Learn to Profit With a Sustainable Mindset
Blair Sheppard is dean of Duke University’s Fuqua School of Business and chair and founder of Duke Corporate Education, the first full-service provider of customized, enterprise-wide management education to global organizations. He has consulted to more than 100 companies and governments in the areas of corporate strategy, relationship management, structure and leadership, and his research has resulted in more than 50 books and articles. Prior to founding Duke CE, Sheppard was the senior associate dean of Fuqua and played a leading role in the creation of two innovative management education programs. He received his bachelor and master’s degrees from the University of Western Ontario and his PhD from the University of Illinois.
Blair Sheppard: One of the things that's happened in business is that, to the pursuit of shareholder value, we've lost raison d'etre.
Blair Sheppard, Dean, Fuqua School of Business, Duke University.
If you get your raison d'etre right, it's not in conflict with making money. It just frames how you do it. So that you do it in a way which is more likely to sustain itself over time, and more likely to contribute to society in a larger sense.
It turns out you fail fast when you've lost your raison d'etre. The year before Arthur Anderson was put out of business, it was the number one company for most business schools in the world. Students wanted to go there. Why? Because they made a lot of money, they were really professionally well-developed, it was a spectacular firm to work for. But they forgot the raison d'etre, which was to ensure fairness and honesty in a market place, it was to make sure that the numbers that we produced were numbers we could believe. As soon as they forgot that, they failed overnight.
Enron failed overnight. Financial services firms failed overnight. Why? Because a whole bunch of reasons; they didn't have the right risk controls in place, they forgot that their brand mattered, they forgot that their franchise mattered, but at one level, you can look at it and say they forgot their raison d'etre.
All I'm saying when I say there's a moral side of business is something that is straightforward, which is, remember why you're in business, and predicate every decision you make on that, as well as whether you are going to make money.
And it turns out if you do those two things together, you will sustainably make money. Forget the one, you go out of business overnight. Forget the other, you go out of business because you won't have the cash to support the business.
Question: What can companies do to prepare for an uncertain future?
Blair Sheppard: Right now, what they need to do is fix what's broken and invent the future. But as they come out of it, the question of what's the mental model you should have for how you manage its success, there is no question that what you need to do is innovate and cull at the same time, always.
What occurs, unfortunately, is as we get wealthy, we forget to cull. So what has to happen then is you cull in the worst of times, which means lay-offs. If you culled in good times, you can actually re-purpose physical plant, you can train people and put them in new jobs. If you do it when you're wealthy, you can actually absorb the consequences of culling. But if you wait till the bad times to do your culling, you're actually going to devastate both yourself as a firm and your employee base and your customer base.
The issue is: be disciplined at the same time you're being creative. If you are going to be disciplined and at the same time you're being creative, you will prepare yourself for the next downturn, because you will be trim where others won't be, and you'll survive better through difficult times.
Recorded on May 18, 2009.
Dean of the Fuqua School of Business at Duke University Blair Sheppard reconciles profits with sustainability in this insightful video about the new mental model required for success in an uncertain world.
Can sensitive coral reefs survive another human generation?
- Coral reefs may not be able to survive another human decade because of the environmental stress we have placed on them, says author David Wallace-Wells. He posits that without meaningful changes to policies, the trend of them dying out, even in light of recent advances, will continue.
- The World Wildlife Fund says that 60 percent of all vertebrate mammals have died since just 1970. On top of this, recent studies suggest that insect populations may have fallen by as much as 75 percent over the last few decades.
- If it were not for our oceans, the planet would probably be already several degrees warmer than it is today due to the emissions we've expelled into the atmosphere.
Malcolm Gladwell teaches "Get over yourself and get to work" for Big Think Edge.
- Learn to recognize failure and know the big difference between panicking and choking.
- At Big Think Edge, Malcolm Gladwell teaches how to check your inner critic and get clear on what failure is.
- Subscribe to Big Think Edge before we launch on March 30 to get 20% off monthly and annual memberships.
Michael Dowling, Northwell Health's CEO, believes we're entering the age of smart medicine.
- The United States health care system has much room for improvement, and big tech may be laying the foundation for those improvements.
- Technological progress in medicine is coming from two fronts: medical technology and information technology.
- As information technology develops, patients will become active participants in their health care, and value-based care may become a reality.
SMARTER FASTER trademarks owned by The Big Think, Inc. All rights reserved.