While many businesses making news today are doing so through outlandish venture capital funding, overpriced IPO offerings, and outrageous profits-at-any-price business strategies, just as many are quietly choosing to concentrate on a different set of values. George Zimmer, who has walked both sides of the public and private spectrum with Men's Wearhouse and is now at the helm of zTailors.com and generationtux.com explained it best when he offered this takeaway at a recent event for business owners in New York City, "Companies should be run with stakeholders, not shareholders in mind. " If you want to be truly successful, in the longterm, built-to-last sense, there are two stakeholders that must be continually cultivated, convinced, and engaged.
Stakeholder #1: Employees. Employees are the lifeblood any company. It doesn't matter if an employee is entry-level, management or somewhere in between. They are the people on the frontlines of our respective industry battlefields, marching our companies forward, step by step, and helping us win more and more marketshare with their energy, ideas, and execution. They need to be continually educated and trained so they always feel both well-armed and well-protected. They need to feel noticed, valued and rewarded for what they do on a daily basis--and this kind of attention can't come just through compensation, but also through feedback, recognition, and gratitude. It is only by getting to know our employees, by encouraging their talents, and by inspiring them to improve on their weaknesses that we can enlist our employees on a visceral level. In the process, we fortify our companies' staying power, because employees who feel personally and professionally in tune with the business and its mission are far more likely to think creatively, to work strategically, and to deliver consistently. And it's no secret that companies that deliver are companies that stick around.
Stakeholder #2: Customers. A lot of corporations seem to have forgotten that customers, rather than seed money, are the key to profits. Customers however, are never won for life. They must be earned, over and over again with every interaction. In a stakeholder focused company, a transaction with a customer is never about taking his money--it is about convincing him that he needs what the company has to offer on a much more profound level. When we satisfy his immediate desire for product satisfaction, we also fuel his desire in the larger sense for customer satisfaction. A customer who is convinced by his experience with a company becomes more than a client--he transforms into a vocal advocate for the company in question. Customers want the company they are buying from to recognize that they have a choice where they spend their money, that they are an important component to the company's success, and that they are individuals, not just part of a nameless, faceless mass of purchasers. It is only by making every product tweak, every marketing effort, every instance of customer service about the needs of the customer that we create a company with real staying power.
Want your company to be more profitable? Focus on taking care of stakeholders before shareholders.