By William F. Brandt, Jr.
The traditional view is that a business competes and wins by pursuing its own self-interests – or as Charles Darwin stated in his book The Origin of the Species (1859), that creatures are naturally selected to survive based upon their fitness in life’s competition. Thus, the phrase “Survival of the Fittest,” although not coined by Darwin, came to symbolize his work.
Earlier, Adam Smith in his Wealth of Nations (1776) had argued that individuals pursuing their own self-interests will not only provide themselves the maximum benefit, but will also create—through “the invisible hand of the marketplace”—the greatest benefit to the overall community.
And in the 1987 film, Wall Street, the central character, Gordon Gekko sums up traditional business self-interest by affirming his business philosophy to a crowd of shareholders, that “…ladies and gentlemen, greed, for a lack of a better word, greed is good. Greed is good, greed is right, greed works, greed clarifies, cuts through and captures the essence of the evolutionary spirit. Greed in all its forms—greed for life, for money, for love, for knowledge has marked the upward surge of mankind, and greed, you mark my words, will save Teldar Paper…(the company that Gekko is maneuvering to buy).”
The problem with the traditional view (survival of the fittest – greed is good) is that it is applied not only to economic institutions that naturally compete for revenues and scarce resources, but to all parties in all situations. The goal is to “win” – even with employees, suppliers, customers and other stakeholders of the institutions. The assumption is that all parties are in conflict with each other, and each pursuing their own respective self-interests.
I believe, however, that to be successful, a company must not only understand how to compete but also how to cooperate—where parties mutually benefit by sharing a concern for one another. The challenge is in knowing when to use one approach over the other.
Adam Smith, it should be noted, even modified his philosophy in a second book, The Theory of Moral Sentiments. It opens with the following sentence: “How selfish so ever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.” He stated that part of being a moral person was having a concern for others, as well as for oneself.
Charles Darwin also wrote a second book, The Descent of Man, in which Darwin postulated that a key part of humankind’s successful evolution was our ability to cooperate with one another. Based upon their writings, neither Smith nor Darwin would endorse a blanket philosophy of “greed is good.” And this is reinforced by the ending message of Wall Street – when Gordon Gekko finds that his world-of-greed has totally collapsed…
As part of a cultural-change initiative at my company, American Woodmark, we strove to interact with all stakeholders on the basis of cooperation first and conflict second. This approach was initially disorienting to union representatives, with whom we had historically acted as hard-nosed adversaries, and to our suppliers and customers, whom we had treated on a win/lose basis when negotiating prices paid for the services rendered.
However, we engaged the union to give workers greater responsibility on the shop floor for decisions previously made by management. And we initiated formal partnership programs with vendors and customers to better understand the details of each others’ businesses to find opportunities for mutual gain. While the elements of competing self-interests were still very much present, they became of lesser importance to the overall relationships.
It would be naïve to assume that some level of cooperation is always possible (some individuals are so self-focused, that the only way to relate to them is on the basis of power). For example, at American Woodmark, we once were ending a relationship with a major customer who owed us a considerable sum and whom we feared would stop paying us once his phase-out needs were met. For our protection, we refused to send him any more product until his account was paid in full, and we made subsequent shipments on a cash-before-delivery basis.
So, while competition and self-interest are necessary for a company’s survival, to be truly sustainable an enterprise also needs to embrace the principles of cooperation, concern for others and partnership ― and knowing when to use one orientation over the other.
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 22 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.