Hmmm. IMO and IME it’s ALL about VABEs. Companies look for a sustainable strategic competitive advantage (SSCA). Products can be backward engineered. The Coca Cola formula is carefully guarded secret. Organizational culture, a set of shared VABEs, however are much more difficult to imitate/duplicate. Because VABEs go deep. And are often unexamined.
Example #1. Pike’s Place Fish Market in Seattle WA has been generating high margins and profitability in a commodity market for years and years. There are other fish markets literally less than 100 yards away who aren’t and can’t. Because they don’t believe that’s the way to run a business.
Example #2. SAS Institute in Cary NC has quadrupled the size and profitability of its primary competitor who was formed the same year—SPSS. NCState vs Stanford. The Stanford based SPSS went public a few years after forming and now—-SAS is four times its size and offering elementary school, health clinics, parks, healthy foods etc. on grounds. Things a public company wouldn’t do because of the “loss” to investors of providing those things.
Example #3. Starbucks founder Howard Schulz offered part-time employees comprehensive health benefits and employee stock option purchasing plans when he had only ten stores and 100 employees. He said that single decision—based on his experience at age 7 when his father was severely injured at work and couldn’t pay the bills—was the basis for their subsequent growth. Who else does that? Imagine a Board of Directors facing that proposal.
People reject science in medicine (face masks?) in favor of their VABEs. Daniel Kahneman got a Nobel Prize for his extensions of Amos Tversky’s work that revealed that people make big decisions based on their VABEs over evidence. VABEs “trump” data and hard science.
This is why I’ve spent most of my career working on Level Three Leadership . How does one influence Level One (visible behavior)? Rewards and Punishments. BF Skinner. Superficial. Level Two is conscious thought—and influence tools include logic, data, science, evidence. Level Three is VABEs—semi- or pre- conscious VABEs. Worldwide VABEs dominate science except for a few for whom the primary VABE is “In Truth We Trust” rather than “In God We Trust.”
In retirement I wrote A Song of Humanity: A Science-Based Alternative to the World’s Scriptures to combat that tendency—which I fell prey to for 35 years. Scientists are inductive thinkers—they start with the raw data. Most people are deductive thinkers—they start with the conclusions and screen out disconfirming data. The well-known “confirmation bias.”
That’s the”it” that IME most companies don’t get. Another “it” is the core VABE in most businesses to “maximize profits.” IMO that VABE is obsolete, morally defunct, and bad capitalism. “Good capitalism” IMO has a core VABE of “maximizing sustainable profits.” Sustainable means protecting not abusing the COMMONS—the things that we all share: air, water, soil, flora, fauna and the underprivileged. A few companies are net contributors rather than net extractors/takers.
Example #1. Indiana freeway construction company owner who sold his company for $200 mm and promptly gave each of his 100 employees a million dollars each. When asked why he noted that they did all the work, all he did was organize them AND he still had $100mm, what did he need with more? Net contributor.
Example #2. Bob Nardelli went from GE to Home Depot and nearly destroyed the company. He got $200mm for going away. Net taker/extractor.
It’s all about VABEs. Net extractors have a perhaps pre-conscious VABE, “My goal is to get as much out of society as I can.” Net contributors have a different VABE, “I want to leave the world around me better than I found it.” A simple Boy Scout principle: leave your campsite better than you found it.
Note that there often, too often, is a gap between espoused VABEs and VABEs-in-Action. Emerson once said, “What you do thunders so loudly in my ears, I cannot hear what you say.”
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