a direct product of the shareholder (and the principal-agent
perverse incentive) model almost brought the United States - and <span style="mso-spacerun: yes;"> </span>global - economies to their knees. These and
so many other examples are caused by practicing shareholder capitalism, with
its dominantly short term mindset and allowance of bad behavior by leaders and
employees. As one indicator, one study estimated the cost of the 2007-’08 great
recession in the United States alone at about $2 trillion – some studies
suggest a much higher cost.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal;"><span style="font-size: 14.0pt;"><span style="mso-spacerun: yes;"> </span>For example, one estimate is that the loss was
as high as $6 trillion to $14 trillion, a range that approximates 33% to 60% of
one year’s output of the United States economy. Other studies are in the same
range – enough to say it was in the trillions of dollars for the United States
alone – before analyzing the global cost.<b style="mso-bidi-font-weight: normal;"><u><o:p></o:p></u></b></span></p>
<p class="MsoNormal"><b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; line-height: 107%;">The Solution: We Need an Existential
and Transformative – Actionable - Model to Get to Stakeholder Capitalism’s
Promise and Potential.<o:p></o:p></span></u></b></p>
<p class="MsoNormal"><b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; line-height: 107%;">The Short Answer Solution.</span></u></b><u><span style="font-size: 14.0pt; line-height: 107%;"> <o:p></o:p></span></u></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 107%;">We should
turn to this axiom Professor Adam Smith gave us. He of course used <span style="mso-spacerun: yes;"> </span>the language of his time in his two major
books 250 years ago to present this <span style="mso-spacerun: yes;"> </span>axiom that connects long term self-interest
value maximization with other-interest value optimization. He might not have
ever considered it to be a precise axiomatic concept, but it is!<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 107%;"><span style="mso-spacerun: yes;"> </span>Here it is:</span><span style="font-size: 14.0pt; line-height: 107%; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-hansi-font-family: Calibri;"> <o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: .5in;"><span style="color: #222222; font-size: 14.0pt; line-height: 107%; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-hansi-font-family: Calibri;">Self-interest
value maximization is a direct function of optimization of the value provided
by every organization to each of that organization's primary stakeholder groups
(PSGs) – each relative to the others.</span><b><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; line-height: 107%;"> <o:p></o:p></span></b></p>
<p class="MsoNormal"><span style="color: #222222; font-size: 14.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin;">Of course, right away we must ask; who are these “primary stakeholder
groups” of every organization. The answer is<b>:</b></span><b><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; line-height: 107%;"> <o:p></o:p></span></b></p>
<p class="MsoNormal" style="margin-left: .5in;"><span style="color: #222222; font-size: 14.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">The Primary Stakeholder Groups (PSGs) of Every Organization are:</span><span style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in;"><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">a. Customers, b. Employees, c. Financial Investors, d. Suppliers, e.
Communities in which it has a presence and f. Society at large (the general
public interest).</span><span style="font-size: 12.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: .5in;"><span style="color: #222222; font-size: 14.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">Every business, in fact every organization (every group with a unifying
purpose), will maximize its own long term value or wealth creation as a direct
function of providing optimal value to each of these six (6) primary
stakeholder groups. There are not seven (7) PSGs and there are not five (5) PSGs.
There are precisely six (6) PSGs for every company – every organization. It is
finite, definite and not open-ended.<o:p></o:p></span></p>
<p class="MsoNormal"><b><u><span style="color: #222222; font-size: 14.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">A little Longer Answer.<o:p></o:p></span></u></b></p>
<p class="MsoNormal"><span style="color: #222222; font-size: 14.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">The angels are in the details, of
course, for this ultimate definition of stakeholder capitalism.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color: #222222; font-size: 14.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">For example, it is essential that we
know what each PSG values and what people in their role as buyers in the
marketplace value. We also must know why and how the self-interest relationship
to other-interest is an axiomatically correct relationship. That explanation
follows. In a nutshell, though, the universally treasured inalienable rights of
all people, with the core and ubiquitous virtues and traits we all share
(around the world) in pursuit of happiness and the full life well lived are
best and only satisfied through this relationship. People everywhere, by their
nature – the better angels of their nature – will yearn for and embrace this
capitalism model – it focuses on them! <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">The summary of the stakeholder model presented here,
including the critically important concept of primary stakeholder groups (PSGs),
is supported by and incorporates several pillars of human characteristics,
including how people choose to behave in their role as markets for goods and
services. These characteristics represent and truly are at the center of the
best of human nature around the world.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><span style="mso-spacerun: yes;"> </span><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><b><u><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">The
Supporting Pillars:<o:p></o:p></span></u></b></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">These pillars are grounded in the special and
wonderful aspects of what can generally be described as the best of human
nature in all parts of life – including life acted out in the marketplace
between sellers and buyers of goods and services locally and globally. And,
capitalism can be the key economic system catalyst that enables all of these
characteristics to flourish, through this existentially correct model in
action.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><span style="mso-spacerun: yes;"> </span><b><u>The Pillars:</u></b><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">1. First,
of course, are the six (6) primary stakeholder groups of every organization –
companies (for profit and non-profit), governments, schools, nations, etc.</span><span style="font-size: 12.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">2. The
things most valued by each primary stakeholder group of every organization.</span><span style="font-size: 12.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">3. The
unalienable rights of every person in the world.</span><span style="font-size: 12.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">4. The
universally (ubiquitously) shared virtues of all people around the world.</span><span style="font-size: 12.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">5. The
traits (behaviors of people) leading to these virtues.</span><span style="font-size: 12.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">6. The
better angels of our human nature (all people and peoples around the world).</span><span style="font-size: 12.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">7. The gold
standard leadership characteristics for all organizations.</span><span style="font-size: 12.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">8. The gold
standard cultural characteristics for all organizations.</span><span style="font-size: 12.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">9. The
centrally important role of ethics and ethical behavior for all organizations.</span><span style="font-size: 12.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">10. The robust
understanding and conduct of fiduciary responsibilities of all organizations.</span><span style="font-size: 12.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="color: #222222; font-size: 14.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">11. Happiness.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">All stakeholder capitalism models, like the 2019 BRT
new purpose statement and the statements and manifestos from Klaus Schwab’s World
Economic Forum (WEF) work over these 50 years will only be actionable through
these pillars – otherwise as said by some, it would all indeed be mostly
just anodyne rhetoric!<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">Again, the Angels are in the Details.<o:p></o:p></span></u></b></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">Importantly, there are details for each pillar – all
very kitchen table understandable, but even the details need some further
explanation to enable an organization to fully live them. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">So, there will remain more to explain. <i style="mso-bidi-font-style: normal;">After all, a written explanation of the “existentially
transformative” model for getting capitalism right should not fit on the back
of a pack of matches!<o:p></o:p></i></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><i style="mso-bidi-font-style: normal;"><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p> </o:p></span></i></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><b><u><span style="color: #222222; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">The
Next Steps.<i style="mso-bidi-font-style: normal;"><o:p></o:p></i></span></u></b></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">This article
asserts the following:<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpFirst" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;"><!--[if !supportLists]--><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">PSG
Stakeholder Capitalism will result in the highest long term wealth and value
creation for societal well-being – for companies, for local and global
societies and economies and for all people everywhere. <u>Both explicitly
explained here and readily deduced where not explicitly explained,<b style="mso-bidi-font-weight: normal;"> the why question is answered here.</b></u><o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p> </o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;"><!--[if !supportLists]--><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">The
explicit answer to the <b style="mso-bidi-font-weight: normal;">how question</b>
is presented in some detail in this narrative. Further detail is readily
available for the interested reader.<o:p></o:p></span></u></p>
<p class="MsoListParagraphCxSpMiddle"><u><span style="font-size: 14.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p><span style="text-decoration: none;"> </span></o:p></span></u></p>
<p class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p><span style="text-decoration: none;"> </span></o:p></span></u></p>
<p class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;"><!--[if !supportLists]--><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">The
answer to the <b style="mso-bidi-font-weight: normal;">what question</b> (what
economic system - shareholder capitalism, stakeholder capitalism or some other
system (others have shown that capitalism of either form is superior to all
other economic systems)) – is now self-evidently clear.<b style="mso-bidi-font-weight: normal;"><u><span style="color: red;"> </span></u></b><o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p><span style="text-decoration: none;"> </span></o:p></span></u></p>
<p class="MsoListParagraphCxSpLast" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;"><!--[if !supportLists]--><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">4.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">PSG
Stakeholder Capitalism is the ultimately best system for all organizations, nations,
local and global economies and all people everywhere!<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"><span style="font-size: 12.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="color: #222222; font-size: 14.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin;"><o:p> </o:p></span></p>
<p class="MsoNormal"><b><u><span style="color: #222222; font-size: 14.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Front
of Mind Focus on All Six (6) PSGs – The Organizational Imperative!<o:p></o:p></span></u></b></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 107%;">A Few Final
Thoughts:<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpFirst" style="mso-list: l1 level1 lfo1; text-indent: -.25in;"><!--[if !supportLists]--><span style="font-size: 14.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-size: 14.0pt; line-height: 107%;">This existentially transformative
change in organizational culture and behavior is necessary to finally gets
capitalism right: modeling the best of people in their various roles in
economies.<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo1; text-indent: -.25in;"><!--[if !supportLists]--><span style="font-size: 14.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-size: 14.0pt; line-height: 107%;">The cultural changes and leadership
changes in companies must go from the boardroom to the boiler room. <o:p></o:p></span></p>
<p class="MsoListParagraphCxSpLast" style="mso-list: l1 level1 lfo1; text-indent: -.25in;"><!--[if !supportLists]--><span style="font-size: 14.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-size: 14.0pt; line-height: 107%;">Co-equal front-of-mind focus on each
of the six (6) PSGs is essential to A. Maximize long term wealth and value
creation for the enterprise, B. Provide optimal long term value for each PSG
and C. Best contribute to maximization of local and global societal well-being.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 107%;">In fact, the
</span><u><span style="color: #222222; font-size: 14.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin;">Front of Mind Focus </span></u><span style="color: #222222; font-size: 14.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin;">on All Six (6) PSGs is at the heart of putting into
action what we all should know and what Adam Smith said forcefully in his own
words. It is capitalism’s Organizational Imperative!<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 107%;">When PSG
Stakeholder Capitalism is universally adopted and acted out, the ultimately
equitable and highest long term wealth and value creation economic system will
be in place.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14.0pt; line-height: 107%;">Always as an
implicit complementary result, all national governance systems will be drawn to
move toward adopting the underlying axiom that the moral philosopher gave us
for economies 250 years ago – an ultimately beneficial outcome for all people
and peoples everywhere!<o:p></o:p></span></p>Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com0tag:blogger.com,1999:blog-4927657185123993411.post-9259525271940211502020-04-18T19:46:00.001-07:002020-04-19T14:26:44.047-07:00Getting Capitalism And Democracy Right - A Mindset and Life View Matter: Smith Had It Right, Friedman's Explicit Teaching, as Applied for 50 Years, Did Not, and President Trump Certainly Does Not!<br />
<div class="MsoNormal">
<b><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">First, The Tragic Corona Virus
Pandemic, and the Trump Failing.</span></u></b><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p></o:p></span></u></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">With its global reach and overwhelming harm to
people everywhere, does the pandemic tell us anything about this mindset and
life view question? Yes, it does.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Using one of Disneyland’s most famous rides as
a guide, “It’s A Small World After All,” it reminds all of us that we do share
this one planet. This one joyful Disneyland ride reminds us that we do have
some extremely important shared interests, some unifying common bonds. So, it
suggests pleasantly and clearly that there is a reason for us to have life
views and mindsets that reflect things that unite us rather than things that
divide us. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">The pandemic would have been much better dealt with
from the start, in the United States and worldwide, if all nations and
international organizations had been working together – grounded in this
unifying long term life view and mindset.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">The handling of the pandemic, nation by
nation, and even state by state in America, has been sadly uncoordinated, with
the Trump administration being one tragic example of getting things wrong from
the start. The Trump failing is clearly visible through the delayed action and the subsequent
(and ongoing) bumbling on specific items – like the irresponsibly delayed testing availability and
provision, the inexcusable failure to get supplies and protection to all health care providers and all essential workers in a timely fashion and lack of national coordination of health care systems and associated needs.</span><span style="font-size: 14pt;"> </span></div>
<div class="MsoNormal">
<span style="font-size: 14pt;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 14pt;">And, most recently (mid-April), the unthinkably divisive posture he has taken toward the governors of the states on testing and on who decides about when and how to ease restrictions is another irresponsible decision on his part.</span></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">In fact this bumbling is not surprising given
that the Donald Trump life view is antithetical to a unifying life view and
unifying behavior, so his leadership is certainly in question on this ominous
matter – and on his entire presidency!<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal">
<b><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Now, Mindsets, Life Views, Professors
Smith and Friedman – The Lessons We Must<span style="mso-spacerun: yes;"> </span>Learn!<o:p></o:p></span></u></b></div>
<div class="MsoNormal">
<b><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><br /></span></u></b></div>
<div class="MsoNormal">
<span style="font-size: 18.6667px;">Democracy and Capitalism, when both are done right, enable societies to reach their highest long term value, wealth and full life well-lived potential.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: large;"><b>Professor Adam Smith,</b>
the father of modern economics by virtually all accounts, wrote in 1776 about
the way butchers, brewers and bakers should be able to make and sell their
products and how people in the marketplace should buy them – or not. Smith’s
teaching 250 years ago supports and even screams out for the life view and long
term mindset presented in this narrative – the way to get capitalism right that
follows his teaching</span><span style="font-size: large;">.</span><span style="font-size: 14pt;"><o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: large;"><b>Professor Milton Friedman,</b>
a disciple of Smith and a Nobel prize-winning economist from the University of
Chicago wrote his doctrine in 1970 for how to get capitalism right. He wrote,
in the New York Times Magazine in September, 1970 – and taught through 2005 - that <u><span style="font-family: "times new roman" , serif; line-height: 107%;">"there
is one and only one social responsibility of business–to use it resources and
engage in activities designed to increase its profits so long as it stays
within the rules of the game, which is to say, engages in open and free
competition without deception or fraud." </span></u>This is his mindset or life view of the purpose of
companies in a free market economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Friedman’s profit-as-sole-purpose model for
leaders of corporations has been dominant in free enterprise capitalist
economies ever since. It has been taught in business schools and used as the
singularly important performance measure for companies and their top management
for the last 50 years. Much value and wealth has been created over this time
period. However, it is sub-optimal as a model and some serious leadership
mistakes have also flowed from (largely) perverse applications of this model.
Yet, it remains dominant.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">What Is The Difference And Why Does It
Matter?<o:p></o:p></span></u></b></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">The difference lies in the mindset or
life view</span><span style="font-size: 18.6667px;"> </span><span style="font-size: 18.6667px;">choice</span><span style="font-size: 14pt;"> leaders make.</span></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">The short description of the difference
between these two critically important mindsets (life views) is:<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">The Friedman shareholder
(profit-as-purpose) mindset is short term, inward-focused and win-lose.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">The Smith stakeholder (primary
stakeholder groups) mindset is long term, outward-focused and value-optimizing
for each of the six (6) primary stakeholder groups of every corporation – every
company or organization.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">This difference matters because one of the
outcomes, if not the uniquely important long term outcome, of every corporation
(company, organization for profit or non-profit, publicly or privately held,
etc.) is the long term maximization of its own value or wealth creation. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">The ironic reality is that the road to
maximization of a company’s long term value (wealth creation) goes through its
focus on and optimization of the long term value it provides to each of its six
(6) primary stakeholder groups! <o:p></o:p></span></u></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Professor Friedman would almost certainly have
explained this model this way 50 years ago if he had not considered it an automatic
result (“the invisible hand”) of each company in an economy focusing narrowly on making
profits from its product or service. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Professor Smith articulated it explicitly and pointedly in
his teaching 250 years ago.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">So, Getting Capitalism and Democracy
Right.<o:p></o:p></span></u></b></div>
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<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">In August, 2019, a group of CEOs from some of
America’s leading companies, through their association, the Business Roundtable
(BRT), signed a new purpose statement for corporations. The BRT is an
association of CEOs from several large American companies. Collectively, their
companies have more than 15 million employees and $7 trillion in annual
revenues – having businesses in every state in the United States. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">BRT effectively endorsed the broad stakeholder
mindset and model as the purpose of corporations on August 19, 2019. This decision moved away from (</span><span style="font-size: 18.6667px;">replaced)</span><span style="font-size: 14pt;"> their long
held shareholder purpose – which they had adopted formally in about 1997, and which
was passionately presented and urged on capitalist (free market) economies by
Professor Friedman in 1970. Again, this model has been dominant for the last 50
years.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">A Bit More About The
Shareholder-Focused Mindset.<o:p></o:p></span></u></b></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">This long held idea that it is by focusing on
profit day in and day out that companies will achieve this outcome (long term
value maximization for the company itself) is simply wrong! <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">A correct understanding of Professor Milton
Friedman’s teaching, it must be said, is that he argued that when management
has a singular focus on profit as it does its work, all those affected by its
work, throughout the economy – especially its own employees, communities,
suppliers and the general public interest will be best served as though by the
guidance of an invisible hand - with all companies behaving in the same way. His motives and expectations for societal
well-being were fine.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">There is no mystery here. This model in action
argues that, with this behavior and action template in use by all participants
in a free market, all participants including all people will be best off. He
therefore implicitly argued that the effects (outcomes) for what we call the
“primary stakeholder groups” of one company and all companies would be as good
as they could possibly be. This model, though, had the mindset and life view, the “focus criterion”
precisely backwards!<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">This shareholder and (short term) profit focus
that the Friedman doctrine calls for relies on the notion of this “invisible
hand” that would automatically guide the company and collective result for
societies and economies to this highest wealth and value level over the long
term. Again, for the last 50 years this doctrine has been literally dominant in business education curricula and in corporations.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">It has indeed resulted in value creation. It
has also required the leaders of companies to behave in accordance with this
dominant short term mindset, partly but not solely driven<span style="mso-spacerun: yes;"> </span>by tying top management compensation to share
price or market capitalization, etc. – measures only of shareholder well-being.
<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">That is, one of the flaws of this model is
that it asks – even requires – managers to behave in short term, inward or
self-focused ways. This flaw alone is disqualifying.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">One result has been companies making big value
destroying mistakes (Enron, WorldCom, Adelphia, VW, GE, GM, etc.). Another
result of this mindset is the 2007-’08 great recession, which is directly
attributable to the behavior this mindset induces. The reality is that, as special as Professor Friedman's teaching is, the 'invisible hand" effect is not automatic. The teachings of Adam Smith were more explicit, as we will see, but without being front-of-mind focused, even his teachings have not been fully followed.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">A Bit More About The Primary
Stakeholder Group-Focused Mindset.<o:p></o:p></span></u></b></div>
<div class="MsoNormal">
<span style="background: white; border: none 1.0pt; color: black; font-size: 14.0pt; padding: 0in;">The primary stakeholder group mindset, on the
other hand, asserts that a company that focuses on optimizing the value it provides to each
of its primary stakeholder groups will produce as one outcome the maximum long
term company wealth and value creation – precisely because of this serving, outward focus. <u>That
is, the ironic <b>outcome</b> for a company, by </u><b style="text-decoration-line: underline;">focusing </b><u>on optimization
of the value it provides to each of its primary stakeholder groups – each
relative to the others - will be long term maximization of the wealth creation
(value) of the company itself!</u> <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; border: none 1.0pt; color: black; font-size: 14.0pt; padding: 0in;">Here is the same idea expressed as a formula:</span><span style="color: black; font-size: 14.0pt;"><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="background: white; border: none 1.0pt; color: black; font-size: 14.0pt; padding: 0in;">IVM= f (S<sub>1</sub>VO, S<sub>2</sub>VO, …S<sub>N</sub>VO).
</span><span style="color: black; font-size: 14.0pt;"><o:p></o:p></span></div>
<div class="MsoNormal" style="mso-margin-top-alt: auto;">
<span style="background: white; border: none 1.0pt; color: black; font-size: 14.0pt; padding: 0in;">That is, a
business (and a person) will maximize its own long-term value when it devotes
its time, talent and treasure (its focus) on optimizing the value it provides
to each of its primary stakeholder groups.</span><span style="background: white; color: black; font-size: 14.0pt;"> <o:p></o:p></span></div>
<div class="MsoNormal" style="mso-margin-top-alt: auto;">
<span style="background: white; color: black; font-size: 14.0pt;">The Primary Stakeholder Groups of any organization are:</span><span style="color: black; font-size: 14.0pt;">
a. <span style="background: white;">Customers, b. Employees, c. Financial
Investors, d. Suppliers, e. Communities in which it has a presence and f.
Society at large (the general public interest). <o:p></o:p></span></span></div>
<div class="MsoNormal" style="mso-margin-top-alt: auto;">
<span style="background: white; color: black; font-size: 14.0pt;">Professor Adam Smith, a moral philosopher by education, used his own
words to express this mindset several times in his two books. Here are some of
his own ways of saying the same thing:<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .25in; mso-margin-top-alt: auto;">
<br /></div>
<ol start="1" style="margin-top: 0in;" type="1">
<li class="MsoNormal" style="background: #E7E9E9; mso-list: l0 level1 lfo2;"><span lang="EN" style="font-size: 14.0pt; mso-ansi-language: EN; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">“The property which every man has is his own
labour; as it is the original foundation of all other property, so it is
the most sacred and inviolable…To hinder him from employing this strength
and dexterity in what manner he thinks proper without injury to his
neighbor is a plain violation of this most sacred property.”<br style="mso-special-character: line-break;" />
<!--[if !supportLineBreakNewLine]--><br style="mso-special-character: line-break;" />
<!--[endif]--><o:p></o:p></span></li>
<li class="MsoNormal" style="background: #E7E9E9; mso-list: l0 level1 lfo2;"><span lang="EN" style="font-size: 14.0pt; mso-ansi-language: EN; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">“How selfish soever man may be supposed,
there are evidently some principles in his nature which interest him in
the fortune of others, and render their happiness necessary to him, though
he derives nothing from it, except the pleasure of seeing it."<br style="mso-special-character: line-break;" />
<!--[if !supportLineBreakNewLine]--><br style="mso-special-character: line-break;" />
<!--[endif]--><o:p></o:p></span></li>
<li class="MsoNormal" style="background: #E7E9E9; mso-list: l0 level1 lfo2;"><span lang="EN" style="font-size: 14.0pt; mso-ansi-language: EN; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">“Man was made for action, and to promote by
the exertion of his faculties such changes in the external circumstances
both of himself and others, as may seem most favourable to the happiness
of all.”<br style="mso-special-character: line-break;" />
<!--[if !supportLineBreakNewLine]--><br style="mso-special-character: line-break;" />
<!--[endif]--><o:p></o:p></span></li>
<li class="MsoNormal" style="background: #E7E9E9; mso-list: l0 level1 lfo2;"><span lang="EN" style="font-size: 14.0pt; mso-ansi-language: EN; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">‘He is certainly not a good citizen who does
not wish to promote, by every means of his power, the welfare of the whole
society of his fellow citizens.”<o:p></o:p></span></li>
</ol>
<div class="MsoNormal" style="background: #E7E9E9; margin-left: .5in;">
<br /></div>
<div class="MsoNormal" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-left: 0.25in; vertical-align: baseline;">
<span lang="EN" style="font-size: 14pt;"><span style="background-color: white;">It is as clear as can be that he connected focus
on others with focus on self. He gave us an axiom that connects self-interest
and other-interest.</span><span style="background-color: #e7e9e9;"><o:p></o:p></span></span></div>
<div class="MsoNormal" style="background: #E7E9E9; vertical-align: baseline;">
<br /></div>
<div class="MsoNormal" style="background: #E7E9E9; vertical-align: baseline;">
<span lang="EN" style="font-size: 14.0pt; mso-ansi-language: EN; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">Therefore, the way for a company in a free market capitalist
economy to maximize its own long term value and wealth creation is to optimize
the long term value it provides to each of its primary stakeholder groups.</span><br />
<span lang="EN" style="font-size: 14.0pt; mso-ansi-language: EN; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"> It is here, though, that even followers of Adam Smith, including Professor Friedman, did not fully explain the front-of-mind necessity that must exist for the "invisible hand" concept to work. </span><br />
<span lang="EN" style="font-size: 14.0pt; mso-ansi-language: EN; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">And importantly, Professor Smith almost certainly did not (and probably could not) anticipate that the six primary stakeholder group reality would exist in the way we now understand it in the 21st century.</span><br />
<span lang="EN" style="font-size: 14.0pt; mso-ansi-language: EN; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"> We do. The BRT new purpose statement does. Some other students of getting capitalism truly right do.</span><br />
<span lang="EN" style="font-size: 14.0pt; mso-ansi-language: EN; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">This explicitly front of mind focus is essential now. We stand of course on the shoulders of many, but especially those of Adam Smith and, more recently, Milton Friedman. We, though, now know that companies, leaders and free market economies must be explicitly committed to the broader primary stakeholder group-focused life view and mindset in order for capitalism to be the economic catalyst for society that it can and must be. </span><br />
<span lang="EN" style="font-size: 14.0pt; mso-ansi-language: EN; mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"> No
new sentence!<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">What About President Trump And His
Mindset, His Presidency’s Performance In The Context of This Discussion of
Capitalism and Democracy?<o:p></o:p></span></u></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">This article until now has been primarily
discussing Capitalism (and indirectly Democracy) done right and wrong, and has
looked at life views – mindsets – to make the case.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">The same concepts, the same criteria for achieving long
term societal well-being, apply to sovereign nations – Democracies and all
governance forms.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">In a nutshell, Donald Trump has brought the
short term, inward-focused and win-lose (us against them) mindset to the White
House, and he personifies all that is fatally flawed about this mindset. It
applies as fully – and more so – to the larger public interest stewardship that
government leaders are entrusted with as it does to corporations in a
capitalism-done-right free market economy. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">With other autocratic leaders around the
world, he is failing. He is failing with a flourish. Others are failing in
other ways – but all the failures are tied to this short term mindset!<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">President Donald Trump is the quintessential
failure as a “leader” in the private sector and even more robustly he has
failed as a “leader” in the public sector!<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Why? Because he personifies all the value
destruction potential, the sub-optimal potential that the short term mindset
brings to the nation and world – in an absolute sense and when compared to the
value creation potential the long term, outward-focused and primary stakeholder
group-focused mindset –life view – can bring to the nation and world!<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">His presidency has displayed this failing from
day one. Each day of his presidency, helped by the win-lose philosophy and conduct of his close advisers, most of whom are themselves absolutely flawed as public servants, has been a seminar on selfishness. But, it has not been quite so fully on display until the corona virus hit the
people of the planet. His mistakes, including unforgivable delays in
decision-making and attempts to cover his mistakes up by lying, are unassailable proof of
his incapacity to handle the job. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">A Final Thought.<o:p></o:p></span></u></b></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">The Smith stakeholder (primary stakeholder
groups) mindset is presented in the context of free market economies and one
model for the way companies can approach their existence.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">This mindset, as a more general matter, is a
golden rule-connected model for behavior of people, companies, governments –
all human groups and interactions. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">To be long term, outward-focused and
value-optimizing for each group of people we </span><span style="font-size: 18.6667px;">significantly affect over time</span><span style="font-size: 14pt;">, as individuals and in our own
groups, is to be living our lives based on a
servant-based leadership life view. And, happily, it is the catalyst that
allows all nations, people and peoples to get on their highest long term value
trajectory and stay there. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">It connects Democracy, free market Capitalism
and the better angels of human nature in the best way possible!<o:p></o:p></span></div>
<br />Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com0tag:blogger.com,1999:blog-4927657185123993411.post-11191490765443017272019-11-21T14:47:00.003-08:002019-11-21T19:56:06.211-08:00Corporate Purpose and Commitment. Is It Really a Choice Between Shareholders and Stakeholders? It Is Not: It Is The Quintessential Both-And Proposition.<br />
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<b><u><span style="font-size: large;"></span></u></b><br /></div>
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">Summary of this Article.</span></u></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">This comment on the Business Roundtable
(BRT) announcement on August 19<sup>th</sup> adopting a new purpose statement
for corporations comes a little late – by more than four months after BRT’s
announcement. This subject of stakeholder purpose or shareholder purpose for
corporations, though, has been continuously discussed and debated since the
1970s.</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">It is offered to make the case that the
shareholder purpose, or profit-as-purpose, model for corporations is absolutely
the wrong model. It also is offered to strongly make a case that the broad
primary stakeholder group model is the correct model for corporate purpose and
commitment.</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;"><span style="mso-spacerun: yes;"> </span>The
shareholder profit-as-purpose model has been the dominant and narrow, primary
focus of corporations since Professor Milton Friedman presented it ably and
forcefully in the 1970s – especially in his article in the New York Times
magazine issue of September, 1970. For the most part, the literature and
discussions on this purpose subject since then has pitted the stakeholder
proposed model against the profit model. Books have been written, lectures given
and debates held. Through it all, and in spite of well-presented arguments
supporting the broader model, the profit model has not only remained dominant,
it has become almost an axiom for publicly held corporations – and private
companies as well.</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">However, it is the wrong purpose, if
maximizing long term profit and value creation of the corporation is in fact
one of or the main outcome corporations seek to produce.</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;"><span style="mso-spacerun: yes;"> </span>BRT’s August 19th announcement moved away from
the profit-as-purpose model to a shared purpose and commitment to all primary
stakeholder groups of a corporation – customers, employees, suppliers,
communities in which they work and long term value for shareholders. This
commitment was adopted, BRT said, to “deliver value to all of these stakeholder
groups – for the success of our companies, our communities and our country.”</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">The reactions to the BRT announcement
ranged from 1. Support to 2. Skepticism that it might be merely a public
relations or political strategy in an election cycle to 3. Rejection. Several
journalists and academics weighed in, generally along this range.</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">It is time for the debate about corporate
purpose or the shared fundamental commitment of all corporations in a free
enterprise capitalist economy to end. <u>There should never have been a debate
in the first place!</u></span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">BRT and its spokesperson, Jamie Dimon, the
current BRT chairman and chair of JP Morgan Chase, should be commended for, at
a minimum, having good intentions. There probably was good discussion before
the 181 CEOs signed the new corporate purpose statement – probably some healthy
debate.</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">Embracing the concept, though, is only
valuable to economies and societies if the full breadth and depth necessary to
breathe everyday life into it in practice happens.</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">Let’s look at both models and see whether
and how they are related. If they are related, we might see if there is a best
way to move forward, a solution to this nagging, irritating and
counter-productive longstanding debate. </span></b></div>
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">Professor Milton Friedman
and Profit as the Sole Purpose.</span></u></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">The dogmatic proclamation by Professor
Friedman in the 1960s and 1970s - the September, 1970 New York Times magazine
article in particular - set the U.S. economy (and other capitalist free
enterprise economies) on a 50 year and counting profit-as-purpose path. <u>This
model is wrong for two reasons:</u></span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">1.</span></b><b style="mso-bidi-font-weight: normal;"><span style="font-size: 7.0pt;"> </span></b><b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">The first reason is that a narrow and dominant focus on profit is
doomed to fall short of maximizing long term profits (value creation) as an
outcome for the corporation – precisely because it is so myopic. To almost
always be looking at and even be fixated on the scoreboard without paying
attention to all the important things that must be done correctly to produce
great scoreboard results as an outcome is self-evidently a flawed model.</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">2.</span></b><b style="mso-bidi-font-weight: normal;"><span style="font-size: 7.0pt;"> </span></b><b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">The second is the failure to understand that a robust, sage and
correct understanding of how to produce maximum long term profit or value
creation for the enterprise itself as an outcome requires a corporate
commitment to and focus on optimization of the long term value it provides to
each of its six (6) primary stakeholder groups. These are essentially those
listed by BRT. They are: Customers, Employees, Suppliers, Communities where it
has a presence, Financial Investors (Shareholders) and The General Public
Interest.</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt;">The Broader Stakeholder Purpose and Commitment.</span></u></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">These are summary thoughts about how
corporations can best breathe full life into this one ultimately correct
corporate purpose or commitment.<span style="mso-spacerun: yes;"> </span>A full
presentation of the pillars supporting this summary is included in the
narrative following this summary statement.</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">To continue to debate which is best,
shareholder or stakeholder purpose, is a tragic waste of time. In fact, the
last 50 years of narrow focus on profit as the sole purpose has led to
sub-optimal economic performance, including being the primary cause of the
2007-’08 great recession. If and only if the broader stakeholder purpose and
commitment is adopted and lived by corporations will long term profit and value
creation maximization for the corporation itself – and for economies - be a
natural outcome.</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">Shareholder profit maximization, as
championed by Professor Friedman and as placed on steroids by Professors
Michael Jensen and William Meckling in 1976, only flows, and flows as an
outcome not a reason for existence or purpose, from primary stakeholder group
value optimization in the long run. It is a functional relationship and a
both-and proposition.</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">In terms of mindsets, the shareholder
mindset is dominantly short term, inward-focused and win-lose. The stakeholder
mindset is dominantly long term, outward-focused and value-optimizing for the
six (6) primary stakeholder groups. As an important aside, this same
“stakeholder mindset” is also completely applicable to governments in
democracies, especially including representative democracies.</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">That is, long term shareholder profits
(value creation), and corporate or entity<span style="mso-spacerun: yes;">
</span>value, are maximized if and only if the long term value the corporation
provides to each of its six (6) primary stakeholder groups is optimized. The
former is a direct function (result) of the latter!</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">The Article.</span></u></b></div>
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">Long Term Profit
Maximization (Value Creation) for a Corporation Is a Function of Optimizing
Long Term Value for Each of the Corporation’s Six (6) Primary Stakeholder
Groups. The Former is a Direct Function of the Latter!</span></u></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">The Business Roundtable (BRT), an
”association of CEOs of America’s leading companies working to promote a
thriving U.S. economy and expanded opportunity for all Americans through sound
public policy,” announced in late August, 2019 its adoption of a new statement
of purpose for corporations. In short, BRT has embraced the broad stakeholder
purpose concept and moved away from the narrow shareholder model of the purpose
for corporations.</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">The Stakeholder Model.</span></u></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">From BRT’s
news announcement on August 19<sup>th</sup>, “The Business Roundtable has<span style="mso-spacerun: yes;"> </span>changed its statement of “the purpose of a
corporation.” No longer should decisions be based solely on whether they will
yield higher profits for shareholders, the group said. Rather, corporate
leaders should take into account “all stakeholders”—that is, “employees,
customers and society writ large.” The release provided more detail about each
of the stakeholder groups but this statement is the heart of the broader
purpose they adopted.</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">The Shareholder Model.</span></u></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;"><span style="mso-spacerun: yes;"> </span>The
shareholder model holds that the purpose of a corporation is solely to produce
profit for corporate shareholders. Its origin is the teaching of Professor
Milton Friedman of the University of Chicago in the 1960s and 1970s. It was
placed on steroids in a 1976 article by Professors Michael Jensen and William
Meckling who asserted that managers are agents of the shareholders, who they
said were the “owners” of the corporation. This agency theory, with its own
flaws, including this ownership matter, led to the practice of tying the
compensation of the top managers of corporations to the share price and related
value measures of the corporation, adding to the narrow focus on value creation
for shareholders over the last 50 years. For one thing, it has been a major
cause of the multiple of CEO compensation compared to entry level employee
compensation going from about 20 to 30 times in the late 1970s to as much as
300 times by 2015, and through the present time. </span></b></div>
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">Reactions to the BRT
Announcement.</span></u></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">Since the BRT announcement, several
articles and other commentary from academics, reporters and corporate leaders
have been written. The comments<span style="mso-spacerun: yes;"> </span>range
from endorsement of the BRT decision to cautious support but skepticism about
whether it is just happy talk that might not lead to behavioral changes in
corporations (not walking the walk), to outright rejection of the stakeholder
model. This latter argument is simply and bluntly that attention to other
stakeholder groups like employees, suppliers and communities is fine, but
shareholders are still and always going to be first among equals – King! </span></b></div>
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">The Answer.</span></u></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">In a nutshell, when capitalism is done as we
present it here and when corporate purpose is <u>conceptually defined</u> as we
define it here, and as the BRT has now chosen to define it, then the reason to
debate the merits of these two models <span style="background: white;">will no
longer exist.</span></span></b><br />
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<b style="mso-bidi-font-weight: normal;"><u><span style="background: white; font-size: 14.0pt; mso-bidi-font-family: Calibri;">Why Not? </span></u></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="background: white; font-size: 14.0pt; mso-bidi-font-family: Calibri;">Because this debate, this
pitting of shareholder interests - one of every corporation’s six (6) primary
stakeholder groups - against the interests of each of its other five (5)
primary stakeholder groups is counter-productive, even self-defeating. The debate
has been about a choice that need not exist. It is a both-and proposition, not
a choice!</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="background: white; font-size: 14.0pt; mso-bidi-font-family: Calibri;">Public companies and all
organizations that focus on optimizing long term value for each of their six
primary stakeholder groups will, <u>as a natural outcome,</u> maximize the long
term value creation, including profit and all value measures, of the
organization itself! Professor Friedman et al simply did not think it all
through deeply enough. </span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="background: white; font-size: 14.0pt; mso-bidi-font-family: Calibri;">They did not take into account
the better angel dominant characteristics of people as people – including
people as markets in the marketplace locally and globally. If the dominant
capitalism model and corporate purpose model over the last 50 years or so had
been the one we present here, that BRT has now supported in concept but not yet
in action, the world would be a better place – ultimately better.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">An Existential and Transformative Change.</span></u></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">It is an existential change to corporate purpose
and to getting capitalism right that the BRT support for the broader
stakeholder concept fortuitously prompts us all to consider and adopt. And, not
just conceptually as BRT has so far done, but as a change that is behavioral,
actionable, teachable and learnable. This is an opportunity to make an ultimate
existential improvement for economies and societies. It also helps get
capitalism right.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">Its explanation and details follow here below. To
repeat and be forcefully clear, the opportunity to get corporate purpose right
and get capitalism right is really what the BRT and its signing CEOs have teed
up for all of us. It will take effort. Embracing the concept, talking the talk,
is only a first step.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;"><span style="mso-spacerun: yes;"> </span>This
article presents one deeply held belief about how to do it – a belief that is
grounded in part on the real core teaching that the moral philosopher and
father of modern Economics, Professor Adam Smith, intended or should have
intended! </span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">Professor Adam Smith’s most relevant statements
on this core subject are presented here first, followed by a complete
explanation of the broad corporate purpose - the stakeholder-based purpose -
that the BRT recently adopted in concept.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;"><span style="mso-spacerun: yes;"> </span>The
primary stakeholder group value optimization model is presented below in its
full detail, following our quotes from Adam Smith. These quotes were
dogmatically expressed by him – he meant them! </span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">His heart and mind are at one in these
statements. His Moral Philosopher self and his “Father of Modern Economics”
self are at one as well.<i style="mso-bidi-font-style: normal;"><span style="color: #c00000;"> </span></i>They are:</span></b><br />
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<div style="margin-left: .5in;">
<br /></div>
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<div style="margin-left: .5in; text-indent: -.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">1.
“The property which every man has is his own labour; as it is the
original foundation of all other property, so it is the most sacred and
inviolable…To hinder him from employing this strength and dexterity in what
manner he thinks proper without injury to his neighbor is a plain violation of
this most sacred property.”<br />
<br style="mso-special-character: line-break;" />
<br style="mso-special-character: line-break;" />
</span></b></div>
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<div style="margin-left: .5in; text-indent: -.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">2.<span style="mso-spacerun: yes;"> </span>“How selfish soever man may be supposed,
there are evidently some principles in his nature which interest him in the
fortune of others, and render their happiness necessary to him, though he
derives nothing from it, except the pleasure of seeing it.”<br />
<br style="mso-special-character: line-break;" />
<br style="mso-special-character: line-break;" />
</span></b></div>
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<div style="margin-left: .5in; text-indent: -.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">3.<span style="mso-spacerun: yes;"> </span> “Man was made for action, and to
promote by the exertion of his faculties such changes in the external
circumstances both of himself and others, as may seem most favourable to the
happiness of all.”<br />
<br style="mso-special-character: line-break;" />
<br style="mso-special-character: line-break;" />
</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">4.
‘He is certainly not a good citizen who does not wish to promote, by
every means of his power, the welfare of the whole society of his fellow
citizens.”</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;"><br />
<br style="mso-special-character: line-break;" />
<br style="mso-special-character: line-break;" />
</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">It is as clear as can be
that he connected focus on others with focus on self. He gave us an axiom that
connects self-interest and other-interest.</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">The Proposed Stakeholder Group Model for
Corporate Purpose and Capitalism. </span></u></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">This is the complete way to express the concept
BRT endorsed. Endorsing the concept is one thing. Breathing everyday life into
it in corporations and entire economies is another. We present the way we think
it should be done here:</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">I. The Proposed New Model – The Essential Mindset
for Corporate Purpose and Capitalism Going Forward:</span></u></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">Self-interest value maximization is a direct
function of optimization of the value provided by an organization to each of
that organization's primary stakeholder groups – each relative to the others.
This is the complete way to express the concept BRT endorsed. </span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">Here is the same idea expressed as a formula:</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">IVM= f (S1VO, S2VO, …SNVO), where N=6. </span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">That is, a business (and a person) will maximize
its own long-term value when it devotes its time, talent and treasure to
optimizing the value it provides to each of its six (6) primary stakeholder
groups. </span></b><br />
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">II. The Primary Stakeholder Groups of Any
Organization (or Person) are:</span></u></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">a. Customers, b. Employees, c. Financial
Investors, d. Suppliers, e. Communities in which it has a presence and f.
Society at large (the general public interest). </span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">Every business, in fact every organization (every
group with a unifying purpose), will maximize its own long term value or wealth
creation as a direct function of optimally serving its six (6) primary
stakeholder groups. </span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">The concise model presented above, including the
critically important concept of primary stakeholder groups, is supported by and
incorporates several pillars of human characteristics, including how people
choose to behave as markets for goods and services. These characteristics
represent and truly are at the center of the best of human nature around the
world. The BRT new purpose statement will be actionable through these pillars –
<u>otherwise as said by some, it would all indeed be mostly just anodyne
rhetoric!</u></span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">Importantly, the details of each pillar follow
the list below, and even the details need further elaboration to enable an
organization to fully live them.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">They are grounded in the special and wonderful
aspects of what can generally be described as the best of human nature in all
parts of life – including life acted out in the marketplace between sellers and
buyers of goods and services, locally and globally. And, capitalism is the key
economic system catalyst that enables all of these characteristics to flourish,
through this model in action.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">III. The Supporting Pillars: </span></u></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">1.<span style="mso-tab-count: 1;"> </span>First,
of course, are the six (6) primary stakeholder groups of every organization – companies
(for profit and non-profit), governments, schools, nations, etc.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">2.<span style="mso-tab-count: 1;"> </span>The
things most valued by each primary stakeholder group of every organization.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">3.<span style="mso-tab-count: 1;"> </span>The
unalienable rights of every person in the world.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">4.<span style="mso-tab-count: 1;"> </span>The
universally (ubiquitously) shared virtues of all people around the world.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">5.<span style="mso-tab-count: 1;"> </span>The
traits (behaviors of people) leading to these virtues.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">6.<span style="mso-tab-count: 1;"> </span>The
better angels of our human nature (all people and peoples around the world).</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">7.<span style="mso-tab-count: 1;"> </span>The
gold standard leadership characteristics for all organizations.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">8.<span style="mso-tab-count: 1;"> </span>The
gold standard cultural characteristics for all organizations.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">9.<span style="mso-tab-count: 1;"> </span>The
centrally important role of ethics and ethical behavior for all organizations.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">10.<span style="mso-tab-count: 1;"> </span>The
robust understanding and conduct of fiduciary responsibilities of all
organizations.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">11.<span style="mso-tab-count: 1;"> </span>Happiness.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">Here Are The Important Details of Each Pillar. </span></u></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">These details really represent the essence of the
highest nature of people around the world, interacting with each other in all
ways and, especially here, in their role as sellers and buyers in the marketplace.
<u>The BRT new purpose concept gets legs through these pillars and the details
for each pillar:</u></span></b><br />
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">A. The Primary Stakeholder Groups of Any
Organization:</span></u></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">1.<span style="mso-tab-count: 1;"> </span>Customers
2. Employees, 3. Suppliers, 4. Financial Investors, 5. Communities where the
organization has a presence, and 6. The General Public Interest.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">B.<span style="mso-spacerun: yes;"> </span>The
things most valued by each primary stakeholder group of every organization.</span></u></b><b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;"> The things listed here for each group are indicative, not exhaustive,
and could be amended. At the same time the valued things listed her are
certainly among the core and finite list of things each stakeholder group
values:</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">1.<span style="mso-tab-count: 1;"> </span>Customers:
1. High quality, 2. Reasonable prices, 3. Kindness, 4. Companies that treat
their employees well and 5. Companies that are good citizens.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">2.<span style="mso-tab-count: 1;"> </span>Employees:
1. Opportunity, 2. Fair compensation, 3. Security, 4. Opportunity and Challenge
to achieve as individuals and teams/groups and 5. Company conducts itself as a
good neighbor, a good citizen.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">3.<span style="mso-tab-count: 1;"> </span>Investors:
1. Best value creation from their funds, for any period but especially over the
long term, 2. Positive company participation in communities, 3. Great company
treatment of employees, 4. Great company standing in society (loved), 5. Gold
standard leadership in the company and 6. Full participation in society.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">4.<span style="mso-tab-count: 1;"> </span>Communities
in which it has a presence: 1. Good citizen in local communities, 2. Long term
participative partner in community well-being, 3. Great company treatment of
its employees, 4. Full company involvement in environmental and societal
stewardship for the long term and 5. Openness.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">5.<span style="mso-tab-count: 1;"> </span>Suppliers:
1. Fair dealing, 2. Long term partnership opportunity mutually earned, 3. Great
treatment of employees, 4. Positive citizenship conduct of company and 5.
Enjoyable to work with.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">6.<span style="mso-tab-count: 1;"> </span>Society
(The General Public Interest): 1. Great local and global citizen, participative
and engaged, 2. Great social and environmental steward, long term, 3. Willing
partner and participant with others (including governments) in serving the
public interest and 4. Excellent treatment of its employees, suppliers and
neighbors.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">C.<span style="mso-spacerun: yes;"> </span>The
Unalienable Rights: The basic unalienable rights of people around the world are
treasured: </span></u></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">1. Life, 2. Liberty, 3. The Pursuit of Happiness
and 4. Property (especially that property that is one’s own aptitudes, about
which one is passionate).</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;"><span style="mso-spacerun: yes;"> </span>Note:
These four rights also incorporate health care and education as universal and
unalienable.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">D.<span style="mso-spacerun: yes;"> </span>The
Globally Held Virtues: Those virtues (and the traits associated with having
each virtue) that are shared as precious by virtually all peoples around the
world:</span></u></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">1. Wisdom and Knowledge (Curiosity, Love of
Learning, Judgment, Ingenuity, Social Intelligence and Perspective), 2. Courage
(Valor, Perseverance and Integrity), 3. Humanity and Love (Kindness and
Loving), 4. Justice (Citizenship, Fairness and Leadership), 5. Temperance
(Self-control, Prudence and Humility), 6. Transcendence (Appreciation of
Beauty, Gratitude, Hope, Spirituality, Forgiveness, Humor, and Zest).</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">E.<span style="mso-spacerun: yes;"> </span>The
Gold Standard Leadership Characteristics:</span></u></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">1. Establish direction – Vision, 2. Personal
humility and professional will – modest and fearless, 3. Inclusive, enabling,
inspirational, a listener, 4. Stakeholder-focused – in a maniacally profound
way, 5. Heart of a servant, 6. Ethical, courageous and just and 7. Fun.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">F. The Gold Standard Cultural Characteristics:</span></u></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">1. Adaptive, with a core ideology (purpose and
values), 2. Risk taking, trusting and proactive, 3. One in which all are heard
and the truth is heard, 4. Reflective, humble, anticipatory and involved, 5.
Rational and respectful, A conscientious mindset, 6. Quietly confident,
unassuming while pursuing the organization’s vision and mission with passion,
perseverance, humor and zest, 7. Disciplined people, thoughts and actions in a
fun and dynamic environment, 8. Open, supportive and enthusiastic, 9 Happy in a
stakeholder-centered (H3) way and 10. Fun. </span></b><br />
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">G.<span style="mso-spacerun: yes;"> </span>Three
Essential Elements of Correct Organizational Behavior at All Times:</span></u></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">1. Ethical behavior in all things, 2. A robust understanding
of fiduciary responsibility and 3. Happiness.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">H.<span style="mso-spacerun: yes;"> </span>People
As Markets:</span></u></b><b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;"> “Markets” here is a
synonym for “people.” It presents the optimization idea in street language, as
follows:</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">1. Markets like companies that have and live the
globally held virtues, 2. Markets like companies that treasure and honor the
unalienable rights, 3. Markets like companies that fully understand they have
fiduciary obligations to all their primary stakeholders, 4. Markets like
companies that are ethical and fair, 5. Markets like companies that are
effective, efficient, productive, creative and innovative (the basic blocking
and tackling requirements of every excellent organization), 6. Markets like
companies that produce high quality products and services at reasonable prices,
7. Markets like companies that are good citizens, pitching in and helping out
in their communities, 8. Markets like companies that treasure the environment
and are good stewards for future generations, attending to the public interest
and 9. Markets like companies that compensate their employees fairly and create
great, stimulating work environments for them – helping them be creative,
innovative, challenged and fulfilled.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">I.<span style="mso-spacerun: yes;"> </span>The
Better Angels of our Human Nature:</span></u></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">What are the better angels of our human nature? </span></b><br />
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<div style="text-indent: -.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">A.</span></b><b style="mso-bidi-font-weight: normal;"><span style="font-size: 7.0pt;">
</span></b><b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">President Lincoln suggested these are: 1.
Humaneness, 2. Compassion, 3. Good will, 4. Tolerance and 5. Other good things.
</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">B.</span></b><b style="mso-bidi-font-weight: normal;"><span style="font-size: 7.0pt;">
</span></b><b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">Harvard Professor Steven Pinker examined four
motives that "can orient [humans] away from violence and towards
cooperation and altruism." He identifies: </span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">1. Empathy: which
"prompts us to feel the pain of others and to align their interests with
our own," 2. Self-Control: which "allows us to anticipate the
consequences of acting on our impulses and to inhibit them accordingly,"
3. The Moral Sense: which "sanctifies a set of norms and taboos that
govern the interactions among people in a culture." These sometimes
decrease violence but can also increase it "when the norms are tribal,
authoritarian, or puritanical" and 4. Reason: which "allows us to
extract ourselves from our parochial vantage points.”</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">J.<span style="mso-spacerun: yes;">
</span>Relevant Quotes From Iconic Leaders Over The Centuries: Each of These
Quotes Supports the Broad Primary Stakeholder Group Purpose in Concept and
Action. </span></u></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">1. All wrong-doing arises because of mind. If
mind is transformed can wrong-doing remain? <u>Buddha. </u></span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;"><span style="mso-spacerun: yes;"> </span>2. A man
is but the product of his thoughts - what he thinks, he becomes.<span style="mso-spacerun: yes;"> </span><u>Mohandas Gandhi.</u></span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">3. I want you to be concerned about your next
door neighbor. Do you know your next door neighbor? <u>Mother Teresa.</u></span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">4. It is very important to generate a good
attitude, a good heart, as much as possible. From this, happiness in both the
short term and the long term for both yourself and others will come. The
purpose of our lives is to be happy.<u> The Dalai Lama. </u></span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">5. “Do to others whatever you would like them to
do to you. This is the essence of all that is taught in the law and the
prophets. <u>(Matthew 7:12).</u></span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">6. Life's most urgent question is: what are you
doing for others? <u>Martin Luther King, Jr.</u></span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;"><span style="mso-spacerun: yes;"> </span>7. “Every
good act is charity. A man's true wealth hereafter is the good that he does in
this world to his fellows.” <u>Mohammed.</u></span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">8. Forbes Thought of the Day – 10/21/’13. “A
man's true wealth is the good he does in this world.” </span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">9. Every art and every inquiry, and similarly
every action and choice, is thought to aim at some good; and for this reason
the good has rightly been declared to be that at which all things aim. <u>Aristotle.</u></span></b><br />
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">IV. Adaptive Strategic Planning (Organic,
Changing but Grounded, etc.). </span></u></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">So, the day to day conduct of the work of a
corporation, and every organization, must be grounded in the new purpose and
the pillars supporting it. </span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">It also must be accompanied by a disciplined but
not stifling near and long term planning process – tactical, strategic and
adaptive. </span></b><br />
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<b><u><span style="background: white; border: none windowtext 1.0pt; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-style: italic; mso-border-alt: none windowtext 0in; padding: 0in;">A Brief Explanation of the Role of
Multi-Year Planning and Doing, The Main Action Vehicle For Our Model, is in
order.</span></u></b><b style="mso-bidi-font-weight: normal;"><span style="background: white; border: none windowtext 1.0pt; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-style: italic; mso-border-alt: none windowtext 0in; padding: 0in;"> </span></b><br />
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<div style="background: #E7E9E9; border: none; line-height: normal; mso-border-bottom-alt: solid #D5D7D8 .75pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; mso-padding-alt: 0in 0in 0in 0in; padding: 0in;">
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<b><span style="background: white; border: none windowtext 1.0pt; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-style: italic; mso-border-alt: none windowtext 0in; padding: 0in;">Strategic plans are often spoken of in a negative way. The criticisms
include being too slow, irrelevant before the ink is dry on the document,
esoteric and a waste of time. They are characterized as being (and often are)
placed on a shelf collecting dust. It has also been said that “plans are
worthless but planning is essential.”</span></b><br />
<div style="background: #E7E9E9; border: none; line-height: normal; mso-border-bottom-alt: solid #D5D7D8 .75pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; mso-padding-alt: 0in 0in 0in 0in; padding: 0in;">
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<b><span style="background: white; border: none windowtext 1.0pt; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-bidi-font-style: italic; mso-border-alt: none windowtext 0in; padding: 0in;">The truth is quite the contrary. Plans and adaptive planning go hand in
glove. In fact, actionable multi-year adaptive, adaptable plans, or playbooks,
are<u> the</u> essential vehicle through which this new mindset-based purpose
happens. The actionable plan is the</span></b><b><span style="background: white; border: none windowtext 1.0pt; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-border-alt: none windowtext 0in; padding: 0in;"> <span style="mso-bidi-font-style: italic;">dynamic
vehicle through which it all springs to life – and continues to be vibrant.</span>
<span style="mso-bidi-font-style: italic;">Again, let’s be clear: An adaptable,
adaptive plan is the very definition of planning, which in turn keeps us on the
maximum value creation trajectory over time, and it fulfills, it is fun.</span></span></b><b style="mso-bidi-font-weight: normal;"><span style="background: white; font-size: 14.0pt; mso-bidi-font-family: Calibri;"> </span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="background: white; font-size: 14.0pt; mso-bidi-font-family: Calibri;">To be more pointed: The SEC
quarterly reports by corporations in the United States are primarily focused on
the financial condition of a company (the investor primary stakeholder group).</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="background: white; font-size: 14.0pt; mso-bidi-font-family: Calibri;">The SEC reports in the U.S. –
and corresponding reports in other nations - and all regular reviews of company
financial health must be complemented by regular reporting and discussion, such
as quarterly reports, on progress toward goals for each of the other primary
stakeholder groups as well. That is how optimal value improvement can be
obtained for each primary stakeholder group – and long term value
maximized for the organization.</span></b><br />
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<b style="mso-bidi-font-weight: normal;"><span style="background: white; font-size: 14.0pt; mso-bidi-font-family: Calibri;">In addition, daily, weekly,
monthly and all leadership focus behavior should consider the effects of
decision choices on each of the six (6) primary stakeholder groups, <u>so that
the optimization of value criterion is front of mind always</u></span></b><b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">. </span></u></b><b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-family: Calibri;">It can
sound burdensome but as it becomes second nature it is both invigorating and
liberating – it leads to long term corporate value maximization as an outcome
precisely because the dominant focus is correct – primary stakeholder group
value optimization!</span></b><br />
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<b><u><span style="background: white; border: none windowtext 1.0pt; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-border-alt: none windowtext 0in; padding: 0in;">A Final Thought on This Existential Change - and Ultimate
Improvement – </span></u></b><b style="mso-bidi-font-weight: normal;"><u><span style="background: white; border: none windowtext 1.0pt; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-border-alt: none windowtext 0in; padding: 0in;">To Corporate Purpose
and Capitalism Done Right.</span></u></b><br />
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<b><span style="background: white; border: none windowtext 1.0pt; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-border-alt: none windowtext 0in; padding: 0in;">All too often
over the years, the easy way out is to do pretty good - to beat the
competition. Excellence is therefore too often not pursued. Of course
breakthrough innovations have been made and do happen, but so often they have
preceded organizational behavior and have flowed from the passion of true
innovators before the fact. </span></b><br />
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<b><span style="background: white; border: none windowtext 1.0pt; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-border-alt: none windowtext 0in; padding: 0in;">The great news
here is that the full life well-lived – the happy life - and the highest value
creation for each and all corporations (all organizations) will flow from, and
only from, adopting and acting out this timely broader corporate purpose that
the BRT has adopted in concept and, of equal importance, this integrally
related and deeper appreciation and adoption of capitalism done right!</span></b><br />
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<b><u><span style="background: white; border: none windowtext 1.0pt; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-border-alt: none windowtext 0in; padding: 0in;">A Perennial Debate?</span></u></b><br />
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<b><span style="background: white; border: none windowtext 1.0pt; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-border-alt: none windowtext 0in; padding: 0in;">The decades
long debate about whether shareholder value or stakeholder value is the proper
purpose or commitment of corporations is in fact a debate that should end. It
should never have been necessary. </span></b><br />
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<b><span style="background: white; border: none windowtext 1.0pt; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-border-alt: none windowtext 0in; padding: 0in;">Shareholder
value and, more generally, corporate long term profits - value creation - is
maximized if and only if the corporation focuses on and delivers optimal long
term value to each of its six (6) primary stakeholder groups.</span></b><br />
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<b><span style="background: white; border: none windowtext 1.0pt; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-border-alt: none windowtext 0in; padding: 0in;">Capitalism as
the best catalyst to enable corporations to act this purpose and commitment out
is itself done right if and only if it is perfectly in harmony with and thus
facilitates this model.</span></b><br />
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<b><span style="background: white; border: none windowtext 1.0pt; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-border-alt: none windowtext 0in; padding: 0in;">The essential
next step is to breathe behavioral, actionable, teaching and learning aspects
of what Adam Smith really intended when he wrote and taught about societies and
economies 250 years ago.</span></b><br />
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<b><u><span style="background: white; border: none windowtext 1.0pt; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-border-alt: none windowtext 0in; padding: 0in;">A Final Thought.</span></u></b><br />
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<b><span style="background: white; border: none windowtext 1.0pt; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-border-alt: none windowtext 0in; padding: 0in;">The BRT
initiative is timely and commendable. It prompts this elaboration on the
perennial question of what the best purpose and commitment of corporations,
indeed all organizations, really should be – the purpose that will enable
corporations to maximize their own long term value (wealth, profit) creation as
an outcome. </span></b><br />
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<b><span style="background: white; border: none windowtext 1.0pt; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-border-alt: none windowtext 0in; padding: 0in;">This
elaboration makes the case that it is if and only if corporations focus on
optimizing the long term value they each provide to their six (6) primary
stakeholder groups will the corporation’s own long term value (wealth, profit)
outcome be maximized. The model requires focus on serving these groups, not on
fixating on the scoreboard – the corporation’s own profit near and long term.</span></b><br />
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<b><span style="background: white; border: none windowtext 1.0pt; font-size: 14.0pt; mso-bidi-font-family: Calibri; mso-border-alt: none windowtext 0in; padding: 0in;">Fortuitously,
serendipitously or perhaps ironically it is this model that does what Professor
Milton Friedman, economist, wanted as an outcome. It also is the model that
Professor Adam Smith, moral philosopher and economist, taught and advocated. It
enables capitalism, as a catalyst, to bring the highest long term well-being to
all societies using it – all people and peoples everywhere!</span></b><br />
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<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike></div>
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<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike><b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com0tag:blogger.com,1999:blog-4927657185123993411.post-68863291091868216222019-07-10T20:54:00.000-07:002019-07-11T12:45:33.252-07:00The Donald Trump Presidency: One Citizen's Thoughts 2 1/2 Years In.<br />
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<b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;">This post comes after an almost three
year hiatus on posts at jackhaffey.blogspot.com.</span></b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;"></span></div>
<br />
<div style="line-height: normal; margin-bottom: 5.75pt; mso-margin-top-alt: auto;">
<b><u><span style="font-family: "times new roman" , serif; font-size: 12.0pt;">The Donald Trump Presidency: Hoping
For the Best.</span></u></b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;"></span></div>
<br />
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<b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;">Following his electoral college
victory in November, 2016, we decided to give time to see how Donald Trump
conducted himself as the newly elected president before talking more about
getting capitalism right – and about him in the context of leadership with our
capitalism done right model.</span></b></div>
<div style="line-height: normal; margin-bottom: 5.75pt; mso-margin-top-alt: auto;">
<b>A Note: In brief, our model is outward-focused, long term and value optimizing for the six primary stakeholder groups of every organization -domestic and global.</b> <b>The dominant capitalism model for the last 50 years or so has been the Professor Milton Friedman model, which holds that the only purpose of a company is profit, to make money for the owners. It is inward-focused, dominantly short term and win-lose.</b></div>
<br />
<div style="line-height: normal; margin-bottom: 5.75pt; mso-margin-top-alt: auto;">
<b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;"> Our capitalism-done-right thoughts apply to all organizations. Governments are, of course, very significant “organizations”
themselves and the proposed paradigm applies to them as well, as we have said
throughout our posts. In fact, our proposed paradigm of capitalism done right
(really, think of it more broadly as organizations doing right) applies to
companies, governments and all organizations around the world. </span></b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;"></span></div>
<br />
<div style="line-height: normal; margin-bottom: 5.75pt; mso-margin-top-alt: auto;">
<b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;">Because this conceptual and
behavioral paradigm that gets capitalism right applies to all organizations –
including governments – it seemed right and fair that we should take some time
to see whether the new president and his administration could or would rise to
the level we assert is necessary to create excellence. </span></b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;"></span></div>
<br />
<div style="line-height: normal; margin-bottom: 5.75pt; mso-margin-top-alt: auto;">
<b>Or whether, on the other hand, our
prediction about then-candidate Trump in our October 23, 2016 post proved spot
on correct. (our post is at jackhaffey.blogspot.com).</b></div>
<br />
<div style="line-height: normal; margin-bottom: 5.75pt; mso-margin-top-alt: auto;">
<b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;">The Presidency of the United States
of America should be among a handful of government executive branch
servant-leadership models around the world worthy of emulation. The Declaration of Independence
and the United States Constitution provide a perfect guiding framework that
fits our model for leadership that will produce long term excellence –
domestically and globally - in all foreign and international relations.</span></b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;"> </span></div>
<br />
<div style="line-height: normal; margin-bottom: 5.75pt; mso-margin-top-alt: auto;">
<b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;">This specific president, Donald
Trump, gave us an opportunity to check on whether his concept of leadership and
organizational purpose – and conduct – fits our model.</span></b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;"></span></div>
<br />
<div style="line-height: normal; margin-bottom: 5.75pt; mso-margin-top-alt: auto;">
<b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;">It is now clear it does not. Indeed,
his way is the antithesis of our way, our model.</span></b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;"></span></div>
<br />
<div style="line-height: normal; margin-bottom: 5.75pt; mso-margin-top-alt: auto;">
<b><u><span style="font-family: "times new roman" , serif; font-size: 12.0pt;">Conclusion and Verdict.</span></u></b></div>
<div style="line-height: normal; margin-bottom: 5.75pt; mso-margin-top-alt: auto;">
<b>Sadly but predictably, we were “spot
on correct!”</b></div>
<div style="line-height: normal; margin-bottom: 5.75pt; mso-margin-top-alt: auto;">
<span style="background-color: white; color: black; display: inline; float: none; font-family: "times new roman" , serif; font-size: 12pt; font-style: normal; font-variant: normal; font-weight: 700; letter-spacing: normal; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">President Trump, you must read that
10/23/2016 post. It will set your hair on fire!</span></div>
<div style="line-height: normal; margin-bottom: 5.75pt; mso-margin-top-alt: auto;">
<b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;">It is a sad commentary on our
democratic system here in the United States that the real needs and hopes of
all Americans, and the more pressing hopes and needs of various sectors of our
population (people in poverty, people harmed economically by job loss due to technological and
related changes, people seeking a more forceful advocate for certain religious
or rights-based issues, people concerned about the appropriate policies on
immigration, etc.) could have their concerns be preyed upon and pandered to by
such an inward-focused amoral, apolitical narcissist. We deserve so much better. The entire world deserves and needs so much better from our president. The world looks to us for wise servant leadership. </span></b></div>
<br />
<div style="line-height: normal; margin-bottom: 5.75pt; mso-margin-top-alt: auto;">
<b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;">But here we are, in the summer of
2019 and the Trump administration, led by this uniquely selfish person
Donald Trump, has established itself as one-of-a-kind BAD. SO TRAGIC!</span></b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;"> </span></div>
<br />
<div style="line-height: normal; margin-bottom: 5.75pt; mso-margin-top-alt: auto;">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt;"> <b>Therefore we must conclude
that our post criticizing you as candidate Trump on October 23, 2016 at
jackhaffey.blogspot.com has been ratified and affirmed as spot on prophetic by
your presidency, Donald Trump, day in and day out, from the moment of your
inauguration.</b> </span></div>
<br />
<div style="line-height: normal; margin-bottom: 5.75pt; mso-margin-top-alt: auto;">
<b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;">You have not let us down, President
Trump. In fact, you have been more inept, disordered and unfit than we ever
could have predicted. </span></b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;"></span></div>
<br />
<div style="line-height: normal; margin-bottom: 5.75pt; mso-margin-top-alt: auto;">
<b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;">So, thank you, President Trump.
Using your own style of teasing and persuading (underlined), <span style="mso-spacerun: yes;"> </span>you are even worse than we anticipated – <u>that
much we can tell you.</u> <span style="mso-spacerun: yes;"> </span></span></b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;"></span></div>
<br />
<div style="line-height: normal; margin-bottom: 5.75pt; mso-margin-top-alt: auto;">
<b><u><span style="font-family: "times new roman" , serif; font-size: 12.0pt;">Many people have been telling us you
have it in you to be so much worse.</span></u></b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;">
<b>We should hope not. </b></span></div>
<br />
<div style="line-height: normal; margin-bottom: 5.75pt; mso-margin-top-alt: auto;">
<b><u><span style="font-family: "times new roman" , serif; font-size: 12.0pt;">We will see.</span></u></b><b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;"> </span></b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;"></span></div>
<br />
<div style="line-height: normal; margin-bottom: 5.75pt; mso-margin-top-alt: auto;">
<b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;">You have already set our country
back thousands of years, domestically and globally. You might not know it, but
we have only been a nation for about 250 years. So, use your big brain and
genius attributes, along with your fertile and delusional self-concept, to
figure that one out.</span></b><span style="font-family: "times new roman" , serif; font-size: 12.0pt;"></span></div>
<br />
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 12.0pt; line-height: 107%;">By the way, your name is mentioned
about 10 times in this post – High Fives!</span></b><br />
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com0tag:blogger.com,1999:blog-4927657185123993411.post-16511017312325470032016-10-23T19:13:00.001-07:002016-10-23T20:59:18.981-07:00The Answers on Democracy (Clinton vs Trump) and Capitalism - Adam Smith Capitalism: Capitalism Done Right!<br />
<div style="margin: 0px 0px 11px;">
<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 10pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;"><br /></span></span></u></b></div>
<br />
<div style="margin: 0px 0px 11px;">
<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 10pt; line-height: 107%; margin: 0px;">First, Democracy and The 2016 Presidential Election
in the United States</span></u></b><b style="mso-bidi-font-weight: normal;"><span style="font-size: 10pt; line-height: 107%; margin: 0px;"> </span></b></div>
<br />
<div style="margin: 0px 0px 11px;">
<span style="font-size: 10pt; line-height: 107%; margin: 0px;">Two Harvard professors, John Kotter
and James Heskett, ended their 1992 book <u>Corporate</u> <u>Culture and
Performance</u> with this strongly worded guidance on leadership: “….if leaders
do not have the hearts of servants, there is only the potential for tyranny.”
While the context and primary focus in their book was corporate leadership, the
guidance applies across all sectors of society.</span></div>
<br />
<div style="margin: 0px 0px 11px;">
<span style="font-size: 10pt; line-height: 107%; margin: 0px;">Donald Trump personifies leadership
that does not “have the hearts of servants.” <u>He</u> clearly does not have
the heart of a servant. Therefore his potential, as is clear through his own
self-descriptions and his behavior, is to be a tyrant. Of course, this
tyrannical characteristic fits well with misogyny and narcissism. His essence
is made of this stuff. He might be able to “act” presidential for a moment or
two, but his essence is tyrannical. </span></div>
<br />
<div style="margin: 0px 0px 11px;">
<span style="font-size: 10pt; line-height: 107%; margin: 0px;">Hillary Clinton has her own flaws.
But, she has also demonstrated thoughtful and decisive leadership in her experience
as a public servant. This experience will let her be up to the job from the
very first day on. She has the mind, soul and heart of a servant. For this
reason and so many others on display during this 2016 campaign, the decision
makes itself – Hillary Clinton is the only choice.</span></div>
<br />
<div style="margin: 0px 0px 11px;">
<span style="font-size: 10pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;"> </span>She is head and shoulders above Donald Trump as
the best person for the job.</span></div>
<br />
<div style="margin: 0px 0px 11px;">
<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 10pt; line-height: 107%; margin: 0px;">Segue - Second, Getting Capitalism Right: Through
Adam Smith’s Teaching, Properly Applied</span></u></b></div>
<br />
<div style="margin: 0px 0px 11px;">
<span style="font-size: 10pt; line-height: 107%; margin: 0px;">The narrative on this second subject
(Capitalism done right – Adam Smith Capitalism) is in clear contrast to the
Trump essence. Adam Smith gave us a model for local and global value creation
that is other-focused, with self-interest value creation as a dependent
function of being truly other-focused. He really described and endorsed the
essence of servant leadership before these words were ever used to name it.</span></div>
<br />
<div style="margin: 0px 0px 11px;">
<span style="font-size: 10pt; line-height: 107%; margin: 0px;">So much has been written and discussed
about capitalism over the last 35 years that one might think we have come to
the place where it has been addressed enough – that there is no more to say.
Many ideas for improving it have been offered – some in response to instances
of companies that have seriously misused it and some in reaction to the
2007-’08 great recession. Nevertheless there seems to be general agreement that
it remains the single best economic system ever created.</span></div>
<br />
<div style="margin: 0px 0px 11px;">
<span style="font-size: 10pt; line-height: 107%; margin: 0px;">The ideas that have been offered for
improving it include a. Conscious capitalism, b. Creative capitalism, c. Triple
bottom line capitalism, d. Creating shared value capitalism, e. Sustainability
capitalism, and more. While there are surely several reasons why improvements
have been offered, a theme running through most is that free enterprise
capitalism is subject to manipulation, as in the characterization of capitalism
in the United States as ‘crony capitalism.’ Milton Friedman said that the
purpose of a company is profit, self-interest value maximization – greed. </span></div>
<br />
<div style="margin: 0px 0px 11px;">
<span style="font-size: 10pt; line-height: 107%; margin: 0px;">What did Adam Smith intend (in The
Wealth of Nations and The Theory of Moral Sentiments)? What might he think
about the ways that his teachings are being variously applied? And, did he have
it right? And if he had it right, what if anything does that mean for local and
global economic (capitalist) systems of the 21<sup>st</sup> century? Remember,
after all, that Adam Smith is universally recognized as the father of modern
economics and of capitalism. Here are four quotes that summarize his teaching
for us:</span></div>
<br />
<div style="margin: 0px 0px 13px 72px; text-indent: -0.25in;">
<span style="font-family: "wingdings"; font-size: 10pt; line-height: 115%; margin: 0px;"><span style="margin: 0px;">n<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;"> </span></span></span><span style="font-size: 10pt; line-height: 115%; margin: 0px;"><span style="margin: 0px;"> </span><span style="margin: 0px;">“The
property which every man has is his own labour</span>; as it is the original
foundation of all other property, so it is the most sacred and inviolable…To
hinder him from employing this strength and dexterity in what manner he thinks
proper without injury to his neighbor is a plain violation of this most sacred
property.”</span></div>
<br />
<div style="margin: 0px 0px 13px 72px; text-indent: -0.25in;">
<span style="font-family: "wingdings"; font-size: 10pt; line-height: 115%; margin: 0px;"><span style="margin: 0px;">n<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;"> </span></span></span><span style="font-size: 10pt; line-height: 115%; margin: 0px;">“How
selfish soever man may be supposed, there are evidently some principles in his
nature which interest him in the fortune of others, and render their happiness
necessary to him, though he derives nothing from it, except the pleasure of
seeing it.”</span></div>
<br />
<div style="margin: 0px 0px 13px 72px; text-indent: -0.25in;">
<span style="font-family: "wingdings"; font-size: 10pt; line-height: 115%; margin: 0px;"><span style="margin: 0px;">n<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;"> </span></span></span><span style="font-size: 10pt; line-height: 115%; margin: 0px;"><span style="margin: 0px;"> </span>“Man was made
for action, and to promote by the exertion of his faculties such changes in the
external circumstances both of himself and others, as may seem most favourable
to the happiness of all.”</span></div>
<br />
<div style="margin: 0px 0px 13px 72px; text-indent: -0.25in;">
<span style="font-family: "wingdings"; font-size: 10pt; line-height: 115%; margin: 0px;"><span style="margin: 0px;">n<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;"> </span></span></span><span style="font-size: 10pt; line-height: 115%; margin: 0px;"><span style="margin: 0px;"> </span>‘He is certainly not a good citizen who does
not wish to promote, by every means of his power, the welfare of the whole
society of his fellow citizens.’</span></div>
<br />
<div style="margin: 0px 0px 13px 72px;">
<br /></div>
<br />
<div style="margin: 0px 0px 13px;">
<span style="font-size: 10pt; line-height: 115%; margin: 0px;">It is as clear as can be that he connected focus on others with focus
on self. He gave us an axiom that connects self-interest and other-interest.</span></div>
<br />
<div style="margin: 0px 0px 13px;">
<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 10pt; line-height: 115%; margin: 0px;">Our
Translation of the Adam Smith Axiom</span></u></b></div>
<br />
<div style="margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; font-family: "calibri" , sans-serif; font-size: 10pt; margin: 0px;">The Smith axiom connects self-interest and other-interest as a
theory of everything for economic and societal behavior. Here it is:</span></div>
<br />
<div style="margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="background: white; color: black; font-family: "calibri" , sans-serif; font-size: 10pt; margin: 0px;">a. Self-interest value maximization is a direct
function of optimization of the value provided by an organization (and a
person) to each of that organization's (and person’s) primary stakeholder groups
– each relative to the others.</span></div>
<br />
<div style="margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="background: white; color: black; font-family: "calibri" , sans-serif; font-size: 10pt; margin: 0px;">b. Here is the same idea expressed as a formula: <span style="margin: 0px;"> </span>IVM= f (S<sub>1</sub>VO, S<sub>2</sub>VO, …S<sub>N</sub>VO).</span><span style="color: black; font-size: 10pt; margin: 0px;"> </span></div>
<br />
<div style="margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="background: white; color: black; font-family: "calibri" , sans-serif; font-size: 10pt; margin: 0px;">c. That is, a business will maximize its own
long-term value when it devotes its time, talent and treasure to optimizing the
value it provides to each of its primary stakeholder groups, each relative to
the others.</span></div>
<br />
<div style="margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="background: white; color: black; font-family: "calibri" , sans-serif; font-size: 10pt; margin: 0px;">d. The primary stakeholder groups for virtually
all companies and all persons are: 1. Customers, 2. Employees, 3. Investors, 4.
Suppliers, 5. Communities where it has a presence and 6. The general public
interest. Sometimes the names are different but these are the primary groups
whose lives every company (organization) significantly affects.</span></div>
<br />
<div style="margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="background: white; color: black; font-family: "calibri" , sans-serif; font-size: 10pt; margin: 0px;"><span style="margin: 0px;"> </span>Certain
complementary concepts are integrally related to this paradigm. They help get
capitalism done right – including income inequity minimization, poverty
minimization and solutions to job/employee dislocations locally and globally.
The complementary concepts are only listed here. The detailed presentation that
explains their essential connection to the paradigm is available but can wait. <u>The
key is that the outcome will be commercial and societal long term value
maximization – in all local economies and the global economy.</u> </span></div>
<br />
<div style="margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="background: white; color: black; font-family: "calibri" , sans-serif; font-size: 10pt; margin: 0px;">These concepts are: 1. Universally treasured
unalienable rights, 2. Ubiquitously held core virtues precious to all peoples,
3. Finite sets of valued things for each primary stakeholder group, 4. Gold
standard leadership and cultural characteristics for all organizations,
including governments, 5. Robust understanding and action on fiduciary
responsibilities and 6. Ethical behavior always.</span></div>
<br />
<div style="margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="background: white; color: black; font-family: "calibri" , sans-serif; font-size: 10pt; margin: 0px;">All of this is of course accompanied by an
adaptive and actionable strategic planning process. The SEC quarterly reports
by corporations in the United States are primarily focused on the financial
condition of a company (the investor primary stakeholder group).The SEC reports
and all regular reviews of company financial health must be complemented by
quarterly reports on progress toward goals for each of the other primary
stakeholder groups as well. That is how optimal value improvement can be
obtained for each primary stakeholder group<span style="background: white; color: black; font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;"> </span>– and long term
value maximized for the organization.</span></span></div>
<br />
<div style="margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="background: white; color: black; font-family: "calibri" , sans-serif; font-size: 10pt; margin: 0px;">There is more. When we enlighten current leaders
and students (upcoming leaders) about how to get economies and societal
institutions (like governments) right, they will rejoice at the value creation
results that will flow from adopting Adam Smith Capitalism. It gets capitalism
right. </span></div>
<br />
<div style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b style="mso-bidi-font-weight: normal;"><u><span style="background: white; color: black; font-family: "calibri" , sans-serif; font-size: 10pt; margin: 0px;"><br /></span></u></b></div>
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com0tag:blogger.com,1999:blog-4927657185123993411.post-36614162734885567512015-06-24T13:04:00.000-07:002015-06-24T13:04:12.928-07:00 Capitalism and the New Paradigm: A Presentation and an Invitation.<div class="MsoNormal" style="margin-bottom: .1in; margin-left: 0in; margin-right: 0in; margin-top: .7pt;">
<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;">Almost all posts at this blog site address the concept of organizational excellence - how to get there and how to stay there. Previous posts have approached the subject from different perspectives, from different parts of the room. This post summarizes the concept, presents the key elements and connects them, resulting in a harmonized integrated paradigm - one that is actionable.</span></span></b></div>
<div class="MsoNormal" style="margin-bottom: .1in; margin-left: 0in; margin-right: 0in; margin-top: .7pt;">
<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;">Others have tried and are trying. The last 45 - 50 years have been grounded in the "profit, the more the better "paradigm and the World is the worse for it.</span></span></b></div>
<div class="MsoNormal" style="margin-bottom: .1in; margin-left: 0in; margin-right: 0in; margin-top: .7pt;">
<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;">This new paradigm requires only courageous leaders and all people to have the hearts of servants to take it, own it and put it into action.</span></span></b></div>
<div class="MsoNormal" style="margin-bottom: .1in; margin-left: 0in; margin-right: 0in; margin-top: .7pt;">
<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;">My bet is that there is at least one corporate leader out there, perhaps more, who will rise to the opportunity. We shall see. Even top academicians, when addressing this subject and knowing that the paradigm offered here is the way to move forward are still held hostage by the profit paradigm. It is almost a viral condition that in a nutshell rests on this old saying: "we have always done it this way," or this one, "changing cultures takes years, let's take baby steps first." Oh the tragedy, the local and global opportunity costs that are caused by this timidity.</span></span></b></div>
<div class="MsoNormal" style="margin-bottom: .1in; margin-left: 0in; margin-right: 0in; margin-top: .7pt;">
<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;">This long post addresses the metaphysical and philosophical aspects of the concept as well as the practical and wrap-around existential aspects. We cover the waterfront.</span></span></b></div>
<div class="MsoNormal" style="margin-bottom: .1in; margin-left: 0in; margin-right: 0in; margin-top: .7pt;">
<span style="font-size: large;"><b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;">So, please read, think and respond. You will be glad you did. </span></b><b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"> </span></b></span></div>
<div style="border-bottom: double windowtext 2.25pt; border: none; mso-element: para-border-div; padding: 0in 0in 1.0pt 0in;">
<div class="MsoNormal" style="border: none; margin-bottom: .1in; margin-left: 0in; margin-right: 0in; margin-top: .7pt; mso-border-bottom-alt: double windowtext 2.25pt; mso-padding-alt: 0in 0in 1.0pt 0in; padding: 0in;">
<span style="font-size: large;"><b><i><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;">A Note: This
article presents a concept and approach to pursuit of long term value creation
and organizational excellence. The concept presented here is original; that is
the dots are all connected in this way for the first time here – as an
integrated paradigm. Some ideas and research results in the article are taken
from the work of others, though, as presented in books, articles and the</span></i></b><b><i><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"> like.
The sources are available upon request.</span></i></b></span></div>
</div>
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<b><span style="border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;"><span style="font-family: 'Times New Roman'; font-stretch: normal; font-weight: normal;"> </span><span style="font-family: 'Times New Roman'; font-stretch: normal;"><u>Why Is An Idea Like This Relevant?</u> </span></span></span></b></div>
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<span style="font-size: large;"><b style="text-indent: -0.25in;"><span style="background: white; border: 1pt none windowtext; padding: 0in;">1. </span><span style="background: white; border: 1pt none windowtext; padding: 0in;">Ever</span></b><b style="text-indent: -0.25in;"><span style="background: white; border: 1pt none windowtext; padding: 0in;">y person
and every organization should do their very best to provide maximum value to
others over their lifetime. Why? A. Because it is the right thing to do and B.
Because it is in their own self-interest.</span></b></span></div>
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<!--[if !supportLists]--><span style="font-size: large;"><b><span style="border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;">2.<span style="font-family: 'Times New Roman'; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="background: white; border: 1pt none windowtext; padding: 0in;">How and why to
do it are ultimate questions. Answers over the centuries have been many. For
corporations, especially publicly held for profit corporations, the answers to
the “how” and “why” questions have been to earn a profit, the more the better,
with capitalism as the economic system of highest choice. That is, provide
value to others in order to make a profit for me.</span></b><b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><o:p></o:p></span></b></span></div>
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<!--[if !supportLists]--><span style="font-size: large;"><b><span style="border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;">3.<span style="font-family: 'Times New Roman'; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="background: white; border: 1pt none windowtext; padding: 0in;">This profit
answer has caused a falling short, a sub-optimization, a lower than A+ grade –
even an F grade in some cases – in local and global economies and the global
aggregate economy.</span></b><b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><o:p></o:p></span></b></span></div>
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<!--[if !supportLists]--><span style="font-size: large;"><b><span style="border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;">4.<span style="font-family: 'Times New Roman'; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="background: white; border: 1pt none windowtext; padding: 0in;">The idea
offered here provides the description of the paradigm that can bring each and
all to that A+ grade over the long term….and national sovereignties will be
helped not harmed under this 21<sup>st</sup> century (and beyond) new paradigm.
And, profit (value) will be maximized as an outcome, not as a purpose.</span></b></span><b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;">This article uses the word “paradigm” so much that a
definition or description of what we mean by paradigm might be helpful:</span></span></b></div>
</div>
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<span style="font-size: large;"><b><u><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"> Paradigm </span></u></b><b><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;">– A theory or
a group of ideas about how something should be done, made or thought about….a
model or pattern for something that may be copied….SYNONYMS – mold, standard,
ideal, paragon, touchstone.<o:p></o:p></span></b></span></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;">The following idea about
capitalism qualifies as a new theory or an ideal that is revolutionary. Many
proposals have been offered, especially over the last 20+ years, about how to
improve capitalism. Bad leadership of
some companies that was on display in the 1990s and into the turn of the
century and the near meltdown of the U.S. and even global economies in 2007-'08
helped stimulate these new ideas about improving capitalism, but some were offered even earlier.<o:p></o:p></span></span></b></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;">We suggest our idea as
another and even the best paradigm change for how to raise capitalism to its
highest level, how to employ capitalism as the best catalyst for both wealth
creation and total societal well-being over the long run. And, we believe capitalism
flourishes most when connected to a legitimate democratic political system
(more on that at another time). <o:p></o:p></span></span></b></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;">We only summarize our idea here.
Making it work takes detailed knowledge of and enthusiastic behavior about acting
this description out. It will be easier done than said, though, which is the
elegant blessing – it fits the best of human nature. <br />
<br />
<u>First, The Existing Paradigm:<o:p></o:p></u></span></span></b></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;"> <u>It
can fairly be said that the existing dominant concept (paradigm) in capitalist
economies is that it is about profit, the more the better.</u> <o:p></o:p></span></span></b></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;">In this way, this argument
goes, corporations will make their best contribution to society. This concept
can be said to have been most forcefully and successfully articulated by
Professor Milton Friedman of the University of Chicago. It has been followed
for more than 40 years. Wall Street is enchanted with it.<o:p></o:p></span></span></b></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;"> The value created over these 40+ years and
even over the last two centuries has unfortunately masked the fact that
capitalist economies – even though they trump all other economic systems - have
been chronically underachieving compared to their highest potential.<o:p></o:p></span></span></b></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;">Let’s be perfectly clear: The
U.S. economy and all economies for that matter are and have been underachievers
when compared to the potential this new paradigm unveils, no matter how good
they have done over the years. Sad but true, the following paradigm or mindfulness and
behavior guide should not be new – but it is.<br />
<br />
<u>Second, The Proposed New Paradigm – the essential mindset for capitalism
going forward:</u><o:p></o:p></span></span></b></div>
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<span style="font-size: large;"><b><i><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"> <u>Self-interest value maximization is a direct
function of optimization of the value provided by an organization (and a
person) to each of that organization's (and person’s) primary stakeholder
groups – each relative to the others.</u> </span></i></b><b><i><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"><o:p></o:p></span></i></b></span></div>
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<span style="font-size: large;"><b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;">Here is the same idea
expressed as a formula:</span></b><b><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"><o:p></o:p></span></b></span></div>
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<span style="font-size: large;"><i><u><span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; border-image-outset: initial; border-image-repeat: initial; border-image-slice: initial; border-image-source: initial; border-image-width: initial; border: 1pt none windowtext; font-family: Garamond, serif; padding: 0in;"><b>IVM= f (S</b></span></u></i><b><i><u><sub><span style="background: white; border: 1pt none windowtext; font-family: Arial, sans-serif; padding: 0in;">1</span></sub></u></i></b><b><i><u><span style="background: white; border: 1pt none windowtext; font-family: Arial, sans-serif; padding: 0in;">VO, S<sub>2</sub>VO,
…S<sub>N</sub>VO). </span></u></i></b><b><i><u><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"><o:p></o:p></span></u></i></b></span></div>
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<b><i><u><span style="background: white; border: 1pt none windowtext; font-family: Arial, sans-serif; padding: 0in;"><span style="font-size: large;"><br /></span></span></u></i></b></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;">That is, a business will
maximize its own long-term value when it devotes its time, talent and treasure
to optimizing the value it provides to each of its primary stakeholder groups.<o:p></o:p></span></span></b></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;"><br /></span></span></b></div>
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<b><u><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;">What is meant by primary
stakeholder groups? <o:p></o:p></span></span></u></b></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;">A primary stakeholder group is a person or
group affected by an organization or person. Taken to an irrational or
illogical extreme, every action of every organization or person affects every
other person and organization. This description always strikes me as one used
by those who might want to avoid the real meaning and implications of the
stakeholder concept.<o:p></o:p></span></span></b></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;">I prefer thinking about primary stakeholder groups as those affected by a person or organization in a way that is significant, one that really matters. So, groups and persons are primary
stakeholders of any other group or person if they are significantly affected by
them over their lives.<o:p></o:p></span></span></b></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;"> Most companies (organizations) and persons
have a truly finite number of primary stakeholder groups -about six for almost
every organization and person:<o:p></o:p></span></span></b></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"><span style="font-size: large;"> 1. <u>The Primary
Stakeholder Groups of Any Organization (or Person) are:</u><o:p></o:p></span></span></b></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;">a. Customers, b.
Employees, c. Investors, d. Suppliers, e. Communities in which it has a
presence and f. Society at large (the general public interest).<o:p></o:p></span></span></b></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"><span style="font-size: large;"> 2. <u>Each of
these groups has four or five things they value most, and the following listings are solidly representative, though improvable (have at it :-)):<o:p></o:p></u></span></span></b></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"><span style="font-size: large;"> <u> a. Customers</u> – 1. High quality, 2. Reasonable
prices, 3. Kindness, 4. Companies that treat their employees well and 5. Companies
that are good citizens.<o:p></o:p></span></span></b></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"><span style="font-size: large;"> <u>b.
Employees</u> -1. Opportunity, 2. Fair compensation, 3. Security, 4. Challenge
to achieve as individuals and teams/groups and 5. Company conducts itself as a good
neighbor, a good citizen.<o:p></o:p></span></span></b></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"><span style="font-size: large;"> <u>c.
Investors</u> 1. Best value creation from their funds over the long term, 2.
Positive company participation in communities, 3. Great company treatment of
employees, 4. Great company standing in society (loved), 5. Gold standard leadership
in the company and 6. Full participation in society.<o:p></o:p></span></span></b></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"><span style="font-size: large;"> <u>d. Communities in which it has a
presence</u> – 1. Good citizen in local communities, 2. Long term participative
partner in community well-being, 3. Great company treatment of its employees,
4. Full company involvement in environmental and societal stewardship for the
long term and 5. Openness.<o:p></o:p></span></span></b></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"><span style="font-size: large;">
<u>e. Suppliers</u> – 1. Fair dealing, 2. Long term partnership
opportunity mutually earned, 3. Great treatment of employees, 4. Positive citizenship
conduct of company and 5. Enjoyable to work with.<o:p></o:p></span></span></b></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"><span style="font-size: large;">
<u>f. Society (The Public Interest) </u>– 1. Great local and global
citizen, participative and engaged, 2. Great social and environmental steward,
long term, 3. Willing partner and participant with others (including
governments) in serving the public interest and 4. Excellent treatment of its
employees, suppliers and neighbors.<o:p></o:p></span></span></b></div>
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<span style="font-size: large;"><b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;">An outcome of this paradigm, <u>in
fact a necessary outcome,</u> will be the maximization of profit – value
creation over the long term - measured in appropriate financial terms as well
as the other value measures a company holds dear.</span></b><b><i><u><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;">This is truly the
breakthrough "big idea."</span></u></i></b></span></div>
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<b><i><u><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;"><br /></span></span></u></i></b></div>
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<b><u><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"><span style="font-size: large;">Is that all there is to it?<o:p></o:p></span></span></u></b></div>
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<b><u><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"><span style="font-size: large;"><br /></span></span></u></b></div>
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<span style="font-size: large;"><b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;">No. There are a few additional
things that are an essential part of this mindset. Here is the additional group
of ideas that are each part of this new mindset – this new paradigm. They are:</span></b><b><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"><o:p></o:p></span></b></span></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;">1. <u>The
basic unalienable rights of people around the world are treasured:</u> Life, Liberty, the Pursuit of Happiness and
Property (one’s own aptitudes about which one is proud and excellent at – loves
to act out),<o:p></o:p></span></span></b></div>
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<b><span style="background: white; border: 1pt none windowtext; color: windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;"> 2<u>. Those virtues
that are shared as precious by all peoples around the world:</u><o:p></o:p></span></span></b></div>
<div class="DefaultLTGliederung1" style="margin-bottom: 14.15pt; margin-left: 1.5in; margin-right: 0in; margin-top: 6.4pt;">
<span style="font-size: large;"><b><u><span style="color: windowtext; font-family: Calibri, sans-serif;">(a).
Wisdom and Knowledge </span></u></b><b><span style="color: windowtext; font-family: Calibri, sans-serif;">–
Curiosity, Love of Learning, Judgment, Ingenuity, Social Intelligence and
Perspective<o:p></o:p></span></b></span></div>
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<b><span style="color: windowtext; font-family: Calibri, sans-serif;"><span style="font-size: large;"> (b)<u>.Courage</u> – Valor, Perseverance and
Integrity.<o:p></o:p></span></span></b></div>
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<b><span style="color: windowtext; font-family: Calibri, sans-serif;"><span style="font-size: large;"> (c).<u>Humanity and Love </u>– Kindness and
Loving. <o:p></o:p></span></span></b></div>
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<b><span style="color: windowtext; font-family: Calibri, sans-serif;"><span style="font-size: large;">(d).<u>Justice</u>
– Citizenship, Fairness and Leadership.<o:p></o:p></span></span></b></div>
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<b><span style="color: windowtext; font-family: Calibri, sans-serif;"><span style="font-size: large;">(e).<u>Temperance</u>
– Self-control, Prudence and Humility.<o:p></o:p></span></span></b></div>
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<b><span style="color: windowtext; font-family: Calibri, sans-serif;"><span style="font-size: large;">(f).<u>Transcendence</u>
– Appreciation of Beauty, Gratitude, Hope, Spirituality, Forgiveness, Humor,
and Zest.<o:p></o:p></span></span></b></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;"> <o:p></o:p></span></span></b></div>
<div class="DefaultLTGliederung1" style="margin-bottom: 14.15pt; margin-left: 1.0in; margin-right: 0in; margin-top: 6.4pt;">
<span style="font-size: large;"><b><span style="background: white; border: 1pt none windowtext; color: windowtext; font-family: inherit, serif; padding: 0in;">3. <u>Gold standard leadership characteristics are
employed and lived:</u></span></b><b><span style="color: windowtext; font-family: Calibri, sans-serif;"><o:p></o:p></span></b></span></div>
<div class="DefaultLTGliederung1" style="margin-bottom: 14.15pt; margin-left: 1.5in; margin-right: 0in; margin-top: 6.4pt;">
<span style="font-size: large;"><b><span style="color: windowtext; font-family: Calibri, sans-serif;">(a). Establish Direction – Vision.</span></b><span style="color: windowtext;"><o:p></o:p></span></span></div>
<div class="DefaultLTGliederung1" style="margin-bottom: 14.15pt; margin-left: 1.5in; margin-right: 0in; margin-top: 6.4pt;">
<span style="font-size: large;"><b><span style="color: windowtext; font-family: Calibri, sans-serif;">(b). Humility and Professional Will – Modest and
Fearless.</span></b><span style="color: windowtext;"><o:p></o:p></span></span></div>
<div class="DefaultLTGliederung1" style="margin-bottom: 14.15pt; margin-left: 1.5in; margin-right: 0in; margin-top: 6.4pt;">
<span style="font-size: large;"><b><span style="color: windowtext; font-family: Calibri, sans-serif;">(c.). Inclusive, Enabling, Inspirational, a
Listener.</span></b><span style="color: windowtext;"><o:p></o:p></span></span></div>
<div class="DefaultLTGliederung1" style="margin-bottom: 14.15pt; margin-left: 1.5in; margin-right: 0in; margin-top: 6.4pt;">
<span style="font-size: large;"><b><span style="color: windowtext; font-family: Calibri, sans-serif;">(d). Stakeholder Focused – in a Maniacally Profound
Way.</span></b><span style="color: windowtext;"><o:p></o:p></span></span></div>
<div class="DefaultLTGliederung1" style="margin-bottom: 14.15pt; margin-left: 1.5in; margin-right: 0in; margin-top: 6.4pt;">
<span style="font-size: large;"><b><u><span style="color: windowtext; font-family: Calibri, sans-serif;">(e). Heart of a Servant.</span></u></b><span style="color: windowtext;"><o:p></o:p></span></span></div>
<div class="DefaultLTGliederung1" style="margin-bottom: 14.15pt; margin-left: 1.5in; margin-right: 0in; margin-top: 6.4pt;">
<span style="font-size: large;"><b><span style="color: windowtext; font-family: Calibri, sans-serif;">(d). Ethical, Courageous and Just, and</span></b><span style="color: windowtext;"><o:p></o:p></span></span></div>
<div class="DefaultLTGliederung1" style="margin-bottom: 14.15pt; margin-left: 1.5in; margin-right: 0in; margin-top: 6.4pt;">
<span style="font-size: large;"><b><span style="color: windowtext; font-family: Calibri, sans-serif;">(f). Fun.</span></b><span style="color: windowtext;"><o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; mso-margin-top-alt: auto;">
<br /></div>
<div class="DefaultLTGliederung1" style="margin-bottom: 14.15pt; margin-left: 1.0in; margin-right: 0in; margin-top: 6.4pt;">
<span style="font-size: large;"><b><span style="background: white; border: 1pt none windowtext; color: windowtext; font-family: inherit, serif; padding: 0in;"> 4. Gold standard
cultural characteristics are in place and second nature:</span></b><b><span style="color: windowtext; font-family: Calibri, sans-serif;"> <o:p></o:p></span></b></span></div>
<div class="DefaultLTGliederung1" style="margin-bottom: 14.15pt; margin-left: 1.5in; margin-right: 0in; margin-top: 6.4pt;">
<span style="font-size: large;"><b><span style="color: windowtext; font-family: Calibri, sans-serif;">(a). Adaptive, with a Core Ideology (Purpose &
Values).</span></b><span style="color: windowtext;"><o:p></o:p></span></span></div>
<div class="DefaultLTGliederung1" style="margin-bottom: 14.15pt; margin-left: 1.5in; margin-right: 0in; margin-top: 6.4pt;">
<span style="font-size: large;"><b><span style="color: windowtext; font-family: Calibri, sans-serif;">(b). Risk taking, trusting, proactive.</span></b><span style="color: windowtext;"><o:p></o:p></span></span></div>
<div class="DefaultLTGliederung1" style="margin-bottom: 14.15pt; margin-left: 1.5in; margin-right: 0in; margin-top: 6.4pt;">
<span style="font-size: large;"><b><span style="color: windowtext; font-family: Calibri, sans-serif;">(c). One in which all are heard and the truth is
heard.</span></b><span style="color: windowtext;"><o:p></o:p></span></span></div>
<div class="DefaultLTGliederung1" style="margin-bottom: 14.15pt; margin-left: 1.5in; margin-right: 0in; margin-top: 6.4pt;">
<span style="font-size: large;"><b><span style="color: windowtext; font-family: Calibri, sans-serif;">(d). Reflective, humble, anticipatory &
involved.</span></b><span style="color: windowtext;"><o:p></o:p></span></span></div>
<div class="DefaultLTGliederung1" style="margin-bottom: 14.15pt; margin-left: 1.5in; margin-right: 0in; margin-top: 6.4pt;">
<span style="font-size: large;"><b><span style="color: windowtext; font-family: Calibri, sans-serif;">(e). Rational & respectful, a conscientious mindset.</span></b><span style="color: windowtext;"><o:p></o:p></span></span></div>
<div class="DefaultLTGliederung1" style="margin-bottom: 14.15pt; margin-left: 1.5in; margin-right: 0in; margin-top: 6.4pt;">
<span style="font-size: large;"><b><span style="color: windowtext; font-family: Calibri, sans-serif;">(f). Quietly confident, unassuming while maniacally
pursuing the organization’s vision & mission with prudence, perseverance,
humor and zest.</span></b><span style="color: windowtext;"><o:p></o:p></span></span></div>
<div class="DefaultLTGliederung1" style="margin-bottom: 14.15pt; margin-left: 1.5in; margin-right: 0in; margin-top: 6.4pt;">
<span style="font-size: large;"><b><span style="color: windowtext; font-family: Calibri, sans-serif;">(g). Disciplined People, Thoughts and Actions in a
Fun and Dynamic Environment.</span></b><span style="color: windowtext;"><o:p></o:p></span></span></div>
<div class="DefaultLTGliederung1" style="margin-bottom: 14.15pt; margin-left: 1.5in; margin-right: 0in; margin-top: 6.4pt;">
<span style="font-size: large;"><b><span style="color: windowtext; font-family: Calibri, sans-serif;">(h). Open, Supportive and Enthusiastic.</span></b><span style="color: windowtext;"><o:p></o:p></span></span></div>
<div class="DefaultLTGliederung1" style="margin-bottom: 14.15pt; margin-left: 1.5in; margin-right: 0in; margin-top: 6.4pt;">
<span style="font-size: large;"><b><u><span style="color: windowtext; font-family: Calibri, sans-serif;">(i). Happy, in a Stakeholder-Centered (H3) Way, and</span></u></b><span style="color: windowtext;"><o:p></o:p></span></span></div>
<div class="DefaultLTGliederung1" style="margin-bottom: 14.15pt; margin-left: 1.5in; margin-right: 0in; margin-top: 6.4pt;">
<b><span style="color: windowtext; font-family: Calibri, sans-serif;"><span style="font-size: large;">(j). Fun.<o:p></o:p></span></span></b></div>
<div class="DefaultLTGliederung1" style="margin-bottom: 14.15pt; margin-left: 1.0in; margin-right: 0in; margin-top: 6.4pt;">
<b><span style="color: windowtext; font-family: Calibri, sans-serif;"><span style="font-size: large;"> 5.
The normal blocking and tackling of organizations will be robustly carried out
because all will be in their correct ‘seats on the bus’ - Effectiveness,
Efficiency, Productivity, Creativity and Innovation, AND<o:p></o:p></span></span></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; mso-margin-top-alt: auto;">
<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;">6. Ethical
behavior always.<o:p></o:p></span></span></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-margin-top-alt: auto;">
<span style="font-size: large;"><b><i><u><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;">Multi-Year
Planning And Doing: The Main Action Vehicle For Our Paradigm.</span></u></i></b><i><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"> <o:p></o:p></span></i></span></div>
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<b><i><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"><span style="font-size: large;">Strategic
plans are often spoken of in a negative way. The criticisms include being too
slow, irrelevant before the ink is dry on the document, esoteric and a waste of
time. They are characterized as being (and often are) placed on a shelf
collecting dust. It has also been said that “plans are worthless but planning
is essential.”<o:p></o:p></span></span></i></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-margin-top-alt: auto;">
<span style="font-size: large;"><b><i><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;">The truth is
quite the contrary. <u>Plans and adaptive planning go hand in glove.</u> In
fact, actionable multi-year adaptive, adaptable plans, or playbooks, are<u> the</u>
essential vehicle through which this new mindset-based paradigm happens. The
actionable plan is the</span></i></b><b><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"> <i>dynamic
vehicle through which it all springs to life – and continues to be vibrant.</i>
<i>Again, let’s be clear: An adaptable,
adaptive plan is the very definition of planning, which in turn keeps us on the
maximum value creation trajectory over time, and it fulfills, it is fun.</i><o:p></o:p></span></b></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-margin-top-alt: auto;">
<span style="font-size: large;"><b><u><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;">A Final Thought.</span></u></b><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"> <o:p></o:p></span></span></div>
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<b><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"><span style="font-size: large;">All too often over the years, the easy way out is to do
pretty good - to beat the competition. Excellence is therefore too often not
pursued. Of course breakthrough innovations have been made and do happen, but
mostly they precede organizational behavior and flow from the passion of true
innovators before the fact. The
blissfully good news is that the full life well-lived – the happy life - and the
highest value creation for each and all organizations flows from, and only from,
adopting and acting out this paradigm, the 21<sup>st</sup> century essential dominant
mindset presented here. Innovation keeps happening because it is fulfilling, it
is fun and it is servant-based. And, this applies to life at work, at home and
at leisure – to all aspects of life.<u><o:p></o:p></u></span></span></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-margin-top-alt: auto;">
<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;"><br />
Embracing and adopting this paradigm will take a little courage and a true long
term picture of the possible for the future. Only a handful of companies appear
to understand this concept now, as seen through their behavior.<o:p></o:p></span></span></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-margin-top-alt: auto;">
<b><span style="background: white; border: 1pt none windowtext; font-family: inherit, serif; padding: 0in;"><span style="font-size: large;">Well intentioned and
respected academics and corporate leaders have come along with ideas that
purport to offer something like this new paradigm, but they all fall short. Most of them appear to be unable to let go of the profit-centered (and short term,
inward-focused and win-lose) old paradigm. Adam Smith would be absolutely
disgusted with this profit-centrism, this old mindset. Conversely, he would be
absolutely enthused with this new paradigm. The Dalai Lama would too.<o:p></o:p></span></span></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-margin-top-alt: auto;">
<b><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"><span style="font-size: large;">Such labels as disruptive, transformational, seminal,
revolutionary and paradigm shift/change will be most completely satisfied when
our idea here becomes the organic and universal way of behaving by all
corporations – all organizations. <o:p></o:p></span></span></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-margin-top-alt: auto;">
<b><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"><span style="font-size: large;">And, Adam Smith would rejoice.<o:p></o:p></span></span></b></div>
<br />
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-margin-top-alt: auto;">
<b><span style="background: white; border: 1pt none windowtext; font-family: 'Times New Roman', serif; padding: 0in;"><span style="font-size: large;">And, the world will be a better place – for all.</span></span></b><b><span style="background: white; border: none windowtext 1.0pt; font-family: "Times New Roman",serif; font-size: 18.0pt; mso-border-alt: none windowtext 0in; mso-fareast-font-family: "Times New Roman"; padding: 0in;"><o:p></o:p></span></b></div>
Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com2tag:blogger.com,1999:blog-4927657185123993411.post-4814661125869524432015-02-25T13:56:00.004-08:002015-04-14T14:24:48.866-07:00How Businesses and All Organizations Can Best Create Maximum Value In The Future.<div class="views-field views-field-field-biography" style="background-color: #f2f2f2; border: 0px currentColor; color: #333333; font-family: Arial, Helvetica, Verdana, "Bitstream Vera Sans", sans-serif; font-size: 13px; font-stretch: inherit; line-height: 23.99px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">
<br /></div>
<div class="views-field views-field-body" style="background-color: #f2f2f2; border: 0px currentColor; color: #333333; font-family: Arial, Helvetica, Verdana, "Bitstream Vera Sans", sans-serif; font-size: 13px; font-stretch: inherit; line-height: 23.99px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">
<div class="field-content" style="border: 0px currentColor; font-size-adjust: inherit; font-stretch: inherit; font: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">
<div style="border: 0px currentColor; font-size-adjust: inherit; font-stretch: inherit; font: inherit; margin-bottom: 1.84em; outline: 0px; padding: 0px; vertical-align: baseline;">
<span style="border: 0px currentColor; color: black; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">Sometimes it is worthwhile to step back, look at how business has been conducted over the years, look at the far future horizon and think about how to change the conduct of business now so that the value being created for all in that future time is as great as possible.</span></div>
<div style="border: 0px currentColor; font-size-adjust: inherit; font-stretch: inherit; font: inherit; margin-bottom: 1.84em; outline: 0px; padding: 0px; vertical-align: baseline;">
<span style="border: 0px currentColor; color: black; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">This article suggests a wide-angle lense approach to creating that future. It also says narrow-minded, short term and inward-focused business conduct should be abandoned - even though some good value has been created over the years. It is yesterday's best paradigm, and we offer the best future way of thinking and behaving - the new paradigm.</span></div>
<div style="border: 0px currentColor; font-size-adjust: inherit; font-stretch: inherit; font: inherit; margin-bottom: 1.84em; outline: 0px; padding: 0px; vertical-align: baseline;">
<span style="border: 0px currentColor; color: black; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">This article also offers a comment about how some leading thinkers are currently addressing value creation. The way they are advising the local and global business world, while indeed understandable, is prolonging this "yesterday's paradigm" problem.</span></div>
<div style="border: 0px currentColor; font-size-adjust: inherit; font-stretch: inherit; font: inherit; margin-bottom: 1.84em; outline: 0px; padding: 0px; vertical-align: baseline;">
<span style="border: 0px currentColor; color: black; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">The paradigm problem is that profit - the more the better - has been taught and accepted by most for years as the primary or only purpose of business.</span></div>
<div style="border: 0px currentColor; font-size-adjust: inherit; font-stretch: inherit; font: inherit; margin-bottom: 1.84em; outline: 0px; padding: 0px; vertical-align: baseline;">
<span style="border: 0px currentColor; color: black; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"> <span style="border: 0px currentColor; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><span style="border: 0px currentColor; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">The late Professor Milton Friedman of the University of Chicago, and others, presented this idea in the 1960s. Professor Friedman himself presented it famously in the New York Times in September, 1970 and continued to preach it up to the turn of the century. This profit fixation has been taught in business schools and, even though some companies and some globally known CEOs say that profit as a purpose is dumb, their behavior says just the opposite. </span></span></span></div>
<div style="border: 0px currentColor; font-size-adjust: inherit; font-stretch: inherit; font: inherit; margin-bottom: 1.84em; outline: 0px; padding: 0px; vertical-align: baseline;">
<span style="border: 0px currentColor; color: black; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">And, the investment banking and Wall Street community largely still clings to this profit-focused paradigm flaw.</span></div>
<div style="border: 0px currentColor; font-size-adjust: inherit; font-stretch: inherit; font: inherit; margin-bottom: 1.84em; outline: 0px; padding: 0px; vertical-align: baseline;">
<u style="border: 0px currentColor; font-size-adjust: inherit; font-stretch: inherit; font: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><strong style="border: 0px currentColor; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><span style="border: 0px currentColor; color: black; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">Profit-Focused Paradigm Flaw?</span></strong></u></div>
<div style="border: 0px currentColor; font-size-adjust: inherit; font-stretch: inherit; font: inherit; margin-bottom: 1.84em; outline: 0px; padding: 0px; vertical-align: baseline;">
<span style="border: 0px currentColor; color: black; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">Precisely. Even in these times of concepts like sustainability, conscious capitalism, creating shared value and other proposals, bringing value to other primary stakeholders (customers of course, and employees, suppliers, communities where the business is and the general public interest) is still used as means to an end – the end of creating value only for shareholders.</span></div>
<div style="border: 0px currentColor; font-size-adjust: inherit; font-stretch: inherit; font: inherit; margin-bottom: 1.84em; outline: 0px; padding: 0px; vertical-align: baseline;">
<span style="border: 0px currentColor; color: black; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">As long as boards and leaders use outward and long term focus as instrumental, they will fail the shareholders (and the organization’s other primary stakeholder groups) over the long run, by fostering creation of less value than the companies have the potential to create.</span></div>
<div style="border: 0px currentColor; font-size-adjust: inherit; font-stretch: inherit; font: inherit; margin-bottom: 1.84em; outline: 0px; padding: 0px; vertical-align: baseline;">
<strong style="border: 0px currentColor; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><u style="border: 0px currentColor; font-size-adjust: inherit; font-stretch: inherit; font: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><span style="border: 0px currentColor; color: black; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">What Is The Answer?</span></u></strong></div>
<div style="border: 0px currentColor; font-size-adjust: inherit; font-stretch: inherit; font: inherit; margin-bottom: 1.84em; outline: 0px; padding: 0px; vertical-align: baseline;">
<span style="border: 0px currentColor; color: black; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">The answer is to adopt a mindset (a new paradigm) that is: a. Dominantly long term, (board room to boiler room), b. Primary stakeholder-focused (customers, employees, investors, suppliers, communities in which the companies have a presence and the general public interest), and c. Value-optimizing for each primary stakeholder group, relative to each of the others.</span></div>
<div style="border: 0px currentColor; font-size-adjust: inherit; font-stretch: inherit; font: inherit; margin-bottom: 1.84em; outline: 0px; padding: 0px; vertical-align: baseline;">
<span style="border: 0px currentColor; color: black; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">More detail about this essential 21st century dominant mindset can be found in previous posts at this site . Importantly here though, we can summarize:</span></div>
<div style="border: 0px currentColor; font-size-adjust: inherit; font-stretch: inherit; font: inherit; margin-bottom: 1.84em; outline: 0px; padding: 0px; vertical-align: baseline;">
<span style="border: 0px currentColor; color: black; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">The highest nature of people, applied to their role as markets, is such that where and when they see companies conducting themselves in accordance with this new paradigm, embracing the six or seven globally ubiquitous virtues people share (peoples from all around the world), treasuring the three or four universally possessed unalienable rights of people and fully acting out their fiduciary responsibilities toward each of their primary stakeholder groups (not just their shareholders), people (markets) will virtually always vote with their hearts, minds and feet and move toward, lean into and buy from such companies.</span></div>
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<u style="border: 0px currentColor; font-size-adjust: inherit; font-stretch: inherit; font: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><strong style="border: 0px currentColor; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><span style="border: 0px currentColor; font-family: inherit; font-size: medium; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">Transformative Concepts, Seminal Concepts and Disruptive Concepts or Technologies.</span></strong></u></div>
<div style="border: 0px currentColor; font-size-adjust: inherit; font-stretch: inherit; font: inherit; margin-bottom: 1.84em; outline: 0px; padding: 0px; vertical-align: baseline;">
<span style="border: 0px currentColor; color: black; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">For a concept to be transformative or seminal - or disruptive - on any subject or area of life in which an existing paradigm has been dominant, and in this case almost idolized, for so long, it must break away from the core of the old paradigm – in this case profit-centrism and short-termism – and present an actionable and entirely new paradigm. </span></div>
<div style="border: 0px currentColor; font-size-adjust: inherit; font-stretch: inherit; font: inherit; margin-bottom: 1.84em; outline: 0px; padding: 0px; vertical-align: baseline;">
<span style="border: 0px currentColor; color: black; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">We do that here. To understand it fully, to flesh out the summary above please go to the two previous posts at this site - October 20, 2014 and July 15, 2014.</span></div>
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<span style="border: 0px currentColor; color: black; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"> <span style="border: 0px currentColor; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><span style="border: 0px currentColor; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">All companies and organizations, including governments, that do change, embrace and make this new paradigm their own will no longer fall short (sub-optimize) but rather will optimize. And, the long term result will include, as an outcome, creation of the highest level of wealth over the long run – for society and themselves. This is what Adam Smith was trying to teach 250 years ago. Very few have made him proud since, but this new paradigm in action would make him proud.</span></span></span></div>
<div style="border: 0px currentColor; font-size-adjust: inherit; font-stretch: inherit; font: inherit; margin-bottom: 1.84em; outline: 0px; padding: 0px; vertical-align: baseline;">
<span style="border: 0px currentColor; color: black; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">This note has not discussed the string of “my bads” of the last 20 plus years, like the 2007-’08 great recession, the Enron behavior, etc., because we need not. Rather, we offer the going forward mindset (paradigm) that will make the likelihood of such “my bads” go toward zero in the future.</span></div>
<div style="border: 0px currentColor; font-size-adjust: inherit; font-stretch: inherit; font: inherit; margin-bottom: 1.84em; outline: 0px; padding: 0px; vertical-align: baseline;">
<span style="border: 0px currentColor; color: black; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">Agree or disagree? Call us and we can wrestle it to the ground :-).</span></div>
</div>
</div>
<br />Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com0tag:blogger.com,1999:blog-4927657185123993411.post-834395448377549012014-10-20T14:09:00.000-07:002014-11-02T10:13:39.434-08:00Capitalism And The Golden Rule: The Perfect Match Maximizing Local And Global Value And Wealth Creation<div class="MsoNormal" style="text-align: justify;">
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<b><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";"> <u>For
Companies And Individuals: Capitalism’s Ultimate Promise</u></span></b><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<b><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";"> <u>Let's Use Kitchen
Table Wisdom And Street Corner Logic, So We All Get It</u></span></b><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">It is time to cut through all the research, studies, speeches
and similar ways to give attention to this critically important subject. Let’s
consider the playbook, the new actionable paradigm for the 21<sup>st</sup> century
and beyond that will elegantly do the job. It is almost embarrassing that we
even need to explain it. If it was a snake it would bite us. We will address
this important subject in some detail in this article.<o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">This post is written, with great respect to other recent efforts
(mentioned below), to get to the heart and essence of the question of how to
repair or rehabilitate Capitalism. Several other efforts in recent years, while
they do offer ways to create value, really only nibble around the edges of this
larger matter. The proposal here addresses Capitalism’s ultimate promise – its highest
value potential for local and global societies. We are confident Adam Smith
would endorse this concept.<o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";"> It should help to provide<b><i> </i></b>two<b><i> </i></b>prefatory
exclamation points on this matter right at the start:<o:p></o:p></span></div>
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<b><u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Doing Well By Doing Good.</span></u></b><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">There have been many efforts recently to study and propose ways
to make capitalism rise to its highest level. Some of them have been described
in short-hand as <b>“doing well</b> <b>by doing good.”</b> This is an
understandable description. It means of course that a company can do better for
itself, have more profit if it does good for others. While understandable it is
so obviously second best, partly because it is still self-focused. It uses
doing good for others as an instrumental means to an end – more profit for
self.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">On the other hand and ironically, the new paradigm we advocate
in this article can be called <b>“the golden rule as the ultimate
commercially effective paradigm”</b> – the way to create ultimate wealth
as an outcome of a total focus on service to others. The difference is one of
focus and reason for existence. In this approach, our focus is on others – our
primary stakeholders. And, this focus is or will become part of any company’s
DNA. The additional value to us (our company) is an outcome, not our driving
purpose. </span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">So, we present the 21<sup>st</sup> century essential
dominant mindset and it is grounded in the true meaning that underlies the
golden rule. How serendipitously elegant that a complete focus on serving
others results also in achieving our own maximum<b><i> </i></b>level of
wealth creation or value over the long run as an outcome.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<b><u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">People As Markets, In Kitchen Table Language.</span></u></b><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">In this article we
discuss ubiquitous virtues, unalienable rights and fiduciary obligations, among
other concepts. We use “markets” as a synonym for “people.” The plain
meaning of it all can be expressed as follows:</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">1.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Markets like companies that have and live the
ubiquitous virtues.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">2.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Markets like companies that treasure and honor
the unalienable rights.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">3.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Markets like companies that fully understand
they have fiduciary obligations to all their primary stakeholders.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">4.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Markets like companies that are ethical and
fair.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">5.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Markets like companies that are effective,
efficient, productive, creative and innovative.<o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">6.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Markets like companies that produce high
quality products and services at reasonable prices.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">7.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Markets like companies that are good citizens,
pitching in and helping out in their communities.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">8.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Markets like companies that treasure the
environment and are good stewards for future generations, attending to the
public interest.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">9.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Markets like companies that compensate their
employees fairly and create great, stimulating work environments for them –
helping them be creative and innovative.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">So, because one of our
principal messages is that there is a mindset that is clearly the best mindset
for capitalism to be grounded in (long term, primary stakeholder-focused and
value-optimizing) and that this mindset itself is grounded in a solid
understanding of the golden rule, these two prefatory explanations should help
the reader make sense of the entire article.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Now, we can get on
with explaining how to achieve capitalism’s ultimate promise – locally,
globally and for all people.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<b><u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Now, Actionable Paradigm – What The Heck Does That Mean?</span></u></b><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Actionable paradigm,
while sounding a bit too-too, simply means something that is or can be the
model for conducting business that changes everything – that sets a new
standard. The model we present here, when put into action by companies, by all
organizations, will result in maximum value and wealth creation, local and
global, over the long run. The real beauty of this paradigm is that it will
reach to and raise the well-being of all people around the globe once it
becomes viral – once it becomes universally embraced. At the same time and as
an essential outcome it will enable companies to get on their long term
trajectory of maximum wealth creation and stay on it over the long term.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">A bunch of study and
research has been done over the last 20 or 30 years on whether and how for
profit publicly held companies can do better – or even their best – as they
make and sell their products and services to customers. The reasons studies are
done are many. The primary one, though, is that while much value has been
created over the last 150 years or so (including through such recent and
disruptive innovations as the communications and internet revolutions), such
moments and events as the great recession of 2007-’08, the behavior of
companies like Enron, WorldCom and others and the gap between the rich and poor
as driven by the economy over time cause us to scratch our heads and look for
approaches to improve the way that capitalism is acted out. Even more
basically, we scratch our heads to determine whether a new way (a new paradigm)
might be needed to allow capitalism to reach its highest potential as the best
wealth creation catalyst for local and global economies.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">It can fairly be said that the existing
dominant concept (paradigm) in capitalist economies is that it is about profit,
the more the better. In this way, that argument goes, corporations will make
their best contribution to society. This concept can be said to have been most
forcefully and successfully articulated by Professor Milton Friedman of the
University of Chicago – extremely crisply in a New York Times article in
September, 1970. It has been largely applied and taught as the intrinsic
purpose and motivation of business since about that time.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Bad things have
happened under this old paradigm, though, including one (the 2007-’08
recession) that nearly ended free market capitalism’s life.<o:p></o:p></span></div>
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<br /></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Here are some examples of efforts to address
this very important matter:</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">1.</span><span style="color: #222222; font-family: "Times New Roman",serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> . </span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Triple bottom line capitalism, 2. Creative
capitalism, 3. Conscious capitalism, 4. Authentic capitalism, 5. Creating
shared value capitalism and 6. Solution-creating (problem solving) capitalism.
This sixth one has democracy necessarily accompany it because democracy helps
create prosperity by resolving conflicts fairly – according to the people who
studied and produced this approach. In fact, we believe legitimate democracy is
the best partner for each of these approaches.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Each and all of these studies, research
efforts and concepts have their own merit. They all fall short, though, of
presenting a concept that is integrally consistent, one that reflects the
highest expectations of local and global markets (populations) and that offers
and ensures that companies – all organizations – and societies can get on their
respective highest wealth creation trajectory and stay on them over the long
term.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">This matter of wealth
creation, then, is that what it’s all about? The answer is yes and no.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Wealth creation is one
way to describe the necessary outcome of a business that creates a product or
service and sells it in the marketplace. Profit is another way, as is value
creation. The main point is that when a business receives more for its product
or service than it costs to produce and sell it, <u>a profit must be an
outcome.</u> It can be called wealth creation. But, and this is the key,
while this outcome is essential for the long term existence of the business,<u> it
is not its purpose.</u></span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Every business has, as
its own purpose, its own reason for existence, the creation of something it has
the passion for and aptitudes to produce. It must be something that buyers will
buy because it creates value for them (it provides a solution for them), enough
that they value it more than the money they pay for it.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">For non-profit
organizations a positive margin must be produced, enough to enable the
non-profit to continue to provide optimal value to its primary stakeholder
groups over the long run.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<br /></div>
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<b><u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">So Far, Kind of
Staying Simple, But Let’s Spit It Out – What Concept Will Do This Job?</span></u></b><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<br /></div>
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<b><u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">The Golden Rule Does
The Job. Period.</span></u></b><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">We think it would be
good to express the golden rule in business lexicon words, although an argument
can be made that these words are not part of business lexicon. We hope they
will be – soon. We lay claim to the “21<sup>st</sup> century essential,
dominant mindset” as the name that applies to the following definition of the
golden rule when used in describing it in the business (organizational)
context. It also qualifies as the truly “big idea” for capitalism, a moniker
claimed by some other efforts on this subject:</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<b><i><u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";"> The
real breakthrough "big idea" is that self-interest value maximization
is a direct function of optimization of the value provided by an organization
(and a person) to each of that organization's (and person’s) primary
stakeholder groups – each relative to the others.</span></u></i></b><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";"> That is, when a business devotes its
time, talent and treasure to doing its best to optimize the value it
provides to its major stakeholder groups (customers, employees, [and investors
as a stakeholder group], suppliers, communities in which it has a presence and
society [the general public interest]), it will maximize its own long-term
value as an outcome (a by-product) - measured in appropriate financial terms as
well as the other value measures it holds dear. This is not a belief; it is a
self-evident axiom.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">It can be expressed as
a formula or an equation:</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<br /></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">IVM= f (S<sub>1</sub>VO,
S<sub>2</sub>VO,..… S<sub>N</sub>VO), where “I” is “institution” (any
organization), “f” is “function of,” “S” is “stakeholder,” “V” is “value”
(valued things) and “O” is “optimization.”</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">A.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">It is important to note here that just as the
number of primary stakeholder groups is finite – really about six for every
organization, so also is the number of “primary valued things” for each of
these groups – about three or four for each group. That is, it is not a
monumental task to identify them. In fact, this makes the marketing dimension
so focusable and so achievable.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">B.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Again, the primary stakeholder groups, almost
without exception, are: customers, employees, investors, suppliers, communities
in which the company has a presence and the general public interest. Depending
on the sector, different names are used – for example in health care the
customer is the patient.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Every business, in
fact every organization (every group with a unifying purpose) will maximize its
own long term value or wealth creation as a direct function of optimally serving
its primary stakeholder groups.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">That is, it is simple
and doable.<o:p></o:p></span></div>
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<br /></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">At the kitchen table and on the street corner
these groups would be and are discussed as the key groups. People look with
great interest at how these groups are treated by any company. If it is good,
people like it and bring their business to that company. If not, people do not.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<b><u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Anything Else?</span></u></b><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Of course. This new
paradigm, this “big idea” conceptual foundation must intersect with and be
integrally connected to an adaptive multi-year planning-and-doing process that
makes it all happen (be actionable) – day in, day out, year in, year out. Often
called a strategic plan, it can also be called a multi-year
playbook. <b><u>How simple is that?</u></b></span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<br /></div>
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<b><u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Other Important
Aspects Of This Paradigm.</span></u></b><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">There are just a few
other very important aspects of this new paradigm. These aspects are integral
to and breathe robust life into it. They are listed here without much
elaboration, to allow the reader to see the dots and, almost certainly, connect
them:<o:p></o:p></span></div>
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<br /></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">1.</span><span style="color: #222222; font-family: "Times New Roman",serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Ubiquitous virtues:</span></u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";"> Research by Professor Martin Seligman of
the University of Pennsylvania, with others, indicates that there are about six
virtues that are treasured by virtually all peoples around the globe. It turns
out that these virtues are literally the same as the cardinal virtues –
together with the theological virtues from Christian teaching. This new
paradigm is areligious, but the ubiquitous virtues are strikingly similar. They
are wisdom and knowledge, courage, humanity, justice, temperance and
transcendence. Of course each virtue presents itself through a number of
tangible traits, like creativity and curiosity as traits indicative of wisdom
and knowledge, and kindness as indicative of humanity. They all make sense and
sell at the kitchen table.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">2.</span><span style="color: #222222; font-family: "Times New Roman",serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Universally Possessed Unalienable Rights:</span></u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";"> The rights to life, liberty, the pursuit
of happiness and property (where property means one’s own skills and aptitudes
– the abilities of each person to actualize her/his own potential) are almost
universally agreed upon to be unalienable.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">3.</span><span style="color: #222222; font-family: "Times New Roman",serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Fiduciary Responsibilities:</span></u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";"> The robust understanding must be that
every organization, certainly every company, has a fiduciary obligation to each
of its primary stakeholder groups – not just to its investors, its owners.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">4.</span><span style="color: #222222; font-family: "Times New Roman",serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">The Normal Blocking and Tackling of a Business:
</span></u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">These will blossom
most fully with our new paradigm. They are the functions of effectiveness,
efficiency, productivity, creativity and innovation. In fact, with each
employee doing that which fits her aptitudes and about which she is most
energized and passionate (Jim Collins’ “seats on the bus<b><i>”</i></b>) these
functions will be artistically acted out.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">5.</span><span style="color: #222222; font-family: "Times New Roman",serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Gold Standard Leadership Characteristics:</span></u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";"> Enough mistakes have been made and
attention given to the characteristics that work and those that don’t work that
these seem obvious: Establish direction (vision, personal humility and
professional will), modest and fearless, inclusive, enabling, inspirational, a
listener, stakeholder-focused – in a maniacally profound way, heart of a
servant, ethical courageous and just, and fun.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">6.</span><span style="color: #222222; font-family: "Times New Roman",serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Gold Standard Cultural Characteristics: </span></u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";"> These are also clear, after many years
of wandering: Adaptive, with a core ideology (purpose and values), risk taking,
trusting, proactive, one in which all are heard and the truth is heard, reflective,
humble, anticipatory and involved, rational and respectful, a conscious
mindset, quietly confident, unassuming while maniacally pursuing the
organization’s vision and mission with prudence, perseverance, humor and zest,
disciplined people, thoughts and actions in a fun and dynamic environment,
open, supportive and enthusiastic, happy, in a stakeholder-centered (H3) way,
and fun.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">7.</span><span style="color: #222222; font-family: "Times New Roman",serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Happiness: </span></u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">This aspect, once dismissed as unnecessary to
have a productive work force, is essential – and it is at the heart of our 21<sup>st</sup> century
mindset. It applies to the entity itself and to its work force. Briefly,
Aristotle’s four kinds or levels of happiness, H1 through H4 are so obviously
explaining that a dominant H3 life, the happiness that flows from contributing
to the happiness of and creating value for others, is ultimately the best way
for one to fully actualize one’s own potential in life. It is servant existence
and servant leadership in action. Our big idea is grounded in this reality – we
just breathe commercial life into the idea. It fits. And, it has as one
essential outcome the maximization of the organization’s H2 (achievement –
wealth creation) level of happiness.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">8.</span><span style="color: #222222; font-family: "Times New Roman",serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Multi-Year Adaptive Planning and Doing
Process:</span></u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";"> the plain
vanilla strategic planning processes are fine. However our 21<sup>st</sup> century
mindset’s intersection (harmonization) with this planning and doing process
puts the company on that highest wealth creation trajectory and helps us stay
there over the long term. Going from charter statements of purpose, values and
beliefs, which are or should be timeless, through vision, mission, the
successive and<b><i> </i></b>adaptive multi-year plans (with their goals
and strategies) to annual budgets (with their objectives and tactics). What
once and forever has seemed perhaps mundane to many (collectors of dust on the
shelves) takes on a vibrant life with this harmonization, this nexus plus.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">9.</span><span style="color: #222222; font-family: "Times New Roman",serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Ethical Behavior Always:</span></u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";"> This imperative was once thought to be
optional for companies. They are legal persons, not real persons<b><i>. </i></b>As
long as they did nothing illegal, as long as they followed the law in their
conduct, ethical behavior was considered optional. Can you believe it?</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">10.</span><span style="color: #222222; font-family: "Times New Roman",serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Opportunity Cost Awareness and Minimization:</span></u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";"> This will be another and welcomed
outcome of the new paradigm, local and global, micro and macro. </span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">11.</span><span style="color: #222222; font-family: "Times New Roman",serif; font-size: 7.0pt; mso-fareast-font-family: "Times New Roman";"> </span><u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Full Potential – Seen and Actualized:</span></u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";"> This state of being is of course the
ultimate outcome for an organization, and our 21<sup>st</sup> century
essential dominant mindset produces it. Reached through our actionable paradigm,
it is the equivalent of the happy life for a real person – the good and full
life, well lived.<o:p></o:p></span></div>
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<u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Now, how is that for
keeping it simple?</span></u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";"> This is the
golden rule applied to<u> </u>organizations – and individuals for that
matter. It applies to all groups of people who are gathered together with a
unifying purpose, a common cause.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<b><u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">The 21st Century
Essential Dominant Mindset: A Summary.</span></u></b><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">This article has
presented the organic new paradigm that will allow companies and, really, all
organizations to get on their highest wealth creation trajectory and stay on it
for the long term. It will do it because it invites and enables companies to
appeal to the highest shared characteristics of people (markets), both locally
and globally. It also invites all people to find work that allows them to fully
use that most precious and unalienable property of theirs – their aptitudes and
skills that they are passionate about.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">While staying simple,
there is more to this actionable paradigm, but the heart and soul of it has
been presented here.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<b><u><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Next Steps?</span></u></b><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Some might or will
consider this proposal to be a bridge too far. That is, to ask leaders of
companies to have a long term, primary stakeholder-focused and value-optimizing
mindset, rather than the largely short term-dominant, inward-focused and
win-lose mindset that they have been accustomed to simply asks too much.<o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">We think that view
underestimates the ability of companies (all organizations) and their leaders
to see and conduct themselves in accordance with their better angels. If for no
other reason, this mindset is and for companies and leaders everywhere will
increasingly become the best commercial choice available. That is, get on board
or go out of existence!<o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">We believe companies
and their leaders, once introduced to this paradigm and enabled to understand
its merit, will enthusiastically embrace and adopt it.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">This, then, represents
a new paradigm for capitalism that can enable all, at the local and global
levels, to fully realize the benefits of capitalism’s ultimate promise.</span><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
</div>
Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com1tag:blogger.com,1999:blog-4927657185123993411.post-3660497764221439582014-07-15T14:19:00.002-07:002014-12-23T19:51:12.262-08:00The Profit Motive: An Understandable Distraction In The Wealth Creation Process. At Best A Misnomer, At Worst A Wealth Inhibitor, A Wealth Limiter. <div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 5.0pt;">
<i>(This post follows
from our themes in previous posts. It might appear to be heresy, but worry not,
my capitalism and democracy friends. We discuss here one important part of how
we lift capitalism to its high and true potential. This post offers a perspective
far too long missed).<o:p></o:p></i></div>
<div style="line-height: 106%;">
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<div style="line-height: 106%;">
What? Surely anyone with a scintilla of
understanding of the business of business knows the assertion in this title
amounts to blasphemy. Throughout commercial time, it has been an accepted axiom
that a seller will sell her/his wares if and only if they receive payment for
them greater than the cost they incur to produce and sell them. The amount by
which the payment exceeds the cost is called profit. And, sale after sale, year
after year, the accumulation of this difference can be called wealth creation,
right? Right!<o:p></o:p></div>
<div style="line-height: 106%;">
So, where’s the beef? Well, a focus on
profit as a motive does a critical disservice to the higher nature of people,
to our better angels. In more practical and commercial terms, it causes the
business to fall short of the wealth creation potential it really has.<o:p></o:p></div>
<div style="line-height: 106%;">
<u>Profit</u>, as we note above and as has been
acknowledged by many students of economics, finance and business over time, <u>is
an axiom</u>, an axiomatic outcome of the commercial process – <u>not a motive</u>.
To suggest that it motivates the seller (producer), is to; (1) do a disservice
to the seller (producer) as a person whose special aptitudes are being used to
produce something she/he has a passion to produce in order to please the buyer,
the consumer and (2) cause a sub-optimization of the use of all the input
resources required to create the product.<o:p></o:p></div>
<div style="line-height: 106%;">
The real bell-ringing motive of the seller (the
producer) in the commercial process, the one that creates maximum wealth over
time, is to <u>optimize the value provided to each primary stakeholder
group (customer, employee, supplier, investor, community where the producer
(seller) exists and the general public interest).</u> It is this primal motive
that causes the seller, the producer, to actualize her/his potential, to be
thrilled to the max AND to create the highest near and long term profit
possible as an outcome of this value-optimizing motive over time. Confusing
motive and outcome (profit as an axiom) results at best in pretty good wealth
creation over time, but not maximum wealth creation.<o:p></o:p></div>
<div style="line-height: 106%;">
Well, so what? The answer to this
provocative question is that a focus on profit rather than on optimizing value
by definition causes the producer (seller), and those who watch her/him, to be
continuously looking inward, to be enchanted with winning (relative to other
sellers (producers)) and to slip into the seductive short termism behavior so
prominent in the commercial world – especially the investment banking part of
the commercial world. By contrast, the value-optimizing focus allows the seller
(producer) to be consumed with and captivated by continuously innovating and
creating the best possible product or service for the customer, while also; (1)
providing employees the truly fairest compensation and the fullest possible
self-actualization opportunities, (2) providing the suppliers with the most
attractive long term fair compensation), (3) providing communities the best
citizen behavior and (4) providing the general public the most able and willing
co-creator of the best society over the long run.<o:p></o:p></div>
<div style="line-height: 106%;">
It all sounds so delightful, but also implausible.
A bit more explanation is in order, to connect with normal business and
organizational practice.<o:p></o:p></div>
<div style="line-height: 106%;">
<span style="line-height: 106%;">Normal
Business Practice.</span> <o:p></o:p></div>
<div style="line-height: 106%;">
The normal blocking and tackling of a business lies
in the important functions of effectiveness, efficiency, productivity,
creativity and innovation. When a business (our seller (producer)) is focused
on optimizing the value provided to its primary stakeholder groups, the
likelihood (the probability) that these blocking and tackling functions will be
performed at their highest level is itself maximized. <o:p></o:p></div>
<div style="line-height: 106%;">
Without explaining every piece here all at once,
other related realities about the market, local and global, such as universally
held unalienable rights and ubiquitously treasured virtues will cause the
products and services of our seller (producer) to attract buyers (consumers)
above all other choices available to them. The marketing opportunity will have
been elegantly achieved and exceeded, simply by focusing on serving others in
this way. AND, the profit outcome, the accumulating wealth, will be maximized
as a result - a necessary and natural result of doing what is right and
actualizing one’s potential (individuals and groups of individuals (companies))
as a seller (producer).<o:p></o:p></div>
<div style="line-height: 106%;">
What Does It all Mean? <o:p></o:p></div>
<div style="line-height: 106%;">
The dominant focus of for profit business over the
years has been inward, near term and win-lose. Profit has been all too often
taught to be both the “business of business” and that which owners and managers
should focus on. <u>It is as though the motivation of producers (sellers) is to
be achieved by a continuously ringing cash register. How silly that is, and how
demeaning!</u> Indeed, though, wealth has been produced over time, much wealth,
but not enough for the very reasons we present. The primal motive has been
misstated.<o:p></o:p></div>
<div style="line-height: 106%;">
<br /></div>
<div style="line-height: 106%;">
However, if business had been dominantly focused on
value creation for its customers and its other primary stakeholders over the
years, more wealth would have been produced. More importantly, in this
beginning of the 21<sup>st</sup> century, with the globally disruptive
communication and technology revolution as one significant catalyst for
paradigm change by itself, we have the opportunity and obligation to reset our
dominant focus toward primary stakeholder group value optimization. Companies
will rock because; (1) customers will eagerly buy their product or service, (2)
their employees will be able to fully actualize their individual and group
value, (3) suppliers will receive optimal value through their relationship with
the companies, (4) communities will receive optimal value from the company as a
citizen member of the community, (5) the general public interest will have a
willing participant in optimizing value in the public interest and (6)
investors, including owner-investors, will have both optimal and maximized long
term value – importantly and necessarily (axiomatically) including maximized
wealth creation.<o:p></o:p></div>
<div style="line-height: 106%;">
By the way, this same paradigm change in focus
applies to non-profit organizations, governments – all organizations, local and
global.<o:p></o:p></div>
<div style="line-height: 106%;">
<br /></div>
<div style="line-height: 106%;">
Summary. <o:p></o:p></div>
<br />
<div style="line-height: 106%;">
The case for a reset of the definition of
motivation and focus for businesses (and all organizations) to the obvious - Optimization
of value for primary stakeholder groups - is clear. More can be
written about it, but the case is intuitive, and it is certainly more than a
semantics game. It is the literal heart and soul of the highest behavior we can
engage in as people and economic actors for local and global societies.<o:p></o:p></div>
Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com0tag:blogger.com,1999:blog-4927657185123993411.post-79457427835641027932014-06-24T20:20:00.000-07:002014-06-24T20:20:21.629-07:00How To Make Capitalism Rock And Roll.<div style="margin-bottom: 0in;">
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<span style="font-family: Times New Roman, serif;"><span style="font-size: 16pt;">How
To Make Capitalism Rock And Roll.</span></span></div>
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<div style="margin-bottom: 0in;">
<span style="font-size: large;">This post includes a previous post that was incorrectly formatted and posted. The introductory paragraphs are intended to make the total message clearer. We can only hope.</span></div>
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<span style="font-family: Times New Roman, serif;"><span style="font-size: 16pt;">The
heart and soul of the piece is that there is a self-evident best
mindset paradigm for capitalism as a catalyst for long term value
creation. It has remained mostly <span style="color: black;">(and
tragically) under-used </span>over the decades. </span></span>
</div>
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<div style="margin-bottom: 0in;">
<span style="font-family: Times New Roman, serif;"><span style="font-size: 16pt;">There
are many reasons. One fundamental and longstanding reason, though, is
a misconstruction or misunderstanding of Adam Smith’s teaching. In
more recent years the dogmatic teaching and assertions of Professor
Milton Friedman, the main themes taught in business schools and,
sadly, Wall Street’s short-termism affliction have had a pervasive
and subtle negative effect on mindset choice. Negative in that even
though much economic value has been created over time, we have
sub-optimized economically, with the associated opportunity costs,
precisely because the ultimate commercial, economic and societal
value that this alternative paradigm can create has been largely
missed. </span></span>
</div>
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<div style="margin-bottom: 0in;">
<span style="font-family: Times New Roman, serif;"><span style="font-size: 16pt;">Some
work has been done to move toward this paradigm, including by
academicians and practitioners, but virtually all that work has
been either incremental or organization-specific and, in any event,
has not embraced the ultimate fullness of the essential mindset
change that is at the core of this new paradigm.</span></span></div>
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<br /></div>
<div style="margin-bottom: 0in;">
<span style="font-family: Times New Roman, serif;"><span style="font-size: 16pt;">Choice
of mindset precedes all other matters for corporations (all
organizations), nations and the global, interactive societies and
economies. The multi-year plans of organizations (strategic plans –
with their goals and strategies), as well as the current year budgets
(with their objectives and tactics) are all established in accordance
with the dominant mindset of an organization. So, it is clear that we
must get this mindset matter right. It is explained in the post
below. However, much goes unsaid in the post, for the sake of
brevity, and is only fully discussed in a longer explanation. For
example, the idea of fiduciary obligation is commonly focused on
owner-investors in an organization. This is an entirely too narrow
construction of fiduciary. The robust, essential construction of the
fiduciary obligation of every organization is that it exists for each
one of the organization’s primary stakeholder groups. One
fortuitous and natural by-product of this construction is, in fact,
that the long term value for owner-investors will be maximized.</span></span></div>
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<div style="margin-bottom: 0in;">
<span style="font-family: Times New Roman, serif;"><span style="font-size: 16pt;">Local
and global value creation (use GDP or any other measure of value
creation) would have been much greater over the last 100 + years, all
other things equal, if our mindset presented here had been dominant,
rather than the Wall Street, university business school-taught
(implicitly or explicitly) old dominant mindset - short term,
inward-focused and win-lose. And, this old dominant mindset was
heavily influenced by that tragic misapplication and misunderstanding
of Adam Smith’s teaching.</span></span></div>
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<div style="margin-bottom: 0in;">
<span style="font-family: Times New Roman, serif;"><span style="font-size: 16pt;">The
piece below addresses this new paradigm, this new and essential 21<sup>st</sup>
century learnable dominant mindset. This post uses a recent event to
present this ultimate value-creating mindset.</span></span></div>
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<div style="margin-bottom: 0in;">
<span style="font-family: Times New Roman, serif;"><span style="font-size: 16pt;">One
important note first: Michael Porter and Mark Kramer of Harvard have
articulated the concept of creating shared value (CSV). They consider
it the next big transformational idea for business (and perhaps
economies and societies by inference). Professors Andrew Crane and
Dirk Matten, business ethics, corporate citizenship and corporate
social responsibility (CSR) professors<span style="color: #c00000;"> </span>take
issue with the Porter-Kramer CSV concept. This post below, together
with the notes here introducing it, acknowledge the good incremental
value of both Porter-Kramer and Crane-Matten, but make it clear to
the attentive reader that both sets of professors fall short of
articulating a truly transformational big idea. Our idea is the big
idea. Adam Smith, the Dalai Lama, Pope Francis and other thinking
leaders and practitioners would sign up for our idea below in a New
York minute.</span></span></div>
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<div style="margin-bottom: 0in;">
<br /></div>
<div style="margin-bottom: 0in;">
<span style="font-size: 16pt;"><b>The
Dalai Lama, Adam Smith, AEI and Capitalism.</b></span></div>
<div style="margin-bottom: 0in;">
<span style="font-size: 16pt;"><b>The
21<sup>st</sup> Century Essential, Dominant Mindset.</b></span></div>
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<div style="margin-bottom: 0in;">
<span style="font-size: 16pt;">This
post is prompted by a reminder for which we are grateful. The
reminder is that we must stay with our nose to the grindstone on this
matter of mindset, achieving excellence and living the full life.
Again, serendipity plays a role, this time in the form of a
channel-surfing bonanza.</span></div>
<div style="margin-bottom: 0in;">
<span style="font-size: 16pt;">The
American Enterprise Institute (AEI) sponsored a panel discussion on
Thursday, February 20, 2014. CSPAN televised it. I surfed right into
it.</span></div>
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<span style="font-size: 16pt;">Here
is the punch line, from my take on the panel’s discussion when
connected to the essential mindset for ultimate excellence
assertion I make, all in one brief paragraph – you will not
need to read the entire post, unless you really want to :-):</span></div>
<div style="margin-bottom: 0in; margin-left: 0.98in; margin-top: 0.07in;">
<span style="font-size: 16pt;">Adam Smith, the free enterprise
capitalist's capitalist, taught that a person's self-interest could
best be served if he/she was allowed to do their thing without
interference and if then a willing buyer wanted to buy it and he
wanted to sell it, the transaction happened – fancier words have
been used, but that's the deal. The other thing he insisted on,
though, was that a person was not a good citizen if he was not also
promoting the welfare of the whole society – he called it fellow
feeling. Well, it turns out the Dalai Lama, the self-described
Marxist, advocates the same thing – he reduces it to being
“wise-selfish.” At Jack Haffey & Associates we call this very
same thing the essential 21<sup>st</sup> century dominant mindset –
our self-value is maximized only if we focus on and create optimal
value for each of our primary stakeholder groups (those whose lives
we significantly affect over time) over the long run.</span></div>
<div style="margin-bottom: 0in; margin-left: 0.98in; margin-top: 0.07in;">
<span style="font-size: 16pt;">My friends, this paragraph
describes how to make capitalism rock and roll. The Dalai Lama will
join right in if we all get it right. And, Adam Smith's teaching will
finally be correctly applied. Read on for color commentary.
Otherwise, just give me a note or a call and we will schedule our
first meeting.</span></div>
<div style="margin-bottom: 0in; margin-left: 0.98in; margin-top: 0.07in;">
<span style="font-size: 16pt;">In addition, the essential 21st
century dominant mindset, as we present it here, has related concepts
which flesh it out, and they must be robustly understood and lived.
Here they are, simply listed:</span></div>
<div style="margin-bottom: 0in; margin-left: 1.5in; margin-top: 0.07in;">
<span style="color: #2a2a2a;"><span style="font-size: 16pt;">Mindset,
excellence, happiness, fiduciary, stakeholders, optimization,
blocking and tackling, universal and unalienable rights, ubiquitous
virtues, traits and valued things, self-interest and other-interest,
gold standard leadership characteristics, gold standard cultural
characteristics, profit (npv of future cash flows, etc.), purpose,
vision, mission, multi-year plans (playbooks), long term, ethics,
full potential – seen and actualized, and opportunity costs, local
and global.</span></span></div>
<div style="margin-bottom: 0in; margin-left: 0.98in; margin-top: 0.07in;">
</div>
<div style="margin-bottom: 0in; margin-left: 0.98in; margin-top: 0.07in;">
</div>
<div style="margin-bottom: 0in;">
<span style="font-size: 16pt;"><u><b>Back
To The AEI Panel.</b></u></span></div>
<div style="margin-bottom: 0in;">
<span style="font-size: 16pt;">The
panel included, among others, Arthur Brooks, President of AEI, and
the Dalai Lama. It was an unprecedented discussion. So much was said.
This brief note zooms in on what we consider the heart of the matter.</span></div>
<div style="margin-bottom: 0in;">
<span style="font-size: 16pt;">Arthur
Brooks, president of AEI describes himself as purpose-driven, not
product-driven. He appears to be the one most responsible for
bringing this panel together, and he also appears to be leading AEI
in an enlightened 21<sup>st</sup> century way. He summarized his
purpose in a few ways, and this quote captures it for me:</span></div>
<div style="margin-bottom: 0in; margin-left: 0.49in; margin-top: 0.07in;">
<span style="color: #333333;"><span style="font-size: 16pt;">"I
don't care about the Republican Party because here's what I really,
really want. I mean, I care about the Republican Party -- I care
about the Democratic Party -- because I care about America," he
said. "To bring back the Republican Party? No, that's not the
objective at all. I want, 15 years from now, to have the free
enterprise movement be as apolitically accepted as the civil rights
movement is today."</span></span></div>
<div style="margin-bottom: 0.16in; margin-left: 0.49in; margin-top: 0.07in;">
<span style="color: #333333;"><span style="font-size: 16pt;">To do so,
Brooks said, conservatism needs an attitude adjustment." To be a
part of the conservative movement, you should be expected to love
people," he said. "This is a movement that must answer
anger with love."</span></span></div>
<div style="margin-bottom: 0.16in;">
<span style="color: #222222;"><span style="font-size: 16pt;">I
believe Arthur Brooks has done a truly great service to the global
discussion on and the global vision of capitalism and society by
bringing the Dalai Lama to engage in dialogue with AEI.</span></span></div>
<div style="margin-bottom: 0.16in;">
<span style="color: #222222;"><span style="font-size: 16pt;">The
AEI panel's moment in time is in harmony with other voices in recent
years, including that of Joseph Stiglitz, Nobel Prize-winning
economist from Columbia University.</span></span></div>
<div style="margin-bottom: 0in;">
<span style="font-size: 16pt;">The
Dalai Lama's comments at the panel discussion, for me, are summarized
as follows:</span></div>
<div style="margin-bottom: 0in;">
<br /></div>
<div style="margin-bottom: 0in; margin-top: 0.07in;">
<span style="font-family: Times New Roman, serif;"><span style="font-size: 16pt;">I.
</span></span><span style="font-size: 16pt;">The Dalai Lama
said that people should be wise-selfish rather than foolish-selfish.</span></div>
<div style="margin-bottom: 0in; margin-top: 0.07in;">
<a href="https://www.blogger.com/null" name="wl-wrapper-container"></a>
<span style="font-family: Times New Roman, serif;"><span style="font-size: 16pt;">II. </span></span><span style="font-size: 16pt;">He
said that ultimately it’s in one's own self-interest to help the
rest of humanity.</span></div>
<div style="margin-bottom: 0in; margin-top: 0.07in;">
<span style="font-size: 16pt;">III. “Today, I developed more
respect about capitalism,” the great Buddhist monk said with a
smile. “Otherwise, in my impression, capitalism only takes money,
then exploitation.”</span></div>
<div style="margin-bottom: 0in;">
<br /></div>
<div style="margin-bottom: 0in;">
<span style="font-size: 16pt;">Here
are a few thoughts from and about Adam Smith, and see whether and how
they connect with the Dalai Lama and Arthur Brooks (AEI):</span></div>
<div style="margin-bottom: 0in;">
<br /></div>
<div style="margin-bottom: 0in; margin-top: 0.07in;">
<span style="font-size: 16pt;">I.
“The property which every man has is his own labour; as it is the
original foundation of all other property, so it is the most sacred
and inviolable…To hinder him from employing this strength and
dexterity in what manner he thinks proper without injury to his
neighbor is a plain violation of this most sacred property.”</span></div>
<div style="margin-bottom: 0in; margin-top: 0.07in;">
<span style="color: black;"><span style="font-size: 16pt;">II.
“It is not from the benevolence of the butcher, the brewer, or the
baker that we expect our dinner, but from their regard to their own
self-interest. We address ourselves not to their humanity but to
their self-love, and never talk to them of our own necessities, but
of their advantages”</span></span></div>
<div style="margin-bottom: 0in; margin-left: 0.49in; margin-top: 0.07in;">
</div>
<div style="margin-bottom: 0in; margin-left: 0.49in; margin-top: 0.07in;">
<span style="font-size: 16pt;">III. Adam Smith also said that
<span style="color: black;">“Man was made for action, and to promote by
the exertion of his faculties such changes in the external
circumstances both of himself and others, as may seem most favourable
to the happiness of all.”</span></span></div>
<div style="margin-bottom: 0in; margin-left: 0.49in; margin-top: 0.07in;">
</div>
<div style="margin-bottom: 0in; margin-top: 0.07in;">
<span style="color: black;"><span style="font-size: 16pt;">IV.
Smith always believed that man's self-interest was not in conflict
with his urge to help others and that this sympathy between fellows
was a fundamental part of human nature.</span></span></div>
<div style="margin-bottom: 0in; margin-top: 0.07in;">
<span style="color: black;"><span style="font-size: 16pt;">V.
Moreover, when he moved from a singular focus on transactions
(butcher, baker, candlestick maker), Smith issued strong strictures:
‘He is certainly not a good citizen who does not wish to promote,
by every means of his power, the welfare of the whole society of his
fellow citizens.’ </span></span>
</div>
<div style="margin-bottom: 0in; margin-left: 0.49in; margin-top: 0.07in;">
</div>
<div style="margin-bottom: 0in;">
<br /></div>
<div style="margin-bottom: 0in;">
<span style="color: black;"><span style="font-size: 16pt;">Our
thoughts on these subjects have been presented in our website and our
blog site. Here they are in brief: </span></span>
</div>
<div style="margin-bottom: 0in;">
<br /></div>
<div style="margin-bottom: 0in;">
<span style="color: black;"><span style="font-size: 16pt;">One
of our fundamental beliefs, that we call the essential, dominant 21</span></span><span style="color: black;"><sup><span style="font-size: 16pt;">st</span></sup></span><span style="color: black;"><span style="font-size: 16pt;">
century mindset, is:</span></span> <span style="font-family: Times New Roman, serif;"><span style="font-size: 16pt;">The
real breakthrough big idea is that self-interest value maximization
is a direct function of optimization of the value provided by an
organization (and a person) to each of that organization's (and
person's) major stakeholder groups – each relative to the others.”</span></span><span style="color: black;">
</span><span style="color: black;"><span style="font-size: 16pt;">That
is, when a business devotes its time, talent and treasure to doing
its best to optimize the value it provides to its major stakeholder
groups (customers, employees, [and investors as a stakeholder group],
suppliers, communities in which it has a presence and society [the
general public interest]), it will maximize its own long-term value
as an outcome (a by-product) - measured in appropriate financial
terms as well as the other value measures it holds dear. This is not
a belief; it is a self-evident axiom.</span></span></div>
<div style="margin-bottom: 0in;">
<span style="color: #222222;"><span style="font-size: 16pt;">It
can be expressed in equation form:</span></span></div>
<div style="margin-bottom: 0in;">
<span style="color: #222222;"><span style="font-size: 16pt;"><u>IVM=
f (S<sub>1</sub>VO, S<sub>2</sub>VO,..… S<sub>N</sub>VO), where “I”
is “institution” (any organization), “f” is “function of,”
“S” is “stakeholder,” “V” is “value,” “M” is
“maximization” and “O” is “optimization.”</u></span></span></div>
<div style="margin-bottom: 0in;">
<span style="color: #222222;"><span style="font-size: 16pt;">Unleashing
the local and global potential of organizations (for profit
companies, non-profits, governments, etc.) will create value. Fully
unleashing this potential will create ultimate long term value –
for each organization and the global population. <u>There is a
functional relationship between self-interest value and other
(stakeholder)-interest value. This relationship is grounded in the
highest characteristics of human nature. </u>And properly understood
and acted on, it will unleash this ultimate potential. It is
philosophically sound, practically actionable and economically
(commercially) optimal. Importantly, capitalism’s highest catalytic
effects on value are also unleashed through this concept.</span></span></div>
<div style="margin-bottom: 0in;">
<br /></div>
<div style="margin-bottom: 0in;">
<span style="color: #222222;"><span style="font-size: 16pt;">We
call this idea the essential and dominant 21<sup>st</sup> century
mindset. What do we mean? Companies have mindsets – ways of looking
at the best way to conduct themselves as entities, in pursuit of
their purposes. The primary mindsets are: a. the short-term,
inward-focused and win-lose mindset; and b. the long-term,
outward-focused and optimizing mindset.</span></span></div>
<div style="margin-bottom: 0in;">
<span style="color: #222222;"><span style="font-size: 16pt;">Unfortunately,
businesses and other organizations usually choose the former. It is
sometimes called “short-termism.” They choose it or they are
forced into it. This has been the norm over the years. It has been
guided by the idea that the organization exists because of its owners
and, therefore, primary focus should be on rewarding the owners. One
example is the SEC quarterly report requirement for publicly held
companies in the United States. Wall Street has used these reports ,
much of the time, as a hammer to pressure companies to behave in
short term ways, and solely to reward the owners.</span></span></div>
<div style="margin-bottom: 0in;">
<span style="color: #222222;"><span style="font-size: 16pt;">In
stark contrast, our big idea is unambiguously dogmatic that the
dominant organizational (and individual) mindset must be the
long-term, outward-focused and optimizing mindset. One outcome, in
fact the fortuitous and yet necessary and natural outcome of behaving
in accordance with this mindset will be that the owners’ long term
value will indeed be maximized.</span></span></div>
<div style="margin-bottom: 0in;">
<span style="color: #222222;"><span style="font-size: 16pt;">How
do these perspectives (Adam Smith’s, the Dalai Lama’s and ours)
connect with each other, if at all?</span></span></div>
<div style="margin-bottom: 0in;">
<span style="color: #222222;"><span style="font-size: 16pt;">It
seems clear and without need for explanation, that:</span></span></div>
<div style="margin-bottom: 0in;">
<br /></div>
<div style="margin-bottom: 0in; margin-top: 0.07in;">
<span style="font-family: Times New Roman, serif;"><span style="font-size: 16pt;">1.
</span></span><span style="color: #222222;"><span style="font-size: 16pt;">What
the Dalai Lama calls “wise-selfish,” and what Adam Smith taught,
using a few different ways to explain it including </span></span><span style="color: black;">“</span><span style="color: black;"><span style="font-size: 16pt;">Man
was made for action, and to promote by the exertion of his faculties
such changes in the external circumstances both of himself and
others, as may seem most favourable to the happiness of all,” and
what we call “the essential and dominant 21</span></span><span style="color: black;"><sup><span style="font-size: 16pt;">st</span></sup></span><span style="color: black;"><span style="font-size: 16pt;">
century mindset - “the </span></span><span style="color: #222222;"><span style="font-size: 16pt;">long-term,
outward-focused and optimizing value for each stakeholder group”
mindset are the same concept, and </span></span>
</div>
<div style="margin-bottom: 0in; margin-top: 0.07in;">
<span style="color: #222222;"><span style="font-size: 16pt;">2.
What the Dalai Lama calls “foolish-selfish,” and what Adam Smith
discusses as, </span></span><span style="color: black;">‘</span><span style="color: black;"><span style="font-size: 16pt;">He
is certainly not a good citizen who does not wish to promote, by
every means of his power, the welfare of the whole society of his
fellow citizens, and what we describe as short termism, the dominant
mindset that has organizations behave in a </span></span><span style="color: #222222;"><span style="font-size: 16pt;">short-term,
inward-focused and win-lose manner are the same</span></span><span style="color: #222222;"><span style="font-size: 16pt;"><u>
</u></span></span><span style="color: #222222;"><span style="font-size: 16pt;">concept.
</span></span>
</div>
<div style="margin-bottom: 0in;">
<br /></div>
<div style="margin-bottom: 0in;">
<span style="color: #222222;"><span style="font-size: 16pt;"><u><b>Happiness.</b></u></span></span></div>
<div style="margin-bottom: 0in;">
<span style="color: #222222;"><span style="font-size: 16pt;">This
concept, happiness, of course was part of the whole panel discussion
that was primarily centered on capitalism. The Dalai Lama's focus is
on happiness. Arthur Brooks recognizes and shares that focus, it
appears.</span></span></div>
<div style="margin-bottom: 0in;">
<span style="color: #222222;"><span style="font-size: 16pt;">And,
our focus is there as well. Mortimer Adler, a 20<sup>th</sup> century
philosopher, was well known for teaching that the happy life can only
be known as it approaches its end, and that the full life well lived
is the way to determine if the life has been happy – has been good.
The panel discussion includes some indication about achieving this
state of happiness, as described here.</span></span></div>
<div style="margin-bottom: 0in;">
<span style="color: #222222;"><span style="font-size: 16pt;">However,
all people must share in this happiness. All people must have the
opportunity to actualize their potential. A prescription for how to
enable us to successfully pursue and achieve this goal is set forth
in this paper.</span></span></div>
<div style="margin-bottom: 0in;">
<span style="color: #222222;"><span style="font-size: 16pt;">A
vivid and incentivizing reminder of the job ahead is the recent
information published by Oxfam that the 87 wealthiest persons in the
world have the same total wealth as the poorest 3.5 billion people.
This inequality is criminal. It is absolutely unacceptable anytime
and especially now, in the 21<sup>st</sup> century global economic
village.</span></span></div>
<div style="margin-bottom: 0in;">
<span style="color: #222222;"><span style="font-size: 16pt;"><u><b>A
Final Thought.</b></u></span></span><span style="color: #222222;"> </span>
</div>
<div style="margin-bottom: 0in;">
<span style="color: #222222;"><span style="font-size: 16pt;">Congratulations
to Arthur Brooks and his leadership at AEI. The Dalai Lama's message
for the world really is harmonized with capitalism as long as the
dominant capitalist mindset is long term, outward-focused
(other-focused) and committed to optimizing value for stakeholders.</span></span></div>
<div style="margin-bottom: 0in;">
<span style="color: #222222;"><span style="font-size: 16pt;">And,
Adam Smith's message, properly understood and acted on, is also in
harmony. For more than 200 years his teaching has been largely
misapplied. Now is the time to robustly apply his guidance.
Capitalism should and will rock if this paradigm is embraced.</span></span></div>
<div style="margin-bottom: 0in;">
<span style="color: #222222;"><span style="font-size: 16pt;">And,
Democracy, properly acted out, goes hand in glove with this
understanding of capitalism. Life, liberty and the pursuit of
happiness are unalienable rights of all people in the world.
Democracy will rock, along with capitalism, if people continue to
demand it – as is happening in the Ukraine now, in 2014, for
example.</span></span></div>
<div style="margin-bottom: 0in;">
<span style="color: #222222;"><span style="font-size: 16pt;"><u><b>The
Practical Connection Between This Article And Organizational Pursuit
Of Excellence.</b></u></span></span><span style="color: #222222;"> </span>
</div>
<div style="margin-bottom: 0in;">
<span style="color: #222222;"><span style="font-size: 16pt;">There
is a clear connection, a nexus, between <b>a.</b> the essential 21<sup>st</sup>
century dominant mindset, the Dalai Lama's wise-selfish and Adam
Smith's sympathy between fellows that is a fundamental part of human
nature and <b>b.</b> The guiding and ongoing foundation documents of
every organization – purpose, vision, mission, multi-year plans
(goals and strategies), budgets, gold standard leadership
characteristics and gold standard cultural characteristics. In fact,
these latter organizational elements will not lead to ultimate
excellence unless they are based on the former concepts.</span></span></div>
<div style="margin-bottom: 0in;">
<span style="color: #222222;"><span style="font-size: 16pt;">At
Jack Haffey & Associates, LLC we teach and advise organizations
about how to make this connection – how to make this ultimate
excellence achievable – in practical, actionable ways. The Dalai
Lama's happiness state is also achieved when all are behaving in this
way. To be sure, it is not a walk down Main Street. It is, though,
the fun and full-life-well-lived way to achieve global, inclusive
excellence – with capitalism rocking and democracy rocking. </span></span>
</div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
</div>
<div style="line-height: 107%;">
<span style="color: #222222;"><span style="font-family: Calibri, sans-serif;"><span style="font-size: 16pt;">Jack
Haffey & Associates, LLC. Contacts: </span></span></span><a href="mailto:jackhaffey@bresnan.net" target="_parent"><span style="color: blue;"><span style="font-family: Calibri, sans-serif;"><span style="font-size: 16pt;">jackhaffey@bresnan.net</span></span></span></a><span style="color: #222222;"><span style="font-family: Calibri, sans-serif;"><span style="font-size: 16pt;">,
</span></span></span><a href="mailto:jackhaffey@gmail.com" target="_parent"><span style="color: blue;"><span style="font-family: Calibri, sans-serif;"><span style="font-size: 16pt;">jackhaffey@gmail.com</span></span></span></a><span style="color: #222222;">
</span><span style="color: #222222;"><span style="font-family: Calibri, sans-serif;"><span style="font-size: 16pt;">and
406-560-2128.</span></span></span><span style="color: white;"> </span>
</div>
Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com1tag:blogger.com,1999:blog-4927657185123993411.post-10048027624349408092013-12-04T13:51:00.001-08:002013-12-04T21:40:25.135-08:00A Truly Transformational Idea For Business (Organizations) and Capitalism <br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<span style="font-family: Calibri;">Much has been written and
discussed the last several years about disruptive technology and disruptive
ideas. Of course the astounding information and communication changes brought
on in great part by the internet qualify as disruptive. The discussion and
writing about transformational changes (disruptive changes) in the leadership,
management and pursuit of excellence in and by companies and all organizations,
though, has been greatly overstated. This paper presents our idea about this
subject. We believe there is an absolute need for organizations to move toward
and adopt the paradigm we present.</span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<span style="font-family: Calibri;">We admit at the start, though,
that the ideas in this post qualify as letting the excellent be the enemy of
the good! </span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<b style="mso-bidi-font-weight: normal;"><u><span style="font-family: Calibri;">Preface.</span></u></b></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<span style="font-family: Calibri;"><span style="mso-spacerun: yes;"> </span>Unleashing the local and global potential of
organizations (for profit companies, non profits, governments, etc.) will
create value. Fully unleashing this potential will create ultimate long term
value – for each organization and the global population. <u><span style="mso-spacerun: yes;"> </span>There is a functional relationship between
self-interest value and other (stakeholder)-interest value.<span style="mso-spacerun: yes;"> </span>This relationship is grounded in the highest
characteristics of human nature.</u> And properly understood and acted on, it
will unleash this ultimate potential. It is philosophically sound, practically
actionable and economically (commercially) optimal. Importantly, capitalism’s
highest catalytic effects on value are also unleashed through this concept as
capitalism’s own grounding.</span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<span style="font-family: Calibri;">Such globally respected
authorities as Professor Jeffrey Sachs of Columbia University have addressed the
relationship. Professors John Kotter and James Heskett of Harvard have
addressed part of it. Adam Smith, in fact, clearly identified it and connected
the functional relationship to the best of our human nature. So, this paper
explains an idea that is the ultimate way to create value in society, locally
and globally.<span style="mso-spacerun: yes;"> </span>Others have generally
touched on this idea and perhaps would agree with it, but no one has<span style="mso-spacerun: yes;"> </span>completed the concept and put it into action.</span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 12pt;"><span style="font-family: Calibri;">First, A Few Brief<span style="mso-spacerun: yes;"> </span>Comments About Some Understandable But Only
Partial Efforts. <o:p></o:p></span></span></u></b></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<span style="font-family: Calibri;">In a Harvard Business Review (HBR)
article in the Jan.-Feb. 2011 issue, Professors Mark Kramer and Michael Porter
of Harvard claimed that their concept of creating shared value (CSV) for
business and society is or could be the next transformational idea for business
in society. The concept simply says that there is much that business can do
that will raise the value of the business itself by engaging in activity that
also raises societal value – that many values are indeed shared. </span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<span style="font-family: Calibri;">Their idea and others mentioned
below is good as far as it goes, but:</span></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-list: l1 level1 lfo1; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">1.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-family: Calibri;"><span style="mso-spacerun: yes;"> </span>It does not go far enough,</span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-list: l1 level1 lfo1; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">2.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-family: Calibri;">It
is instrumental, meaning its purpose is to expand the value pie and raise the
economic<span style="mso-spacerun: yes;"> </span>value of the business while
also adding specific value to society,</span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-list: l1 level1 lfo1; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">3.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-family: Calibri;">It
is not new. Harvard colleagues, like Rosabeth Moss Kanter, have articulated
similar concepts in different words, as have others: <span style="mso-spacerun: yes;"> </span>Jim Collins in Colorado, Jerry Porras at
Stanford and John Mackey and Rajendra Sisodia, <span style="mso-spacerun: yes;"> </span>the authors of <u>Conscious Capitalism</u>.</span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-list: l1 level1 lfo1; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">4.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-family: Calibri;">When
the Porter/Kramer idea is presented to business leaders and others at
conferences and in other forums, it creates the possibility that some will
embrace and adopt their idea – allowing them to raise their firms’ value by
some amount, and to participate in creating a specific value for society. But,
by falling short of the truly “transformational and big idea,” there will be
remaining opportunity costs that should not remain. Why? Because Professors Porter
and Kramer, like so many others through the years, do a great job suggesting ways
to raise the level of value from business performance in and with society - but
only incrementally. And, their focus remains inward. These world class
professors could embrace our concept, which would increase its likelihood of
acceptance.</span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-list: l1 level1 lfo1; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">5.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-family: Calibri;">The
Conscious Capitalism and Vanguard Company concepts also go quite far in the
direction of the complete idea we will present here. Our belief is that even
the commendably enlightened thinking of Professor Kanter (Vanguard Companies)
and of John Mackey and Professor Raj Sisodia (Conscious Capitalism) do not
complete the big idea. They do not present the complete, stand-alone
transformational paradigm idea. We do. </span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-list: l1 level1 lfo1; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">6.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-family: Calibri;">Two
grounding observations are important here: a. Capitalism, as we describe it
here, is indeed the economic engagement model necessary for the future, and it
has been widely and chronically under-utilized and misapplied; and b. Contrary
to standard thinking and observation when organizational culture change is
being discussed - that it is extremely difficult and takes a long time to
achieve - cultures are relatively easy to change with our idea because the
culture we present with our big idea is in fact an integral part of the best of
human nature (seek the good, happiness, shared virtues, etc.). The cultural
dimension of the idea we present includes these ubiquitous elements of our
human DNA – similar to unalienable rights.</span></div>
<br />
<div class="MsoListParagraphCxSpLast" style="line-height: normal; margin: 0in 0in 10pt 0.5in;">
<span style="mso-spacerun: yes;"><span style="font-family: Calibri;"> </span></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<span style="font-family: Calibri;">Ironically, Adam Smith seemed to
understand and briefly explained, in his terminology, our truly big idea more
than 200 years ago. Even Milton Friedman appears to have understood it a bit.
However, self-focus on profit, the more the better, and focus on nothing else
as long as one stays within the law (the rules), sometimes even being ethically
correct if necessary, has been widely seen as not only enough over the years
but more has been viewed as inappropriate. Capitalism can do so much better.</span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<span style="font-family: Calibri;">So, Professors Porter and Kramer
stop short, even if they each might think they have discovered the new
transformational idea. From their HBR article: </span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt 1in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 8pt;"><span style="font-family: Calibri;">“</span></span></b><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Helvetica","sans-serif"; font-size: 8pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi;">The solution lies in the principle of shared value, which involves
creating economic value in a way that <span class="bodyitalic1"><em>also</em></span>
creates value for society by addressing its needs and challenges. Businesses
must reconnect company success with social progress. Shared value is not social
responsibility, philanthropy, or even sustainability, but a new way to achieve
economic success. It is not on the margin of what companies do but at the
center. We believe that it can give rise to the next major transformation of
business thinking.”</span></b><b style="mso-bidi-font-weight: normal;"><span style="font-size: 8pt;"><o:p></o:p></span></b></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<span style="font-family: Calibri;">They do have company. Such ideas
as conscious capitalism and vanguard companies also stop short. Like CSV, each
of these ideas has some merit and is directionally correct, but neither makes
the natural jump to the breakthrough big idea. Other ideas stop short by
design. They are aimed at improving processes, productivity, efficiency and
effectiveness, and for achieving measurable and quantifiable results. For
example, the balanced scorecard (BSC) was conceived in 1992 by Harvard
professors Robert Kaplan and David Norton. It is basically an excellent
measuring, motivating and unifying system. Total quality management (TQM), lean
management and six sigma are other examples. These ideas each would take much
more explanation to describe. They each are intended to help companies create
incremental value.</span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<span style="font-family: Calibri;"><span style="mso-spacerun: yes;"> </span>Professor Robert Kaplan, for example,
summarized the balanced scorecard’s evolved purpose this way in 2010:</span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt 1in; mso-layout-grid-align: none;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "TimesNewRomanPSMT","serif"; font-size: 10pt; mso-bidi-font-family: TimesNewRomanPSMT;">“After publication of the 1992 HBR article, several
companies quickly adopted the<o:p></o:p></span></b></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt 1in; mso-layout-grid-align: none;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "TimesNewRomanPSMT","serif"; font-size: 10pt; mso-bidi-font-family: TimesNewRomanPSMT;">Balanced Scorecard giving us deeper and broader insights
into its power and potential. During the next 15 years, as it was adopted by
thousands of private, public, and nonprofit enterprises around the world, <i style="mso-bidi-font-style: normal;"><u>we extended and broadened the concept
into a management tool for describing, communicating and implementing
strategy.”<o:p></o:p></u></i></span></b></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt 1in; mso-layout-grid-align: none;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "TimesNewRomanPSMT","serif"; font-size: 10pt; mso-bidi-font-family: TimesNewRomanPSMT;"><o:p> </o:p></span></b></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<span style="font-family: Calibri;">Another example of research and
comment on the subject of businesses (organizations) pursuing excellence is the
work of Professor Michael Jensen of Harvard University and the Monitor Group (a
consulting firm). He addresses, in a thorough manner, the idea of “stakeholder
theory” and concludes that it is flawed. He then goes on to offer his
“enlightened stakeholder theory” and “enlightened value maximization” concept.
Without addressing his work in detail, he simply seems not to recognize the
both simple and complex functional relationship between self-interest and
other-interest. </span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<span style="font-family: Calibri;">Nevertheless, let’s assume that
Professor Jensen was correct about the necessity for a single value objective
function. We do in fact recognize his single value objective function
principle. The explanation below explicitly presents it. The decision(s) about
maximum value for owners, though, is made by the owners. It might, for example,
be broader for some owners than the value Jensen presents. Our idea, in
addition though, recognizes the critical responsibility to know, understand and
fully serve the primary valued things of each major stakeholder group. This is
wonderfully doable and essential. It can be thought of, using business
terminology, as breathing full life into marketing, innovation, productivity, etc.
That is, the fundamentals of businesses – high quality, low prices,
productivity, efficiency and yes, innovation will all be raised to their
highest levels through full living of our idea in organizations.</span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<span style="font-family: Calibri;">What about family life, leisure
and all other aspects of life outside the organization? That is an excellent
question. With individual and organizational focus on optimizing value for
primary stakeholder groups, all aspects of an individual’s life and of an
organization’s life in will be at their highest levels.</span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<span style="font-family: Calibri;"><span style="mso-spacerun: yes;"> </span>For organizational long term value
maximization (net present value of future cash flows for example), the “what”
question is best answered through the optimization functional relationship we
present here.<span style="mso-spacerun: yes;"> </span>This obvious answer
requires the synthesizing and creative mind to be fully engaged. This paper
will explain the human nature “dna” reasons that underly the axiomatically
correct self-interest, other-interest transformational paradigm change that is
now ready to bring us into the future.</span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<span style="font-family: Calibri;">So, there are many competent
perspectives that are brought to bear on the question of maximizing
organizational value, and certainly a tremendous amount of value has been
created – particularly over the last 250 years. However, we still fall short of
shooting our individual and collective moons.<span style="mso-spacerun: yes;">
</span></span><span style="font-family: Wingdings; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-char-type: symbol; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin; mso-symbol-font-family: Wingdings;"><span style="mso-char-type: symbol; mso-symbol-font-family: Wingdings;">J</span></span><span style="font-family: Calibri;">.</span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<span style="font-family: Calibri;">What, then, is the idea that
actually does unveil the transformational paradigm change for business, all
organizations and societies - local and global?</span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<span style="font-family: Calibri;"><b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 12pt;">The truly transformational,
paradigm-changing “big idea.”</span></u></b><span style="font-size: 12pt;"> <o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<span style="font-family: Calibri;">It is presented here in brief and
with dogmatic confidence. Upon reading and reflecting on it, though, one might
consider it either; 1. Simply naïve, pollyanna-ish and dismissible, or 2. Too
hard to attempt – even if one understood it.</span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<span style="font-family: Calibri;">In fact, it is just the opposite.
Our big idea is elegantly straight-forward, easily understood and simple to put
into practice, especially with the 21<sup><span style="font-size: x-small;">st</span></sup> century electronic
(Internet, etc.) information and relationship models catalytically in place
locally and globally. And it is morally imperative that we get on with it. Of
course, the passion and aptitudes for each organization’s purpose must be in
place, a need right from the start.</span></div>
<br />
<div class="MsoNormal" style="background: white; line-height: normal; margin: 0in 0in 10pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Calibri;">Here it is:</span></div>
<br />
<div class="MsoNormal" style="background: white; line-height: normal; margin: 0in 0in 10pt 0.5in; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Calibri;"><u><span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"><span style="mso-spacerun: yes;"> </span><b style="mso-bidi-font-weight: normal;">The
real breakthrough "big idea" is that self-interest value maximization
is a direct function of optimization of the value provided by an organization
to each of that organization's major stakeholder groups – each relative to the
others. That is, when a business devotes its time, talent and treasure to doing
its <span style="mso-spacerun: yes;"> </span>best to optimize the value it
provides to its major stakeholder groups (customers, employees, [and investors
as a stakeholder group], suppliers, communities in which it has a presence and
society [the general public interest]), it will maximize its own long-term
value as an outcome (a by-product) - measured in appropriate financial terms as
well as the other value measures it holds dear. This is not a belief; it is a
self-evident axiom.</b></span></u><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></b></span></div>
<br />
<div class="MsoNormal" style="background: white; line-height: normal; margin: 0in 0in 10pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-size: 12pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: Calibri;">It can be expressed
as an equation:<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt 0.5in;">
<b><span style="font-size: 12pt;"><span style="font-family: Calibri;">IVM= f (S<sub>1</sub>VO, S<sub>2</sub>VO,..… S<sub>N</sub>VO),
where “I” is “institution” (any organization), “f” is “function of,” “S” is
“stakeholder,” “V” is “value” and “O” is “optimization.”<o:p></o:p></span></span></b></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<span style="mso-bidi-font-weight: bold;"><span style="font-family: Calibri;">This idea is the foundation axiom that can guide every organization that
truly wants to maximize its value in and for society. It is philosophically precise,
uniting self interest and other interest, and commercially excellent, ensuring
that, with the corollaries below, it earns its opportunity to delight its
stakeholders over the long run.<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt 0.5in;">
<span style="mso-bidi-font-weight: bold;"><span style="font-family: Calibri;">Note: This big (transformational) idea can,
for ultimate organizational excellence purposes, be thought of as analogous to
the physical “theory of everything” sought by Professor Stephen Hawking and
others over the last several decades.<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<b><u><span style="font-family: Calibri;">The corollaries for our big
idea are:<o:p></o:p></span></u></b></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo2; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">1.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="mso-bidi-font-weight: bold;"><span style="font-family: Calibri;">Universal unalienable rights (including life,
liberty and the pursuit of happiness) are possessed (or yearned for) by all
people everywhere.</span></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo2; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">2.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><span style="font-family: Calibri;"><span style="mso-bidi-font-weight: bold;">Ubiquitous
global virtues, traits leading to these virtues and valued matters exist and
are held dear by virtually all people around the globe. The virtues and traits
(aptitudes leading to these virtues) are:<b> Wisdom and Knowledge </b></span>–
curiosity, love of learning, judgment, ingenuity, social intelligence and
perspective; <b>Courage </b>– valor, perseverance and integrity;<b> Humanity
and Love </b>– kindness and loving, <b>Justice; </b>– citizenship, fairness and
leadership,<b> Temperance;</b> – self-control, prudence and humility, <b>Transcendence;</b>
– appreciation of beauty, gratitude, hope, spirituality, forgiveness, humor,
and zest.</span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo2; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">3.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="mso-bidi-font-weight: bold;"><span style="font-family: Calibri;">Happiness, “the good” and the “full life well
lived” are all treasured by individuals and societies – local and global.</span></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 78pt; mso-add-space: auto; mso-list: l5 level1 lfo3; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">a.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><span style="mso-bidi-font-weight: bold;"><span style="font-family: Calibri;">These
corollaries mean that people, in their roles as markets and as stakeholders in
general will be attracted to and embrace every organization that provides them
with what they value as they pursue happiness. Of course, the organizations in
each space that do it best will rise to the top (market share, etc.), again as
a by-product.</span></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 78pt; mso-add-space: auto; mso-list: l5 level1 lfo3; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">b.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><span style="mso-bidi-font-weight: bold;"><span style="font-family: Calibri;">When an
organization’s stakeholders see that the organization is focused on providing
them the things that matter to them (their valued things), they will tend to be
attracted to that organization – buy from it, sell to it, have it as a member
of their community, work for it, invest in it and treasure it as in their own
interest and the public interest.</span></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo2; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">4.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-family: Calibri;">Fiduciary
obligations exist for organizations for each of their primary stakeholder
groups. That is, the fiduciary obligation is not limited to the financial
dimension of an organization. To optimize the value provided to each
stakeholder group relative to the others is to be fiduciarily responsible – to
be an excellent steward.</span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo2; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">5.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-family: Calibri;">This
functional relationship between self interest and other interest is the
ultimate commercial or economic value creation axiom. It is not just a
philosophical, societally nice axiom. It can result in a. the maximization of
local and global economic value over the long run; and b. the basis for the
good life well lived for individuals and organizations and c. the movement
toward zero of local and global opportunity costs.</span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in;">
<o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in;">
<b style="mso-bidi-font-weight: normal;"><u><span style="font-family: Calibri;">Opportunity Costs.<o:p></o:p></span></u></b></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in;">
<b style="mso-bidi-font-weight: normal;"><u><o:p><span style="text-decoration: none;"><span style="font-family: Calibri;"> </span></span></o:p></u></b></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in;">
<span style="font-family: Calibri;">It is important
here to discuss the opportunity cost concept in the context of our message.</span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in;">
<span style="font-family: Calibri;">The entire globe
is virtually one marketplace now. The way a company does business certainly
affects its local community and market. Now, though, it increasingly affects
people and places beyond the local community and market.</span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in;">
<span style="font-family: Calibri;">The notion of
opportunity costs is underappreciated in economies and societies. Simply put,
if one<span style="mso-spacerun: yes;"> </span>organization or more (or most)
organizations do good or even very good at providing products or services but
do not fully actualize their potential for excellence, then some value is lost
to society – and to the organization itself. This part that is lost can be
called an opportunity cost – a value not created and received. </span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1in; mso-add-space: auto;">
<span style="font-family: Calibri;">NOTE: Of course, there are larger opportunity costs
being incurred globally and locally. Without expanding on the matter, it is
enough to mention here that national sovereignty can be retained even as our
model for excellence is embraced by all organizations, including nations. Think
of famine, wars, widespread disease, etc. that exist because our idea is not
yet the paradigm of choice for organizations of all kinds. That is, this idea
enables actualization of the potential of virtually all 7 billion people (and
rising) on the planet. It can and must be pursued and achieved in order to: a.
maximize local and global value; b. minimize local and global opportunity
costs: and c. create the opportunity for all people to live the happy life –
the full life well lived.</span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto;">
<o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in;">
<b style="mso-bidi-font-weight: normal;"><u><span style="font-family: Calibri;">Moral Imperative.<o:p></o:p></span></u></b></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in;">
<o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in;">
<span style="font-family: Calibri;">If we believe
there is a model for excellence in organizational behavior, as we do in this
paper, then we have a moral imperative, an obligation, facing us. It is to
communicate and explain the model, and help all raise their games to their
highest level. By definition, the model we explain here, when fully acted out,
brings us to that full actualization. So, with the “what” question being
answered, the “why” question follows.</span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in;">
<o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoListParagraphCxSpLast" style="line-height: normal; margin: 0in 0in 10pt 0.5in;">
<span style="font-family: Calibri;"><span style="mso-spacerun: yes;"> </span>Why focus on stakeholder group value
optimization? The answer is, succinctly put, when we know, without question,
what to do to maximize our organization’s long term value, we have a broad
fiduciary obligation, a moral imperative, to get on with it. And, the
delightful reality is that our organization and each of its members fully
actualize our own potential as an outcome, a proper and necessary outcome.</span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<b style="mso-bidi-font-weight: normal;"><u><span style="font-family: Calibri;">The other main characteristics of our big idea are:<o:p></o:p></span></u></b></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-list: l4 level1 lfo4; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">1.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-family: Calibri;"><u>The
connection of self interest and other interest:</u> Just to reinforce this part
of the axiom, while it might be obvious when discussed as we do here, this
functional connection is nothing more or less than putting the golden rule into
robust action and following Adam Smith’s two part idea on capitalism. I am
maximizing my value by optimizing the value I provide to those main persons and
groups whose lives I most affect. Happiness and self-actualization are
integrally related here. Note: Even if Adam Smith did not intend this
connection, he should have – and I think he did.</span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-list: l4 level1 lfo4; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">2.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-family: Calibri;"><u>Happiness:</u>
Briefly, Aristotle’s four kinds or levels of happiness, H1 through H4 are so
obviously explaining that a dominant H3 life, the happiness that flows from
contributing to the happiness of and creating value for others, is ultimately
the best way for one to fully actualize one’s own potential in life. It is
servant existence and servant leadership in action. Our big idea is grounded in
this reality – we just breathe commercial and economic meaningfulness into the
idea. It fits.</span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in;">
<o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-list: l4 level1 lfo4; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">3.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-family: Calibri;"><u>Mindset:
</u>Companies have mindsets – ways of looking at the best way to conduct
themselves as<span style="mso-spacerun: yes;"> </span>entities, in pursuit of
their purposes. The primary mindsets are: a. the short-term, inward-focused and
win-lose mindset; and b. the long-term, outward-focused and optimizing mindset.</span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in;">
<span style="font-family: Calibri;">Unfortunately,
businesses and other organizations usually choose the former. <span style="mso-spacerun: yes;"> </span>Or, they are forced into it. Unfortunately,
this choice has been the norm over the years. It has been guided<span style="font-size: 12pt;"> b</span>y the idea that the organization exists
because of its owners and, therefore, primary focus should be on rewarding the
owners. One example is the SEC quarterly report requirement for publicly held
companies in the United States. Wall Street uses these reports , much of the
time, as a hammer to pressure companies to behave in short term ways, and
solely to reward the owners.</span></div>
<br />
<div class="MsoListParagraphCxSpLast" style="line-height: normal; margin: 0in 0in 10pt 0.5in;">
<span style="font-family: Calibri;">Our big idea is
unambiguously dogmatic that the mindset must be long term, the focus must be
outward and that optimizing value for stakeholders is the purpose of the
organization. One outcome, in fact the fortuitous and yet necessary and natural
outcome will be that the owners’ long term value will be maximized.<u> <o:p></o:p></u></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<b style="mso-bidi-font-weight: normal;"><u><span style="font-family: Calibri;">The Nexus between This Truly Big Value Creation Idea and Strategic
Playbooks (Multi-year or Strategic Planning).<o:p></o:p></span></u></b></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<span style="font-family: Calibri;"><span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>Our big idea is the prescription for how
to pursue ultimate business or organizational excellence at the philosophical
and long term level. It is in perfect harmony, though, with the best practical,
specific and near-term leadership, management and cultural characteristics of
organizations. In fact, it creates the basis for excellence in these aspects of
organizational excellence. It is in these aspects that such well known and
widely adopted performance frameworks like the balanced scorecard are most
helpful – they complement our value creation idea.</span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;">
<b style="mso-bidi-font-weight: normal;"><u><span style="font-family: Calibri;">Here are the 21<sup><span style="font-size: x-small;">st</span></sup> century characteristics we mean when we
discuss pursuit of organizational excellence:<o:p></o:p></span></u></b></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0pt 0.5in; mso-list: l3 level1 lfo5; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-font-weight: bold; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">1.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><span style="font-family: Calibri;">Threading from the organization’s charter
purpose through its annual budgets exists - <span style="mso-bidi-font-style: italic; mso-bidi-font-weight: bold;">core ideology (purpose & beliefs),</span><span style="mso-bidi-font-weight: bold;"> vision, mission multi-year adaptive goals, organizational
goals and goals for serving each stakeholder group, strategies for achievement
of each goal, annual budgets (objectives, tactics and financials), gold<span style="mso-spacerun: yes;"> </span>standard leadership characteristics</span>
and <span style="mso-bidi-font-weight: bold;">gold standard cultural
characteristics.<o:p></o:p></span></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 84.75pt; mso-add-space: auto; mso-list: l2 level1 lfo6; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">a.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><span style="font-family: Calibri;">Gold Standard Leadership Characteristics – <span style="mso-bidi-font-style: italic; mso-bidi-font-weight: bold;">establish
direction, (vision, personal humility and professional will), modest and
fearless, inclusive, enabling, inspirational, a listener, stakeholder focused –
in a maniacally profound way, heart of a servant,<b><i> </i></b>ethical, courageous
and just,<b><i> </i></b>and fun.</span></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 66.75pt; mso-add-space: auto;">
<o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 84.75pt; mso-add-space: auto; mso-list: l2 level1 lfo6; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">b.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><span style="font-family: Calibri;">Gold Standard Cultural Characteristics - <span style="mso-bidi-font-style: italic; mso-bidi-font-weight: bold;">adaptive, with a
core ideology (purpose and values), risk taking, trusting, proactive, one in
which all are heard and the truth is heard, reflective, humble, anticipatory
and <span style="mso-spacerun: yes;"> </span>involved, rational and respectful, a
conscientious mindset, quietly confident, unassuming while maniacally pursuing
the organization’s vision and mission with prudence, perseverance, humor and
zest, disciplined people, thoughts and actions in a fun and dynamic
environment, open, supportive and enthusiastic, <u>happy, in a stakeholder-centered
(H3) way,</u> and fun.</span></span></div>
<br />
<div class="MsoListParagraphCxSpLast" style="margin: 0in 0in 10pt 0.5in;">
<o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt 0.25in;">
<span style="font-family: Calibri;">These all fit with and are
integrally related to the organizational excellence elements described above. Organizations
must: a. have a <span style="mso-bidi-font-style: italic; mso-bidi-font-weight: bold;">core ideology (purpose and values/beliefs); b. have the correct
dominant mindset (long term, outward-focused and optimizing); c. appreciate
that “fiduciary” <span style="mso-spacerun: yes;"> </span>means an obligation to
excellently care for that which each of its main stakeholder groups entrust to
it; d. embrace the ubiquitous human characteristics people around the globe
share (unalienable rights, virtues and traits, and valued things); and e. know
that the ultimate achievement of maximum value for every institution
(organization) reflects the fact that virtually all people also seek the good
and happiness.<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-family: Calibri;"><b><u><span style="mso-bidi-font-style: italic;">Where Do We
Go From Here?</span></u></b><span style="mso-bidi-font-style: italic; mso-bidi-font-weight: bold;"> <o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="mso-bidi-font-style: italic; mso-bidi-font-weight: bold;"><span style="font-family: Calibri;">We cannot help but notice that the CSV concept is being presented at
conferences and related forums around the world, at a substantial fee for
participants. That is fine. The Conscious Capitalism concept is available in
books for interested leaders, managers and others to purchase, consider and go
from there. The other concepts we mentioned are being made available as well,
and it is all good and fine.<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="mso-bidi-font-style: italic; mso-bidi-font-weight: bold;"><span style="font-family: Calibri;">However, because we contend that, as meritorious and well intended as
they each might be, they are only partial loaves, they stop short, or at best
are narrowly focused. They do not pierce the membrane that leads to ultimate
organizational excellence and highest value creation.<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="mso-bidi-font-style: italic; mso-bidi-font-weight: bold;"><span style="font-family: Calibri;">We believe we do, with our idea.<span style="mso-spacerun: yes;">
</span>Through the 21<sup><span style="font-size: x-small;">st</span></sup> century transformational, paradigm-changing
actionable big idea we present here, organizations of all kinds can embrace the
full-life-well-lived, fully actualized potential they each and all really
should want to pursue and achieve. To strive for less is to fail – no matter
how well they might believe they have done.<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="mso-bidi-font-style: italic; mso-bidi-font-weight: bold;"><span style="font-family: Calibri;">The gigantic but tragic irony is that by not embracing and acting out
our big idea, each organization, local and global economies, nations and the
entire globe will fail to maximize the likelihood that the stakeholders they
each serve will receive optimal value and that the organizations themselves
will maximize their own long term value as well.<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="mso-bidi-font-style: italic; mso-bidi-font-weight: bold;"><span style="font-family: Calibri;">So, this big idea must be embraced and acted out. It is a societal and
economic moral imperative for the new millennium.<o:p></o:p></span></span></div>
Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com0tag:blogger.com,1999:blog-4927657185123993411.post-73245147974534449242013-09-08T21:11:00.001-07:002013-09-08T21:11:12.107-07:00The USA, President Obama, Pope Francis, Syria and the International Community <br />
<br />
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;"><b style="mso-bidi-font-weight: normal;"><span style="font-size: 12pt;"><span style="font-family: Calibri;">It has once again been a month of Sundays since our last post. Life keeps taking priority over the posts. Our last post about the Roman Catholic Church, and the subsequent election of Cardinal Bergoglio to become the new pope, gives us a starting point for this post. The Cardinal, now Pope Francis, has already shown by his actions and words that he has the potential to be a once-in-a-blue-moon leader as pope. That is, he shows early indications that he embraces characteristics we have presented here at our blog site – regarding leadership, mindset, vision, the stuff that we believe makes for true leadership and that is most likely to lead to organizational excellence, even global excellence.<o:p></o:p></span></span></b></div><br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt;"><b style="mso-bidi-font-weight: normal;"><span style="font-size: 12pt;"><span style="font-family: Calibri;">Now, the Syria situation and President Obama’s decision to ask Congress to consider and support his decision to conduct a military action against the Syrian regime adds a second starting point for this post. Both of these leaders follow the principles we present throughout our posts. We hear so often about what the folks back home are telling our senators and representatives, we thought we would give our opinion as a blog site post.<o:p></o:p></span></span></b></div><br />
<b style="mso-bidi-font-weight: normal;">As we look at it, these two world leaders are each embracing the spirit and letter of these words from the Declaration of Independence of the United States of America (USA):<o:p></o:p></b><br />
<br />
<div style="margin-left: 1in;"><b style="mso-bidi-font-weight: normal;"><span style="mso-spacerun: yes;"> </span>“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are <u>Life, Liberty and the pursuit of<span style="mso-spacerun: yes;"> </span>Happiness.”</u><o:p></o:p></b></div><br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; vertical-align: top;"><b style="mso-bidi-font-weight: normal;"><span style="color: black; font-family: "Arial","sans-serif"; mso-fareast-font-family: "Times New Roman"; mso-themecolor: text1;">We believe the USA has an affirmative obligation (as do other leading nations, like Russia) to be available to all nations as they consider the universal applicability of these <u>“unalienable rights.”</u> In fact, all five of the United Nation (UN) Security Council member nations (the permanent members) recognize these rights in their charter documents – each in their own words. <o:p></o:p></span></b></div><br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; vertical-align: top;"><b style="mso-bidi-font-weight: normal;"><span style="color: black; font-family: "Arial","sans-serif"; mso-fareast-font-family: "Times New Roman"; mso-themecolor: text1;">The United Nations (UN) has a declaration of universal human rights. Those rights include the unalienable rights set forth in the USA Declaration of Independence. Importantly, the UN and the members of its Security Council have an affirmative obligation to address instances where a nation is denying these rights to its citizens. Syria is doing just that – and more. While there have been and perhaps even now are other nations that are trampling on their peoples’ unalienable rights, Syria is the nation needing immediate attention.<o:p></o:p></span></b></div><br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; vertical-align: top;"><b style="mso-bidi-font-weight: normal;"><span style="color: black; font-family: "Arial","sans-serif"; mso-fareast-font-family: "Times New Roman"; mso-themecolor: text1;">It just seems to be basic kitchen table wisdom and street corner logic that the UN, particularly through its Security Council, should join the USA in bringing the Syrian troubles to an end. As Pope Francis is urging, the preferred way of course is to bring the Assad regime to the negotiating table (which in this case might need to be a very tough love pull to the table). <o:p></o:p></span></b></div><br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; vertical-align: top;"><b style="mso-bidi-font-weight: normal;"><span style="color: black; font-family: "Arial","sans-serif"; mso-fareast-font-family: "Times New Roman"; mso-themecolor: text1;">China, France, The UK, Russia and the USA, each and all in their respective more lucid moments, must understand that their own long term interests, those of the Syrian people and of the world in general will be best served by a negotiated resolution that brings the fighting and killing of innocents to an end, and that sets the template for a proper Syrian future – one that is in keeping with the self-evident unalienable rights premise we all seem to embrace.<o:p></o:p></span></b></div><br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; vertical-align: top;"><b style="mso-bidi-font-weight: normal;"><span style="color: black; font-family: "Arial","sans-serif"; mso-fareast-font-family: "Times New Roman"; mso-themecolor: text1;">President Obama has looked at the heinous chemical weapons use as the straw that breaks the camel’s back.<span style="mso-spacerun: yes;"> </span>Indeed on its own it is a bright line, as at least implicitly reflected in UN proclamations, among other places. To be sure, though, the Syrian situation with more than 100,000 deaths so far calls for international attention and resolution. <o:p></o:p></span></b></div><br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 10pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; vertical-align: top;"><b style="mso-bidi-font-weight: normal;"><span style="color: black; font-family: "Arial","sans-serif"; mso-fareast-font-family: "Times New Roman"; mso-themecolor: text1;">The leadership words and actions of both President Obama and Pope Francis ought to be heeded and followed. A negotiated resolution , it appears, will only be possible if the other Security Council member nations “adult up,” and join President Obama – including avoiding the need for military intervention. The chemical weapon use in Syria is of course a “never again’ matter. The entire complicated set of circumstances there, and elsewhere in the region, though, cry out for a wise and long lasting resolution, one that could conceivably even lead to subsequent attention and resolution of other extremely serious issues in the Middle East.<o:p></o:p></span></b></div>Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com0tag:blogger.com,1999:blog-4927657185123993411.post-35789078134396446902013-02-15T20:04:00.000-08:002013-02-15T20:04:01.005-08:00Some 3rd Millennium Thoughts For The Roman Catholic Church.
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-size: 12pt; line-height: 115%;"><o:p><span style="font-family: Calibri;"> </span></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">With the
announcement by Pope Benedict XVI on February 11, 2013 that he will resign as
pope on February 28, 2013, virtually all 1.2 billion Catholics around the world
have or will have thoughts about why, what it means for the Church in the
future and related questions. This Catholic does, and I share some in this
post.<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">First,
though, I must explain that the thoughts presented here are grounded in the
same philosophy and mindset that we discuss throughout our blogs and at
www.jackhaffey.com, our home page. The mindset that we believe enables organizations
to achieve their highest long term potential is a. outward-focused (focused on
their stakeholder groups), b. long term and c. committed to optimizing the
value they provide to each of their primary stakeholder groups, relative to all
the other groups. This mindset applies to the Roman Catholic Church, and is in
perfect harmony with its mission and its purpose.<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">So, we share
our own first thoughts here. They are about some of the most pressing and
central questions the Church has been facing. We share them humbly but firmly. <o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">One of our
grandchildren recently asked whether girls can be priests, because he has not
ever seen one. I answered that the Church does not allow girls to become
priests. He quickly responded, “That’s not fair. Lots of girls might want to be
priests and they might be good ones. That isn’t right.” I think the Holy Spirit
smiled at that, approvingly.<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">These
thoughts below of course address only part of the larger mosaic that constitutes
the mission of the Church here on earth. Yet these few subjects seem to us to
be among the most pivotal on the question of how the Church best creates its
future for all people affected by it.<span style="mso-spacerun: yes;"> </span>The
1.2 billion current Catholics really are The Church now of course. <o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">This looks and
feels like a millennial fork in the road for the Roman Catholic Church. So, we
offer these first thoughts, knowing blog sites like this one reach only a few
people.<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-family: Calibri;"><span style="font-size: 12pt; line-height: 115%;"><span style="mso-spacerun: yes;"> </span></span><b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14pt; line-height: 115%;">Pope Benedict XVI’s Gift to the Church and the World:<o:p></o:p></span></u></b></span></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0pt 82.5pt; mso-add-space: auto; mso-list: l2 level1 lfo2; text-indent: -0.25in;">
<span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">A.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">The opportunity for the Church to
choose a new pope who will center and re-center the Church on the life and
teachings of Jesus Christ and on the continuing guidance of the Holy Spirit.<o:p></o:p></span></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 113.25pt; mso-add-space: auto; mso-list: l3 level1 lfo1; text-indent: -0.25in;">
<span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">1.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">Conservative and liberal in the
Church must and will become, at best, of secondary importance in Church
decision-making.<o:p></o:p></span></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 113.25pt; mso-add-space: auto; mso-list: l3 level1 lfo1; text-indent: -0.25in;">
<span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">2.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">Of primary importance must be the
clear centerpiece purpose, belief and value system upon which the Church was
founded – and is universally known. That is:<o:p></o:p></span></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 147pt; mso-add-space: auto; mso-list: l1 level1 lfo3; text-indent: -0.25in;">
<span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">a.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">Love God above all things.<o:p></o:p></span></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 147pt; mso-add-space: auto; mso-list: l1 level1 lfo3; text-indent: -0.25in;">
<span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">b.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">Love your neighbor as yourself.<o:p></o:p></span></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 147pt; mso-add-space: auto; mso-list: l1 level1 lfo3; text-indent: -0.25in;">
<span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">c.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">“…and the greatest of these is
love….”<o:p></o:p></span></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 113.25pt; mso-add-space: auto; mso-list: l3 level1 lfo1; text-indent: -0.25in;">
<span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">3.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">So, it is Love and all that goes with
it, not fear and all that goes with it that is the original and forever purpose
of the Church.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 82.5pt; mso-add-space: auto; mso-list: l2 level1 lfo2; text-indent: -0.25in;">
<span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">B.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">Jesus Christ and the Holy Spirit are,
I believe, therefore saying and requiring, among other Love-grounded matters,
that:<o:p></o:p></span></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 113.25pt; mso-add-space: auto; mso-list: l0 level1 lfo4; text-indent: -0.25in;">
<span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">1.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">Priests should be able to marry.<o:p></o:p></span></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 113.25pt; mso-add-space: auto; mso-list: l0 level1 lfo4; text-indent: -0.25in;">
<span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">2.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;"><span style="mso-spacerun: yes;"> </span>Women should be co-equally able to become and
be ordained priests.<o:p></o:p></span></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 113.25pt; mso-add-space: auto; mso-list: l0 level1 lfo4; text-indent: -0.25in;">
<span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">3.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">Divorced and remarried Catholics
should and must be declared and considered “fully in communion” (FIC) with the
Church.<o:p></o:p></span></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 113.25pt; mso-add-space: auto; mso-list: l0 level1 lfo4; text-indent: -0.25in;">
<span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">4.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">Gay and Lesbian Catholics should and
must be declared and considered FIC with the Church (whether civilly married or
not – no matter). <o:p></o:p></span></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 113.25pt; mso-add-space: auto; mso-list: l0 level1 lfo4; text-indent: -0.25in;">
<span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">5.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">Prohibition of the use of birth
control and all contraceptives should end. <span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 113.25pt; mso-add-space: auto; mso-list: l0 level1 lfo4; text-indent: -0.25in;">
<span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">6.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">If it is possible that life begins at
conception, and if it is wise to do no harm on existence of life issues, then
this most intimate and important life issue of prohibiting abortion should and
must be retained, except for (1) When indirectly necessary to save the life of
the Mother and (2) Upon full and competent study, perhaps in cases of rape and
incest. These two categories demand full study and recommendations. Like all
the thoughts, this thought is grounded in Love.<o:p></o:p></span></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 113.25pt; mso-add-space: auto; mso-list: l0 level1 lfo4; text-indent: -0.25in;">
<span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">7.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">In general, the Church should be open
to and fully inclusive (not excluding any individual or group) of all who want
to be engaged, participating members of the Church, with love as the single
criterion for Church decision-making on these matters.<o:p></o:p></span></span></div>
<br />
<div class="MsoListParagraphCxSpLast" style="margin: 0in 0in 10pt 113.25pt; mso-add-space: auto; mso-list: l0 level1 lfo4; text-indent: -0.25in;">
<span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">8.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">The role of the Laity in the church
has been reduced over the last 30 years. This non-inclusive, non-participative
message is at odds with the fullness of meaning that accompanies Church
pronouncements that the people are the Church. This trend should be reversed. A
welcoming, inviting, fully engaged culture of Church should increasingly exist.<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">There are so
many who can speak more knowledgeably about these and related matters. Surely
that robust and respectful dialogue will be held. The Roman Catholic Church, in
its human institutional, organizational, hierarchical culture and authority,
accountability and responsibility existence is, like other institutions and
organizations, subject to the pulls and tugs of liberal and conservative,
orthodox and other political power behavior. This political power institutional
behavior must be set aside in the process of choosing and electing a new pope. <u>Love
is the</u> <u>singular Holy Spirit-guided decision criterion each voting
cardinal must use.<o:p></o:p></u></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">I believe this
millennial moment is a singularly special one happening now as a gift to the
church flowing from Pope Benedict XVI’s resignation. <span style="mso-spacerun: yes;"> </span>It needs to be one that is Holy Spirit-guided
and therefore rises far above these understandable but counter-productive power
struggle tendencies that burden so many institutions over time – including the
Roman Catholic Church.<o:p></o:p></span></span></div>
Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com0tag:blogger.com,1999:blog-4927657185123993411.post-53671180955262108762012-12-04T15:38:00.001-08:002012-12-04T15:38:43.400-08:00Solve The "Fiscal Cliff" drama Before Christmas <br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;"><span style="font-family: Calibri;"><b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 12pt; line-height: 115%;">The “Fiscal Cliff” Drama.</span></u></b><span style="font-size: 12pt; line-height: 115%;"> <o:p></o:p></span></span></div><br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;"><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">This post offers a few thoughts to the leaders of Congress, and to President Obama and his team. They come from a card-carrying member of the “American People.”<o:p></o:p></span></span></div><br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;"><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">As we have mentioned in our previous posts, the foundation principles that underlie the organizational excellence theory of everything apply to national governments and local government units every bit as much as they do to for profit corporations, non profits, educational institutions, etc. An organization is an organization when it comes to the question of how best to pursue excellence. Specifically, Value is maximized when the guiding mindset is outward-focused, long term and dedicated to optimizing value for each and all stakeholder groups. This last element, “optimizing” apparently can be a bit difficult to understand. <o:p></o:p></span></span></div><br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;"><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">So, what in the world is going on with Congressional leaders and President Obama on this “fiscal cliff” matter? Even if one gives all the participants the benefit of the doubt in their public statements about what must be done in the near and long term to best serve the public interest, it still looks like they think the American people are an unthinking, nearly brain-dead lot! However, this writer truly believes that even Congressional leaders and the President and his staff can understand what the American people understand, across the board. The “optimizing” element of the guiding mindset, in fact, must be understood. The Congressional behavior during these last 12 years has not been guided by this mindset-based actionable wisdom.<o:p></o:p></span></span></div><br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;"><span style="font-family: Calibri;"><u><span style="font-size: 12pt; line-height: 115%;">Let’s be blunt and clear.President Obama has been re-elected. Therefore he has a mandate, period.</span></u><span style="font-size: 12pt; line-height: 115%;"> Of course he can read too much into the mandate. He can abuse it. At the same time Congress should engage in discussions with the President, predisposed to find a mutually acceptable near and long term fiscal plan for the nation, through its government, a predisposition that recognizes the mandate really extends to Congress as well. Specifically:<o:p></o:p></span></span></div><br />
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;"><span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">1.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">Quit purposely being cute with the words revenue and tax. <span style="mso-spacerun: yes;"> </span>The Bush era tax cut on taxable income above $250 thousand should expire on 1/1/’13.<span style="mso-spacerun: yes;"> </span>That tax rate should return to the Clinton era tax rate. All other Bush era tax rates should be extended – no increase. And, the tax code should be cleaned up to eliminate the loopholes and other taxable income-reducing language for which there is no compelling public interest.<o:p></o:p></span></span></div><br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in;"><span style="font-size: 12pt; line-height: 115%;"><o:p><span style="font-family: Calibri;"> </span></o:p></span></div><br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;"><span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">2.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">Entitlements should be on the table and addressed, not with a meat axe nor with disingenuous revisions whose purpose is to embarrass the “other side.” Rather, revisions to the huge entitlement programs that affect the near and especially long term should be made. The main criteria should be that a. the revisions be phased in, b. the revisions should not affect those who are already beneficiaries, but rather should be applicable to new beneficiaries as of a date certain. The concept here is, “keep the bargains,” and c. the annual budget deficits and accumulating long term debt must be reduced as a result of these changes.<o:p></o:p></span></span></div><br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in;"><span style="font-size: 12pt; line-height: 115%;"><o:p><span style="font-family: Calibri;"> </span></o:p></span></div><br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in;"><span style="font-size: 12pt; line-height: 115%;"><o:p><span style="font-family: Calibri;"> </span></o:p></span></div><br />
<div class="MsoListParagraphCxSpLast" style="margin: 0in 0in 10pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;"><span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">3.</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">Both defense and non-defense programs should be addressed and reductions made using criteria that include a. no harm but rather improvement to our national defense (and our ability and obligation to lead around the globe where military presence is truly called for), b. reduction or elimination of programs whose public interest time has passed or has been reduced and c. the requirement that members of Congress act as trustees more than delegates in this decision process.<o:p></o:p></span></span></div><br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;"><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">The Congressional leaders should rise to the courage and wisdom level voters expect from them. The President and his administration should as well. Trickery and cat and mouse games, often guided by un-elected and somewhat self-appointed opinion leaders in the form of talk show hosts and carefully selected guests must end.<o:p></o:p></span></span></div><br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;"><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">The American people expect a long term, broadly embraced and actionable agreement before Christmas. It should pass societal muster, commercial muster, financial market muster and global well-being muster. If it is not done, then it might be time to start throwing the rascals out.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></div><br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;"><span style="font-size: 12pt; line-height: 115%;"><span style="font-family: Calibri;">So, adult up, wisdom up and reach agreement, Administration and Congress.<o:p></o:p></span></span></div>Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com0tag:blogger.com,1999:blog-4927657185123993411.post-47408860748796874902012-10-19T04:54:00.003-07:002012-10-19T04:54:36.472-07:00Obama ... by at least 10 lengths
<p>It has been more than a month of Sundays since our last post. Been busy? Yes, but that is no excuse. Rather, like most Americans, I have been listening day in and day out to the advocacy for (and against) the incumbent, President Barack Obama, and the challenger, former Massachusetts Governor Romney.</p>
<p>I put “and against” in parentheses above and quotation marks here because the dominant tone of the race has been to tear the other person down. How goofed up is that?</p>
<p>Let’s be brief and clear: The state of the nation and the world when President Obama took office was terrible, lousy, awful.</p>
<p>President Obama did some things wrong and some things right. On balance, he did great.</p>
<p>Domestically, he has us climbing out of a bad economy into a sustainably good economy in a mere four years. Mere? Yes. The economic problems he inherited by definition had lagging economic consequences. The annual deficits and therefore the increasing national debt all was predictable, given the private sector behavior and the Bush era actions from the early 2000s through 2008. To be this far up the economic recovery curve in just four years is a small miracle. Far from being harshly criticized, his leadership should be applauded. And we must include the role of the psychologically dysfunctional House of Representatives in 2011 and 2012 as being the anchor that has prevented us from being further up the recovery curve. To be sure, this president focused strongly on health care in 2009 and 2010, while the Democrats had the majority in the House. He could and should have done more in other areas, and done it by reaching out adult to adult to both sides of the aisle in Congress. But even if he had, the underlying ideologue-induced 2011-12 gridlock would have happened.</p>
<p>In foreign affairs and policy, the president got it right (1) in managing the wars in Iraq and Afghanistan as well as the war on terror, and (2) in developing increasingly strong, mutually respectful relationships with nations around the world. Far from the often used “apology tour” and apology behavior some label him with, he has set the globe on a course of a mutually respectful nation-to-nation and collective future and has done it without the self-serving bravado some would like to see.</p>
<p>In general, his tendency to be a bit aloof and a bit intellectually arrogant is softening, and his appreciation of the long-term national and global benefits that flow from a win-win-win mindset is just what we need.</p>
<p>Governor Romney successfully emerged from a rough Republican primary as the nominee of that party. He now presents himself as: (1) a person who knows how the business world works and, (2) a person who knows how to be successfully tough in foreign affairs, including tough in global commerce.</p>
<p>The Governor, though, now also clearly presents himself as he is – an imperious, self-absorbed autocratic CEO type. This condition is, in fact, not atypical in persons who have had professional experiences like his, but it is archaic, transparent, and behaviorally dna-imbedded. He can’t change it and wouldn’t if he could. Mitt Romney has unveiled himself, his true self, increasingly through the Republican primary debates and now the debates with the president. The “I’ll let you know when you can speak,” behavior and his condescending treatment toward the moderators, not to mention toward the president is not a surprise. He is reverting to form, to the autocratic, imperious CEO mindset he has. This mindset is fatal, though, for one who seeks the presidency of the United States. This office’s job description is ultimately grounded in serving at the will of the people, not the will of the Board of Directors and not in the predispositions of a Donald Trump-type self-made person.</p>
<p>There is a second behavior that Mitt Romney exhibits that is equally problematic. He ran to the right in the primary and now to the center in the general. Republicans do that. Democrats run to the left in primaries and to the center in generals. Governor Romney, though, has taken this to the next level. He appears to believe he can do as he wants if elected, ignoring the zealotry of the tea party ideology and Members of Congress. This would find favor with mainstream Republicans and some Democrats. But he can’t do it. He would ignore them at his peril. Further, if he acquiesces and is guided by their agenda, he almost certainly alienates mainstream Rebublicans, all Democrats, and finds himself powerless on an ideological island. Either way, his chameleonic conduct leads him to dead ends.</p>
<p>The upshot is that Mitt Romney has exposed himself as unfit to be president. He is the wrong person at the wrong time. AND, all this does not even take into account his misguided, myopic and clueless mistreatment of several groups of citizens, voters, people: Women, Hispanics, those going through a time of dependency in their lives, educators, and union and non-union workers. The list goes on.</p>
<p>President Obama, on the other hand, is positioned to break through, working with a co-equal and pro-active Congress, on the domestic front, in international trade and global commerce (indeed, he recognizes that the 21st century coincides with the transformational characteristics of technology and communication, such that while national sovereignty will remain integrally part of the world, globalization is on us – for the good of all), and in foreign policy. The United States will remain and even grow as the world’s leading power in times of peace and war. War is going to become less and less of a role player in the future, though, and the president knows what policies and philosophical grounding embraces that reality.</p>
<p>The choice is clear. In fact, the re-election of President Obama to a second four-year term should be by acclamation.</p>
Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com0tag:blogger.com,1999:blog-4927657185123993411.post-55358298441719634252011-12-07T23:06:00.000-08:002011-12-07T23:06:13.543-08:00An Ultimate Question Serendipitously Showing Up On Charlie Rose (PBS)<b>Charlie asked about a “theory of everything for society.” Is There One?<b></b></b><br />
<br />
Before we can do anything profound, we need to develop a societal theory of everything. Recent discussions on the national level have broached this subject, but haven't gone far enough. <br />
<br />
We are all fortunate to have the Charlie Rose show on PBS to have truly relevant,<br />
instructive discussions about life in all its aspects. Charlie asks many of the world’s<br />
finest thinkers and doers some of the best questions it is possible to ask.<br />
<br />
This post turns to a couple messages we took from some of his recent interviews,<br />
addresses them through our colored glasses and gives an ultimate answer to Charlie.<br />
<br />
He interviewed David Brooks, a highly respected New York Times journalist and<br />
author, recently (11/21/'11) about the supercommittee report and its admission of<br />
failure. The interview was good and Brooks had some instructive things to say. Most<br />
important for our purposes, though, paraphrasing here, Rose asked Brooks whether,<br />
in political economics, government and society, there is a counterpart to the scientific<br />
community's search for a "theory of everything," referring by name to Einstein and<br />
Stephen Hawking. David gave a thoughtful response, saying that he believes the U.S.<br />
is unique in the sense that we have an ability to put large groups of people together and<br />
manage them as they deal with complex, complicated matters better than other nations<br />
do. This aptitude in part he connects to our understanding that all kinds of people,<br />
diversity in every way, can come together and make great things happen - and we know<br />
how to do that.<br />
<br />
We believe David and Charlie missed a golden opportunity to add real enlightenment to<br />
the public discourse:<br />
<br />
a. David’s answer was a reasonable way to characterize a demonstrated ability<br />
that exists in the U.S.<br />
b. At best, though, it was an incomplete answer to a profound question.<br />
c. Charlie asked an ultimate question, David gave about a B- response and<br />
Charlie failed to pursue the matter. Either Charlie did not know he had asked an<br />
ultimate question or did not know that David’s response was quite inadequate or<br />
both.<br />
d. It was, therefore, an ultimate opportunity lost.<br />
<br />
On 11/29/’11 Mr. Rose interviewed two journalists, Mattathias Schwartz and John<br />
Helemann, about the Occupy movement – where it is and where it might go. Their<br />
responses were in line with the outcomes that can be produced by a societal “theory of<br />
everything.” Through selflessness (and selfless behavior), individuals and organizations<br />
can maximize their own self-value as a by-product. Both the Occupy and Tea Party<br />
movements have the seeds of the theory’s grounding in their movements. The Occupy<br />
movement has its own blind spots, such as having part of its platform(as informal as it<br />
<br />
is so far) perceivable, somewhat correctly, as free, free, free. In addition, they do not<br />
fully know they have an ultimate nature to their purpose. The Tea Party movement also<br />
unknowingly shares part of this purpose in its nature, except its platform is perceivable<br />
(also somewhat correctly) as me, me, me.<br />
<br />
Charlie also interviewed Marc Benioff, Chairman and CEO of salesforce.com. on 11/<br />
29/’11. Mr. Benioff’s corporation appears to have built at least part of the foundation<br />
principles of the societal “theory of everything” into its corporate DNA – their 1,1,1<br />
philanthropy model for one thing. They are; a. a significant exception to inward-focused<br />
corporate behavior as we have seen it in recent years and b. still only partly there.<br />
<br />
One need not study Locke, Hume, Hobbes, Smith and others in context to try to capture<br />
an evolution or synthesis in their thinking and teaching. It is certain, though, that they<br />
would agree with the functional relationship, set forth below, between self interest and<br />
other interest. Adam Smith explicitly endorsed it.<br />
<br />
The natural law, social contract, etc. ideas all crystallize in the following, straight<br />
forward "theory of everything" for societies, governments and political economics. This<br />
would have been an ultimate answer to Charlie Rose's ultimate question. Connecting<br />
self interest and other interest is the purpose and the challenge, just as in physics<br />
connecting quantum mechanics and general relativity is the purpose and the challenge.<br />
We offer the functional relationship here, in kitchen table mathematical language,<br />
preceded by a narrative explanation:<br />
<br />
a. Theory of Everything for Political Economics, Governments and Societies:<br />
<br />
(1) Our self interest and self value ( for organizations and individuals alike) is maximized<br />
<br />
over the long run as a direct function of focusing on and optimizing the value<br />
provided to those persons and groups whose lives we affect (our stakeholders).<br />
<br />
(2) Self interest is best satisfied by focusing on and serving others – those whose lives<br />
<br />
we affect in a meaningful way.<br />
<br />
b. NOTE: Here it is in a mathematics- like formula relationship:<br />
<br />
IVM = f(S1VO, S2VO,……….SnVO), where<br />
<br />
1. I means “institutional,” which really is an all-inclusive synonym<br />
for “organizational” for our purposes.<br />
2. V means “value,” and value is financial, ethical, security, quality, safety, etc. – the<br />
finite and knowable list of things valued by each stakeholder group (marketing<br />
groups are some of the knowledge leaders here).<br />
3. M means “maximization,” where value is defined.<br />
<br />
4. f means “function of” – it really indicates that an organization’s long term value<br />
is directly dependent on how well it does in optimizing the value packages it<br />
provides to each stakeholder group in the context of all the other groups.<br />
5. S means “stakeholder,” – those main groups affected by an organization.<br />
6. O means “optimize,” and optimize means doing as well as possible for each group<br />
in the context of doing the same for every other stakeholder group.<br />
<br />
It is important to add that every organization (institution) has a finite number of main<br />
stakeholder groups. In general they are; a. Customers, b. Employees, c. Investors, d. Suppliers, e.<br />
Communities where they have a presence and f. The general public interest or common good.<br />
<br />
There is a substantial amount of empirical research directly and indirectly supporting this “theory<br />
of everything” and there are many stories about specific organizations whose value is high and<br />
continuously growing over decades, and they all have at least some of the characteristics that<br />
fit the theory. We need not be concerned about a refutation of it. Rather, we are searching for<br />
the right ways to present it to organizations and have them take the risk of adopting it as their<br />
philosophical and behavioral paradigm.<br />
<br />
There are of course other concepts related to the theory, such as “globally ubiquitous<br />
human characteristics” - virtues, traits or paths to these virtues, values and a yearning<br />
for or possession of the fundamental rights of life, liberty, pursuit of happiness, and<br />
property - at least that property each human has that is his or her own aptitudes.<br />
<br />
This kind of approach to public interest decision-making, let alone decision-making<br />
in large corporations and in governments will take more wisdom and fortitude than<br />
currently is evident - especially in Congress and the Administration, and certainly on<br />
Wall Street.<br />
<br />
No one else appears to want to take this fully on, either because they do not understand<br />
it, have not focused on it or simply do not want to "go there", but we are going there.<br />
Ultimate questions must be asked (a thought effort in itself), answered and acted upon.<br />
<br />
It is all actionable at the organizational level through seminars, lovingly tough love<br />
seminars and similar forums and through follow up - like teaching and helping people<br />
rise to the highest level of human behavior ----too much to ask? We think not. Just<br />
the opposite is true. It is that main remaining leap to the high plateau implicit in the<br />
question, “is there a theory of everything for economies, societies, governments and<br />
political economies?”<br />
<br />
That’s our story and we’re sticking to it. It can be called naïve, pollyannaish, innocent<br />
and similar names. It is none of these. It simply invites us all to “mature up.” It is at<br />
the very heart of pursuit of the common good and public interest, theoretically precise,<br />
<br />
commercially robust and societally optimum. It respects national sovereignty while<br />
recognizing we now have one global village and market. Opportunity costs will move<br />
toward zero as all organizations (including governments) adopt it.Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com0tag:blogger.com,1999:blog-4927657185123993411.post-683472380944707952011-11-02T23:51:00.000-07:002011-11-02T23:51:05.816-07:00CEOs The World Over Must Become Servant LeadersAdam Smith Must Be Spinning In His Grave In Edinburgh<br />
Self Value Is Maximized Only By Optimizing Value For Others<br />
[Note: It has been an active seven months for all of us, as we have been watching the global and domestic political, economic and pursuit of freedom activity around the world. The reinforcement for the ideas we discuss here (from the kitchen table) has been flowing from all this activity. In this post we begin to address it all. It is a bit long (1900 words) but the subject matter requires it. J.]<br />
CEOs should be on the factory floor and in the back offices every day, supporting, asking, serving and leading through inclusive, disciplined empowerment. They must also have the right people in the right jobs. Servant leadership is one imperative. As leadership goes, so goes the company, the government, the organization of any kind.<br />
Only a small fraction of all companies, all organizations for that matter, practice this simple recipe for excellence. And it is this failing that significantly contributes to the national and global economic failures in the 21st century – brink of disaster failures since 2008 and continuing. And from about 1980 through 2007, just prior to the 2008 blowout in the U.S., the ground was laid for at least the U.S. and Europe to come to this cliff’s edge. And, China and the rest of the globe are in harm’s way going forward unless ways are changed.<br />
This servant leadership stuff, mushy as it might sound, is one of the primary ingredients essential not only to recovery but to the path of value maximization and excellence. We will discuss the other ingredients in this brief post.<br />
Is Adam Smith really spinning in his grave? Just consider the following excerpts from his writing, and a few comments from others, to understand that this moral philosopher taught that free markets would maximize value; a. if individuals were free to pursue their own interests – by employing their own labor in what manner they think proper and b. if individuals (and organizations) followed their nature to advance the common good – the good of all their neighbors. The quotes:<br />
*“The property which every man has is his own labour; as it is the original foundation of all other property, so it is the most sacred and inviolable…To hinder him from employing this strength and dexterity in what manner he thinks proper without injury to his neighbor is a plain violation of this most sacred property.”<br />
*“How selfish soever man may be supposed, there are evidently some principles in his nature which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.”<br />
*Man was made for action, and to promote by the exertion of his faculties such changes in the external circumstances both of himself and others, as may seem most favourable to the happiness of all.”<br />
*Joseph Stiglitz, Nobel Prize winner in Economics and professor at Columbia University – Two observations about Adam Smith:<br />
*“A naïve reading of Adam Smith might have suggested that he had relieved market participants from having to think about issues of morality.” <br />
*“We should remember that Adam Smith was a professor of moral philosophy. …Economics is concerned with how we make decisions about the use of resources – and how these decisions affect others. Any (such) inquiry quickly brings us into a moral discourse.”<br />
Smith always believed that man's self-interest was not in conflict with his urge to help others and that this sympathy between fellows was a fundamental part of human nature.<br />
<br />
Another view of Adam Smith’s teaching: Howard Gardner is a Harvard professor. He recently wrote Five Minds For The Future. Some praise for his work includes:<br />
1. “By most accounts, Howard Gardner is the most influential living theorist in the education world today,” NEA Today.<br />
2. “Howard Gardner is….the man who changed our notion of what it means to be clever,” The Financial Times.<br />
3. “One of the most influential psychologists of his generation,” The Economist.<br />
<br />
Talking about markets, Gardner writes that, in addition to Smith’s well known invisible hand concept so widely embraced, “They (markets) can be quite cruel and, anyway, are fundamentally amoral. Adam Smith actually had a quite nuanced view of markets; their morality presupposed on a certain kind of society, inhabited by actors who were able to take a long – rather than a short term view. Moreover, when he moved from a singular focus on transactions (butcher, baker, brewer), Smith issued strong strictures: ‘He is certainly not a good citizen who does not wish to promote, by every means of his power, the welfare of the whole society of his fellow citizens.’ “(emphasis added).<br />
We can take from all this that Adam Smith prescribed both perspectives and behavioral paradigms for societies and economies – in simplest terms, harmonizing of self interest and other interest. That is, self interest and the welfare of the whole society must advance together, and it does not happen automatically as a naïve reading of Smith’s writing might suggest. We can also be certain that he would not approve at all of the failure to achieve this harmonization in the national and global economies of today. In fact, this failure is the heart of the problem. That is why he must be spinning in his grave in Edinburgh.<br />
Of course it has not helped that the once and long time intellectual leader of the University of Chicago School of Economics, Milton Friedman, and a long standing chair of the U.S. Federal Reserve Board, Alan Greenspan, effectively ignored the second perspective – choosing to assert that an automatically good outcome for the whole society would result if the first perspective is given free reign. What a monumental mistake!<br />
The Congressional Budget Office (CBO) in the United States recently released its study on income inequality in the U.S. In a nutshell it shows that Smithian economics is not being successfully applied in the U.S.<br />
A brief look at the income inequality story in The Peoples Republic of China gives us a similar picture. Of course, the Chinese economy has been growing rapidly over the last 30 years. A similar failure to satisfy the expectations inherent in Smithian economics, though, appears to be presenting itself in China. The details are different.<br />
The point is that Adam Smith was setting out a prescription for maximizing economic and societal value through a specific economic model. The model, time has proven, works excellently when properly applied. That is not the case in the U.S. over the last 30 + years and may not be the case in China as it rolls out its market economy. This same reasoning applies around the globe, national economy by national economy and in the interactive global economy.<br />
This brings us to self interest and value as a function of providing optimal value to others – to what are widely called the “stakeholders” of an organization. The CEO on the factory floor really means that leadership in all organizations, including governments, such as the U.S. Administration and Congress, must take on the responsibilities Adam Smith so succinctly prescribed in the second part of his two-part economic value maximization teaching – that of “promoting the welfare of the whole society of our fellow citizens.”<br />
With or without Adam Smith’s wise and inspired teaching from the late 1700s, one could still easily reach this conclusion at the kitchen table. Self interest value is directly related to promoting the welfare of the whole society. The same goes for the conclusion regarding local and global economic value maximization.<br />
It is really apolitical. It is not grounded in liberal or conservative philosophies, democratic or republican philosophies, left or right philosophies. Rather, it is grounded in the idea that all should be allowed and enabled to attain the happiness that Adam Smith prescribed.<br />
The very idea that this self-interest, other-interest connection is not fully understood and embraced by leadership groups everywhere is a pivotal 21st century problem that must be solved.<br />
How Do We Make Servant Leadership Flourish, Optimize Value For Others And Let Adam Smith Rest In Peace?<br />
We connect the servant leadership, self-interest and other-interest imperatives by combining standard strategic planning elements with the organizational excellence elements that flow from our discussion here. This nexus, stirred together and then lived out by both leaders and all persons in every organization, will do the job.<br />
Standard Strategic Planning.<br />
This subject is sometimes regarded as superfluous, just a paper exercise that adds no real value. Perhaps the best judges of its value are coaches of major sports teams. Their playbooks, culture, style of coaching and year after year consistency in application are strategic planning in action. Its elements are; a. a core purpose and set of values, b. a vision, c. a mission, d. a set of long term and near term goals and d. adaptable strategies and tactics to achieve those goals. Those who do it best are most likely to achieve excellence.<br />
Organizational Excellence.<br />
Organizational excellence flows from a philosophically solid mind-set, has the clear and largely fixed sets of gold standard leadership and cultural characteristics, and the behavior necessary for excellence is that which applies this mind-set and these gold standard characteristics to standard strategic planning. The synergistic result is that “standard” becomes “robust” and the detailed pieces of an ongoing, adaptive strategic planning process are thoroughly enriched by the other-focused mind-set and the gold standard leadership and cultural characteristics. It all raises this nexus, this combination, to that individual, organizational, national and global level that lets Adam Smith rejoice, let alone rest in peace.<br />
Our Actionable Take-Aways.<br />
Selflessness is the key. Stakeholder value optimization is the goal and self-interest value maximization is the natural by-product. That is, to passionately re-state the answer provided above,… We connect the servant leadership, self-interest and other-interest imperatives by combining standard strategic planning elements with the organizational excellence elements that flow from our discussion here. This nexus, stirred together and then lived out by both leaders and all persons in every organization, will do the job.<br />
<br />
As Professor Howard Gardner says, “Adam Smith actually had a quite nuanced view of markets; their morality presupposed on a certain kind of society, inhabited by actors who were able to take a long – rather than a short term view.”(emphasis added).<br />
It is imperative that all persons in leadership positions - in government, business, in all organizations – rise to this high level of wisdom, courage and vision. The short-termism that prevails today is a fatal condition. The failure to consider the two parts of the Adam Smith prescription for societies and economies as co-equal and integrally connected is also fatal.<br />
It is important to write the obvious: The fatal conditions we describe here apply to the real economies and their participants, to the financial sector part of the economies and their participants and to top government leadership groups – both executive and legislative branches.<br />
So then, specifically in the U.S. it is time for the Congress and Administration to adult-up. It is time for the entire world to put in place the 21st century organizational, financial, economic and societal systems that allow this harmonization to be elegantly achieved going forward. Adam Smith, correctly understood and applied, demands it. He was and is a once-in-a-millennium visionary. He captured kitchen table wisdom. With or without him telling all of us the obvious about human nature, though, adult-up time is here.Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com0tag:blogger.com,1999:blog-4927657185123993411.post-26006649193538998362011-04-03T14:49:00.000-07:002011-04-03T14:49:48.233-07:00The Ultimate Big Idea That Unveils Capitalism’s Highest Value Creation Role - Locally and GloballyIt has been a couple months since our last post. We have been engaged in sessions with clients, and comments from our clients will be added as a page on www.jackhaffey.com, our website.<br />
We continue to check our thinking, to check the principles that are the foundation for the consultative advice and mutual learning we engage in with clients. At the same time, new information comes our way that, thankfully, reinforces our beliefs. This post shares an important affirmation of our beliefs. It is a bit long, but we believe the subject matter is extremely important. We hope you agree.<br />
<b>Rather Than Being Under Siege, The Capitalist System Should Be At A Moment Of Value Creation Breakthrough.<br />
</b>A significant and serendipitous piece of information came our way recently in a Harvard Business Review (HBR) article written by Michael Porter and Mark Kramer, both professors at Harvard. The article includes a video interview with Professor Porter. Porter is one of only a handful of Harvard professors to carry the distinguished title of university professor. It is reserved for those who make not only a significant contribution to knowledge in their field but who “are individuals of distinction….working on the frontiers of knowledge, and in such a way as to cross the conventional boundaries of the specialties.” The HBR January - February issue includes an article about their big idea – creating shared value. Their article begins with the words “The capitalist system is under siege.” Professors Kramer and Porter then go on to present the idea of corporations creating shared value with society. They believe this idea might be the next major transformational breakthrough in understanding the real value of capitalism. <br />
They have recognized and explained, in clear language, part of the underlying and ultimate truism about the elegant beauty of capitalism. It is a good step forward in understanding the exquisite interrelationship of organizations and society in terms of value creation. They include Johnson & Johnson and IBM in a list of companies that are creating shared value – companies that do have this deeper understanding of how to reset the boundaries of capitalism. We too see these companies as having this necessarily broad view of value creation. Johnson & Johnson is a particularly good example of a company whose history, leadership and cultural characteristics have enabled them to maximize their own value in the long term by focusing on doing their very best for their stakeholders ( customers, employees, communities, suppliers and society in general). <br />
We applaud their work. When Professor Porter speaks, the business world listens – heads of state listen.<br />
However, Professors Porter and Kramer have not brought the thoughts to completion, in our view. That is, they have stopped short of the almost self-evident and truly Big Idea. We are confident they understand what this elegant beauty is when expressed in full. It might be that, in some part, they view the shared value concept in an instrumental way. That is, they describe the principle of creating shared value as a new way of creating economic success for the corporation. It is, to be sure, but that is really just the natural by-product of connecting self-interest and other-interest. And, it stops short of its logical completion.<br />
• We are quite confident they know the rational, logical extension of the concept of creating shared value that they describe. Adam Smith certainly did, though he did not expand on his firm belief regarding this clear connection between self-interest and other or societal interest. What is this rational and logical extension? It is that organizations thrive when they focus on all their stakeholder groups instead of just their bottom line. Maximizing net global and local organizational and societal welfare (value) flows directly from this other, stakeholder-centered, long term value optimization mindset. <br />
• The beauty is that self-interest is best maximized as an outcome of focus on serving others (stakeholders). An organization must be almost maniacally dedicated to optimizing value for each of its stakeholder groups. Optimizing is kind of like making music in an orchestra. The organization must strive to harmonize everything for its stakeholders, as a result maximizing its own long term value. At bottom, it is simply a mindset and focus matter, one that will unveil the real potential value of capitalism and of organizational value to society in general.<br />
• Professor Porter’s five forces of competition, of course, remain centrally important in this expanded understanding of value creation. In fact, they take on an even deeper multi-dimensional nature when stakeholder (other) focus is dominant, and self-interest value maximization is the by-product. <br />
<br />
<br />
Just as Professor Stephen Hawking and others have focused on finding a “theory of everything” to explain the physical world (quantum mechanics and general relativity in a unified way), leading thinkers observing the world of organizations - for profit, non profit, large and small (including but not limited to those fully engaged in free market capitalism) - should focus on finding and articulating an “organizational excellence theory of everything.” To qualify as a truly big idea or rather The Big Idea it is necessary to do just that – and Professors Porter and Kramer appear to be on the right path. At Jack Haffey & Associates (JH&A), we believe we have in fact identified and presented this theory, as briefly summarized above. It might need a bit of fine tuning, as much as we hesitate to admit it, but we were heartened to read the HBS article precisely because it looks like these two world class professors might “get it,” at least directionally they certainly appear to get it - in part. There is more to do, of course. And certainly Professor Porter’s five forces of competition do fit firmly in the mix – as a means to the end.<br />
While the HBS article does not address it explicitly, we believe it is axiomatically true that until we move toward and get closer and closer to having all organizations behave as described here, organizations and society, globally, will continue to incur significant, harmful and avoidable near and long term opportunity costs as they individually and collectively fall short of actualizing their individual and our collective global value potential. Behavior in accordance with our ideas presented here, on the other hand, will tend to produce just the opposite – full actualization of long term organizational and societal value. That is capitalism’s potential – its elegant beauty actualized.Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com0tag:blogger.com,1999:blog-4927657185123993411.post-75700034987787184232011-01-24T06:51:00.000-08:002011-01-24T06:51:02.615-08:00Leading the way to excellence: the attributes that are essentialIt’s January 24. Remember that New Year’s Resolution you made way back on the first? If you’re still keeping it, bravo! Great job. Keep it up. If not, no worries. You<br />
aren’t alone in letting it fizzle as the exuberance for a new calendar year wanes.<br />
<br />
Authentic change typically doesn’t occur by choosing to do—or not do—something on an arbitrary date, like Jan. 1. Whether we’re talking about an individual who decides to start exercising or an organization that resolves to sell more widgets, it<br />
usually takes a closer look under the hood.<br />
<br />
We’ve talked extensively about the importance of creating a strong vision and mission statement when working toward true organizational excellence. Indeed, when<br />
looking at gold-standard leadership characteristics, one of the first is the ability to establish direction and vision.<br />
<br />
In addition, leaders must possess other attributes, many of which have little to do<br />
with self-reliance or individual strength in the conventional sense. Gold standard<br />
leadership characteristics include:<br />
<br />
• Personal humility and professional will: One definition of humility is an accurate<br />
assessment of one’s own abilities and shortcomings. Couple such an attribute with<br />
a fearless conviction to improve, and you’re on your way.<br />
<br />
• Inclusivity: The common theme through much of what we discuss is that one<br />
person’s best ideas—even the best ideas of one really smart person—simply<br />
aren’t enough to move a company or organization forward in a profound way.<br />
Others need to be involved, and in many cases, the more stakeholders who are<br />
represented, the better the results will be. And the smarter the leaders will look.<br />
<br />
• Stakeholder focused, in a maniacally profound way: There’s that word again:<br />
stakeholders. Organizational excellence is predicated on the concept that all<br />
parties involved in or affected by a company or nonprofit must benefit in some<br />
way from the company’s endeavors. Typically, such stakeholders include (not<br />
necessarily in order of importance) owners/stockholders, employees, customers,<br />
vendors, and the community in which the organization operates.<br />
<br />
• Heart of a servant: We’ve heard the saying, “You get back what<br />
you put in.” Leaders who focused on their own needs and desires often don’t<br />
understand why the people around them aren’t loyal and self-sacrificing. Serve<br />
those you lead by keeping their professional needs at the forefront of your mind,<br />
and in return, you will get a stakeholder who is as true to the vision and mission<br />
as you are.<br />
<br />
• Ethical and just: The standard for ethical behavior is best set at the top of an<br />
organization. Open conversations about doing things the right way—even when<br />
inconvenient—will be appreciated by and ultimately benefit all stakeholders.<br />
<br />
• Fun: In an organization that is led in such a manner, all stakeholders will<br />
enjoy being involved. Imagine all stakeholders leaving your company with a high five everyday. Whether it’s a metaphoric high five or a physical one, it’s the kind of response you can achieve when striving for excellence.<br />
<br />
Many or most organizations are alert enough to talk this kind of talk. Few, the<br />
excellent ones, actually walk this walk. All should.Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com0tag:blogger.com,1999:blog-4927657185123993411.post-74589155615165579092010-12-23T08:17:00.000-08:002010-12-23T08:17:51.084-08:00Making work more workableHappy hour. Thank God it’s Friday. Working for the weekend.<br />
<br />
We’re conditioned to think the best part of work is not having to do it anymore, that we’re trading 40 hours on the job for a couple of days on the lake, in the garden, at the game. Anywhere but there.<br />
<br />
Work isn’t like that for everybody, of course, and it doesn’t have to be like that for anybody. When we talk about organizational excellence, we’re talking about making the work life better for all those involved, from the boiler room to the board room.<br />
<br />
It’s not easy, but it is possible. Through strategic planning and creation of inspired mission and vision statements that are acted out every day, a company can create a plan for the future that benefits everybody it touches: employees, stockholders, customers, vendors, and the communities in which it works.<br />
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This endeavor is a job in its own right. It takes the commitment of leadership and management and the ability to think long term. It also involves the participation of employees and requires them to think beyond the next paycheck. It doesn’t hurt to have a knowledgeable, objective third party involved, which is where we come in.<br />
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The payoff is a strong understanding of where the organization is going, why it’s going there, and how it’s going to get there. <br />
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The why involves the benefits for all parties. Those benefits are going to be different for every organization, but generally speaking, this means that one group won’t prosper at the expense of other groups. The company’s shareholders will see a return on investment while employees are treated well. Vendors will be treated fairly while customers receive a good value. In fact, each group should and will be as well off as possible.<br />
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As you mull all of this over, please don’t confuse benefits with getting your way. This doesn’t mean that everybody makes six figures while sitting in a corner office. After all, most offices only have four corners, and there’s only so much money coming in the door.<br />
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It does mean everybody can go to work understanding how they are contributing to a bigger picture and how they are part of an effort that’s grander than their own needs.<br />
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In this environment, we’re all still going to look forward to our family, leisure and other life activities, but we’ll also look forward to hitting the ground running on Monday mornings and not keep such a close eye on the clock when we’re there. For most people, that right there would be a benefit in its own right. <br />
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So, organizational excellence in the 21st century can and should be totally achievable – and be absolutely fun. This brief note suggests the mindset starting point.Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com0tag:blogger.com,1999:blog-4927657185123993411.post-21179414128481654572010-11-19T15:12:00.000-08:002010-11-19T15:12:35.427-08:00Teleopathy: The subtle and vexing condition that is viral in many corporationsWhen creating a long-term strategic plan in the pursuit of organizational excellence, a company should have a set of goals that optimally serve all of its stakeholder groups. The key word in that sentence is <i>should</i>, and the main problem many groups face is that they don’t change their inward-focused mindsets to match the outward-focused approach that must be the heart of a solid multi-year plan.<br />
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More specifically, many companies prioritize the needs and goals of one stakeholder group above all others. When that happens, it nearly always is investors who are given top priority. This is what’s known as teleopathic behavior. Teleopathy is most simply defined as the unbalanced pursuit of objectives, and the needs of others often are sacrificed during that pursuit. <br />
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It’s easy to see how this happens in a typical corporate culture. While companies develop long-term strategic plans to guide them toward a prosperous future, they frequently measure their success in short-term increments, such as quarterly or annually. <br />
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In good economic times, ink flows black as sales and profits grow, and employees are added to handle increasing demand. Suppliers are called upon to provide more goods, and the community in which a company operates often benefits as dollars course through the local economy. All stakeholders are served, and everybody should be happy.<br />
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When sales slow and hard times hit, however, companies often work to keep that quarterly report looking good for its investors to the detriment of the other stakeholders--employees, customers, suppliers and the community as a whole. To maintain shareholder value, companies might downsize their workforce and bargain more sharply with suppliers. They often cut corners on customer service and reduce their investment in the community. All of this occurs in the name of maintaining shareholder value.<br />
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The tough decisions described above may be necessary for a company to remain viable when times get tough. If revenues fall and a company starts operating at a loss, tough decisions must be made, of course. That is, even an outward-focused and excellently run company might need to make such tough short-term decisions in the context of its mission for the long term. In this case, the decision process is balanced.<br />
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Returning to the behavior of the teleopathic condition, this unbalanced pursuit can be most harmful when it exists whether the company is in good times or bad. With teleopathy, the dominant behavior is inward-focused, short term and narrowly interested only in shareholders. This is a long-term recipe for failure. Problem is, it is wide spread, and it is viral.<br />
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One of the greatest consequences of teleopathy is this: when it’s pervasive, organizational excellence is impossible to achieve. Further, this behavior is a symptom of a larger problem – a leadership culture that is indeed inward and short term-focused, which is ultimately doomed to failure.<br />
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True value will be realized if and only if goals and strategies are established to optimally serve all stakeholder groups through all economic cycles, through good times and bad. It truly takes discipline and courage. This discipline and courage are grounded in a common vision that truly inspires every employee, from the boiler room to the CEO’s office, to always serve all stakeholders.<br />
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It’s a tall order, to be sure, but it’s an achievable one for a company that has a strong, livable vision, a mission that involves all stakeholders, and a strategic plan that takes into account what’s best for all involved.Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com1tag:blogger.com,1999:blog-4927657185123993411.post-39665233734302690332010-11-11T14:02:00.000-08:002010-11-11T14:02:42.273-08:00Strategic planning, visions, missions, and stuffIn our blog, we focus on organizational excellence in every post. Today we discuss one of the centerpieces of that excellence – core purposes and strategic plans.<br />
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When meeting with clients and traveling around, I talk a lot about developing a playbook for an organization or business. A playbook, or a multi-year strategic plan, is an essential tool for any organization that wants to reach its full potential. Before a business can create such a tool, though, there are a couple of absolute gotta-haves that must be in place at the front of the book—a livable vision statement and a mission statement. When properly thought through, written well and used together, these three elements can go a long way toward helping any organization attain true excellence. <br />
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Over the years, I have often heard leaders downplay and even pooh-pooh vision and mission statements and multi-year strategic plans. While outfits might do well without such formal playbook-like guidance, I know, deeply, that they probably were all falling short of their best, no matter how well they might have been doing. I wonder how well John Wooden’s UCLA basketball dynasty would have done by just playing street ball. Phil Jackson’s Bulls and Lakers are another fine example of what a unifying set of guidelines—vision, mission and plan—can produce. All businesses and organizations maximize their success probability through such playbook guidance. Of all things, this truism is not rocket science, yet downplaying a playbook or performing a going-through-the-motions creation of a strategic plan persists for so many. This is an organizational and, collectively, societal tragedy.<br />
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A vision statement is a forward-looking statement—a picture of the elegantly desirable future—that explains what the organization wants to achieve in a broad sense. Ideally, it’s inspirational and is embraced from the boiler room to the CEO’s corner office. It should energize executives, employees, investors and customers alike. <br />
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For example, the American Hospital Association has an elegant vision. It’s a vision of a society of healthy communities, where all individuals reach their highest potential for health. Think about that for a minute. I’ve never worked in a hospital, but this vision inspires even me.<br />
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The mission statement is an organization’s brief explanation as to how it is working toward fulfillment of the vision, the very reason for existence. Going back to our friends at the AHA, that organization’s mission is “to advance the health of individuals and communities. The AHA leads, represents and serves hospitals, health systems and other related organizations that are accountable to the community and committed to health improvement.”<br />
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Again, good. Note how they don’t mention what they actually do on a day-to-day basis. This is good, and here’s why. Let’s say you and I worked at the American Hospital Association, and there was some issue at hand—an important decision that needed to be made. One of us could step back and ask, “Which option really helps us to advance the health of individuals and communities?” In a practical sense, it might be a silly question to ask if we were trying to decide where to buy copy paper or toilet cleaner. I would argue, though, that at some level, the vision and mission statements are relevant in every decision a company makes.<br />
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<b>Now you’re ready for the playbook.</b><br />
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Next comes the multi-year plan part of the playbook. This is where we get into goals and strategies. There are a few ways to ensure the playbook is written so that it will be followed—and ultimately successful. <br />
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The playbook should be written in everyday street language that everybody can understand. It should be developed for a finite period of time, and it should be adaptable. The amount of time isn’t altogether relevant; most are three to five years, though organizations in some cultures have 300-year plans. It’s just important to have time attached to each goal so that they don’t get permanently back-burnered. <br />
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Most importantly, the number of goals should be closely related to the number of stakeholder groups, and nearly every organization has at least five primary stakeholder groups: investors, customers, employees, suppliers, and the community or communities in which the organization exists. Each also must have the general common good or public interest in mind.<br />
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For a strategic plan to be embraced, it must have goals connected to the vision and mission statements, and those goals must provide value to each stakeholder group. They must energize the people of the organization – make them want to excel, to be best in the world. <br />
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If it’s a good playbook with benefits for everybody, it’s more likely to be successfully executed—and more likely to get an organization closer to fulfilling its mission and realizing its vision. <br />
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The Takeaway? Each individual and organization should want to know, indeed must know, who they are, what they love, where they are going and how to get there. As importantly, they need to know how high is up for them, their true potential. <br />
Organizations that develop and continuously update their playbooks over time, changing them with shifts in society and the marketplace, will see their potential (how high is up for them) and will have fun achieving it. Those who don’t will waddle along, doing at best pretty good, with opportunity costs being incurred all along the way.<br />
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Which organization do you want to be?Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com1tag:blogger.com,1999:blog-4927657185123993411.post-15724520200588329562010-10-15T19:16:00.000-07:002010-10-15T19:16:10.351-07:00Mid-terms elections and organizational excellenceBack in January, I wrote about Wall Street’s well-documented institutional failures<br />
and the bad mindset that contributed to the recent recession. Our thoughts then, regarding how organizations and sectors of the economy can be dysfunctional but can be dramatically improved just by adopting a new mindset apply every bit as much to our political sector, which is now moving toward the mid-term elections. Politics as usual shows the same self-serving inward focused mindset. We talk here about improving that behavior so that the public interest is best served.<br />
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The problem for corporations, at its root, is short-term, inward-focused thinking that concentrates largely on how the quarterly report looks to investors and shareholders, to the detriment at times of the organization’s long term maximum value. The solution is the same now as it was when Adam Smith wrote in the late 1700s and Milton Friedman wrote in the second half of the 1900s about maximizing value in a firm and an economy, a society. This solution is a long-term, outward-focused outlook that concentrates on optimizing a company’s value for everybody it affects: customers, employees, and, yes, shareholders. - all stakeholders.<br />
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The imperative is to drop this bad mindset and replace it with a new millennium mindset. A bad mindset is inward-focused with the short term as the relevant time frame. It is also usually win-lose. The good “new millennium” mindset that we all must strive for is outward-focused (stakeholder-focused) with the long term as the relevant time frame. And, rather than a win-lose inclination it zealously works to optimize the value it provides between and among its stakeholders.<br />
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The free enterprise, capitalist economy in the United States, conducted the way it<br />
should be conducted, is an economy that all can embrace, left, right, liberal, conservative and so on. But when it is not conducted properly, bad things happen. The financial crisis and its strongly lingering effects, the “real” economy dysfunctions including the auto industry (GM, Chrysler) and others all are infected with these bad mindset-based and leadership-allowed culture and behavioral practices. We all should want to fix this systemic problem. And, those in Congress, no matter their party affiliation, who attach themselves to this bad mindset are as culpable as the organizations themselves. In fact, their acquiescence and involvement in it is the “inside the beltway “problem we hear so much about.<br />
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As we approach the Nov. 2 mid-term elections, it’s good to revisit these ideas and<br />
look at how they apply to politics. It’s easy to confuse legitimate philosophical and political differences—Democrat vs. Republican, conservative vs. liberal—with bad, short-term-driven behavior.<br />
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As the inward-focused corporation focuses too narrowly on quarterly and similar short<br />
term results, the inward-focused politician focuses primarily on his or her public image – and re-election. Indeed, no longstanding political party and no ad-hoc movement—like the Tea Party—is immune from this dysfunction, nor has any one party figured out how to be consistently and truly outward-focused statespersons, communicate this wisdom and earn the voters’ approval. What tragic irony. The American people are far wiser collectively and at kitchen tables around the nation than these inward-focused short term office holders. As a note too tempting to pass up, the extreme liberal and conservative radio and TV political talking heads, of course, fan the flames because they are the essence of inward-focus and short-term behavior – and they want to win the ratings battles.<br />
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I served two terms as a citizen legislator in the Montana State Senate in the 1980s. My colleagues included ranchers, farmers, people in the crafts, main street business people, attorneys, physicians and teachers from across the state. In other words, we weren’t career politicians. We went to Helena to represent the interests of Montana and Montanans collectively, and of the communities we came from. We were not focused on having and retaining a position of power.<br />
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Don’t let me mislead though. Politics could get just about as dysfunctional then<br />
as it does now, but most of the legislators and other elected leaders—and the voters—<br />
didn’t seem as content to settle for sound bites and stereotypical political posturing. Today,there is but a glimmer of such enlightened, wisdom-based conversation in some races, but most seem to have an inability to lift their minds and their rhetoric to this higher level.<br />
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Our words from January help us present the prescription for resolution, and we encourage all candidates to think deeply and act courageously on the matter. There is a “beltway” mindset that needs fixing, and I believe it is wrapped up in the same dysfunction we talked about innJanuary. The courage to rise above the fray is precisely what real leaders need. It is indeed possible, though unlikely given the present polarized and immature campaign dialogues.<br />
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We encourage a step back, a deep breath and a call to wisdom from any candidate willing and able to do it. Voters will listen and will support such candidates. Voters are wise and see right through the charades. As of now, though, they do not see much real courage, much real focus on the long term - jobs and all other public interest matters. As a result, they see no real, well-grounded hope for a better future—just more immature, inward-focused waddling.<br />
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And it is this selfless outward-focused, truly servant-leader mindset from politicians, and from organizations and their leaders, for which there is an urgent clarion call to embrace and adopt.Jackhttp://www.blogger.com/profile/09872417924116842250noreply@blogger.com0