Book Review - Firms of Endearment: : How World-Class Companies Profit from Passion and Purpose
Category Book Review
There's a difference when you fly Southwest vs. United. You feel different shopping at Costco than you feel shopping at Wal-mart. Why? That question is explored and answered in the book Firms of Endearment: How World-Class Companies Profit from Passion and Purpose by Raj Sisodia, Jag Sheth, and David B. Wolfe. This is one of those books that will cause you to think about why you feel as you do towards certain companies, and how those feelings translate into real profits.
Contents: A Whole New World; It's Not Share of Wallet Anymore - It's Share of Heart; New Age, New Rules, New Capitalism; The Chaotic Interregnum; Employees - The Decline and Fall of Human Resources; Customers - The Power of Love; Investors - Reaping What FoEs Sow; Partners - Elegant Harmonies; Society - The Ultimate Stakeholder; Culture - The Secret Ingredient; Lessons Learned; Crossing Over to the Other Side; Acknowledgements
On Wall Street, companies are usually judged on their profit. Squeeze as much out of your business as you can, cut costs wherever possible, and make sure you meet your numbers. To be sure, plenty of companies are successful under those rules (such as Wal-mart). But when you look at their performance over the last few years on the stock market, returns have been stagnant or have trailed the field. The alternative way to run a business is as a "firm of endearment" (FoE). These companies have a passion for what they do/sell, they have a strongly defined purpose for what they want to accomplish, and they look to contribute to society in more ways than just the quarterly dividend to shareholders. These FoEs, like Costco, Whole Foods, Harley-Davidson, and others, include stakeholders to mean all parts of society that they touch... shareholders, employees, the community, etc. The focus isn't on pure profit, but instead on contributing to the well-being of all the stakeholders. That's why a company like Costco can afford to pay their employees a living wage, have low turnover, and *still* turn a substantial profit. They have captured the hearts of their customer base, and that base will go out of their way to shop at Costco whenever possible. That's also why a company like Ikea can propose a new location and have nearly universal acceptance in the community, while a new Wal-mart location brings out protesters in force. There's obviously a lot more that differentiates FoEs from their counterparts in the marketplace, but once you recognize an FoE, you'll understand why they are successful by *not* following the same formula as everyone else.
It's tempting to think that all the FoEs covered in this book can do no wrong. That's not the case. JetBlue was/is an FoE that badly damaged their reputation during the winter when storms caused massive cancellations. It even led to the resignation of the CEO. Like other business books of this genre (In Search Of Excellence, From Good To Great), only time will tell how these companies will fare over the long term. It may well be that a decade from now, the stars of this book will have all fallen to the wayside. But I would venture to guess that the companies covered here will have a much larger margin of forgiveness than would other companies that are just focused on the next quarter...
This is a book that is highly recommended for anyone running a business. It should cause you to rethink the factors of success for your company, as well as point you in directions that could lead you to become an FoE in your niche.
There's a difference when you fly Southwest vs. United. You feel different shopping at Costco than you feel shopping at Wal-mart. Why? That question is explored and answered in the book Firms of Endearment: How World-Class Companies Profit from Passion and Purpose by Raj Sisodia, Jag Sheth, and David B. Wolfe. This is one of those books that will cause you to think about why you feel as you do towards certain companies, and how those feelings translate into real profits.
Contents: A Whole New World; It's Not Share of Wallet Anymore - It's Share of Heart; New Age, New Rules, New Capitalism; The Chaotic Interregnum; Employees - The Decline and Fall of Human Resources; Customers - The Power of Love; Investors - Reaping What FoEs Sow; Partners - Elegant Harmonies; Society - The Ultimate Stakeholder; Culture - The Secret Ingredient; Lessons Learned; Crossing Over to the Other Side; Acknowledgements
On Wall Street, companies are usually judged on their profit. Squeeze as much out of your business as you can, cut costs wherever possible, and make sure you meet your numbers. To be sure, plenty of companies are successful under those rules (such as Wal-mart). But when you look at their performance over the last few years on the stock market, returns have been stagnant or have trailed the field. The alternative way to run a business is as a "firm of endearment" (FoE). These companies have a passion for what they do/sell, they have a strongly defined purpose for what they want to accomplish, and they look to contribute to society in more ways than just the quarterly dividend to shareholders. These FoEs, like Costco, Whole Foods, Harley-Davidson, and others, include stakeholders to mean all parts of society that they touch... shareholders, employees, the community, etc. The focus isn't on pure profit, but instead on contributing to the well-being of all the stakeholders. That's why a company like Costco can afford to pay their employees a living wage, have low turnover, and *still* turn a substantial profit. They have captured the hearts of their customer base, and that base will go out of their way to shop at Costco whenever possible. That's also why a company like Ikea can propose a new location and have nearly universal acceptance in the community, while a new Wal-mart location brings out protesters in force. There's obviously a lot more that differentiates FoEs from their counterparts in the marketplace, but once you recognize an FoE, you'll understand why they are successful by *not* following the same formula as everyone else.
It's tempting to think that all the FoEs covered in this book can do no wrong. That's not the case. JetBlue was/is an FoE that badly damaged their reputation during the winter when storms caused massive cancellations. It even led to the resignation of the CEO. Like other business books of this genre (In Search Of Excellence, From Good To Great), only time will tell how these companies will fare over the long term. It may well be that a decade from now, the stars of this book will have all fallen to the wayside. But I would venture to guess that the companies covered here will have a much larger margin of forgiveness than would other companies that are just focused on the next quarter...
This is a book that is highly recommended for anyone running a business. It should cause you to rethink the factors of success for your company, as well as point you in directions that could lead you to become an FoE in your niche.
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