Built to Last

Jul.31.2017 Counsel

For any business to enjoy long-term success, we must continually address several key factors. Among these are the four fundamental groups of stakeholders involved in every business – customers, suppliers, employees, and owners – each with a set of legitimate needs that must be satisfied for the organization to thrive. Long-term success depends on the ability of the business and its leaders to keep these legitimate needs in balance with a degree of unity and alignment. Let’s briefly look at the needs of each group:

■ Customers desire to buy products from us that serve their needs well at a perceived value that’s better than they can find elsewhere. This necessitates the need for constant innovation in both our supply chain and product offering to retain our long-term supplier- of-choice status. This also requires on-going focus to achieve and sustain customer intimacy. If they find another supplier who better understands and serves them, they have every right to leave… and should!

■ Suppliers need to sell their products or services to us at a price that allows them to satisfy their stakeholders. They must produce sufficient profit to allow them to stay in the game, invest in R&D, pay a return to their owners, and retain their employees, just like us. If our commercial relationship is so one-sided or poorly conceived that they can’t maintain a healthy equilibrium, they’ll necessarily hold back from us or fail to survive, and we’ll eventually lose the type of relationship required to deliver the most value. Long-term prosperity requires teamwork and intimacy with our key suppliers and a hands-on approach to wringing-out waste and confusion, for mutual benefit.

 ■ Employees legitimately need to be compensated at a level commensurate with their market value and performance. If they aren’t fairly appreciated for their personal contribution to our success, they’ll be unlikely to stay with us in spite of other satisfying aspects of their work (e.g., culture, vision, personal growth, and ministry). Beyond addressing prevailing marketplace economics, we must maintain on-going intimacy and understanding of the needs and performance of individual employees and teams.

■ Owners have a legitimate need to earn a solid financial return. They obviously have alternative investment options and must see the opportunity to achieve earnings proportionate to the risk on their investment in our business. Otherwise, they’ll eventually move their capital to more attractive investments. Of course, there may be other reasons for investing in our enterprise, but deciphering this would again require… you guessed it… intimacy with our equity-holders. Consider these four stakeholder groups and your current level of positional authority and personal intimacy with each of them. How well does your business serve their needs, both now and for eternity? Do any (or all) of them represent a source of enduring competitive advantage for your company? Whatever you conclude, you now have a more accurate basis for assessing your strategic position and long-term opportunities. We might not like what we see, but like the law of gravity, it remains true nevertheless!