The Soul of Business
Michael R. Czinkota
Georgetown University and University of Kent
Washington D.C., USA Canterbury U.K.
January 21, 2017
Innovation Disruption and the Imperative of Curative Marketing
More than 7 decades ago, Joseph Schumpeter regaled us with the concept of creative disruption. He presented successful innovation as only a temporary market power, which, though threatening the profits of old firms, were themselves facing the pressure of new competitors which were beginning to commercialize their own inventions. Such continuing cyclicality was taken on in greater detail by various subfields in business and society and delivered high explanatory value. Consider the link between transportation capabilities and market reach developed by von Thuenen (1826) or the time/service linkages developed in the “wheel of retailing” which Stanley Hollander described in the late 1950’s. He sees firms starting at the bottom of the wheel and moving up in terms of services and pricing until they are transitioned out from the wheel by more efficient competitors. Today, the disruption has become more broad scoped with new entrants and their disruptions coming not just from the same industry or even from similar business models. A re-presentation of disruption speaks for newly entering players emanating from different countries and regions (Christensen and Horn, 2015)
To countermand aggression, it is no longer sufficient to have besieged firms lower their prices. They must make entirely different products which deliver better value to consumers. Unicorn companies like Twitter and Netflix, which are start-ups valued at over $1 billion, have succeeded and caused many casualties with their winner-takes-all market approach. When Netflix emerged in 1997, with it lower price and convenience, it quickly became too late for Blockbuster, the video rental firm with its 10,000 retail stores to deliver digital service and the firm was forced to declare bankruptcy in 2010.
But with the world becoming more dynamic and divided than ever before, security and religion appear to be held in higher esteem by society at large than economics and business. Corporations are increasingly expected to play a stronger role as a collaborator with government and society in finding solutions to future challenges. A winner takes all competitive plan begins to give way to a strategy based on global collaboration. Money no longer is the only or ultimate outcome of business. Firms who neglect holistic perspectives and argue based on business principles alone may increasingly find themselves on the losing side. Self-sufficient, societally supportive and leading is how many business executives like to see themselves, but their activities are only one slice of a sphere formed by a score of other components integral to society.
This is one reason for the emergence of the concept of curative marketing, which accepts responsibility for problems that marketing has caused. It then uses marketing’s capabilities to set things right and to increase the well-being of the individual and society on a global level. Curative marketing’s two key perspectives consist of looking back at what marketing has wrought and setting things right in future actions. (Czinkota, 2012)
Ethical Failures in Modern Society
As engagement of business in society is paving the way for sustainable development in the future, the traditional pillars of business which are risk, competition, profit and ownership are re-defined because they no longer sufficiently sustain the corporation in today’s world. A key tenet of marketing is reverence for the customer. However, firms often choose a predatory approach which Georgetown’s Charles Skuba(2011) has labelled inappropriate, unjust and counterproductive “vampire marketing” Typically, this takes place when the key consumption decision has already been made, but circumstances allow for additional offers. High minibar charges in a hotel or pillows for rent on an airplane are examples.
More importantly, ethical failures of companies not only cause the loss of profit and reputation, but also reduce the trust of consumers. In 2008, a milk scandal in China with the tainted infant formula of Sanlu Group involved 300,000 victims and 4 deaths of babies, which eventually led to the bankruptcy of Sanlu one year later. In an emission scandal, in Germany, Volkswagen (VW) affected 11 million of consumers with defeat devices installed to cheat on performance test. Within one year, the cost and penalties already surpassed $16 billion, heading beyond $ 22 billion.,. In the United States, Wells Fargo fired 5,300 employees for illegally intervening with customer accounts in order to obtain personal bonuses.
An insufficient conscience (or guiding soul) of business often brings deleterious financial impact to business. The way companies are guided and shift directions seems to be fundamentally slow.
Let the Soul Catch Up with the Body
Instead of widening the girth of the business pillars consisting of Profit, Personal Property, we should consider to connect them all with a seat on top, which improves comfort and reach. It may be time to combine the doctrine of capitalism with the insights of wisdom and philosophy. Such a connection represents a linkage by the soul of business.
In the court of Solomon during the monarchic period of the 10th century BCE, Genesis 2:7 describes that a living soul was seen to denote a living person. Shouldn’t a living soul also denote a living business? In the 8th century BCE, a royal official from Sam’al named Kuttamuwa ordered an inscribed stele erected upon his death. The inscription requested that his mourners commemorate his life and his afterlife with feasts “for my soul that is in this stele”. It seems not reasonable to have business as an entity consist of living people which also reflect to living souls. If the soul is removed from a living person, the person dies; if the soul is removed from a business, the business dies. The soul of business might well be a separate entity capstoning the non-soul business model taken up by many firms. A soul guides business to see itself, just as already raised by the bible, as part of a whole, past, present and future and to become prosocial, holistic and humanistic both externally in the social sphere and internally in the management environment.
Christianity in the West has shed the light of Catholic moral tradition onto business ethics with Christians endeavoring to do their duties honestly and going beyond what they must do diligently and not taking actions simply because they can be taken. Pope Benedict XVI wrote “Christians oppose greed and exploitation out of a conviction that generosity and selfless love, as taught and lived by Jesus of Nazareth, are the way that leads to fullness of life. The belief in the transcendent destiny of every human being gives urgency to the task of promoting peace and justice for all.” The Anglican Church wrestles with the position of companies when addressing the theme of “Can Companies Sin?”(Welby, 1992).
Taoism in the East emphasizes the necessity to consciously experience ourselves, listen to both our inner voices and to the voices of our environment in a non-interfering and receptive manner. Lao Tzu tabled the concept of “wu wei” for centuries, which is literally translated as “non-doing”: If one leaves the people alone and lets them get on with it, social problems will resolve themselves — because political interference is more often the cause of such problems than their solution, as was certainly the case during the Warring States period.
East or West, these wisdoms are inspiring the modern world with one single lesson in our value systems: Slow down the steps of profit making and let the soul catch up with the body! To have soul isn’t some business skill that is “nice to have”. Rather it provides guidance for companies to align their principles with a mission and vision. A soul needs to be noticeable in organization, affecting all members of the team.
The Practice of the Soul
To honor God in all we do, to help people develop, to pursue excellence, and to grow profitably, these are the espoused values of ServiceMaster Company, one of the leading companies delivering world-class service. The first two items in its motto are the ends and the second two “to” are the means. Below we offer thoughts of a practical nature to help executives capture the opportunity to call on the soul in our changing times.
- Understand the four new core areas which are a field’s pillars for a shining business position: Truthfulness, simplicity, expanded participation and personal responsibility. Frontline marketers need to understand how a product works and provide uncomplicated experiences to costumers. In the meantime, distance can mean abdication of responsibility. Having a positive boardroom culture where different views are respected and allowed to be discussed can play a big role. Though the chairman of a multinational corporation may feel far removed from local issues, the locals take all of the firm’s actions very personally.
- Introduce the mindfulness practice in the work. The concept of mindfulness has been used by leading corporations like Google, Intel and General Mills. It is a meditation practice speaker Paul Ryan has also been promoting to reinvigorate the core American values. It is believed to not only unlock the productive habits of staff, but also build conscious professionalism as well as leadership.
- Consider the introduction of guiding key tenets in the educational curriculum of business schools. One approach could be the transference and implementation of Jesuit tenets. Education by members of the Society of Jesus is characterized by the distinctive imperatives of ethic and honesty. When the religious order of the Jesuit was founded by Ignatius of Loyola almost 500 years ago, he expressly saw himself as establishing a service of special defenders and promoters of papal theological thought and clerical practice. He presented the vow of obedience and encouraged all members of the society to become “soldiers of God”. Today Jesuit colleges teaching business should offer no less than Ignatius intended by ensuring that the MBAs students they honor with a degree are vigorous promoters and defenders of honest and straight forward business mission and practice. For business, there is no need to call for ghost busters when engaging the service of a Jesuit MBA. An enhanced collaboration with Jesuit education could help future executives to know and see leadership and clarify even for distanced ownersthe means and ends of international business.
A key auto industry executive, Bob Lutz used to describe two kinds of people in automobile companies – car makers and bean counters. Car guys are those who work at GM or Ford or Chrysler during the day and then at night, work on their cars as a hobby. On weekends, they would race them. During their free time, they would talk cars with other car folks. That’s what built GM and Detroit in general. What has almost destroyed it has been the rise of the non-makers to positions of dominance in the domestic car industry, where they focus on financial manipulation over product excellence. As the philosopher Ludwig von Wittgenstein stated: “A philosopher who is not taking part in discussions is like a boxer who never goes into the ring.” It’s time for all of us to enter the ring, slow down the steps and let the body of business catch up with the soul.