Part One of the Force of Distinction series
There was a time in business when the word company enjoyed an intimate connection to its linguistic derivative: the word companion. Companies were made up of closely knit groups of people with common values, led by a founder and organized around a vision created to make a difference in the world and add value to all its stakeholders. The Falun Copper Mine in Sweden is an example. Reputedly the first "modern" corporation, it was founded over a thousand years ago and survived as an important commercial entity until 1992. In its 1347 charter, miners were given company shares to foster the idea and importance of their companionship. In those times, companies each had their own spirit, attracted their own kinds of people, and served their own markets in distinctive ways. Companies were inherently different from one another, and so were their cultures and products.
However, with its exhilarating "new" manufacturing methods, industrialization eventually sapped the human spirit out of the idea of a company--so much so that Frederick Winslow Taylor saw employees as nothing more than moving parts or cogs of a machine who, he writes in Principles of Scientific Management (1911), should "more nearly resemble in (their) mental makeup the ox than any other type." Meanwhile, Henry Ford commented enthusiastically on "the reduction of the necessity for thought on the part of the worker."[i] The world of business had been permanently transformed.
Between Taylorism at the beginning of the 20th century and the Michael Hammer-led reengineering of the corporation toward the century's end, companionability, along with any place for values and a higher purpose in business, disappeared. These were replaced by the idea that the purpose of business--its sole and dominant function--was to operate efficiently and generate value for its owners. In 1970, Milton Freedman castigated purveyors of the idea that business has a social responsibility, "a corporate executive ... has direct responsibility to his employers. That responsibility is ...to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom." It is not surprising that today's era of the disengaged employee quickly followed.
Gallup's 2013 worldwide study of almost 50,000 businesses and about 1.4 million employees found 63 percent of workers in 142 countries feeling disengaged. That means "they lack motivation and are less likely to invest discretionary effort in organizational goals or outcomes." And of that 63 percent, 24 percent are "actively disengaged," meaning "they are unhappy and unproductive at work and liable to spread negativity to coworkers." "Employee engagement strongly relates to key organizational outcomes" such as productivity and profitability, along with talent retention, and drives up healthcare and associated personnel costs. Engagement numbers in the U.S. are not significantly better. Even more disturbing was the The How Report, a study conducted by the LRN Organization with the Boston Research Group and Research Data Technology. It found that CEOs are six times more likely than "average workers" to believe they work in a company where people are inspired. Employees said they were primarily coerced (84 percent) or motivated (12 percent) by carrots and sticks at work rather than inspired by values and a commitment to a mission and purpose (4 percent). The cost of employee disengagement to the U.S economy has, according to Gallup's 2012 report, been in excess of $450 billion in lost productivity.
The relentless focus on efficiency, growth, and shareholder value hasn't even delivered great results to shareholders, according to Roger Martin, former Dean of Toronto's Rotman School of Management and Premier's Chair in Productivity and Competitiveness, in his 2010 HBR Article. Many others agree with him. Martin argues that even Jack Welch, master of shareholder value maximization who increased GE shareholder value by $471 billion during his tenure as CEO, left shareholders with questionable long term benefit.
Over the past ten years, though, we have witnessed a new force emerging in business that is capable of infusing even greater meaning into business than ever before. More than just giving greater meaning to business, it is also generating growth in the hyper-competitive and commoditized world of sameness in which business leaders need to perform and deliver results. The force I am referring to is the force of DISTINCTION, an idea you will be hearing a lot more about from us in the coming months. With the new force of DISTINCTION, corporations are captivating their customers and stunning their competitors in astonishing ways.
[i] Geoffrey Colvin, "Managing in the Info Era," Fortune Magazine, March 26, 2000.
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