American industry—those for-profit and non-profit organizations that provide the bulk of our society’s goods and services—has served us well, advancing the lives of people for over 200 years and helping to build a great nation. The foundation of this advancement is capitalism, which has as its premise, that the pursuit of “self-interest” benefits not only the individual but also society.
While this underlying premise has proved successful, it does have its limitations—and these limitations are increasing as our world becomes more complex, more interconnected and more interdependent. These conditions were exceedingly evident in the most recent financial crisis, where a few institutions—who absorbed substantial risks in the zealous pursuit of their own self-interests—hurt not only their own stakeholders but also had the potential to disrupt the world financial markets with disastrous consequences for all.
While I acknowledge that the pursuit of self-interest has benefited society, I also offer a new, more powerful paradigm—namely, the simultaneous pursuit of both “self-interest” and “concern for others.” This new orientation provides a guide for behavior that reflects both the greatest aspirations of humankind and the reality of the world in which we live. This paradigm is not in opposition to the industry structure that has fostered our historic success, but rather stands upon the shoulders of what has come before.
We can act according to this new paradigm by creating what I call EXCEPTIONAL ORGANIZATIONS—those which are:
1. Viable—in that they achieve their purposes and do so while acting according to society’s highest values.
2. Sustainable—by remaining viable over time.
3. Valued—in that all stakeholders—owners, employees, clients, providers and communities—see their association with these enterprises as being worthy, whereby they benefit to a significantly greater degree than they would with competing entities.
Such Exceptional Organizations foster the personal, professional and moral growth of their members and are, by definition, valued by society because society is one of their stakeholders.
An Exceptional Organization is potentially more powerful than a traditional organization because all of its members—by pursuing both their own self-interests and concerns for others—have a shared interest in sustaining the viability and value-creation of the enterprise.
This is in sharp contrast to members of a traditional organization, who, by acting only in their own self-interests, relate to the entity strictly on a transactional basis. Such members attempt to receive “the highest value for services rendered,” without regard for the enterprise as a whole or its other stakeholders.
Exceptional Organizations are also more powerful because their leaders focus upon long-term viability and value creation rather than attempting to optimize their own or any other stake-holder’s interests. By doing so, these enterprises are more likely to prosper and grow to the greater benefit of all.
By William F. Brandt, Jr.
William F. Brandt, Jr., is cofounder and former CEO of American Woodmark Corporation—the third largest producer of kitchen cabinets in America. His books include the winner of 21 Book Awards COMPASS—Creating Exceptional Organizations: A Leader’s Guide and COMPASS TOOL KIT, the teaching companion to COMPASS (www.WinterValePress.com ).
Copyright 2015 © William F. Brandt, Jr.