So we thought about how stakeholders let's us see business and society as going together. And by the way, thinking about stakeholders isn't separate from thinking about philanthropy and corporate social responsibility and the environment. Usually these things build together. We've talked about how thinking about stakeholders has to go along with purpose. I want to add to that two principles that often times are a little counterintuitive, because the standard story just can't deal with these principles. They're worth spelling out because they are really important. In building these new models. The first principle I'm going to call the Interconnection Principle. The Interconnection Principles work like this. Because stakeholder interests go together over time, we need solutions to issues that satisfy multiple stakeholders simultaneously. Many years ago, in the United States, Datsun, now Nissan ran developed an engine, it ran on just regular gas. This was before unleaded gas and they, they planted a tree for every one you test drove. They figured out a way, they figured out a way to satisfy multiple stakeholders simultaneously. Companies need to figure out how to creating value for one stakeholder implies value creation for another. It's about win, win, win, win, win. It's about how when you do something for customers you also make the community greener, etcetera. So the second principle that's involved in this is that you can't think about trade-offs. It's something I want to call the No Tradeoff Principle. If we take the stakeholder idea seriously, we try to never trade off the interest of one stakeholder versus another. Certainly not, continuously over time. When you trade the interest of one group off versus another, continuously over time. If you always make trade offs in favor of shareholders versus employees, what happens? In a relatively free society it's straight forward. employers would use the political mechanism to have their rights enforced. If you always trade off the interest of a customers over suppliers, what's going to happen? Suppliers are going to go to your competitors and help make your competitors better. Because you're not creating enough value for them. So the idea here is the No Tradeoff Principle says, whey you make customers better off, how does that make suppliers better off? And when you make customers and suppliers better off, how does that make employees better off? And when you do that how does that make communities off? And when you do that, how do you make. Share holders or financiers better off, and by the way, if you make customers worse off you better understand how to improve the trade-offs. When you have to make a trade-off the next question is how do I improve the trade-offs for both sides. This was brought home to me, listening to a CEO talk about again, example from the environment. This was a large chemical company. They were pretty routinely seen as being a pretty dirty company. And the CEO decides to change things, and so they announce that they're going to be committed to zero pollution. Now that's going to take time. It'll take actually generations, big co, company, worldwide company. And they're going to have a, you know, a pretty business like process with milestones and this kind of thing. And the CEO as he told the story is going around to all the facilities. telling people here is our new approach, you know, we mean this, we're going to, we're going to clean up our act. And the engineers at one facility came to them and said you know, we just can't do this. This planting equipment is too old, this process is too dirty. We can't meet the interim standards, the interim milestones. We'll never do that, and the CEO said, well okay, you know we're serious about this, so we'll have to close this plant. So the engineers walked away. Two, three weeks happen, go, go by, you know what happens, the engineers come back. And they say to the CEO well actually you know, [LAUGH], looks like a miracle. We've figured out how to do it, and [LAUGH], you know, so we can, you know, it's going to work for us. You don't have to close the plant. The CEO said, well how much is it going to cost? He's thinking you know, several millions of dollars, big plant. And the engineer said, actually, we're embarrassed to say, if we do it this way, we're going to save money. What's happening? Tradeoff, community, that's where I would put environmental in the stakeholder model, and employees. The CEO says okay, we'll make a tradeoff if you can't figure it out. Community wins, employees lose, okay? This is unacceptable to the employees. They kick into gear, the only infinite resource we have, and that's what's up here. They figure out how to be creative, and, how to make this plant more efficient, greener, safer, cleaner and save money. And what we find is, when we allow people to exercise their creativity, we see this again and again and again. What I'd like you to think about, is how do the No Tradeoff Principles, don't look for trade-offs among stakeholders. And how to the interconnection principles see stakeholders as going in the same direction. How do they apply, not to the companies you know? But how do they apply to how you spend your time? Do you constantly make trade-offs? Or do you look for ways for trade-offs to disappear?
