The 4 Footers of Success

Without them, your foundation may crumble

First, this article is dedicated to my son Peter. During the 2016 elections, Peter was nineteen years old and we had numerous debates about the pros and cons of capitalism. Some of what you are going to read here about Purpose and my philosophy surrounding it was shaped by these discussions. Thanks Bud.

In business we talk and write a lot about “foundations”. As in “The foundation of our success is based on…”.

This “foundation” we talk and write about is usually based around culture and includes references to the best people, customer satisfaction, founder’s vision, company values, etc.

However, if you read my piece in Medium entitled “Are You and Your Employees Suffering”?, you would have read about how human nature negatively impacts our mindset. Therefore, it stands to reason that the “foundation” of a business is only as strong as the characteristics of human nature that subtly or not so subtly influence the thinking and actions of a company’s shareholders, board and leadership team. While that may seem like a relatively small group of people, human nature is at work 24–7–365 with ALL of your employees even when the office lights are out.

For instance, take self-interest. While we all have varying degrees of self-interest, a high-degree of self-interest in a Type-A individual on a team, may keep that team from producing its best work. And, wouldn’t that be ironic especially if Teamwork is one of the company values on the ‘Corporate Values’ sign hanging in the lunchroom.

According to Merriam-Webster, the definition of Human Nature is: “the nature of humans, especially the fundamental dispositions and traits of humans”. Translation: they cannot be changed. Those dispositions are the underlying ground on which your business’s foundation is built, and some of them can, and do shift the ground on which your foundation sits. If they didn’t, maintaining a great culture wouldn’t be so difficult.

Thanks to the construction industry and the engineers behind it we have learned that all buildings need more than just a strong foundation, they also need footers.

In construction, the foundation sits atop the building’s footers. The purpose of the footer is to spread the weight of the building across a larger surface so that it keeps the foundation from sinking.

Following this engineering terminology and the facts surrounding human nature, it follows that all business foundations need to be built on specific footers, “The 4 Footers of Success”. These footers are not negotiable and not changeable. Without them, don’t even bother trying to build an enduring business. Every distressed business I have worked in or consulted for, has lacked these footers. Without them and a religious adherence to them starting at the highest levels of the company, your foundation will not be built on solid ground. Once these Footers are poured, we can lay what I call The Middle Path Foundation based on the principles from my “Suffering” article which I mentioned above and will expand upon soon.

The first three, “Ownership”, “Integrity”, and “Humility” are specific values that MUST be present to have a stable foundation. As a young reader without the scar tissue that years of getting beat up in business brings, you are probably thinking, “No shit Matt, that goes without saying”. But for those of you with that scar tissue, you know that these terms are always talked about by leadership, but not always lived.

Ownership. It is opposite of deflection. Borrowing from my “Suffering” article, everyone in the company strives to avoid looking bad every day. This leads to deflection instead of ownership. Think of Ownership in the way that Jim Collins described Level 5 Leaders in “From Good to Great”: He said that when things go right, a Level 5 Leader looks out the window onto the plant floor and when they go wrong…a Level 5 Leader looks in the mirror. She or he owns it. This is a footer because it is critical that everyone in the company needs to be able, without the fear of looking bad, to own their mistakes and leadership needs to foster an environment where Ownership is a constant. And it takes vigilant practice.

Integrity. Every day and in subtle ways people do things that compromise their integrity. Take lying to a customer. A customer service representative may make up an excuse or worse yet, be told by their boss to make up an excuse as to why the customer’s order did not go out. The next time, they will lie again without even asking the boss. Now, the person next to them has heard them lie twice and they start to do it. Integrity is defined as “firm adherence to a code of especially moral or artistic values”. Without Integrity as the second of The 4 Footers of Success, your business will not last long and we may see you doing the perp walk on television sometime.

Humility. Humility is an antonym of “Ego”. Probably 99% of the mistakes I have made in business and failures I have had in business were because of my ego. Ego can cloud your judgement, it can drive away good employees and can be a huge warning sign to investors. Ego, is what can lead you to not listen to the part of yourself who knows what is best and to not listen to others. On the other hand, Humility is what allows us to listen, it slows us down, it allows us to be considerate of others, and without it…Ownership and Integrity will be elusive. A good friend of mine in the finance business once remarked that before they invested in a company, they always tried to find out what the CEO’s reputation was like from people like the security guards in the lobby or the people who cleaned his office. Did he or she know their names, talk to them, etc. If you are out to quickly build a business, sell it for F.U. money then sail into the sunset, humility may not be that important as a footer. But if you are trying to build something enduring…it is essential.

Purpose. Capitalism, without question has generated and spread more wealth than any other economic system in all of human history. It created an entire middle class in the 1900s, enabled the United States to help the good guys win WW’s I and II, enabled us to spend the Soviet Union into insolvency, and has led to some of the worlds greatest medical and technological advances. There is one problem though: That darn human nature, AKA, Adam Smith’s “Invisible Hand”. Human nature has had the unintended consequence of creating and perpetuating social problems that could have been avoided had businesses always operated for the benefit of all stakeholders and with a pursuit of not just Profit but Purpose.

Today there is a tidal wave of social issues that only business can address because in government the self-interest of others runs rampant and can never be controlled because while governing is not supposed to be about money…it’s about money…and self-promotion and self-interest when it is not supposed to be. Businesses are in the unique position being able to help with these social issues specifically because in business, IT IS about the money. Profits allow for reinvestment in the business and towards it’s Purpose and this cycle can self-perpetuate. Money is nothing more than a medium of exchange and when businesses also serve a Purpose, that Purpose itself becomes a medium of exchange. For example, if the Purpose of Dorky Donuts is to help young, disadvantaged African-American children to graduate from high school and attend college or trade school while that same time becoming a 5,000 store chain in pursuit of Profits, it gets to convert that Purpose into cash and exchange it for the labor of people who want to work at the company, not just because they like to eat jelly donuts and help build a 5,000-store chain, but because the Dorky Donuts’ Purpose is important to them. It is part of the reason they “took their talents” there in the first place.

To illustrate how Purpose is becoming more and more important in business, in 2019 The Business Roundtable issued its periodic “Principles of Corporate Governance” and for the first time since it started doing this in the early 1980s, it endorsed the notion that corporations need to exist not just for the benefit of its shareholders but for ALL STAKEHOLDERS. 181 CEOs signed this document. In signing it, Larry Fink, CEO of BlackRock stated: “Purpose is not the sole pursuit of profits but the animating force for achieving them. Profits are in no way inconsistent with purpose — in fact, profits and purpose are inextricably linked.” Without a Purpose that benefits all stakeholders as one of your “4 Footers of Success” your business will lack the “authenticity” that is becoming more and more important to your employees and customers.

Without these 4 Footers of Success supporting your foundation, your business will sway whichever way the wind blows, or years of rain will slowly erode the ground under your foundation and you won’t know about it until it is too late for you to do anything about it, or worse yet a 100-year storm (a crisis) can wipe away all or part of the foundation risking the structural integrity of the entire company in the blink of an eye, negatively impacting all of your stakeholders with differing degrees of severity.

Step back, take a look at the business you have built or are building and ask yourself whether or not its foundation sits atop The 4 Footers of Success so that it can withstand whatever comes its way as well as the test of time.