Putting Customers FIRST: Find out how this credo helps one health and wellness company ethically maximize wealth! [Tuesdays: Return Driven Strategy]
Miles Everson’s Business Builder Daily speaks to the heart of what great marketers, business leaders, and other professionals need to succeed in advertising, communications, managing their investments, career strategy, and more.
A Note from Miles Everson:
The Return Driven Strategy is one of the most effective business frameworks I’ve encountered in my many years of working in the industry.
This pyramid-shaped framework has 11 tenets and 3 foundations, which, if implemented properly in your business operations and strategies, will lead you towards wealth and value creation for your firm.
In today’s article, let’s focus on the first tenet of the Return Driven Strategy, which is also known as the Commitment Tenet: Ethically Maximize Wealth.
I believe proper understanding of this top tenet will help you make wise decisions that will positively impact your entire business and constituents in the long term.
Read the article to know why ethics is a critical part of wealth creation and how this concept applies in one case study we’ll feature below.
Return Driven Strategy
Johnson & Johnson (J&J) is one of the most popular health and wellness brands with the largest global reach.
For over 130 years, the company has constantly served families and healthcare professionals around the globe by providing high-quality products that promote good health.
Part of J&J’s success is attributed to its focus on putting the needs of its customers and the communities where it operates in first. This is evident in the company’s credo, which says:
“We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers, and all others who use our products and services. In meeting their needs, everything we do must be of high quality. We must constantly strive to reduce our costs in order to maintain reasonable prices. Customers’ orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit.
We are responsible to our employees, the men and women who work with us throughout the world. Everyone must be considered as an individual. We must respect their dignity and recognize their merit. They must have a sense of security in their jobs. Compensation must be fair and adequate, and working conditions clean, orderly, and safe. We must be mindful of ways to help our employees fulfill their family responsibilities. Employees must feel free to make suggestions and complaints. There must be equal opportunity for employment, development, and advancement for those qualified. We must provide competent management, and their actions must be just and ethical.
We are responsible to the communities in which we live and work and to the world community as well. We must be good citizens – support good works and charities and bear our fair share of taxes. We must encourage civic improvements and better health and education. We must maintain in good order the property we are privileged to use, protecting the environment and natural resources.
Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas. Research must be carried on, innovative programs developed, and mistakes paid for. New equipment must be purchased, new facilities provided, and new products launched. Reserves must be created to provide for adverse times. When we operate according to these principles, the stockholders should realize a fair return.”
As we can see in the credo, J&J points out its major constituents―businesses, customers, employees, and stockholders. This is a good practice because it helps the company perform better in all areas of its business.
How can we relate this case study to ethically maximizing wealth―the first tenet of the Return Driven Strategy, which is discussed by Valens Research President and CEO, Professor Joel Litman, and Kellstadt Graduate School of Business Professor, Dr. Mark L. Frigo, in the “Driven” book?
- In the long term, businesses succeed by being a central exchange point for their constituents.
As each group acts and looks for ways to fulfill their needs, the company or business that serves as a central point of the exchange of goods and services will generate significant levels of wealth.
As Professor Litman and Dr. Frigo said in their book, in an economic democracy, constituents drive the cash flows.
[Economic Democracy: A state where businesses are free to choose what offerings to provide, customers are free to choose where they spend their money, employees are free to choose where they work and for whom, and stockholders are free to choose where to invest their capital.]
This is what happens at J&J. By establishing itself as a brand that provides the offerings constituents are looking for, the company becomes the central exchange point―in the transaction process, constituents get what they want and J&J generates wealth through its products and services.
- J&J’s credo is consistent with the first tenet of the Return Driven Strategy.
The credo aligns J&J towards specific goals that help generate and maximize its wealth WITH integrity.
You will also see in the credo that J&J places attention on all its constituents, ethical considerations, and implied long-term timetables.
Thanks to the long history and success of this guiding principle, the company is able to produce offerings to a point that customers willingly pay prices for J&J goods and services. This allows the company to ETHICALLY generate high cash flows!
The credo is one of J&J’s genuine assets in sustaining its ability to achieve the first tenet. Not only does this philosophy highlight the importance of the company’s constituents in the creation of wealth, but it also clearly lays out J&J’s measures of wealth and the activities that will help achieve these measures.
In fact, there are other tenets in the Return Driven Strategy that J&J’s credo addresses in a single statement!
More than releasing some of the popular brands and products like Band-Aid, Neutrogena, Tylenol, Listerine, and Benadryl, J&J positions itself as a company that practices ethical sales and marketing.
J&J wants its customers and other constituents to know that one of its priorities is to provide them with only the best services that they cannot get elsewhere!
The company’s campaigns also have a strong focus on health care and emphasize spreading awareness about various health issues. These enable J&J to build high shareholder value and strong customer loyalty, which is seen in the enduring popularity of its products.
Thanks to these strategies, the company continues to thrive in a competitive global health marketplace!
J&J’s long period of success and adherence to its credo shows that part of ethically maximizing wealth is to remain committed to providing high quality products to consumers… and that without the right vision and policies in place, it would be hard for businesses to reach their potential.
The absence of a guiding principle might also lead some companies to lose sight of their goals and lose momentum.
That’s why in establishing or being part of a return driven company, you must develop strong, positive connections with your customers and other constituents. One of the ways to do that?
Being a great example in spreading awareness and strengthening your brand identity in the long term to build customer loyalty!
Once you’ve established strong connections with your customers and built brand loyalty, you’ll see―high cash flows will keep coming and many consumers will associate your brand with competence, integrity, and trustworthiness.
With loyal customers becoming your marketing advocates, you’ll be more inspired to deliver high quality offerings that fulfill your target market’s needs. Thus, maximizing your wealth ethically.
(This article is from The Business Builder Daily, a newsletter by The I Institute in collaboration with MBO Partners.)
About The Dynamic Marketing Communiqué’s
“Tuesdays: Return Driven Strategy”
In the book, “Driven,” authors Professor Joel Litman and Dr. Mark L. Frigo said that the goal of every long-term successful business strategy should incorporate the combined necessity of “making the world a better place” and “getting wealthy.”
That is why they created the Return Driven Strategy and Career Driven Strategy―frameworks that were built to help leaders and professionals plan and evaluate businesses so they can also help others achieve their organizational goals and career goals.
The frameworks describe the plans and actions that drive returns for anyone in an organization such as independent contractors, marketers, brand managers, communicators, and other people in any field. These actions lead to the creation of wealth and value for customers, employees, shareholders, and the society.
Every Tuesday, we’ll highlight case studies, business strategies, tips, and insights related to the Return Driven Strategy and Career Driven Strategy.
In planning, building, or managing brands and businesses, these strategies, case studies, and guidelines will help you choose what specific actions to take and when to take them.
Hope you found this week’s insights interesting and helpful.
Stay tuned for next Tuesday’s “Return Driven Strategy!”
Head of Marketing
Valens Dynamic Marketing Capabilities
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