Every so often, I'll hear an argument for why companies shouldn't chase revenues, profits, and shareholder value. They should instead focus on being better employers, custodians of the environment, and all around corporate citizens.
Actually, I've got an even better question. Why should companies have to choose between the two extremes? Why not go for broke and do both? Is that even feasible, to shoot for both? I would argue that, to be successful these days, business leaders actually have to do both.
Take Google, for example. The search giant was rated the top company to work for in a recent poll and, last time I checked, it's stock had just hit a record high.
But then you've got to wonder, is Google a great employer because it's the hands-down leader in a high growth market and its business model mints cash? Or is the reverse true, that its financial metrics are stellar because its employees are engaged, well compensated, and generally ecstatic to work there?
Former happy Googler Marissa Mayer is certainly trying to replicate that situation at the helm of Yahoo. It's not a bad idea considering that Yahoo's employees have been dragged through the mud for years as CEOs and dozens of top executives have come and gone through one of the most well lubricated revolving doors in corporate history.
But even Mayer knows which side her bread is buttered on. She knows that her job is to kick-start Yahoo and get it growing again, to increase shareholder value and generate enough profits to keep both shareholders and employees happy and motivated. Which, in a nutshell, is a dance that all chief executives must learn, these days.
Learning the Dance
While that sounds like a Catch 22 or chicken-and-egg problem, it's really not. A wise CEO once told me that the answer to any chicken-and-egg dilemma is not to determine which one to do first or as a priority, but to do both at the same time. Indeed, he was right about that.
You see, when a company is stagnant, when it's growth trajectory flat-lines, that's a sign for employees, shareholders, customers--indeed, everyone--to start looking elsewhere. The reason for that is simple. Markets grow. And if you're not at least growing with the market, then you're effectively on the decline.
Something else inevitably happens to companies that aren't growing. Their products lose their differentiation and become commodities. Their profit margins erode. Their profits decline. They generate less cash. And over time that produces a slow, steady decline.
Just look at Radio Shack, Kodak, Sony, Nokia, and Best Buy. Those are just the big names we're talking about these days. There are literally hundreds, even thousands of companies big and small that lost their edge.
And one thing I can tell you for sure: it isn't any fun working for a company in that situation. There's less security, fewer perks, and fewer exciting projects to work on that'll allow you to achieve any kind of personal or professional growth.
Not only that, but it's risky for customers to buy from a company in decline, as well. Sure, you might get a better deal, a discount. But you know what they say: You get what you pay for. And who knows if it'll be around to provide support if anything goes wrong?
Likewise, investors are anything but forgiving creatures. They've abandoned those declining names without one bit of regret, I can tell you that.
The point is this. If there was ever a time when executives and business leaders could afford to just focus on one thing, one metric, those days are over.
Companies need great products to attract customers. They need to grow revenues and gain market share to thrive. They need profits to fuel growth. They need employees to be engaged and empowered to develop great products that attract customers. And the wheel goes round and round. That's how it really works.