Is doing the right thing in business the same as doing the right thing in life? Let’s consider a corporate strategy based on innovation that delivers greater value to customers but means lower sales and reduced ROI for investors. It promises, over the long term, greater market share and corporate growth.
Philip S. Krone, president of Productive Strategies, Inc., discusses with Smart Business what the “right thing” is in such a case and the thinking behind it.
Productive Strategies, Inc. believes in “paying it forward” as a way of doing business. We find time and again, in our own experience and that of our clients, that helping out a prospect, client, or even opponent without expecting much if anything in return does in fact tend to pay off over time. The pay-off might be directly in more business, indirectly as a reference or referral, or even in the form of an invitation to speak at or attend an event that might lead to more business. The pay-off could also just be the pure satisfaction of helping others.
So now the practice is second nature. Whenever we gain a new client, for example, we can’t help but think about whether this company and any of our other clients or prospects might benefit from being introduced to one another. (We do draw the line at introducing our clients to our competitors and recommend that you do, too.)
Paying it forward is one version of “doing the right thing” in business. It’s not completely without self-interest, but the return, other than some positive vibes from the parties involved, may not be quantified or otherwise obvious.
“The time is always right to do what is right.”
-Dr. Martin Luther King, Jr.
Of course there are other versions of doing the right thing in business. How often do you take significant actions that benefit your customers, or even the “greater good,” but do not necessarily benefit your business or that might even hurt it? We were once supporting a client offering a new technology to an oil company. The technology was clearly an attractive opportunity because it delivered positive ROI, provided a slight competitive advantage, and reduced the pollution created by retail gasoline stations great PR for any oil company. But the technology was also a threat because it would likely reduce the oil company’s gasoline sales to independent dealers. What’s the right decision: Take the opportunity or sidestep the threat?
Another of our other client companies offers pharmacy services to senior living communities. This client invested heavily in automated equipment as it came on the market to package medications in a way that significantly reduces medication waste. (Too often pills are thrown out, for example, because prescriptions change before expiration. The senior still pays for the pills, however, and so does the insurance company.)
Our client was founded as a non-profit that puts mission over margin; its executives made the investment knowing they would reduce revenue because they would sell fewer pills. However, as industry experts, they also knew the decision would benefit their customers, both the senior communities they serve and the seniors who live in them. Our client’s mantra has always been: Figure out what’s best for the customers and then take that action, if at all possible. Is that kind of decision-making easier because this organization was founded as a non-profit? Perhaps. But that doesn’t mean it was a bad business decision. In fact, following this basic philosophy, our client has grown from zero annual revenue 13 years ago to more than $110 million today.
“Efficiency is doing things right. Effectiveness is doing the right thing.” -Zig Ziglar
We can’t take credit for that growth, by the way. This company grew without much marketing at all. Its leadership engaged us a couple of years ago because they realized that the larger the enterprise became, achieving such an impressive growth rate would only be tougher and tougher, even if they were determined to keep their customers’ best interests at heart. They knew they needed to look into marketing and consultative selling in a more formal, aggressive way.
But what a foundation for success they had built. For years the leadership tried always to do the right thing for customers with the expectation, but not the guarantee, that the communities they served would be more competitive in their industry, would grow, and in the long run increase business volume with our client. And that’s exactly what happened.
Just recently our client’s primary, much larger competitor turned down an attractive opportunity to buy the latest technology and drive medication waste even lower for its customers. The competitor’s reasoning was straightforward: “We’ll sell fewer pills.” This company is publicly held with stockholders and other stakeholders. Is it wrong for the executives to pursue the most immediate avenue of return, even if it doesn’t benefit its customers?
“Right is right, even if everyone is against it. Wrong is wrong, even if everyone is for it.”
In general, we believe that delivering greater value to customers, even if it results in lower, short-term sales, is the right strategy for the long term. This strategy tends to disrupt a market and creates competitive advantage. Customer trust grows, volume increases, and market leadership in product innovation and pricing more than holds competition at bay.
Are we right? Let us know what you think. And let us know, too, how you think about “doing the right thing.”
Philip S. Krone is the founder and president of Productive Strategies, Inc., a 17-year-old Northfield, Illinios-based management and marketing consulting firm. Productive Strategies provides clients with particular expertise in sales process development, lead generation and appointment setting, marketing and marketing communications. Phil can be reached at (847) 446-0008 ext. 1 or email@example.com.