Firms of Endearment

Social Responsibility in Movie-making

New Hollywood Genre: Message Movies

Have you heard about Participant Productions? If you haven’t you should know about this nontraditional film company. Under founder Jeff Skoll, Participant Productions is nullifying the classic Hollywood advice that if you want to send a message, call Western Union. People supposedly don’t go to the movies to get lectured at but for entertainment.

But Jeff Skoll, with an estimated $$2 billion fortune earned fas the number two employee of E-Bay, resigned as its first president to take up the mission of changing the world through film.

Skoll's productions include An Inconvenient Truth (the Al Gore global warming documentary), Good Night and Good Luck (the story of Edward R. Murrow’s attack on McCarthyism) , Murderball (the inspirational story of handicapped athletes), Fast Food Nation (about how America got so fat), North Country (about the story behind the first sexual harassment lawsuit) and Syriana (about intrigue and avarice in the global oil industry).

Critical acclaim and box office receipts indicate that Skoll's confidence in "message" movie making is paying off.

In this era, which I have dubbed the Age of Transcendence, the zeitgeist – the spirit of the times – has risen to a higher and more complex level of expression than ever before in human history. Legions of people in mainstream society are coming to believe that the materialistic foundations of the past century stand in the way of creating a better world for all.

Formerly, only people at the fringes of society renounced materialism for an experiential connection to the world.

This historic shift in worldview on a society wide basis reflects the emergence of people over 40 as the adult majority, with those in midlife (almost entirely boomers) exerting the largest influence on the zeitgeist.

Successful marketing is obviously dependent on connecting the dots between an offering and perhaps the company behind it and the consumer. That makes it important to come to a full understanding of the makeup of people’s worldviews in today’s marketplace.

By worldview I don’t mean what people believe, but how they connect to the world. In the first half of life connections to the world tend to be highly egocentric: my connections are based on what I can get from them. In the second half of life, connections to the world more often are based in altruistic aspirations: what can I give to them.

The first half of life is mostly about the individual; the second half of life is (or should be) mostly about the group, or more broadly, the species. This is why we survived and other hominid lines in homo sapiens’ ancestry did not. The latter turned out to be more successful in preserving their tribes and indeed the species.

Today, we are witnessing the ongoing struggle to improve humankind’s condition as efforts to do so take us into new, higher and more complex states of human beingness. I’ll say more about this in my next post.

   

 

Have you heard about Participant Productions? If you haven’t you should know about this nontraditional film company. Under founder Jeff Skoll, Participant Productions is nullifying the classic Hollywood advice that if you want to send a message, call Western Union. People supposedly don’t go to the movies to get lectured at but for entertainment.

But Jeff Skoll, with an estimated $$2 billion fortune earned fas the number two employee of E-Bay, resigned as its first president to take up the mission of changing the world through film.

Skoll's productions include An Inconvenient Truth (the Al Gore global warming documentary), Good Night and Good Luck (the story of Edward R. Murrow’s attack on McCarthyism) , Murderball (the inspirational story of handicapped athletes), Fast Food Nation (about how America got so fat), North Country (about the story behind the first sexual harassment lawsuit) and Syriana (about intrigue and avarice in the global oil industry).

Critical acclaim and box office receipts indicate that Skoll's confidence in "message" movie making is paying off.

In this era, which I have dubbed the Age of Transcendence, the zeitgeist – the spirit of the times – has risen to a higher and more complex level of expression than ever before in human history. Legions of people in mainstream society are coming to believe that the materialistic foundations of the past century stand in the way of creating a better world for all.

Formerly, only people at the fringes of society renounced materialism for an experiential connection to the world.

This historic shift in worldview on a society wide basis reflects the emergence of people over 40 as the adult majority, with those in midlife (almost entirely boomers) exerting the largest influence on the zeitgeist.

Successful marketing is obviously dependent on connecting the dots between an offering and perhaps the company behind it and the consumer. That makes it important to come to a full understanding of the makeup of people’s worldviews in today’s marketplace.

By worldview I don’t mean what people believe, but how they connect to the world. In the first half of life connections to the world tend to be highly egocentric: my connections are based on what I can get from them. In the second half of life, connections to the world more often are based in altruistic aspirations: what can I give to them.

The first half of life is mostly about the individual; the second half of life is (or should be) mostly about the group, or more broadly, the species. This is why we survived and other hominid lines in homo sapiens’ ancestry did not. The latter turned out to be more successful in preserving their tribes and indeed the species.

Today, we are witnessing the ongoing struggle to improve humankind’s condition as efforts to do so take us into new, higher and more complex states of human beingness. I’ll say more about this in my next post.

New Hollywood Genre: Message Movies

Have you heard about Participant Productions? If you haven’t you should know about this nontraditional film company. Under founder Jeff Skoll, Participant Productions is nullifying the classic Hollywood advice that if you want to send a message, call Western Union. People supposedly don’t go to the movies to get lectured at but for entertainment.

But Jeff Skoll, with an estimated $$2 billion fortune earned fas the number two employee of E-Bay, resigned as its first president to take up the mission of changing the world through film.

Skoll's productions include An Inconvenient Truth (the Al Gore global warming documentary), Good Night and Good Luck (the story of Edward R. Murrow’s attack on McCarthyism) , Murderball (the inspirational story of handicapped athletes), Fast Food Nation (about how America got so fat), North Country (about the story behind the first sexual harassment lawsuit) and Syriana (about intrigue and avarice in the global oil industry).

Critical acclaim and box office receipts indicate that Skoll's confidence in "message" movie making is paying off.

In this era, which I have dubbed the Age of Transcendence, the zeitgeist – the spirit of the times – has risen to a higher and more complex level of expression than ever before in human history. Legions of people in mainstream society are coming to believe that the materialistic foundations of the past century stand in the way of creating a better world for all.

Formerly, only people at the fringes of society renounced materialism for an experiential connection to the world.

This historic shift in worldview on a society wide basis reflects the emergence of people over 40 as the adult majority, with those in midlife (almost entirely boomers) exerting the largest influence on the zeitgeist.

Successful marketing is obviously dependent on connecting the dots between an offering and perhaps the company behind it and the consumer. That makes it important to come to a full understanding of the makeup of people’s worldviews in today’s marketplace.

By worldview I don’t mean what people believe, but how they connect to the world. In the first half of life connections to the world tend to be highly egocentric: my connections are based on what I can get from them. In the second half of life, connections to the world more often are based in altruistic aspirations: what can I give to them.

The first half of life is mostly about the individual; the second half of life is (or should be) mostly about the group, or more broadly, the species. This is why we survived and other hominid lines in homo sapiens’ ancestry did not. The latter turned out to be more successful in preserving their tribes and indeed the species.

Today, we are witnessing the ongoing struggle to improve humankind’s condition as efforts to do so take us into new, higher and more complex states of human beingness. I’ll say more about this in my next post.

The United States of Wal-Mart

The day may be not far off when some begin referring to the world’s largest retailer as the United States of Wal-Mart.

Under CEO Lee Scott Wal-Mart increasingly appears to be launching initiatives to address items on the nation’s social agenda that government is struggling with, such as the rising costs of healthcare.

Yesterday, Wal-Mart announced that it was dropping the price on generic drugs to $4.00. Two years ago, my monthly prescription costs ran about $150. Then I switched from my local Safeway pharmacy to Costco and my monthly bill dropped to around $50.00. Now, under the new Wal-Mart program, my tally would drop to $20.00.

Earlier this year, Wal-Mart struck a deal with Posit Science, which has developed a brain fitness program that has been scientifically proven to significantly increase brain performance after age 50. Supporters of the program believe that many older people will not only achieve stronger mental well being but physical well being as well.

The current issue of Fast Company carries a story about how Wal-Mart is taking on the challenge of dramatically cutting back consumer demand for electricity. It will shortly be promoting on a nationwide basis the replacement of incandescent bulbs with the new spiraling fluorescent bulbs.

What does that mean in energy savings? Here is the Fast Company article’s answer:

If every one of 110 million American households bought just one ice-cream-cone bulb, took it home, and screwed it in the place of an ordinary 60-watt bulb, the energy saved would be enough to power a city of 1.5 million people. One bulb swapped out, enough electricity saved to power all the homes in Delaware and Rhode Island. In terms of oil not burned, or greenhouse gases not exhausted into the atmosphere, one bulb is equivalent to taking 1.3 million cars off the roads.

When we began writing Firms of Endearment (due out in January from Wharton School Publishing) Wal-Mart served as our foil, a negative exemplar in several aspects of what a company should not be. However, even as we were headed toward the finish line, Lee Scott was beginning to reflect a stronger social conscientiousness in Wal-Mart operations. Accordingly, we struck out our strongest criticisms and suggested that Wal-Mart, too, might some day become an FoE.

Wal-Mart’s power to change the human condition is almost like that of government. It economic power is berath-taking: annual sales account for over two percent of the national gross product. It has been credited with shaving at least one percentage point off of inflation over a sustained period.

Now that Wal-Mart is giving serious attention to the healthcare needs of America, taking actions to decrease human degradation of the environment, and looking at other ways it can serve the social agenda, we should keep in mind that its sheer size inevitably means significant progress.

Many people still view Wal-Mart’s nascent turnabout in social conscientiousness as a PR ploy. But if it is, it seems to be a win-win ploy.

Wal-Mart's (Possible) Epiphany

Wal-Mart CEO H. Lee Scott said earlier this year, “The question of how to assure that American capitalism creates a decent society is one that will engage all of us in the era ahead.”

Who among the legions of Wal-Mart detractors is willing to put stock in Scott’s implicit dedication to address the question he posed?

I, for one – but very tentatively of course.

Charles Fishman, presents a sweeping picture of the good, the bad and the just plain ugly in the Wal-Mart economic ecosystem in his recently released book, The Wal-Mart Effect. I have just finished reading an excerpt in Wharton’s journal, The Academy of Management Perspectives. The excerpt leaves me with hope that fundamental change benefiting society at-large in a new kind of way is on the way from Wal-Mart. I say new kind of way because even Wal-Mart’s strongest critics acknowledge the company’s positive impact on household budgets.

In our new book, Firms of Endearment, we write about Toyota’s ruthless past when it strove at all costs to ratchet up productivity day-by-day with little concern for its workers' well being. Workers were even penalized for taking toilet breaks. Today, Toyota is a model of compassionate concern for employees, one of the reasons we named it a firm of endearment or FoE.

Wal-Mart is sending signals that suggest it may have experienced an epiphany of sorts. What started out as a PR campaign to counter the rising tidal wave of criticism for exploiting workers, suppliers and communities could morph into one of the most powerful forces for socially responsible change in Corporate America.

No one can doubt Wal-Mart’s capacity to change the course of entire industries. Fishman points out, for example that in the early 1990s Wal-Mart demanded that its suppliers of personal products no longer box up such products as deodorants, shampoos and so on. This moved increased shelf capacity, saved a nickel per unit, which Wal-Mart shared with consumers and suppliers, left untold numbers of trees standing, and saved many gallons of fuel used in shipping the extra weight that boxes added.

The scale of Wal-Mart is almost beyond grasping. It accounts for 2% of the nation’s GDP. It is the planet’s largest employer. On a worldwide basis, customer visits add up to over 7.5 billion, over a billion more than the entire population of earth.

Wall-Mart's guiding vision is "everyday low prices everyday!" Fishman says Wal-Mart has never violated that promise, even after decimating its competition. Now, Wal-Mart CEO Lee Scott seems to be recognizing that as admirable as the vision behind that slogan is, everyday low prices, everyday! is no longer enough. That Wal-Mart will begin using its vast power for the common good in a broader fashion than savings on household budgets seems more and more to a joyful possibility.

Could the FoE bug have bitten Lee Scott? It has happened before in other companies, as we report in Firms of Endearment.  Who is to say it can’t happen at Wal-Mart?

DBW

 

Is Green Good for Shareholders?

The arguments go back and forth from an investor’s perspective – “Is green good for shareholders or not?”

 Certainly in contemplating GE’s ecoimagination initiative announced earlier this year by CEO Jeff Immelt one must look at the green movement as no longer being on the cultural fringes of society. It is not likely that Immelt is going to take GE in a direction that will cost shareholders.

 More recently, and no less impressive, is the policy adopted by the prestigious investment bank Goldman Sachs to bring all 22,000 of its employees into a green mindset with a handbook all receive to guide them in carrying out their job duties.

 Goldman’s green policy goes well beyond the Equator Principles, a set of guidelines for assessing environmental and social risks of investments. Bankers worldwide have voluntarily committed themselves to the Equator Principles.

Ilyse Hogue, global finance campaign director for Rainforest Action Network which advised Goldman on its green policy observed, “This policy helps disintegrate the illusion of the wall between the economy and environmental integrity. More details can be seen in the June issue of Fast Company.

I recently had a conversation with a community developer client who said no studies have yet shown that being green in the housing business helps sale. Thinking about the green policies of GE, Goldman and other major players I advised him to continue thinking green because the time is not far into the future when the costs of not being green will be easily measurable. Especially considering the new aggressive approach of Wal-Mart CEO Lee Scott in turning that retail behemoth toward the green side of life.

DBW

The Self-Actualization of Business

(First of a series. In this series we examine epochal changes taking place in the bedrock of capitallist business culture. These changes bear consiiderable familiarity to the values that Abraham Maslow attributed to people who had reached the lofty heights of self-actualization. The postings in this series are adapted from Firms of Endearment© 2006 – which means our publisher will get upset if it sees the material in this series appear elsewhere without permission.
_______________________

It has become fashionable to view recent changes in people’s worldviews as a product of 9/11. However, the events of that infamous day simply brought into sharper focus changes already reshaping the world.

Newspaperman John Perry, former White House speechwriter and editor of several newspapers, views the roiling waves of change sweeping over us as major realignments in science, technology, medicine, education, the arts, religion, economies, demographics, social systems, governments, and in institutions, private and public, the world over. Perry believes we are in the midst of a society-wide moral renaissance:

Most compelling of all, fundamental beliefs and value systems are realigning. On balance, most of those realignments are for the good. This is, accept it or not, actually becoming a better world – and at no previous time in modern history has that statement been possible.

Despite daily large font headlines calling attention to serious mischief in every institutional category, evidence of a moral renaissance courses through contemporary literature. With more than 22 million copies sold, Rick Warren’s The Purpose Driven Life, a book about higher purpose in life than indulging one’s worldly self, has become the best-selling non-fiction hardback in history. People are hungrier than ever for a durable sense of meaning in their lives. This is a defining characteristic of the Age of Transcendence.

In the business book category, recent “morality” titles include Mihaly Csikszentmihalyi’s Good Business: Leadership, Flow and the Making of Meaning; William Greider’s The Soul of Capitalism: Opening Paths to a Moral Economy; Richard Barrett’s Liberating the Corporate Soul: Building a Visionary Organization; and Marc Benioff and Karen Southwick’s

Compassionate Capitalism: How Corporations Can Make Doing Good an Integral Part of Doing Well. Benioff and Southwick speculate about how the world would change for the better if every company donated a meagerly one percent of its sales, one percent of its employees’ time and one percent of its stock to better the communities in which they operate.

Business has yet to broadly come to terms with the ebbing influence of materialistic values on what people want from life that is the inevitable result of an aging society. However, this sea change in values is changing the calculus of supply and demand in large ways.

In psychoanalyst Eric Fromm’s terms we are transitioning from a having society to a being society. Having societies are steeped in self-centeredness and materialism. Being societies have an others-centered focus, and are deeply vested in high ground moral values.

The consumer economy has been grounded in a materialistic having focus for a full century. That focus is now being diffused by rising desires for a sense of meaning that cannot be drawn from material things. Consumers may still want a given product, but along with that product many want a high road experience that connects with their more mature being focus. For example, shoppers at pricey FoE Whole Foods pay substantially more than they would pay for eggs at Kroger’s just for the good feeling that they are doing right by purchasing eggs from free-range hens.

Obviously, material appetites are not disappearing from society. Materialistic values and behavior are a fact of life. Young people in particular will always have hearty materialistic appetites. They express their identities and give evidence of their accomplishments and potential through the material things they acquire. But mainstream culture increasingly reflects the being focus that emerges at upper levels of psychological maturity as the thrills of “things” ebb. This is dramatically changing the calculus of supply and demand and challenging companies everywhere to reexamine the business they are in.

DBW

Coke's Potemkin Village

Yesterday, it was announced that Warren Buffet has resigned from Coke-Cola’s board after 17 years of service. The reason given was time demands of new acquisitions by Buffet’s Berkshire Hathaway. But is there another reason? Could it be that Buffet with 8.3% of the beverage giant’s stock doesn’t believe Coke will solve its deeper problems anytime soon?

Coke is a brand in trouble. Nearly everyone who studies publicly traded companies knows it. In the four years leading up to 2005, the brand’s value fell an average of 9% a year. Figures are not yet in for 2005.

Some of my friends are former Coke employees who think they know why Coke is a troubled company. First is arrogance born of being at the top for so long as the world’s most valuable brand. Company executives project a know-it-all aura that closes their minds to a) seeing what Coke’s problems really are, and b) what will turn things around.

Secondly, Coke is a numbers-driven company that sees employees as replaceable pawns, its bottlers as something akin to indentured servants and consumers as prey. In short, Coke is about as far away from being a firm of endearment as one could imagine for the world’s once most valuable brand.

Another announcement made yesterday indicates that. Fifty 50 bottlers are suing Coke for a far-reaching breach of contract. The company made a deal with Wal-Mart to sell its Powerade sports drink directly to the retail behemoth. Reported AdAge.com, “Coke bottlers fear the move would violate their territory exclusivity and make it easier for the company to move to warehouse distribution with other products. They also contend they’ve had a contract with Coke since 1994 that prohibits warehouse delivery of Powerade to retailers.”

By cutting out the bottlers, Wal-Mart’s gross margin grows from 20% to 30%. This is a classic violation (pun intended) of the FoE principle of aligning stakeholders interests such that one stakeholder group doe not benefit at the material expense of another stakeholder group. Independent bottles made Coke the world’s most valuable brand.

While we may think of the Coca-Cola Company as a benign descendent of the modest business Coke inventor pharmacist John Pemberton founded in 1886, it is not the company implied by its anthem, “I'd Like to Buy The World a Coke.” It is a hierarchical, command-and-control company operating behind a Potemkin Village façade. Margaret Mark and Carol Pearson writing in The Hero and the Outlaw, a first-rate book on brand archetypes, describe Coke as the Innocent. Yes, in marketing that is so. That’s why every time Coke tries to go to the edge, where Pepsi dwells, consumers bombard it with complaints. But inside, Coke is not the Innocent. And it’s more surreal than Real in the minds of at least some of the people I know who used to work in its Atlanta headquarters.

From the November 19, 2004 post: Coke’s chairman/CEO Neville Isdell proclaim(ed) “Coke’s Manifesto for Change” … (and his) objective to “double the value of the Coca Cola trademark within a decade by reviving the icon with advertising with a youthful point of view.”

Isdell is still living in the 20th century when advertising and PR cured all problems in the marketplace. Today’s consumers’ want real Real. Employees want to know they are appreciated. Suppliers want to be able to trust companies they serve. It’s all about the stakeholder business model followed by firms of endearment. On its present course, Coke’s brand value will continue to melt away. Do you think Warren Buffet knows that?

Posted by DBW

Why GM May Be Sliding Down the Slippery Slope toward Oblivion

With GM’s announcement that it’s cutting its dividend’s in half and executive salaries 30% to 50%, I suspect this wave of economic retreat is only the first of a string of retreats that will ultimately lead to the end of what was once the world’s largest company. Obviously, size isn’t everything when it comes to prospects for survival in the rough and tumble world of business.

Meanwhile, Toyota just reported a 34% jump in fiscal third-quarter net earnings. Predictions now abound that the Japanese automaker will pass GM in size over the next 18 months, and perhaps by the end of this year say some.

To date, I’ve not seen any report of GM officials, starting with chairman/ceo Rick Wagoner, in which anyone at the top admits to GM being the maker of its present, perhaps life-threatening problems. Such is the resistance of most companies in to look inward for the source of their problems threatening their very existence.

Toyota once operated in many ways like GM still does. It was hierarchical, command-and-control driven, and bent on exploiting workers to the maximum legally permissible extent. There was a time, for example, when Toyota penalized workers for taking rest room breaks.

But Toyota experienced an epiphany. Today it has a much more collaborative relationship with its workers than GM has. It has the same relationship with its unions, in both the U.S. and Japan.

In our research for Firms of Endearment, the executives of FoEs were united in believing that their greatest competitive advantage was neither product design, nor innovation. Nor was it marketing or service delivery, nor their employees. It was corporate culture.

FoE leadership seems to believe in what James Surowiecki calls “the wisdom of crowds.” In a book so named, Surowiecki argues, "Under the right circumstances, groups are remarkably intelligent, and are often smarter than the smartest people in them." That view is antithetical to core management beliefs in corporate cultures that support a hierarchical, command-and-control driven enterprise.

However, we found that FoEs have a remarkable agility for either quickly solving problems or getting out of the way of problems over which they have no control in part because of a corporate culture that respects the wisdom of crowds – in other words, the wisdom of their employees from top to bottom.

I’ve seen apologists for GM’s fumbling ways place the blame for the auto giant’s present travails on unions and particularly on health benefits that add $1,600 to every vehicle’s cost, pointing out that in Japan, the Japanese government picks up all health costs. They neglect to point out that those health costs are covered in part by higher taxes corporations pay in Japan.

We have concluded from our research that the shareholder-driven business model that GM exemplifies is outdated. The mindset that supports that model is ill suited for success in the 21^st century marketplace. The stakeholder business model followed by FoEs, by which a company seeks to align and serve the interests of all stakeholders – not just shareholders – seems to generally work better for reasons that we will detail in future posts. But one reason the stakeholder model is proving to be highly effective in this era of light-speed change is that it leads to quicker responses to challenging changes in conditions that arise, often with little warning.

DBW