What makes a good company?
The answer to this question is pretty simple isn’t it? A good company is a good business, they strive towards and consistently meet their business goals. A for-profit business makes more money than it spends (good ‘ol profits), gives itself enough of a margin to both reinvest in growing the business and putting money back in the pockets of its owners. On the other hand a non-profit looks to achieve some goal in the public interest, this could be more food for hungry populations, delivering more resources to underserved population etc. Question answered — Job done.
Why?
Why are we here? Why are you reading this? Good question. In the United States and many other parts of the world, capitalism is the dominant economic system. Let’s take a step back to move forward. The idea of coming together and cooperating is evolutionarily wired into us. In the earlier days of our species, when we lived among dangerous predators, our ancestors had to come together, cooperate, and organize to find strategies to survive. This mindset of collaboration is what has taken us from hunter-gatherers to today’s techno-society. Social organization is essential to our survival, growth, and development as a species. There are a lot of great writings on the evolutionary advantages so I would not go too deep into that in respect of your time, if you are interested in that — a google search would do you a world of good.
Back to the matter.
With regards to capitalism, companies are the main form of organization. It is essential that we think harder about what a good company is because it has implications for the future of humanity. We need to look past the surface of companies (making profits and achieving goals) and into their core philosophies. A good company should not only strive to make profits but also be mindful of its impact on society and the environment. It should have a sense of purpose beyond just making money and should be committed to creating value for all its stakeholders.
What makes a good company? (Again)
Here’s what we’ve been waiting for folks, finally we get to talk about the core of a good company. All the qualities of a good company piggy back off the others, the goal is to understand how the different qualities laid out in this piece could come together to make a good company. Here goes nothing!
Mission Driven
A good company should have a shared mission that guides the company’s actions and decisions. What does a mission driven company look like? This is not very easy to define and is subject of constant debate.
In my view, a mission driven company comes up with an idea of how the world could be better, spends the lifetime of the company focusing on this goal and finding ways to constantly move towards achieving said goal. The path towards the mission may not always be linear, the company may have to adapt and change its approach over time.
The legendary investor John Doerr argues that what separates the company builders who are able to make a big difference from those that aren’t is the idea of being a missionary not a mercenary. According to Doerr, missionaries stay the course (going towards an important mission usually takes time) and focus on the big idea as opposed to mercenaries who tend to be opportunistic and seek short-term payoffs.
In short, a good company should have a clear and ambitious mission that guides its actions and decisions, and should be committed to creating positive impact on society and the environment.
Mercenaries have “a lust for making money,” while missionaries have “a lust for making meaning.”
An inclination to service
A good company should be focused on serving a specific group of people, a community or humanity as a whole. It is not enough to be solely focused on making more money and growing operations; a good company should have a desire to make the lives of a specific group of people better.
What makes someone’s life better? This is a subjective question but is not impossible to answer. A starting point is a discovery process of sorts that can help you understand the needs of those who you want to serve. A good model to use is the process of customer discovery in the world of startups. The customer discovery process requires you to have assumptions about how to make someones life better or solve a problem, talk to potential customers, figure out what they want and iterate your offerings to meet those needs.
This model can be used for all types of companies, not just tech startups. Imagine a restaurant opening up in a community that is starved of meaningful human connection, this restaurant can talk to people or observe the community to gain insights into the community they wish to serve. Using this process of community discovery, the restaurant figures out the need for human connection and then design their restaurant to not only serve food but also provide opportunities for meaningful social interaction.
In the process of service, it is crucial to pay attention to ethics. This means taking the time to consider what is right and wrong and adhering to a chosen code of ethics. A good company should strive to be net positive in its impact on society and the environment. For example, the restaurant should serve healthy, nourishing food as unhealthy foods can cause a wide range of problems for individuals and ultimately impact society at large. It can be argued that a restaurant that primarily serves unhealthy food is not making a net positive impact on the world. A company should be conscious of the impact of its actions and strive to make a positive difference in the world.
Look to develop those within the company
A good company grounded in a shared mission an ethical code should strive to develop the people within the company (staff) so that they can help further the company’s mission/ inclination to service. This is just not professional education but also moral and philosophical education, this is more than just building the professional — it is building the person.
How does this work in practice? A good company should invest in programs and initiatives that give its people important skills to bring value to the world. The company should also educate its people about the importance of having an ethical mission, contributing to humanity, and trying to make the world a better place. This piece is not as straightforward as skill building, but if great minds think about ways this could be achieved, I am almost certain that we would find a way.
Ultimately, the goal of developing people is to give us more individuals who are mission-driven and have an inclination to serve, thus helping to create a better world.
Having a long-term horizon
A good company with a worthy mission knows that the journey towards achieving that mission is often a long-term one. Many worthwhile goals take time and effort to achieve.
Let’s take an example to test out this hypothesis. A worthy mission to me is reducing income inequality and lifting as many people out of poverty. A paper by Australian economist Martin Ravallion predicts it would take 50 years or more to lift a billion people out of poverty. That’s like a really long time.
Even something seemingly as simple as building community takes time. You have to find people who have common interest, bring these people together, organize events and activities that enable these people to interact with each other and build trust, as trust starts to build so do deeper bonds and the community still has to repeat the aforementioned cycle in order to build momentum in order to solidify the community.
A long term horizon allows you to build consistency and time to hammer in the maxims of a good company that we have spoken about.
I hope that you can see how these principles are interconnected. I hope this was worth your time and you are leaving this piece with good ideas that you can apply in your life. Ultimately I hope you were entertained.
From the bottom of my heart, thank you so much for reading this. I hope that this piece will have a positive impact on your life — Cheers!
