The Hindu Business Line : Goalposts are moving but it is riskier to do nothing

BUSINESS is busy-ness is how my teacher of `fundamentals of business organisation' defined the word to begin with. That was long ago, when scandals didn't hit the headlines with the regularity as they do now. Business, as seen these days, is often fishiness and books are rather well cooked, so much so that we need a provision in tax law to specifically ban falsification. Numbers are good for eye-testing charts and when they're on annual reports, they adorn more, and educate less. So, it may appear strange that Ira A. Jackson and Jane Nelson write a book titled Profits with Principles, published by Currency Books (www. currencybooks.com), to lay down "seven strategies for delivering value with values". How old-fashioned, one may think, for the authors to be so misguided as to talk about grandma stuff, but Tom Peters has called the work, `a stunning achievement'. He adds: "This utterly original work is not only a survival guide for business and business executives, but also a survival guide for capitalism itself."

The book is divided into two parts: the first is about `doing business in a turbulent world', and the second focuses on `putting principles into practice'.

Well, what are the seven principles? Harness innovation for public good, put people at the centre, spread economic opportunity, engage in new alliances, be performance-driven in everything, practice superior governance, and pursue purpose beyond profit.

These offer no quick fixes or off-the-shelf solutions, state the authors. Yet, they describe over sixty examples of companies around the world that illustrate one or more principles in action.

These include DuPont, Toyota, Ford and so on, that have "cut operating costs, improved quality, and gained market share through innovative redesign of products, services, and manufacturing systems"; Citigroup, JP Morgan Chase, Deutsche Bank and Goldman Sachs for reaching out to underserved markets; Unilever, Nestle, Proctor & Gamble, Co co-Cola, Nike and so on operating in "fiercely competitive, low-margin, brand-sensitive, consumer-driven markets"; Cisco, Nokia, Dell, HP, IBM and Microsoft for "creating economically viable business models and social venture solutions for bridging the digital divide"; BP, GE and GM for practising "sustainability governance"; Merck, Johnson & Johnson, GSK, Novartis and Pfizer "facing increased competition and challenges to their intellectual property rights"; and firms such as McKinsey, KPMG, PWC and Accenture for "harnessing the intellectual capital and problem-solving skills of their staffs".

A survey cited in the book says that in the US only 26 per cent believe that companies are straightforward and honest in their dealings with consumers and employees. Apart from the crisis of trust, there is the crisis of inequality and that of sustainability.

Chapter 2, titled `building tomorrow's competitive advantage today' begins with the one prominent word in most annual reports, `value' and dissects it into value for shareholder, employee, customer and society. An interesting visual sourced from PricewaterhouseCoopers is about `new sources of sustainable business value and growth'. It lists the forms of value as assets, financial, brand and reputation, intellectual, human and social, and environmental. Currently measured value is but one-ninth of the whole!

The seventh principle, `pursue purpose beyond profit' is put at the centre of the remaining six. But why?

Because the soul of a company is its purpose, explains the book. This principle has six steps, viz., align words with actions, engage employees, learn from outsiders, have the courage of conviction, emphasise purpose and values even more in tough times, and build in accountability systems.

The book offers no simple solutions. "Goalposts keep moving. Boundaries keep changing. Competition keeps increasing... As daunting as the challenges are, it is riskier to do nothing."

Are you going to wait till there is an accounting standard on accounting for principles?

BooksOfAccount@TheHindu.co.in

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