8X Bottom Line Results

My reading of the book Firms of Endearment (FoE) has intersected with the March 1 issue of Fortune. Both confirm the power of TRUE North.

The Fortune issue featured the world’s Most Admired Companies; from essentially a Fortune 1000 starter list, here are the top 10 from their 50 All-Stars list: (1) Apple, (2) Google, (3) Berkshire Hathaway, (4) Amazon.com, (5) Starbucks, (6) Walt Disney, (7) Southwest Airlines, (8) American Express, (9) GE, and (10) Coca-Cola.

To qualify for the Most Admired list companies were ranked by 4100 executives on nine criteria from investment value to sustainability. Jumping over to FoE where firms are rated based on investment value but more heavily on “articulated and manifested higher purpose”, 12 of the 50 All-Stars were on the FoE US public companies list. Not surprising. Here’s the punchline: great company performance is determined by the esprit de corps which is granted by the firm’s leadership. Culture dictates bottom line results. Want facts? Over a 10 year period ending in 2006, FoE companies returned 1,026 percent for investors compared to 122% for the S&P 500. That’s 8-1… or 8X. To rub it in, FoE’s outperformed Good to Great companies by 3-1.

The key is higher purpose… my characterization of that is TRUE North, a never-wavering direction and destination that gives added meaning to all tasks by the organization – from boardroom to mailroom.

Buried in the Fortune issue was a story about KPMG. In June 2014 they asked employees to create posters to illustrate the purpose of their work. They staged a program kickoff in New York City at the Top of The Rock and announced their goal “the 10,000 stories challenge”. If the company received that many posters by Thanksgiving, everyone would earn two extra days of paid vacation this year. No small gesture considering KPMG US employee count is 160,000. No one expected the outcome… in the first week posters arrived proclaiming “I Advance Science”, “I Promote Peace”… etc. By the time Thanksgiving rolled around they had received more than four times the requested goal. That’s 40,000 posters!

What matters matters. People that work for higher purpose organizations are inspired to contribute and belong to more than the P&L. I think the 4X surprise at KPMG is typical. Most leaders do not recognize the power of paying attention to the human spirit by validating the humanity of employee’s work.

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