Should you really be doing it just because everyone else is? This business concept will help you stand out in the market! [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:
Professor Joel Litman and Dr. Mark L. Frigo’s Return Driven Strategy (RDS) is a great business model. They’ve discussed this in detail in their book, “Driven.”
The RDS framework has 11 tenets and 3 foundations. When taken into the context of your brand, these will lead you towards ethical wealth and value creation for your firm.
At MBO Partners, we use these concepts in our day-to-day processes. We make sure that everything we do in the firm enables us to ethically, effectively, and efficiently fulfill our clients’ and customers’ unmet needs.
Let’s talk about the importance of defining “ethics” and “wealth.” I believe this is essential because understanding what ethics and wealth means to you and your constituents will help you make the right decisions and actions for your brand.
Continue reading to learn more about this topic and how you can use the RDS framework in your business.
Return Driven Strategy
“Everyone else is doing it. To compete, we need to do it too.”
According to Professor Joel Litman and Dr. Mark L. Frigo in the book, “Driven,” this defense has usually been made by firms to justify actions later found to be grossly unethical.
People involved in these actions will often admit that at first, they had a hunch that something was wrong but didn’t do anything about it.
The reason is simple: Those involved in a firm’s unethical conduct think that since everyone else is doing “it,” they need to do that too to equally compete in the market.
Here’s the thing: There’s nothing wrong with wanting to be a strong market player and to also use strategies your competitors have executed to generate leads and increase their sales.
However, if you know those strategies are unethical, you shouldn’t do what everyone else in the industry is doing. In fact, you must not involve yourself, your staff, and your business in anything illegal―AT. ALL. COSTS.
Sure, you might see those businesses flourishing… but you have to take note that it’s just the short-term effect of their actions. All their misdeeds will eventually be exposed and everything they earned in the short term won’t be enough to compensate for all the damages they’ll experience in the long term.
The Firms’ Constituents Define Ethics, Not The Firms
In our past “Return Driven Strategy” articles, we mentioned that a firm’s constituents consist of customers, employees, investors, and managers.
Let’s take a look at the roles they play in defining a brand’s “ethics”…
One of the tests for identifying ethical behavior is the Mob Test. Here, it’s not just the leaders and managers who get to decide what is ethical and what is not for their business but also the constituents.
For example: If a manager is using the everyone-is-doing-it phrase to justify an action, it means something’s potentially wrong from an ethical standpoint. This leads to a question on whether or not that action is grossly unethical from the standpoint of constituents.
If customers, employees, and investors think that a certain action is unethical, then the long-term health of a brand is at risk.
Professor Litman and Dr. Frigo said constituents will find ways to retaliate against unethical behavior as they define it―not as a firm’s management team chooses to define it. Business leaders saying a particular practice is “okay” doesn’t necessarily make it okay, no matter how many firms would agree.
That’s because if an action is not in line with constituents’ definition of ethics, a brand won’t easily appeal to them and compel them to make a transaction.
Another test is the Public Display Test. Here, management is asked to imagine that a particular activity is being reported on the front page of a newspaper. This test helps managers rethink an action before doing it.
Once Ethical Standards are Understood, Wealth Needs to be Defined
Companies easily fail when they lack an understanding of what their real goals are. So, to ethically create and maximize wealth, they need to define it first.
“Wealth” means different things to different people. For some, it could be money. For others, it could be health, real estate, skills, etc.
Let’s take a look at this example from the “Driven” book:
One Midwest bakery asked a group of consultants how to improve their business. After a few studies, the consultants came to a conclusion that the best option for the owners and managers is to sell their business to a global food company.
It was a good concept. First, the global firm would have taken the bakery’s brand and distribution to national levels. Second, the owners and managers of the bakery would have received a substantial amount of cash.
Simply said, the idea was a good opportunity for wealth creation that would benefit both parties.
The consultants met with the bakery owners and managers. Then and there, their recommendation was rejected! The bakery’s management team’s response was simple:
“That sounds like a lot of money. But if we sell our business… then what would we do?”
Based on this example, we can see that the consultants failed to define what wealth meant to the owners and managers in the first place. They only thought it was money. However, the management team’s response clearly showed that for them, wealth meant something else.
All financial goals of a business must be based on this principle of understanding what ethics and wealth mean for a firm.
Think about this: It’s difficult to generate wealth when various parts of an organization aren’t working together. It’s like saying,
“The upper management says we’re an entrepreneurial organization. But many of us think we’re just a bunch of business units going ten different directions because the upper management hasn’t laid out a plan for exactly what they want.”
This is why high-performing firms make sure to align their businesses towards the goal of wealth-creation… and as they do that, they also consider the ethical actions that will help them maximize wealth.
Ethics is an important aspect of an organization… and as a business owner or marketer, you have to remember that this is not simply defined by the firms’ management teams but by their constituents.
So, avoid making the everyone-is-doing-it phrase as an excuse! If customers, employees, and investors say an action is unethical, it’s unethical.
Nothing and no one can ever justify that, even if a lot of firms agree with that excuse. Every business or management team that’s conducting an illegal practice will be held accountable by their constituents.
We hope you get a lot of insights from this topic!
As Professor Litman and Dr. Frigo said, valuing ethics will enable you to place your firm in a position to facilitate the activities of your investors, customers, employees, and business partners. Flourishing economies have always been dependent on this concept.
Businesses that act as central points of these exchanges not only ethically generate wealth for owners, leaders, and managers for long periods of time but also earn the trust of constituents in the long run.
Stay tuned for our next business insight from Return Driven Strategy!
(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 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 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!”
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