Harvard Business Review in its Jan/Feb 2010 issue published an illuminating article by Roger Martin, dean of the Rotman School of Management at the University of Toronto. In The Age of Customer Capitalism, Martin argues that companies that make shareholder value their top priority often don't do as well as companies that focus first on satisfying customers.
According to Martin, one way to break down modern capitalism is into two eras. The first era, beginning in 1932, was characterized by the notion that firms need professional management (management should be divorced from ownership). The second era, beginning around 1976, is characterized by the belief that the purpose of business is to increase shareholder value.
The problem, as Martin details, is that shareholders are no better off in the second era than the first. With all the attention on shareholders, you would think there would be long-term metrics to validate the focus. Not so. From 1933 to 1976, shareholders of the S&P 500 earned compound annual real returns of 7.6 percent. From 1977 to the end of 2008, they earned real returns of 5.9 percent per year.
Shareholder value is largely driven by expectations about the future. The implications for managers' actions are clear. To increase shareholder value, one needs to raise expectations about the future, which is often done through rapid growth.
Martin cites GE and Coca-Cola under Jack Welch and Roberto Goizueta, respectively, two of the most iconic and successful figures of the shareholder movement. Both chiefs generated incredible market capitalization, but the executives who followed them "have struggled to deal productively with the legacy of rapid growth and frenzied acquisition." Growth works for a while but eventually catches up with firms, which cannot raise shareholder expectations indefinitely through such means.
Two companies that have pursued customer satisfaction as their top priority over decades and have performed admirably are Johnson & Johnson and P&G. In the case of Johnson & Johnson, the company's steadfast dedication to customers, expressed eloquently in its credo, which dates back to 1943, has guided the firm through serious storms, most notably the Tylenol poisoning cases of 1982.
For both companies, shareholder value is a by-product of customer satisfaction and not the top priority for the firms. J&J and P&G both lead their respective sectors in creating shareholder value over the long term, helping to demonstrate that focusing on customers over shareholders often returns greater rewards to owners.
My favorite anecdote from the article involves Research in Motion (RIM), maker of the BlackBerry. As the author recounts, back in 1997, just after the RIM's initial public offering of stock, the founders agreed that anyone who talked about share price at work would be obligated to buy donuts for the entire organization. When the company was small, mistaken pronouncements about the stock price were not as costly. But in 2001, when the chief operating officer slipped publicly, he was forced to buy donuts for all 800 employees.
The debate over the purpose of business and primacy of shareholder value intensifies. The conversation is healthy, as companies, business schools, governments, even the Vatican, search for ways to reform capitalism so that it increasingly delivers value to customers, pays fair returns to owners, and serves other societal stakeholders. What are your thoughts about the ultimate purpose of business?
John Terrill is the Director for the Center for Integrity in Business at Seattle Pacific University
Biblical Texts: Genesis 28:10-22 and John 1:43-51
[Presented by Uli Chi at Seattle Pacific University's chapel service, April 13, 2010]
I was always a bit of geek growing up. I was the kid who read advanced math and physics books in junior high when others were doing more age-appropriate things. If you had met me in high school - sad to say - you might have seen me sporting a pocket protector with too many pens and a slide rule hanging from the belt of my too short jeans. The fact that I can appear before you dressed appropriately today is a tribute to the mercy and grace of God as it has been embodied in my wife, Gayle, to whom I owe a great deal, not least of which is being spared an appearance on the TV show "What Not to Wear."
Not surprisingly, I studied math and computer science at university. By then Christ had already brought me to himself, and I became not only an avid technophile but also a committed follower of Jesus. Like many who came to faith without a significant faith heritage, I was eager to live out my faith in the context of the vocation to which I was called - which in my case was the business of technology. Still, it was a struggle. While I was an eager student - instead of reading advanced math and physics books in my spare time, by then I was busy reading books on theology and the bible - I nevertheless found much of what I was learning remote to my budding career as a technologist and a business person.
But, there were moments that encouraged me along the way. One in particular that I remember was the wonder I felt when I wrote and saw the result of my first piece of computer software. That experience, it seemed to me, was the closest thing to participating in God's act of "ex nihilo" creation that I had ever experienced - what started as a mere idea in my mind had become an actual physically reality on my computer screen! It was quite remarkable and something I've never forgotten. Looking back, it seemed that for the first time, I saw the coming together - the intersection - of who God is and what he does and who I am and what I do. In other words, I finally saw the connection between God, as Creator of all things, and me, created in his image, a creator (with a little "c" of course!) in the work that he had assigned to me.
That moment of insight, I have come to believe, is a kind of foretaste of what is at the heart of God's ultimate purpose for the world in which we live. As the whole biblical narrative and our recent celebration of Jesus' resurrection reminds us, God's purpose and creation's destiny is the coming together - the uniting - of heaven and earth where we will recover our fully human identity and vocation, to use the biblical metaphor, of being priests and stewards of creation. In the meantime, we are called live in light of that future - to have our lives, in the present, become a place and time of intersection between heaven and earth.
So what does this mean and how do we live this out, particularly in my vocation of business? And, what do these ancient biblical texts from this morning have to say to us in the 21st Century? We don't have a lot of time this morning so I would make just a couple of observations from the texts followed by a few insights on how we might live this out.
First, each of these texts speaks of a place and a time of intersection between heaven and earth - whether Jacob's "ladder dream" describing a place where the traffic of heaven intersects (in a surprising and perhaps disturbing way) that of Jacob's "run for your life and go find a wife" journey to Haran, or Jesus' more cryptic reference to a similar place, except that Jesus himself becomes the focal point of that intersection. It is clear from each context that the place of intersection is neither easily recognizable nor plainly visible. To quote Jacob, "God was in this place and I knew it not!" And, while we don't have a record of Nathaniel's reaction to Jesus' comments, he, like many other students of the Bible after him, likely was scratching his head wondering exactly what Jesus was talking about. For our purposes this morning, it is enough to observe that both the Old Testament and the New Testament speak of a God who, sometimes despite appearances, is not "far off" or "absent" (or even worse "non-existent") but who is engaged in our everyday life and business in hidden ways that require revelation and wisdom to see. This is profoundly important to all of us who live in a culture (particularly in business) that - in a phrase and with due apologies to Brother Lawrence - "practices the absence of God."
My second observation from the texts is that neither Jacob nor Nathaniel exhibited any particular spiritual sensitivity or insight prior to the encounter. Even worse, neither were particularly admirable characters - Jacob on the run from stealing his brother's birthright and Nathaniel expressing some form of first century bigotry regarding people from Nazareth. I don't know how you react to this observation, but it always gives me great hope that God did not disqualify "people behaving badly" - even business people! - from experiencing their own "intersection of heaven and earth" as part of God's work of transformation in their lives. So if the thought of experiencing the intersection of heaven and earth seems a bit too intimidating to you this morning, you are in good company.
So how do these observations inform and help us today, particularly for those of us who are in business? To begin with, business is often viewed with suspicion as a "godly vocation". This is deeply unfortunate for it has lead to the alienation of many in business whose life in business is viewed as a "means to an end" in the context of God's work. "We have to do work in business so that we have money and time to give to the God's real work in ministry and mission." It is a wholesale abdication of our Christian responsibility and mission to reclaim all of life for God's kingdom. Thankfully, this is not a view shared here at SPU. The Business School's vision of "Another Way of Doing Business" is in the vanguard of a thoughtful recovery for this generation of what business as a biblical vocation looks like. Those of you who have had the privilege of studying business here have a wonderful start in living integrated lives in business.
But make no mistake - the challenge of living out that vision will be neither simple nor easy. I think the primary reason for this can be found in the biblical texts with the imagery of God (in the Old Testament text) and Jesus (in the New Testament) being on the earth rather than in heaven, i.e., they are at the bottom of the "angelic ladder" rather than at the top. Already hinted at in the Old Testament and fully realized in the New, the radical nature of the Incarnation means that those of us who have business as a vocation are called not only to enter fully into the messiness that is the reality of life in the business world (that of course is in itself an important insight from the Incarnation), but to also enter that messy life with a radically different vision of what (to mix the biblical metaphor with a contemporary one) the "ladder of success" looks like. As the Greek philosopher Heraclitus said (although he could have hardly imagined the extent to which Jesus would demonstrate its truth) "the way up and the way down are one and the same". Living out this embrace of our vocation in a way that goes against almost all the assumptions of our culture is, I think, the great challenge in front of all of us who seek to live in the intersection of heaven and earth in our generation and will require all the creative thought, mature discernment and passionate love that we can muster, individually and collectively.
A second insight from my observations of the texts is, as all our wise spiritual guides would reminds us, the importance of the virtue of humility. Given who Jacob and Nathaniel were, the conclusion that neither had much to boast about should be quite self-evident. But, Jacob became one of The Patriarchs, and Nathaniel became one of The Twelve, so we as we become successful in our business vocation easily lose sight of how to, simultaneously "live at the bottom" as we "reach the top" of our profession From personal experience, I know that actual business success creates innumerable possibilities for pride - living in an economically luxurious and isolated world without meaningful connection to human needs and suffering; having the world revolve around our needs, wants and desires; the almost "godlike" ability to tell people and whole organizations what to do and have them go do it; the list goes on... A good friend of mine who is a New Testament scholar reminds me that there are more biblical texts on money and humility than there are on sex and alcohol. Those texts all remind us of the importance of staying rooted in a life of humility - to remain at "the bottom of the ladder" (where, remember, God and Jesus are in today's texts!) no matter where success in our vocation takes us.
I want to say one more thing on humility, particularly to those of you who are, or aspire to be, in leadership in business, academia or elsewhere. Speaking from personal observation and experience, the practice of humility in leadership as one of the radical Christian virtues - even among those of us who are Christian leaders in business, academic and other institutions - is quite rare and difficult. We have a need to be right and to have our own way that runs surprisingly deep and is remarkably pervasive in each of us. And, only the grace and virtue of humility can save us and those whom we lead from ourselves. Perhaps the most difficult lesson of humility is discovering - as the apostle Paul once did on the road to Damascus - that the way in which we are carrying out what we think is our God-given vocation can be, in fact, deeply misguided. I have had some experience with this myself and with other friends in leadership where we have discovered much to our sorrow - in the words of the poet T.S. Eliot -
... the rending pain of re-enactment
Of all that you have done and been; the shame
Of motives late revealed, and the awareness
Of things ill done and done to other's harm
Which once you took for exercise of virtue.
Then fools' approval stings, and honor stains.
I think one of the distinctively Christian characteristics of leadership - whether in business, academia or elsewhere - is this willingness to go to the dark place in ourselves which we once thought was light. Or, the willingness to see and hear, in the words of the poet, "of things ill done and done to other's harm which once you took for exercise of virtue". This willingness to face our own sins squarely without flinching - the acknowledgement that the praise and honor we thought we were due was in fact the "approval of fools" and a stain of dishonor - is, in some ways, one of the highest price of humility for those of us in leadership. And, as Jesus' beatitude reminds us - particularly those of us who have the stewardship of leading communities and organizations - it is the poor in spirit who will inherit the kingdom of God.
The third and last insight from my observations from the text is that we need to cultivate an attentiveness to these places and times of intersection between heaven and earth. Like Jacob and Nathaniel, we are not very good at this. However, these places of intersection, when recognized, invariably lead to a flourishing of creativity. Creativity, as I discovered early in my Christian journey, is one of the great gifts of our being made in the image of God. It is also the singular most important quality to any thriving business or organization. We need to cultivate in ourselves and in the organizational cultures we are building a renewed appreciation for and recognition of those places and times where we experience this kind of intersection. In my experience, this is slow but rewarding work. And, it can be discouraging and painful work, for it requires us to enter into the messiness of life with a radically different view of success and with the personally costly virtue of humility. But, in the end, this is what we've been called to do.
I close with the words of T.S. Eliot:
... to apprehend
The point of intersection of the timeless
With time is an occupation for the saint -
As Jacob discovered long ago, this "point of intersection of the timeless with time" changes peoples' lives and can radically re-form their vocation. To "apprehend" that place of intersection is worthy of our life's attention. But, to fulfill that occupation of the saint doesn't mean necessarily becoming a missionary, a pastor, or even a doctor or a nurse. As admirable as those vocations are, I am deeply persuaded that the occupation of business, perhaps particularly in this century, is an equally worthy occupation for the saint. May God grant that many of you hear God's call in that direction.
© 2010 Uli Chi
About the Speaker: Uli Chi serves on the Executive Committee for the Center for Integrity in Business. Uli's professional interest is in the field of computer science and mathematics. Uli, who holds a doctorate in computer science, is currently founder and chair of Computer Human Interaction, a software company that develops 3-D, virtual reality software that is both comprehensive and intuitive to the consumer.
Chi serves as chair of Regent College in Vancouver, B.C., as well as a board member for The Max De Pree Center for Leadership at Fuller Seminary in Pasadena and Highline Medical Center in the Seattle area. Chi was born in Asia, spent a few years in Europe as a child, and then settled in the U.S. Pacific Northwest. He is married to Gayle, and they have two adult children, Peter and Chrissa.
My good friend and mentor, Dr. Albert (Al) E. Greene Jr. died today. He was 93. He had lived a good long life, and was a faithful follower of Christ. He had become gradually weaker over the past few years, so it is difficult to argue that this was a surprise. But it will leave a hole for me and for many others whom he influenced. He had become my mentor and father figure after my dad had died, far too young, about 37 years ago. Al was like no one I had ever met before or since, and he changed my life.
I first met him in 1973 when he was superintendent at Bellevue Christian School. He used to give talks on Monday evenings at the school, and my wife, Nancy, and I attended them a year before our kids enrolled there. He presented a worldview that all of life was sacred. He talked about how, when we come to faith in Christ, we put on a new set of glasses. "Everything becomes new," he said over and over again.
But he didn't leave it at that. Instead he developed the subject in ways I had never heard before. For example, he suggested there were many ways of knowing. Science is wonderful and important, he would say, but it can tell us some things and not others. For example, from a scientific point of view, we may think we understand water when we know that it is H2O - two parts hydrogen to one part oxygen. But there is much more to water than this, because this scientific formula doesn't explain why a warm shower feels so good in the morning, why seeing water adds value to your home ("Unless the water is in the basement," Al would add with his wonderful sense of humor), or why water baptism brings a touch of God that we can't otherwise explain. He loved science and never downplayed its value, but always cautioned us to know its limits.
Al developed a seminar titled "A Christian Mind in a Secular Age," which I took several times, and later taught. He did an advanced course that I was able to take from him with four other people on Saturday mornings in the early1980s.
A Wide Impact
Al's teaching was well received in Canada and around the world. We were visiting in Indonesia a couple of years ago, and my wife met a woman at a church seminar there. The woman told my wife about the Christian school she had started based on a book from someone named Dr. Albert Greene. She was ecstatic when she learned that we knew him! She later came to Bellevue to meet him and get more of his insights.
He also taught me to never stop learning. He got his Ph.D. from the University of Washington in 1976, at age 60, when others were thinking of retirement. His topic, not surprisingly, was developing a Christian mind as a foundation for education. He did his research based on the work of the Dutch Christian philosopher Herman Dooyeweerd. Whenever he was asked about this he always added his warm laugh at the thought that he could do this kind of research at a public university.
Al was a life-long resident of the Seattle area, and one of the early settlers in Bellevue. He served on the mission field in China as a young man, coming home in the 1940s when Christians were chased from the country. Trained to be a pastor, he got into Christian education as a teacher almost by accident when his brother, Joe, was starting Bellevue Christian School in 1950. The teacher Joe had hired quit at the last minute and Al got pulled in to teach classes, drive a bus, and generally do what it took, along with his brother, to get the school started.
In China, Al had survived polio, and he walked with a limp the rest of his life. That did not keep him from long hikes in the mountains into his 70s. He amazed us all.
Al continued to read and feed books to me, including the last time I saw him last fall (he had moved about 80 miles north of Seattle a few years ago to live with his daughter, and I regret I didn't see him as often recently). He also showed me the draft of a book he was writing on rethinking Christian education. We always knew what to get him for his birthday - a Barnes and Noble gift card. We did this again for his birthday in October, and he sent this note:
Thanks for your and Nancy's visit last week. I enjoyed it ever so much. And thank you even more for your gracious Birthday Card with its very generous Gift Card from Barnes & Noble. You are too good to me, and I do thank you. I will enjoy the gift card.
Recently I have been writing a book titled, The Accidental Executive: Lessons in Business, Faith, and Calling From the Life of Joseph. From the foundation I had learned from Al Greene, I had started thinking about my own career at Boeing, and realized that though I was not a missionary or pastor, I was in full-time Christian service. And I was delighted to find, in the story of Joseph, one who was also called to the marketplace, in his case to be CEO of a large food distribution company in Egypt. Here is what I wrote last fall as I started the book:
I was raised on Bible stories, hearing them at home and church from as long ago as I can remember. Before I was five years old I could have told you many stories about Jesus, David, Joseph, Daniel, Esther, and Ruth.
What I have learned in adulthood, however, is that these stories can be seen through many lenses, and each lens can produce an entirely new way of seeing. My friend and mentor Dr. Albert E. Greene taught me this. What I will share with you in this book is a new look at the life of Joseph, son of Jacob, son of Isaac, son of Abraham.
I will miss not being able to share this book with Al. I will miss not being able to talk with Al. I believe his insights into God's creation are so important, and it is vital that others carry on his legacy.
In the end, however, this is not about Al Greene. One of his other strong themes Al taught was that all of us are made to be image bearers of God. We get into trouble when we think we are originals, rather than those who reflect God into our world. He used a wonderful graphic in his teaching, drawn by his son, Peter, showing a mirror reflecting honor back to God. A broken mirror depicted our attempts to be ultimate originals rather than image bearers, and it was Christ who could restore us as image bearers. Al was definitely an image bearer, with a sharp and clear reflection, and I am thankful for him.
How does this connect to business, and in particular, business with integrity? I have come to see a collection of building blocks that help us understand what it is to do business under the reign of God. It starts with a Christian worldview. From that foundation, we can build a theology of work. And from that foundation we build a theology of business. In other words, doing business based on the principles of the Kingdom of God starts with a biblical worldview, and I gained my foundational understanding of that from Al Greene.
Thank you, Al. I will miss you.
Thursday, April 8, 2010
Al Erisman is an Executive in Residence at Seattle Pacific University