Stephen Barden (0:00)

Foreign. If this is the first time you've listened to the power of balance, welcome. If you're coming back to us, welcome back. Either way, thank you very much so we continue with the theme of Wherefore art Thou? In the last episode I talked about how it applies to individuals, and this one I gradually move on to the wherefore of organizations. But before I do, it's probably sensible if I retrace and expand on some of the stuff I talked about last time and explain some of the terms. Again, most theorists and practitioners talk about how crucial purpose is to individuals and organizations. My experience tells me that before purpose, the why and the what for, comes the wherefore. Where is the place of meaning that we and the world we live in, that is the context we operate in, share the highest mutual value? Wherefore art thou? Comes of course from Shakespeare's play Romeo and Juliet, in which Juliet asks Romeo whether his place is to be a member of his father's clan with all their conflicts and restrictions, or is it to be a free man, to love and to be loved in equal terms? The balance of significance, caring and value between oneself and our context, the world we directly experience, is crucial to the wherefore. It's a development from my theory and book on the partnering stance, which holds that if, as I found in my research, the most successful leaders were those who learned to assume that they and their world held a reasonable balance of power, then it should also be true that they held a reasonable balance of value, of meaning, with their world. They valued their world as much as their world valued them. It makes sense that if you see your context as your more or less equal partner in power, the capacity to do is you're going to see that world as your equal partner in value and meaning, the capacity to be. And even though I'm still talking about the wherefore of individuals, all of this, as I hope I make clear later, applies to organizations as well, and probably countries. Many extraordinary leaders have formed this assumption of equilibrium with their world at a very early age. The rest of us, as I said in the previous episode, need to develop that assumption. How? By finding a place, a situation, work, a community where you can experience and more important, practice what it is like to be of equal value and meaning with your world. And if at first you can't find that place, I suggested that you act and be as if you have in a bite sized chunk. I told you as an example about my brother who brought into one task fixing his battered old truck, the care and patience of his creativity that he loved but that he couldn't express in his work as a farmer. This search for the place of meaning shouldn't be focused on what can I do to be valued? Or what can my context, my community, my institution, my world do so that I can value it? Because then neither you nor your world have intrinsic worth. Only what you can do for one another has value. Think of a family where the only value you place on your mother, your brother or your daughter is what they can do for you. They become tools for your profit, for your gain, as of course, do you become instruments for their gain. It's a family where no member has inherent value. As a human being, when you judge yourself and your world first and foremost by what you do for each other, you are not at your best value place in that world. You don't value your world, and your world certainly doesn't value you. You are in fact nothing other than a transaction or part of a transaction. When you find your wherefore, your place in the world as a human being, then you act for your family or your community or your organization from a place of connection, caring and balance, and therefore you give of your best. Now the question is whether organizations have or even need their wherefore, their place of balanced value and meaning with their market, with their customers before they get to their purpose, or whether organizations have to be, by definition purely transactional to thrive. What did that fairly successful billionaire Warren Buffett say amongst a load of other things? In the world of business, the people who are most successful are those who are doing what they love. I can only assume that applies to organizations as well, since they are, as we speak, still controlled by people. The people who are most successful are those who are doing what they love. I know the language of love, value, meaning, caring, heart can seem just completely out of place in the realm of organizations and business. It's altogether too soft, apparently. Think about this for a second. I suspect you didn't blink when Buffett used the word love. Or when you talk about the value of the dollar today. There's nothing strange about meaning when you're analyzing a market. And caring. We're not exactly feeling soft when we tell someone, for heaven's sake, take some care with how you're treating that piece of equipment. Or even when we use the phrase customer care to describe our priorities or apparent priorities as an organization. What's that about? Pure cant, pure hypocrisy? And what about heart, the heart of your business? We both know that if you don't Know the heart of your business. You, your business and your bank balance are going to have some problems for a long time. My model for developing strategic alignment for organizations started with purpose. Why are you here? What are you here to do? From there we would tackle the network of for whom, with whom, with what, to what end? And with what levels of achievement of return. But more recently, I've worried that I missed out the key first step, the wherefore. Can an organization have a place of meaning where it holds a balance of value with its world? What was the wherefore of Tesla, Apple, Microsoft, Meta before their very first product or service? And by the way, can that place change? You can find Apple's original wherefore right there on the flyleaf of Make Something Wonderful, the collection of speeches and writings by Steve Jobs. He said in 2007, there's lots of ways to be as a person and some people express their deep appreciation in different ways. But one of the ways that I believe people express their appreciation to the rest of humanity is to make something wonderful and put it out there. He went on, and you never meet the people, you never shake their hands, you never hear their story or tell yours. But somehow in the act of making something with a great deal of care and love, something's transmitted there. And it's a way of expressing to the rest of our species our deep appreciation. So we need to be true to who we are and remember what's really important to us. A few things stand out for me there. His emphasis on being being comes first and then action. First one is a being and then one is a being that appreciates the rest of humanity. How do you express your appreciation to someone? You give them your gift. And with Jobs, I think he brought to his world his gift of making something wonderful to through his organization, beautifully designed, revolutionary and very useful personal communication tools. And finally, he didn't do that because he glimpsed a money making gap in the market. He had no idea whether it would make money or not. He did it because, as he said, it was really important to him. How do we know? Because he drove everyone nuts with insisting on was Jobs wherefore that gave Apple its place of meaning in the market. And it, like him, had to decide what was important and how to stay true to that meaning or not. Not once but twice when he left the company, the wherefore was removed and started to fail. When he came back, it returned. For a time after his death, it looked as if his heirs held fast that place of meaning. Now I'm not So sure, on the surface, finding the organization's wherefore may look no different from spotting a money making gap in the market and going for it. Actually, it's a lot different when you go purely for the gap in the market. You're looking for what you can get out of it, what you can extract. The level of quality you provide is entirely dependent on the market's tolerance or ability to find an alternative. So you'll have a few options if you want to stay afloat. You can periodically up your quality to get back into your market's levels of tolerance, but then you'll be bound to drop it again when the profits slip. Or on the other extreme, you can capture the market. You can become so big that you not only squeeze out your customers, alternative suppliers, but you probably own them. Even better, you can invest in so many different assets in different sectors that you'll be able to smooth out your profit volatility across the sectors, which is what those massive investment companies do increasingly. So, in the meantime, of course, quality of service goes down. Customers feel more and more powerless, resentful and irrelevant. Trust in institutions, including those that are supposed to protect you, diminishes. And here's the irony. Those organizations that treat their customer, their, their market as a commodity become a commodity themselves. They lose their differentiation. How much difference in service, reliability and performance have you experienced in the utilities, telecoms and even the banking sectors you've used? So going purely for profit, finding those gaps in the market and even controlling them may make some people very, very, very rich. But it kills innovation, it alienates customers, and it breaks down trust in institutions well beyond the marketplace. Why? Because there's no balance of meaning or value. There is no wherefore. There is a purpose, of course, a purpose to make money. Now, you may be saying to yourself, well, that's good enough. That's a good enough purpose for me. But actually it isn't. The trajectory of the marketplace over the last 20 to 30 years shows that the ability to make sustainable profits is narrowing for all but the very, very few. And chances are you're not one of the very, very few. SMEs, for example, account for around 90% of businesses worldwide and 50% of employment. Despite their significance, they're facing increasing difficulties accessing finance markets and resources and staying afloat. Bankruptcies are on the app. According to Brabners.com, global bankruptcies increased 9% year on year by November 2024. More larger companies are collapsing. The rise of bankruptcies amongst large organizations in Western Europe is 23%. The behemoths, however, remain intact because they have ensured they have most of the resources to do so. So purely transactional companies are struggling more and more unless they've been swallowed up by the very biggest. And the customers, that's us, are experiencing near zero customization, differentiation and yes meaning in products, services and distribution. Remember what happened when Steve Jobs was turfed up of his own company? Between the years of 1985 and 1997, Apple became yet another computer maker that struggled against IBM and others that that were producing cheaper and probably more reliable PCs. It retained its purpose. It lost its meaning. Jobs himself, apparently, though he made buckets of money through shrewd investments while he was away, probably also lost something of his wherefore when he formed a company that sold computers to businesses. Computers that needed cost efficient functionality, not beautiful design. When he returned, he brought back his gift born of that meeting place of appreciation between himself and his world, his customers and his people. And since his death, while Apple has continued to design excellent products, it may well be damaging itself by not holding true to that deep place of mutual value. I often look at changes it makes and wonder, did you do that because it's helpful to me or to you? The wherefore asks the question of organizations. In what space do we and the market value each other most? Where can we bring our best value and be recognized for that value? The value, the place of meaning can start with the founders, but it can also be changed by new leadership. Any leader can discover or rediscover their organization's place of meaning, no matter how soulless that company has become. Once unearthed, that meaning can then go on to be expressed by the organization in its purpose, in the products and services it provides, as well as the relationship with the market, the design, the care and the mutual respect and integrity. Ironic, isn't it? By the way, that the billionaire Steve Jobs used the words appreciation, gift, care and love to describe his approach to his work. In the meantime, I keep on having to reassure myself, let alone you, that I'm not sounding corny. So, are heart, love and gifts too soppy? Do they have a place in the hard world of enterprise? I think there's a clue in that phrase, the hard word of enterprise. Enterprise may be tough, resilient, sometimes even ruthless. But it's not hard. It's not indifferent. What is ultimately indifferent is stock trading or value trading. And it is that attitude that has been imported into the world of enterprise. And with it, it's language. I've never heard the words care, love, quality or make something wonderful on a trading floor. Indifference in both the language and the quality of service and product made itself felt not just when private equity started buying up service production and increasingly now manufacturing companies, but even more so when those self same PE companies were dominated by even more transactional shareholders, the investment institutions and mutual funds. If I'm buying into your company or investing into a private equity company that's buying your company, my interest is only, or at least primarily on how you impact the value of my equity. Financial and investment institutions are largely indifferent to the quality of your service or or product. But your customers are not. As Larry Ellison, the co founder of Oracle, is quoted as saying, don't mistake any of this for altruism, fear and greed just doesn't work if you want to be successful. Quality and service just works better. And here's the thing. To provide quality, you have to care about the product you're providing. And in order to provide service, you have to care about who you're providing it to. If you think that your customers are there just so that you can make money out of them, then even if you initially think that quality and service is the way to get money out of their wallets sooner rather than later, you'll have to cut back on both because your priority is increasing profit. The irony, of course, is that the customer who came to you for quality and service in the first place will walk away. Hence, as Ellison said, quality and service just work better. However, Ellison, whether he knew it or not, had to find his wherefore, his place of mutual value with his world to know what quality and service actually meant, what levels both he and his world expected before his company started providing it. So find your and your company's wherefore, then you can go on and act. What does this mean in practical terms for an existing or new organization? Start your strategic analysis not with what is our purpose, but with the question where are we? For where does this company belong? Where does it and its context, its customers, its stakeholders meet in value and values? Don't think like an investor institution. Think like a member of your society. Think and talk not just about making something wonderful, but your organization being something wonderful because of the way it gives and earns respect and integrity as employer, as producer and value to its society. Whether you are a manufacturer, a financier, a designer, a media company, and yes, a private equity fund, think about where your organization and its context, its market, its customers can be in balance. Care about your customers and you care about what you're providing for them. Care about your customers and they'll care about you. Understand? Where your place is, your wherefore, and then work on your what for your purpose. Do that and you'll be rewarded in spades. I'm Stephen Barden. This has been another episode of the Power of Balance. Thanks for listening.