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CuriousLeaders explores how leaders can think differently about sustaining commercial success.   

The key drivers of environmental (and social) harm are not generated by people who are deliberately trying to wreck the planet while growing their business.

The real driver is a myth (accelerated by all things digital) that without exponential business growth there is only decline, unemployment, poverty and ‘death’.  This is particularly true in the corporate world where pressure to deliver short- term shareholder value creates unintended consequences both internally and externally.

It’s clear that Millennials want businesses ‘to focus more on people (employees, customers and society), products, and purpose – and less on profits (The Deloitte Millennial Survey 2016).  At the same time, the executive leadership of any large company has to contend with immense complexity and the competing demands of multiple stakeholders where investors take precedence.

Today, multinational corporations grow by acquiring, merging and expanding far beyond their home markets.  Homo Economicus has broken nature’s rules for the preservation of a healthy ‘ecosystem’. In a confined ecosystem, unless animals or plants add value to the collective whole they become extinct.  Yet, ultimately there is one finite ecosystem called planet earth.  So, how can a company grow its immediate ecosystem responsibly while adding value to the global one we all share?

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Leaders and companies that manage growth conscientiously can be both sustainable and profitable.  Instead of ‘getting around’ regulatory compliance and treating CSR as a ‘department’ they seek to do the right thing for all stakeholders (customers, employees, suppliers, investors, communities, and the environment itself).  For instance, Unilever has extended its business ecosystem to include the health of the environment, disadvantaged customers and environmental activists.

In ‘Firms of Endearment’ R.S. Sisodia, J.N. Sheth, and D.B. Wolfe make a business case for conscious leadership. The organizations researched choose to do the right thing for all stakeholders because they believe it is mutually beneficial. This includes companies like BMW, Caterpillar, Harley-Davidson, and Timberland. They hold a more long-term perspective, favour organic growth and actively focus on creating cultures that value more than wealth generation.  The great news is that they are commercially successful.

They have out performed the S&P 500 by 14 times and Good to Great Companies by 6 times over a period of 15 years.

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This was the question behind a recent conversation CuriousLeaders had with Uwe Lübbermann, the founder of Premium Cola.

Premium Cola is a soft drink based on a recipe that was changed by new owners of the iconic brand Afri-Cola. Premium acquired the original license as a collective and started producing it in partnership with drinks manufacturers. Today the beverage is sold in over 200 cities across Germany, Switzerland and Austria.

Uwe is passionate about equality.  Everyone is paid the same.  He sees Premium not as a product manufacturer, but as a service that moderates and balances the needs of all stakeholders.

‘We don’t have a single contract with any of our 1680 partners and distributors. And we haven’t had a single law suit in 14 years. That’s success for me’ says Uwe.  No contracts allows for immense flexibility since a decision that was taken last week can be replaced immediately when relevant.

All decisions are made by a consensus of 150 out of the 1680 ‘collectivists’ who represent every element of the value chain (roughly 50% commercial partners and 50% consumers).   Uwe describes himself as a leader without formal power.  “My leadership style is a mixture of Forrest Gump and an Eagle Scout – I create a balance and facilitate decisions and relationships.  I win trust by suggesting how to solve problems.  If a recommendation from Uwe is vetoed he has to come up with another suggestion until all stakeholders agree.  His criteria for a good decision?  ‘no veto’ !

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Everyone involved with Premium has a strong sense of collective responsibility. Growth is monitored carefully so as not to compromise the existing culture.  “In the first 7 years we grew very slowly. We didn’t have any structures. Then one quarter we grew by about 30% and couldn’t pay our suppliers on time.  Fortunately one of our biggest wholesalers offered to pay for his delivery faster which is not typical!”

Despite pent up demand for product Premium has decided to cap the speed of annual growth at 10% to safeguard its culture: “we know that we can’t grow too fast, but we don’t really know what the maximum size of the company means yet. We’ll know when we get there!’’.  Uwe then tells me sales are up 19% over last year’s number and that he is already looking for ways to slow down a bit. I asked him how he handles investors:

 “We don’t have any. Investors have to be interested in maximizing profit. If one of our partners wanted to maximize his share (of the value of a bottle) somebody else would have to suffer. We try to avoid that.”

As featured in Salt Magazine • June 24, 2016

 

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