Short-Termism Be Gone: Investments for Total Shareholder Returns

WEBVTT

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What's working on purpose anyway? Each
week we ponder the answer to this question.

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People ache for meaning and purpose at
work, to contribute their talents passionately

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and know their lives really matter.
They crave being part of an organization that

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inspires them and helps them grow into
realizing their highest potential. Business can be

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such a force for good in the
world, elevating humanity. In our program,

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we provide guidance and inspiration to help
usher in this world we all want

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Working on purpose. Now Here is
your host, Doctor Elise Cortez. Welcome

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back to the Working on Purpose Program. Thanks for tuning again this week.

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Great to have you. I'm your
host, doctor Elis Cortez, to a

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new live from Dallas, Texas,
which is home based for me. If

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you don't know me yet, I'm
a management consultant specializing in meaning and purpose,

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organizational law, of therapist, inspirational
speaker, of social scientist, and

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author. My team and I help
companies discover and articulate their purpose to throw

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it through their culture and operations.
We work with forward thinking and forward reaching

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organizations to develop inspirational leaders who create
cultures where people actually want to come to

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work and do their best and we
provide programs like the Grab Your Gusto that

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enable individual team members to discover and
un least their passion and purpose at work

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to catalyze fulfillment, engagement, and
productivity. You learn more about us and

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how we can work together at a
last Cortez dot com and Gusto dashnow dot

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Com. With us today is Gregorymolano. He's the founder and CEO of Fortuna

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Advisors, a thought leader and trusted
advisor in helping clients transform their value creation

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potential through bold improvements to manager insights, decisions, and behaviors. Is also

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author of Curing Corporate short Termism Future
Growth Versus Current Earnings. We'll be talking

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about their problem of short termism and
companies today, how pay structure can contribute

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to the problem or help humilierate it, and how companies can build a culture

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of ownership to best overcome it.
Jorge today from Pontevedra Beach, Florida.

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Greg, welcome to Working on Purpose. Hi, thanks having me on.

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You're so welcome. And look at
this beautiful book you created. Oh my

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gosh, this thing is gorgeous.
So happy to have you on, Greg,

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Thank you so much. So I
want to get right into it,

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because, as you know I talked
about before on air, I've hinted at

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the importance of addressing this notion of
the quarterly earning cycle here. But your

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book is very much about ending corporate
short termism, so I think it probably

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it's important for us to start by
talking about defining what you mean by short

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termism in this connection to the quarterly
earning cycle. Let's start there. Yeah,

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I mean, the quarterly earning cycle
is clearly one of the big problems

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because it gets people to focus too
much on short periods of time, which

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takes their eye off the ball on
longer periods of time. And it wasn't

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really the intent of the quarterly earnings
process, right, It was just to

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get a good read on how things
are going up, progress report, if

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you will. But over time it's
become such a big thing that companies they

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make commitments of what they think they
can do, and then if they feel

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like they're falling short, they have
to find some way to try to meet

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their commitments, and unfortunately sometimes they
cut expenditures that are really investments in the

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future, could be advertising, could
be trained, could be research expenditures in

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order to meet this quote as earnings, and maybe they do meet the earnings,

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but they've done something much worse for
the future as a result. And

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what we really really been trying to
work on over the years is a way

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to change the management paradigm inside the
company so that they think more like long

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term committed owners, still worried about
delivering current performance, but in the context

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of at the same time investing in
the future. One of the things that

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you also mentioned in net sort of
general conversation is you say that executives tend

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to fear that their share prices will
be crusted if they don't deliver earnings per

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share or EPs that meets or exceeds
Analystic consensus estimates. I think that's really

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important to talk about as well.
Yeah, we've done some really interesting research

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on what actually happens in the market, and we love quoting Margaret Mead who

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said what people say, what people
do, and what they say they do

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are entirely different things. It's as
true about investors as it is about the

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rest of us. And you know, what an investor says when you're speaking

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to them and the way the market
actually behaves are actually quite different. Very

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often, you know it sounds like
the world is going to fall if you

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don't meet this quarter's earnings. We've
done studies to show that within a quarter,

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the meeting of consensus earnings, that's
the expectations of the analysts that cover

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a company, is actually really important
to the share price in that quarter.

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But as soon as we go to
longer periods of two or four or eight

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or twelve quarters, the amount of
improvement matters so much more than the frequency

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with which you beat the analyst expectations. And you know, the worst thing

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is if you keep beating their expectations
but your performance is going down. You

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know, that's bad performance, and
that leads the very bad share price performance.

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So once we can get people off
the myopic view of only the quarter

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and thinking about the longer term,
they become a little more willing to miss

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sometimes what the analysts expect in order
to do the right thing for the long

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term. And when they do that, they often get the much better performance

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over those longer periods of times.
And kind of taking it home a little

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bit further, because I really like
to be able to share how you're right,

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because it's very crisp and very compelling, easy to understand, what you're

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saying. So you say, one
of the biggest obstacles to economic growth,

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employment expansion, financial security, and
social well being is that companies are investing

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less and less in building their future. Instead are devoting more and more capital

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to activities that provide a quick fix
but deliver a few, if any,

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lasting benefits. So building what you
were saying before, but really showing more

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of a bigger picture there. Yeah, And as far as people or companies

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investing less in the future, just
to be clear, there are some companies

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that are investing a lot in the
future. Amazon, for example, over

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the last twelve months has spent fifty
one billion dollars on what the investor treat

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is R and D and that's clearly
a lot of investment in the future.

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And they've been doing that all along. It's why they weren't showing a lot

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of accounting earnings. They had decent
earnings, but they were investing it all

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back into the company every year.
And if you'd look back over time,

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that investment was only one point seven
billion dollars back in twenty ten. So

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one point seven billion, then fifty
one billion. Now I did the math

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just before we came on here,
that's a thirty seven percent growth rate in

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the amount of investment back into the
business every year. And so there are

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some companies out there that are making
big investments in the future, but an

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aggregate company, these are investing less
in growth and therefore they're growing less.

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If you look, for example,
at the ten years through twenty nineteen,

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so kind of ending before COVID kicked
in, and then you look at the

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ten years before that. In the
more recent period, revenue growth in aggregate

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by all the companies that were public
for the whole period was about three percent

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less than it was in the prior
period. So they're growing less, and

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their share performance share price performance of
the total returns they've delivered the shareholders is

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about half what it was in the
prior period. So they're creating less value,

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they're growing less, and it's all
because many of them, again not

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at all Amazon, and there were
many other companies that are investing more,

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but many of them are investing less
in the future. And I believe there

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are two things driving this. One
is this myopic short termism, and the

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other is more and more of investment
is in intangible assets, brands, technologies,

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things that are not don't appear on
the financial balance sheet of the company,

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and those investments are expensed for accounting
purposes, they're treated as just a

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period expense, even though they're obviously
investments in the future, and so the

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pursuit of quarterly earnings puts extra pressure
on those kind of investments. It doesn't

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put pressure on like building bricks and
mortar, which is more the sort of

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old economy and puts pressure on building
brands and building technologies. The whole expenditure

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on innovation, which is an increasing
problem as we get into more and more

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of an economy that's dependent on innovation. Okay, So now that brings me

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to a place that I want to
talk about the new term that you taught

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me that I've never heard before,
which is really, I think very pertinent

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to this whole discussion here, and
that's sand bagging. So you say that

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from an internal corporate perspective, the
problem is hands down the very worst manager

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of behavior problem. So if you
could share with this more about what is

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sandbagging and why is it such a
problem. Yeah, I didn't invent the

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term, just to be clear,
but if I go back to its origin,

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it's actually a military term, a
sandbag is something they would pile up

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to fortify a field location, and
you'd have these sort of piles of sandbags.

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When I was young, I played
with g I Joe and we had

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little sandbags we would pile up,
and so that's how I guess I first

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became familiar with it. But it's
intended to protect you from an fire by

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having these bags of sand between you
and where the enemy is. And in

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a similar way, sand bagging in
a corporate way is to protect your bonus.

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And that's whether the term really or
the analogy where the term really comes

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from and what it actually happens is
in most companies, you're measured on some

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measure of profit or what have you
against your plan. Right, submit a

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budget or a plan to your corporate
headquarters and they review it and they say,

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you know, you should be planning
for this, and you say,

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I should be planning lower, and
they want higher, and you go back

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and forth and back and forth,
and you kind of negotiate a target,

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and in that process, the manager
of the business has an interest in trying

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to get the planned profit as low
as possible so that whatever they wind up

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achieving it looks really good against that
goal and they make more money in terms

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of the financial bonus. So sandbagging
is the act of understating what you think

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is going to happen, and that
really isn't great for the business. You

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know, we're basically paying people to
plan for mediocrity, and my experience,

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when people plan for mediocrity, that's
often what results. What we want is

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to get away from measuring people against
their plan so that they don't have an

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incentive to sandbag, and instead they
have an incentive to reach for the stars.

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As they often say, I'd much
rather have people plan for ten percent

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growth and achieve a percent growth rather
than planning for two percent growth and achieving

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three percent growth. And so you
know, when we focus more on absolute

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improvements and less on performance against plan, we eliminate the sandbagging and we encourage

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people much more like an entrepreneur to
sort of plan for the to reach the

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stars rather than planning for the lowest
plan I can possibly get away with.

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Really appreciate how you explain things.
Great, it's very Christmas, very clear,

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easy to follow, So thank you
for that. So you were talking

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about you're welcome, You were talking
about just you know, managers in general

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or corporate folks in general. So
then if we'd build on to that.

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The next thing that I found terribly
disturbing, if not even really kind of

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bordering on despicable, is you say
that when serving over four hundred chief financial

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officers, you found that some eighty
percent of those CFOs express their willingness to

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sacrifice shareable your value simply to meet
or beat a quarterly earning school Really,

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yeah, it is very disturbing.
I mean, the research that I quoted

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in my book was from a two
thousand, a wonderful two thousand Poland paper

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called the Economic Implications of Corporate Financial
Reporting. It was produced by Professor John

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Graham and Campbell Harvey from Duke University
and Shiva Ragapole of University of Washington in

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Seattle, and they surveyed over four
hundred executives and it was just amazing.

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Over eighty percent of them openly admitted
that they would take an action that limited

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the long term value of the company
in order to meet quarterly earnings. And

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I guess two things. One is
if eighty percent of them admitted, how

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many really do it and don't admit
it? Right? I was shocked at

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eighty percent would admit it. But
you know, and then on top of

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that, that was in two thousand
and five, and you know, I've

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been doing what I'm doing for almost
thirty years. Now it seems to be

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getting worse to me, not better. So the idea that you know,

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more than eighty percent of companies,
you know, actively knowingly do things that

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are not in the long term interest
to the company in order to meet a

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quarterly number, is not good,
right, I mean, And by the

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way, my experience doesn't counter that. I mean, I've worked with hundreds

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of companies over the last thirty years, and I see it all the time.

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I see, you know, companies
getting towards the end of a year

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and realizing they're a little short of
their plan, and you know, cutting

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some training program to reduce expense and
meet the meet their budget, or you

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know, shifting an R and D
project into next year, delaying when it

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might eventually come to market in order
to meet you know, a quarterly number

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now, or offering discounts to your
customers to buy in December instead of January,

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and you know, you make less
money overall, but you get it

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in December instead of January. And
an owner would never do that. An

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owner who founded and manages their own
company would never play those games in order

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to try to get payments at the
end of the year. They realize that's

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not in the good long term interest
to the company, and then they would

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just never do it. But in
public companies we see it happen all the

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time. So you know, here
we are, we're talking about the problem

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of short term and that's the whole
idea for this segment is to really showcase

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this. But I think we're doing
this fantastic job of that. And let's

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take another step here. This was
also really really fascinating and it made me

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really think about, well, gosh, no, wonder we were a problem

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with engagement if this is sort of
an issue here. So you say that

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in some companies things are so bad
that the people preparing the plan, No,

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it has no meaning that they are
just compiling data and preparing materials as

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parts of a routine designed to check
a box and take home paycheck. Yeah.

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I mean the truth is, in
most organizations, planning isn't really about

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planning at all. Ye, planning
should be about you know, what do

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we want to try to achieve?
What are the initiatives what resources do we

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need. Let's you know, marshal
all those resources to achieve the initiatives.

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But in most companies, it's really
it's a game, right, It's a

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negotiating game. I'll tell you what
I think I can accomplish, and I'll

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underplay all the good things that are
going to happen, and I'll overplay all

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the bad things are going to happen. And then you know, I submit

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a plan to headquarters, or if
it's the consolidated company, they submit their

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plan to the board of directors and
see thing happens, and then the other

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side, of course, looks at
it and they come up with all these

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reasons why the goals should be higher, and you know, there's this big

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negotiation that goes on and nobody really, nobody really benefits, right, And

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it makes the It creates a lack
of transparency in the organization. That's a

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problem. You know, if something
good comes up down in the business,

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people have no incentive to tell their
boss because then they'll just raise their targets,

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you know. So it's it's and
that stifling of information can't be good,

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and it creates an environment where people
are on opposite sides of the table.

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You know, the person goes to
see their boss and we have opposite

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goals. You know, when we
create more of an ownership culture where improvement

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matters, not performance against the goal. When we're planning, it's like we're

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on the same side of the table, right. If we can agree on

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things that will make performance better,
we all get paid more, me and

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my boss, and so you know, that's a much more constructive method of

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getting people to collaborate and work together
than what the typical negotiating game that goes

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on, yes, which is of
course we're going to talk about next to

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go ahead, and let's go and
grab our first break where we've been on

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the air with Greg Malano. He's
the author of Curing Corporate short Termism Future

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Growth Versus Current Earnings. I'm your
host, Doctor Release Cortez. We've been

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really talking about and trying to help
showcase the problem of short termism. After

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the break, we're going to tackle
pay and performance and the model our CE

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that Greg and his team have come
up with. Staying with us, We'll

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be right back. Doctor Release Cortez
is a management consultant specializing in meaning and

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purpose and inspirational speaker and author She
helps companies visioneer for greater purpose among stakeholders

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and develop purpose inspired leadership and meaning
infused cultures that elevate fulfillment, performance,

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and commitment within the workforce. To
learn more or to invite a Lease to

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speak to your organization, please visit
her at a Lease Cortez dot com.

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Let's talk about how to get your
employees working on purpose. This is working

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on Purpose with doctor Elise Cortez.
To reach our program today or open a

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00:15:05.919 --> 00:15:11.639
conversation with Elise, send an email
to Elise ali Se at Elise Cortez dot

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00:15:11.639 --> 00:15:18.399
com. Now back to working on
Purpose. Thanks for staying with us,

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00:15:18.399 --> 00:15:22.360
and welcome back to working on Purpose. Before we get back into the program,

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I would like to invite you to
check out my book called Purpose Ignited,

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How Inspiring Leaders ignite passion and elevate
Cause. It's on Amazon. I

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wrote it to awaken readers to their
passionate purpose and helped transform them into inspirational

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leaders to enliven the workplace and elevate
the contribution of business to all its stakeholders.

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And I use the content as a
basis for my vitally Inspired Leadership program

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and the Gregor Gusto program, so
hope you'll check it out with me if

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you're just joining the program today.
My guest is Greg Mlano. He's the

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founder and CEO of Fortuna Advisors,
a thought leader and trusted advisor and helping

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clients transform their value creation potential through
bold improvements to manage your insights, decisions

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and behaviors. Is also the author
of Curing Corporate short Termism, Teach Growth

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Versus Current Earnings. I'm your host, doctor Les Cortez. So for this

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next segment here we want to focus
on the problem of pay and the opportunity

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as well as this measurement model you've
come up with Ourse. So before we

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do that, let's sort of situate
the opportunity here. So you say in

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your book, strategic position comes from
the differentiation achieved by developing distinctive and meaningful

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products or service attributes, stronger brands, and better manufacturing or service delivery processes.

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Many give two little credence to these
important drivers strategic thinking and care only

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about the financial numbers, which is
a very bad idea. Goals are generally

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meaningless without a strategy to achieve them. So let's start there talking about pay

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and performance and where are we actually
trying to get to. Yeah, I'm

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really glad you asked about this because
it's really the ultimate truth, right.

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Differentiation is where value comes from.
If you have a superior product, people

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are going to love that product and
they're going to be willing to pay for

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it. And if you have superior
ways of producing or delivering that product,

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you can do so more efficiently than
others, more quicker than others. There

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are advantages that are beneficial to the
consumer, which is what attracts them to

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want to buy your products and services
and pay the prices that you ask.

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And so all value ultimately comes from
doing something well and better than the competition.

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And unfortunately, the focus on short
term earnings and financial numbers in total

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often usurps some of the investment that
produces the differentiation. I've worked with companies

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over the years where the management had
great brands when they got there, and

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then over time they produced decent financial
results, but the real value of the

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brands eroded. That's a big problem. I think that companies should be willing

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to invest in the future and build
brands and build technologies and build these differentiation

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capabilities while they're trying to deliver current
performance and getting the two happening at the

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same time as it's really important.
Then if you just envision the typical company,

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and this is an example I created
recently in a conversation with a client,

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so I'll repeat it here. Imagine
a company that expects, you know,

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five percent growth per year in profits. Just make it a really simple

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example. And there R and D
comes in and says, you know,

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we have a new product idea.
We've got to spend some money. We're

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really confident in it. And you
know, if we if we achieve what

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we think we could achieve, instead
of having five percent growth over the next

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three years, we're going to have
ten percent growth over the next three years.

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But actually the first year is going
to be dead, and then we're

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going to grow at more than ten
percent after that sort of catch up to

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this ten percent growth rate. And
you know, if you think about senior

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management that has proposed this, this
investment in in something that might create a

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brand new, great product, you
know, the reception depends a bit on

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who the company is. You know, if you presented that inside of Amazon,

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they would jump at it. Right. They're not worried about today's profit.

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They're worried about constantly building what's better
and better for the customer, and

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you know, they want to make
money over time, not not not so

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worried about it right now. But
you know, unfortunately, you know,

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I guess for those people listening think
about you know, would your company jump

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at that or would they be,
oh, no, we can't miss next

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quarters earning, so we'll have to
think about that project some more. Unfortunately,

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that's that's all too often the case. They don't want to make those

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investments that will lead to new,
better products, new better brands, largely

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because they don't want to miss next
quarters earnings. They feel like if they

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just smear a little bit of research
money around so they can tell everybody they're

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working on innovation and so forth,
that's really the goal. It's not really

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creating you know, breakthroughs and creating
real innovation that matters to them. It's

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a matter of being able to basically
tell people we're spending money in innovation,

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while in reality they're mostly just focused
on small incremental improvements period by period.

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Yeah, so missing the force for
the trees, it seems to me.

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But exactly so. Then adding to
that, we wanted to focus on this

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segment. Then you've already talked about, you know, the problem of continuous

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improvement. So now if we can
go ahead and add on you talk about

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in your book about in addition to
these complicating challenges are a counterproductive incentives proud

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of by today's prevailing practice is a
performance measurement and compensation. So could you

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speak generally about what's problematic about them? Well, incentive plans, as I

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say said earlier, incentive plans usually
are based on measuring something some measure of

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performance against its plan against the plan
of that nature. And we think it's

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better to focus on continuous improvement.
And actually the term continuous improvement throws some

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people because they think, yeah,
you said, it's like every year I've

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got to improve. I can improve
every year I'm going to a business with

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maybe commodity of volatility, commodity price
of futility or something like that. But

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the way I like to think about
it is it's cumulative improvement. You know,

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how much improvement can I generate over
the next three to five years.

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Forget about the pattern of how I'm
going to get there. It might go

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up and down a little bit,
you know, based on externalities and patterns

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of investment internally and so forth.
But what I really want to know is

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where am I going to get through
three to five years from now? And

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if I focus on that, and
I create an incentive system that encourages me

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to focus on that and not to
focus so much on the individual quarter in

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a year, I get much better
behavior. And you know, we find

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that one of the real big problems
inside companies is they use too many measures

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of performance, and each one of
them is incomplete. So they'll look at

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growth, they'll look at profit margin, they'll look at return on capital,

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they'll look at free cash flow.
They've got a bunch of measures. They've

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got this this menagerie of measures,
if you will, and everything they look

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at. Every decision they look at. You know, three measures get better

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and two measures get worse. It's
a good or is it bad? I

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have no idea. Am I going
to make more money? Is it going

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to make the share price go up? Is really very unclear. And you

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know, and each of the signals
that they get individually would tell you to

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do something or not do something,
but collectively it all doesn't really tell you

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much. It's just like a cloud
of information. And this is why companies

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very often struggle to make decisions.
You know, I've worked with companies that

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are making small, small acquisitions.
They're not very sizeable in the context of

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the size of the company, and
they have meeting after meeting after meeting.

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They can't really make a decision because
they don't have any real clear answer to

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what value is and how value is
created. So, you know, this

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focus on measuring, you know,
too many incomplete measures against plans leads to

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all sorts of behavior problems. And
in fact, I spoke recently at a

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conference. It was really an HR
oriented conference, and I spoke specifically on

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what is the behavior that you're incentive
plan is motivating? And afterwards, I

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asked a handful of people that I
met with one on one after my session,

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you know, do you ever in
your process think about the behavior that's

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being motivated by We were specifically talking
about executive compensation, and they all sat

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their heads. Know that they spend
their time looking at what everybody else is

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doing, and what they want to
do is be somewhere in the middle,

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so they can't be criticized for doing
anything wrong even when they know they're encouraging

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bad behavior. As long as it's
in the safe zone of kind of doing

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what everybody else is doing. It's
okay, and so this problem really perpetuates

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itself in a healthy way. Oh
yeah, you talk about that very very

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clearly in your book. By the
way, it's very well explained. So

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then that then cuses up beautifully.
Then Greg to talk about CEO pay,

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and you say, it's not that
it's excessive pay is the issue, but

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rather how they are paid in a
way that is virtually independent of performance.

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To help us understand what's the disconnect
here. So there are two problems.

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Okay, there there are bad compensation
programs, but there's also bad journalism,

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to be fair, and so let
me talk a little bit about that first

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and then I'll come back to the
bad compensation problem. Journalists only complain about

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the amount of pay, right,
oh, being paid too much. They

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try to create this like almost like
class warfare kind of you know emotion.

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And you know, does everybody get
upset about the money that like star athletes

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are paid or that like you know, celebrities are paid not not so much,

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but they get upset about CEOs.
You know, Jerry Seinfeld is almost

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a villionaire, and did he create
more value than the CEO who managed a

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company with a hundred thousand employees to
grow employment and grow the share price and

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do so forth. So I think
the amount of pay it shouldn't be the

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focus, and that's really a problem
of journalism. To me, the bigger

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problem is how they get paid.
And some years ago we published an article

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and we plotted on one access the
amount of money the CEO was paid,

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and the other access the share price
performance. And it was a cloud of

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data with no meaningful relationship at all, And that, to me is the

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problem. I want a system where
when people do good things that create value,

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they get paid more, and when
they don't get paid less, just

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like an owner. Right. I
want them to be treated just like an

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owner. I don't want them to
be able to negotiate their way out of

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problems and get target relief performance target
relief to get a bonus they don't really

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deserve, and and all that sort
of thing. We see. Funny things

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happen too if a compensation committee sets
the targets a little tough one year and

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the management does well in terms of
their share price, but they don't get

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paid that well. They go out
of their way to kind of make up

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for it the next year, and
they wind up with really just exacerbating this

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negotiation problem and further disassociating performance from
from or pay from performance, which is

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really not really not not not great. Uh. You know, I want,

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I want CEOs to earn more than
star athletes and uh and and celebrities

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when when they're really running a successful
company and creating a lot of value.

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And but I also want their pay
to drop precipitously. You know, they're

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all pretty wealthy people to begin with. They don't have to have pay this

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year to survive, and so to
get them really motivated to not have a

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really bad year, the pay has
got to go down when we get to

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the other side, and that that
sort of sensitivity to pay pay to performance

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is really not great. We just
published an article based on some research I

399
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did with a couple of colleagues showing
that you know, measuring just measuring improvements

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and performance the way you know we
do, which we'll get into I'm sure

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00:25:52.960 --> 00:25:57.559
in a little bit, uh,
provides so much better linkage or so much

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stronger correlation to share price performance then
what actually happens inside of companies and so

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whatever they're doing now is really just
disassociating pay from performance. And it's really

404
00:26:10.720 --> 00:26:14.359
hard to say that we're motivating any
good behavior when there's really no correlation between

405
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what it is we're trying to motivate
and how much pay we're giving. So

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it's a mess. It's really a
mess, and it needs it needs to

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be fixed. It needs to the
alignment needs to be improved if we ever

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want people to really focus on embracing
that long term value creation view. H

409
00:26:30.440 --> 00:26:33.880
Well, it seems to me that
what you came up with here, your

410
00:26:34.000 --> 00:26:40.359
r C does give companies a consistent
framework to make high level decisions regarding strategy,

411
00:26:40.440 --> 00:26:42.839
resource allocation, and investments. And
I would I think I would imagine

412
00:26:42.839 --> 00:26:47.240
too compensation, but maybe that's not
true. But if you would at this

413
00:26:47.279 --> 00:26:52.319
point tell us more about our ce
your model. Okay, So OURSE is

414
00:26:52.359 --> 00:26:57.079
the acronym for residual cash earnings.
In reality, when we use it inside

415
00:26:57.079 --> 00:27:00.559
of a company, we name it
after the company, so it's a company

416
00:27:00.640 --> 00:27:06.279
name cash earning. So each company
has kind of a measure that is people

417
00:27:06.319 --> 00:27:07.680
feel like is their own, which
is I think good good, rather than

418
00:27:07.720 --> 00:27:12.599
having some outside trademarkd acronym. But
the principles behind it are very simple,

419
00:27:14.039 --> 00:27:17.519
and the way I explain it to
people is not by trying to explain finance,

420
00:27:17.640 --> 00:27:21.039
but just think about a simple story. Let's imagine, you know,

421
00:27:21.359 --> 00:27:25.720
if you're one of the listeners.
Imagine you open a small retail store and

422
00:27:25.799 --> 00:27:29.480
you invest your life savings in it, and also one of your neighbors invest

423
00:27:29.559 --> 00:27:30.960
in it as well. It's your
store, but they're they're an investor,

424
00:27:32.000 --> 00:27:33.920
side by side with you, And
just as you get started that that neighbor

425
00:27:33.960 --> 00:27:37.279
says to you, you know,
I expect to return on my investment,

426
00:27:37.799 --> 00:27:38.920
and you say, of course you
do, and they say, well,

427
00:27:40.039 --> 00:27:42.440
I've done some analysis and I've talked
to my accountant and a few other people,

428
00:27:42.480 --> 00:27:45.440
and I'd like you to earn ten
percent on my money. And you

429
00:27:45.480 --> 00:27:48.240
say, okay, that's great.
So at the end of the year,

430
00:27:48.279 --> 00:27:51.559
you can figure out how much profit, how much cash profit did I generate,

431
00:27:52.039 --> 00:27:55.240
and what would I have needed to
generate for it to earn a ten

432
00:27:55.279 --> 00:27:59.000
percent for me and the other investor, and I can compare the two and

433
00:27:59.039 --> 00:28:02.359
if I hadn't generated more profit than
covering that ten percent, what we call

434
00:28:02.400 --> 00:28:04.759
a capital charge, if I can
generate more profit than that, then I've

435
00:28:04.759 --> 00:28:11.079
created value. And if I've generated
less profit than that of destroyed value,

436
00:28:11.480 --> 00:28:15.720
and r C is just the difference
between the cash profit I generate and that

437
00:28:15.799 --> 00:28:18.839
ten percent of investment. Actually these
days, with interest rates where they are,

438
00:28:18.839 --> 00:28:21.480
it's usually more like eight percent,
but I use ten percent because the

439
00:28:21.480 --> 00:28:23.200
math is easy. But the point
is it's it's very simple. It's just

440
00:28:23.240 --> 00:28:27.119
a matter of treating the expected return
of your investors like any other cost.

441
00:28:27.200 --> 00:28:30.799
And after that it's just like trying
to maximize profits. And so now you

442
00:28:30.839 --> 00:28:36.480
know when you think about you know, in my store, I can invest

443
00:28:36.519 --> 00:28:38.880
in growth. I can get more
investment from the outside and invest in growth

444
00:28:38.880 --> 00:28:42.359
as almost the growth produces at least
a ten percent return. I'm going to

445
00:28:42.440 --> 00:28:48.200
improve my RC. I can improve
performance. I can reduce costs. I

446
00:28:48.279 --> 00:28:52.000
can I can improve the quality of
my products such that I can charge a

447
00:28:52.079 --> 00:28:57.200
higher price. I can carry less
inventory, which ties up less capital.

448
00:28:57.319 --> 00:29:00.640
There are things I can do to
improves and every one of them has a

449
00:29:00.720 --> 00:29:06.400
very direct and tangible relationship how it
improves the dollars of our CE. So

450
00:29:06.759 --> 00:29:11.640
now I have a management team that
looks at this really pretty simple measure and

451
00:29:11.759 --> 00:29:15.279
says Okay, we're thinking about investing
in a new warehouse. What's the RC.

452
00:29:17.000 --> 00:29:18.920
If it's positive, it's going to
add to our r C, we

453
00:29:19.039 --> 00:29:22.960
go do the warehouse, and if
it's negative, we don't. And when

454
00:29:23.000 --> 00:29:27.000
we think about tying this back to
compensation, that last part of the equation

455
00:29:27.079 --> 00:29:32.440
is the important part because if somebody, let's say that you know you're you're

456
00:29:32.480 --> 00:29:36.240
the boss alist and I'm the I
have the running one of the business units,

457
00:29:36.240 --> 00:29:38.079
and I come to you to ask
for your approval from my warehouse.

458
00:29:38.480 --> 00:29:41.319
You may or may not approve it. But before you even consider it,

459
00:29:41.359 --> 00:29:45.119
you know I believe in it.
Because if I invest in that warehouse and

460
00:29:45.160 --> 00:29:48.079
it doesn't cover the ten percent,
I'm going to make less money. I

461
00:29:48.119 --> 00:29:51.119
can't negotiate a new target, a
new budget next year. If the RC

462
00:29:51.359 --> 00:29:53.240
goes down, I'm going to get
paid less money. We always measure our

463
00:29:53.279 --> 00:29:57.480
CE against last year, and so
it creates this feeling of ownership where I'm

464
00:29:57.480 --> 00:30:02.160
treating the company's capital as if it
was my own money, and that's really

465
00:30:02.200 --> 00:30:04.000
the beauty of our CE. It
gets people to think and act more like

466
00:30:04.079 --> 00:30:07.480
those long term committed owners, even
if it takes a little time for that

467
00:30:07.519 --> 00:30:11.759
our cee to get turned positive as
long as it eventually does, you know,

468
00:30:11.799 --> 00:30:15.599
I'm going to get paid for and
that is just a gorgeous opportunity right

469
00:30:15.599 --> 00:30:17.759
there, Greg, So one of
the big reasons I wanted to have you

470
00:30:17.799 --> 00:30:21.160
on the show right there. So
let's grab our last break. We've been

471
00:30:21.200 --> 00:30:23.519
on the air with Craig Mulatto.
He's the author of Occurring Curing, Corporate

472
00:30:23.519 --> 00:30:27.079
short Termism, Future Growth versus Current
Earnings. I'm your host, Doctor Release

473
00:30:27.160 --> 00:30:32.799
Cortez. We've been talking about the
problem of performance models paying performance models.

474
00:30:32.839 --> 00:30:36.000
After the break, we're going to
get into now creating a culture of ownership.

475
00:30:36.079 --> 00:30:38.240
Staying with this, We'll be right
back. Doctor Release Cortez is a

476
00:30:38.279 --> 00:30:45.559
management consultant specializing in meaning and purpose
and inspirational speaker and author. She helps

477
00:30:45.599 --> 00:30:52.599
companies visioneer for greater purpose among stakeholders
and develop purpose inspired leadership and meaning infused

478
00:30:52.640 --> 00:30:57.880
cultures that elevate fulfillment, performance,
and commitment within the workforce. To learn

479
00:30:57.880 --> 00:31:02.759
more or to invite at a lease
to speak to your organization, please visit

480
00:31:02.799 --> 00:31:07.000
her at Elise Cortez dot com.
Let's talk about how to get your employees

481
00:31:07.119 --> 00:31:18.759
working on purpose. This is working
on Purpose with doctor Release Cortez. To

482
00:31:18.839 --> 00:31:22.160
reach our program today or open a
conversation with Elise, send an email to

483
00:31:22.279 --> 00:31:30.720
Elise ali se at Elise Cortez dot
com. Now back to working on Purpose.

484
00:31:33.000 --> 00:31:34.359
Thanks for stating with us, and
welcome back to working on Purpose.

485
00:31:34.559 --> 00:31:37.240
One other bit of news I want
to share with you is that the anthology

486
00:31:37.279 --> 00:31:41.519
I've been creating for the last two
years has been released. It's a question

487
00:31:41.559 --> 00:31:45.039
of twenty five stories from women across
the globe who share their intimate details of

488
00:31:45.160 --> 00:31:47.759
finding their purpose and what they're now
doing to serve from it. It's called

489
00:31:47.759 --> 00:31:51.400
Passionately Striving and Why, an anthology
of women who person are mindly to live

490
00:31:51.440 --> 00:31:53.319
their purpose. It's on Amazon.
I'm actually so proud of that I could

491
00:31:53.319 --> 00:31:57.400
bust if you're just joining us today. My guest is Greg Milano. He's

492
00:31:57.440 --> 00:32:01.039
the founder and CEO of Fortune Ins, a thought leader and trusted advisor and

493
00:32:01.119 --> 00:32:07.079
helping clients transform their value creation potential
through bold improvements to manage your insights,

494
00:32:07.079 --> 00:32:12.559
decisions, and behaviors. He's also
the author of Curing Short Term Short Termism,

495
00:32:12.720 --> 00:32:15.920
Future Growth Versus Current Earnings. I'm
your host, doctor leads Quartz,

496
00:32:15.440 --> 00:32:19.079
so for this last bit, Greg, We're going to bring it home right.

497
00:32:19.119 --> 00:32:21.839
So I just think that what you
have created here, this idea of

498
00:32:21.839 --> 00:32:25.000
creating a culture of ownership, is
so exciting, so compelling, and exactly

499
00:32:25.000 --> 00:32:29.519
why I wanted to share you with
our listeners around the world, because I

500
00:32:29.519 --> 00:32:34.240
think we have a perfect opportunity in
this pandemic to recreate how business has done,

501
00:32:34.400 --> 00:32:38.039
how it's organized, how we hire
people, train them, reward them,

502
00:32:38.039 --> 00:32:40.839
all that, and you've got such
a great example here in doing it.

503
00:32:42.279 --> 00:32:45.359
So you say in the book,
you say, you tell us,

504
00:32:45.960 --> 00:32:49.319
you say that. To reinforce the
longer term focus, management should seek to

505
00:32:49.319 --> 00:32:54.160
create an ownership culture in which managers
throughout the organization participate in and assume responsibility

506
00:32:54.200 --> 00:33:00.720
for decisions result in consequences. When
each manager and each employee accept their business

507
00:33:00.759 --> 00:33:05.960
obligations as if they own them,
organizations create more value. Sounds great to

508
00:33:05.960 --> 00:33:10.839
me. It is great. You
know, when managers know that they're going

509
00:33:10.880 --> 00:33:15.720
to be objectively held accountable for outcomes, they just they make better decisions and

510
00:33:16.200 --> 00:33:20.640
objective accountability. When you say those
words, people think, well, that

511
00:33:20.680 --> 00:33:22.640
means I'm going to crack the whip
if they don't perform. But It works

512
00:33:22.640 --> 00:33:27.160
the other way too. The manager
has certainty about getting paid when they do

513
00:33:27.200 --> 00:33:30.319
perform, and so it's it's certainty
up and it's certainty down. They become

514
00:33:30.319 --> 00:33:36.039
more eager to take actions that create
value, more more eager to pursue what

515
00:33:36.119 --> 00:33:38.039
they really believe in, and more
eager to cut out what they really don't.

516
00:33:38.400 --> 00:33:42.039
And almost every company I've ever worked
with, there are all sorts of

517
00:33:42.039 --> 00:33:45.960
failed initiatives that are still being funded
because nobody wants to admit failure. And

518
00:33:45.039 --> 00:33:50.559
this creates a huge incentive to stop
those things and redirect the resources toward things

519
00:33:50.640 --> 00:33:54.160
that are more productive and more more
effective. And that re resource allocation is

520
00:33:54.599 --> 00:34:00.640
a really important part of this.
Getting people to think about placing that in

521
00:34:00.680 --> 00:34:04.759
the best places it is really important. It's it's less about how you justify

522
00:34:04.839 --> 00:34:07.440
what you're doing and more about just
trying to do what you're really believing.

523
00:34:07.920 --> 00:34:10.719
And most people find that environment.
If you can if you can change the

524
00:34:12.199 --> 00:34:15.280
sort of measurement, that incentive framework
as I've described, and also really change

525
00:34:15.320 --> 00:34:19.280
the culture, because it's not an
automatic. You have to really work at

526
00:34:19.639 --> 00:34:22.559
changing the culture and the behavior.
But if you can get that to happen,

527
00:34:22.920 --> 00:34:27.119
people really like it. It's the
transparency and the objectivity of it is

528
00:34:27.119 --> 00:34:30.199
actually much better than you know,
constantly gaming and negotiating and all the things

529
00:34:30.239 --> 00:34:35.119
that happen unfortunately and unfortunately companies.
Yeah, so now, Gregg, seems

530
00:34:35.119 --> 00:34:37.880
to me, you're talking about what
I what's the purpose of the show?

531
00:34:37.920 --> 00:34:40.719
How do we create environments where people
can actually thrive and bring their best and

532
00:34:40.760 --> 00:34:45.880
do their best? That's that sounds
like a perfect sandbox to me. Yeah,

533
00:34:46.159 --> 00:34:50.079
it is really great. I think
what I do now, which has

534
00:34:50.119 --> 00:34:52.440
evolved a bit over the years from
being sort of a financial expert thirty years

535
00:34:52.440 --> 00:34:59.800
ago, is unbelievably satisfying because you
really see creativity, you see innovation,

536
00:35:00.000 --> 00:35:04.440
You see people that are they feel
better about what they're doing, they feel

537
00:35:04.480 --> 00:35:07.679
more convinced that they're on the right
path. They're more willing to invest in

538
00:35:07.039 --> 00:35:12.559
the people around them and do things
that leave the company in better shape when

539
00:35:12.559 --> 00:35:16.679
they leave than it was when they
got there. It's very satisfying. Indeed,

540
00:35:17.159 --> 00:35:21.599
I feel very similar about my work. That's beautiful. So let's help

541
00:35:21.639 --> 00:35:24.920
our listeners and viewers understand. You
talk about five tenants underlying and ownership culture.

542
00:35:24.960 --> 00:35:30.559
Will you talk about each one?
Sure? So there are five five

543
00:35:30.679 --> 00:35:35.679
things that we've come up with that
really illustrate how well a company embraces and

544
00:35:35.760 --> 00:35:39.039
ownership culture. And when we first
meet a company, we actually interview people

545
00:35:39.400 --> 00:35:43.920
around the company in different roles,
different functions, different levels, and we

546
00:35:43.960 --> 00:35:47.960
ask them specifically about these five tenets
of an ownership culture. And we learn

547
00:35:47.960 --> 00:35:51.679
a lot about the good in the
bed just by asking questions about these five

548
00:35:51.719 --> 00:35:54.960
things. And let's them as you
requested. First, is spending money like

549
00:35:55.039 --> 00:35:58.920
at your own And I've kind of
already addressed this a little bit, but

550
00:35:59.360 --> 00:36:02.239
when we expo those people to outcomes
good and bad, they're much more careful

551
00:36:02.239 --> 00:36:07.360
and how they spend resources. They
don't waste money. But they're also actually

552
00:36:07.440 --> 00:36:10.960
more willing to invest money into good
things. And I've seen situations in companies

553
00:36:10.960 --> 00:36:15.360
where a really good opportunity comes up
in the middle of the year and somebody

554
00:36:15.400 --> 00:36:17.079
says, oh, yeah, let's
ask for money to invest in that in

555
00:36:17.079 --> 00:36:20.960
the next planning cycle next year,
and you know, it's like my head

556
00:36:21.119 --> 00:36:23.960
does a complete circle around like a
crazy doll, like, wait a minute,

557
00:36:24.079 --> 00:36:27.880
shouldn't we do this right now?
It's not my budget, you know.

558
00:36:28.679 --> 00:36:32.159
And so spending money like it's yours. It often leads to being careful

559
00:36:32.159 --> 00:36:35.679
about it what you spend on things
that you wouldn't spend your own money on,

560
00:36:35.719 --> 00:36:38.039
But it also makes you more eager
to spend money on things that are

561
00:36:38.039 --> 00:36:43.960
good investments without waiting for the next
budget cycle. The second principle is it's

562
00:36:44.000 --> 00:36:50.199
extreme prioritization. And I really love
this one because it's it's almost every company

563
00:36:50.199 --> 00:36:53.360
I meet has a problem with prioritization, so it's you know, actually getting

564
00:36:53.400 --> 00:36:58.639
them to have real extreme prioritization is
really really important. I Mean, most

565
00:36:58.639 --> 00:37:02.559
companies just kind of smear resources across
all different initiatives and opportunities, and they're

566
00:37:02.599 --> 00:37:06.400
trying to hedge their bets by kind
of putting money a little bit here,

567
00:37:06.440 --> 00:37:08.880
a little bit there, and they
don't realize that, you know, eighty

568
00:37:08.880 --> 00:37:13.320
percent of the potential value creation comes
from twenty percent of the activities. I

569
00:37:13.320 --> 00:37:16.000
mean, the Parado principle applies very
well in business. We see it all

570
00:37:16.039 --> 00:37:21.320
the time. And once you embrace
that principle and you have something like our

571
00:37:21.480 --> 00:37:24.199
RC measure to clarify where you're really
creating value in where you're not, what

572
00:37:24.280 --> 00:37:29.679
we want is for them to really
disproportionately invest in the really good things and

573
00:37:29.760 --> 00:37:32.079
stop investing in the in the weak
or really bad things. You know,

574
00:37:32.079 --> 00:37:35.960
it's like Warren Buffett. Warren Buffett
doesn't just put a little money on every

575
00:37:36.000 --> 00:37:37.280
stock out there. He tries to
figure out the ones he really thinks are

576
00:37:37.280 --> 00:37:42.119
going to go up, and he
focuses billions of dollars in those companies.

577
00:37:42.119 --> 00:37:45.519
And that's really that's exactly the way
we want people acting inside the company,

578
00:37:45.559 --> 00:37:49.960
just like a long term committed owner. The third one is embracing and willingness

579
00:37:49.960 --> 00:37:53.239
to fail. And sometimes people say, well, how does that go along

580
00:37:53.280 --> 00:37:58.039
with prioritization, because it means,
you know, sort of experimenting on things

581
00:37:58.079 --> 00:38:02.599
you're not sure are going to work
out. The source of all innovation is

582
00:38:02.639 --> 00:38:07.079
experimentation and sort of just trying things, and so trying to get a more

583
00:38:07.079 --> 00:38:13.280
of a willingness to fail where people
are willing to try things they're not one

584
00:38:13.320 --> 00:38:17.519
hundred percent certain of is difficult.
In a company where you're measuring performance against

585
00:38:17.559 --> 00:38:21.960
the plan, nobody wants to put
anything in their plan that might not happen,

586
00:38:22.119 --> 00:38:23.599
and so you wind up with very
few initiatives. The only things you

587
00:38:23.599 --> 00:38:28.559
think are definitely going to happen,
and the experimentation stops, the innovation stops,

588
00:38:28.559 --> 00:38:31.039
and that leads to a degrading of
the business over time. So you

589
00:38:31.079 --> 00:38:34.719
know, we want we want to
create an environment where people are willing to

590
00:38:34.719 --> 00:38:37.679
experiment. They might have five initiatives
and a three of them workout. That's

591
00:38:37.719 --> 00:38:39.760
great, but in most companies you
get waxed for the two that didn't work

592
00:38:39.800 --> 00:38:43.039
out. But now we want to
celebrate the three that did work out,

593
00:38:43.119 --> 00:38:47.880
and that's that's a culturally a big
improvement. The fourth one is doing more

594
00:38:47.920 --> 00:38:52.559
in talking less, and it's it's
another big problem, especially in big pure

595
00:38:52.960 --> 00:38:57.079
credit companies, where you know,
every meeting seems to end in well,

596
00:38:57.159 --> 00:39:00.719
let's study it further, and they
go on and on and on. They

597
00:39:00.800 --> 00:39:05.400
never make a decision. You founder
owners know that if they make an acquisition

598
00:39:05.760 --> 00:39:08.320
that creates two million dollars of value, but they spend three million dollars studying

599
00:39:08.360 --> 00:39:12.760
it, it's not really a good
thing. And so doing more on talking

600
00:39:12.840 --> 00:39:15.400
less is really important. And lastly, remembering that it's about both the short

601
00:39:15.440 --> 00:39:17.559
and the long term. We've talked
a lot about long term, so I

602
00:39:17.599 --> 00:39:21.880
won't go into this one too much, but just being long term isn't good

603
00:39:21.920 --> 00:39:24.400
either. You need to have both. I want owner managers tend to want

604
00:39:24.400 --> 00:39:28.719
to drive performance as hard as anybody, but they would never get there by

605
00:39:28.719 --> 00:39:30.880
sacrificing the future, and so we
want both to be on the minds of

606
00:39:30.920 --> 00:39:35.599
management all the time. Gorgeous,
great, thank you. That's just really

607
00:39:35.960 --> 00:39:38.599
gives us access to that. So
of course you talk about the importance to

608
00:39:38.920 --> 00:39:44.039
reinforce these business spatial processes and all
the training and communication that goes with it.

609
00:39:44.079 --> 00:39:46.119
That's so important. But I want
to really share share with our listen

610
00:39:46.199 --> 00:39:50.079
and viewers and promise of your book
as I see it. So I'm going

611
00:39:50.119 --> 00:39:52.280
to read it and have you comment
on it, and then we're getting during

612
00:39:52.320 --> 00:39:54.480
close to the end of the show. So you see companies that embrace in

613
00:39:54.559 --> 00:39:59.840
ownership culture to promote a balance,
long term outlook and make will make more

614
00:40:00.079 --> 00:40:02.960
good investments, will be more accountable
for delivering desirable returns on those investments,

615
00:40:04.000 --> 00:40:07.679
and will create more value. They
will go by what what investors do,

616
00:40:07.320 --> 00:40:12.639
and sorry, they will go by
what investors do rather than what they say,

617
00:40:12.719 --> 00:40:15.960
and they will generate more cash flow, deliver higher returns, and see

618
00:40:15.000 --> 00:40:20.039
their share price rise faster than their
peer companies. Most important, they will

619
00:40:20.039 --> 00:40:22.360
feel less concerned about what their share
price is doing next week or next month,

620
00:40:22.559 --> 00:40:25.320
and more concerned about what their share
price will be doing in the long

621
00:40:25.440 --> 00:40:30.760
run. That's it. I mean, it's it's a gorgeous solve. Yeah,

622
00:40:30.880 --> 00:40:35.480
yeah, I mean it's it's it's
important that people understand that at the

623
00:40:35.519 --> 00:40:39.400
core, it's all about human behavior. It's all about corporate culture, and

624
00:40:39.480 --> 00:40:45.079
it's about helping companies to become better
versions of themselves. When we replace a

625
00:40:45.079 --> 00:40:52.679
collection of poor performance measures and give
give misguided signals with one good measure that

626
00:40:52.719 --> 00:40:55.360
gives really clear signals, people like
it. They make better decisions, but

627
00:40:55.400 --> 00:40:59.000
they just like it. They like
the clarity and the simplicity of it all.

628
00:40:59.320 --> 00:41:02.920
And when we replace poor incentives with
you know, clear, simpler approaches

629
00:41:04.000 --> 00:41:07.239
that you pay more when people do
well and pay less when people do poorly,

630
00:41:07.639 --> 00:41:08.679
they think they like it. Even
in years when they don't get paid

631
00:41:08.679 --> 00:41:12.320
well, they kind of feel like
it's fair because they knew the deal and

632
00:41:12.360 --> 00:41:15.920
it wasn't like somebody just you know, negotiated too tough of a goal for

633
00:41:15.960 --> 00:41:17.079
them or something. They kind of
knew the deal. It was fair and

634
00:41:17.400 --> 00:41:21.199
in good years they do well.
And actually one example of that that's really

635
00:41:21.199 --> 00:41:24.000
good To really emphasize this point is
you know when covid hit, one of

636
00:41:24.000 --> 00:41:27.599
my partners called the CFO of a
client and said, what are you gonna

637
00:41:27.599 --> 00:41:30.199
do? You're going to make any
adjustments here incentive plan? And he said,

638
00:41:30.199 --> 00:41:32.280
no, we're not making any adjustments. If performance goes down this year

639
00:41:32.320 --> 00:41:35.559
as we expect it, we'll get
paid less, and then next year,

640
00:41:35.559 --> 00:41:38.000
if we can get performance back up, we'll get paid more. And you

641
00:41:38.039 --> 00:41:42.679
know, just like owners that's that's
the deal we have, and that's not

642
00:41:42.719 --> 00:41:45.719
exactly what happened at most companies.
So in ownership mentality, a true authentic

643
00:41:45.800 --> 00:41:51.079
ownership mentality, really does get people
thinking longer term, and that's what's really

644
00:41:51.119 --> 00:41:54.840
helpful. Beautiful Greg, you know
this show was listened to by people across

645
00:41:54.880 --> 00:41:58.079
the world. Do you know that
the premise is being able to create an

646
00:41:58.119 --> 00:42:02.079
environment people can actually bring their best
and be incentivized motivated to bring their best,

647
00:42:02.159 --> 00:42:05.440
and we do business that betters the
world. We should like to leave

648
00:42:05.440 --> 00:42:08.800
our listeners with today, just a
really short message. We believe and I've

649
00:42:08.840 --> 00:42:13.440
proven with a lot of research that
you can't really create long term value for

650
00:42:13.480 --> 00:42:19.280
shareholders without creating long term value for
all stakeholders. And managements that worry about

651
00:42:19.320 --> 00:42:22.000
their employees, about their customers,
about their suppliers, about the communities they

652
00:42:22.039 --> 00:42:27.360
serve, tend to be viewed as
operating with higher purpose. And we've found

653
00:42:27.440 --> 00:42:30.239
and shown in a lot of our
research that companies that are recognized for operating

654
00:42:30.239 --> 00:42:35.559
with higher purpose produce more growth,
they produce better profit margins, they are

655
00:42:35.639 --> 00:42:39.079
valued at higher valuation multiples, they
produce higher total shareholder return. So I

656
00:42:39.119 --> 00:42:43.960
just want to be clear that when
we talk about an authentic long term ownership

657
00:42:44.000 --> 00:42:47.159
culture, it's not just to create
value for the shareholders. To be successful

658
00:42:47.199 --> 00:42:51.079
at it, you really need to
create value for all stakeholders. And that's

659
00:42:51.119 --> 00:42:54.360
really at the core of our message, which completely aligns with mind Break.

660
00:42:54.480 --> 00:42:59.719
So really really appreciate having you on
the show, your thoughtfulness, your ability

661
00:42:59.760 --> 00:43:05.440
to really explain really complicated things in
a very easily accessible way, and bringing

662
00:43:05.480 --> 00:43:08.639
an opportunity and a promise that I
think the world really needs. So thank

663
00:43:08.639 --> 00:43:12.320
you for it. For sharing,
now, thank you for having the analties.

664
00:43:12.360 --> 00:43:15.480
I appreciate it. So welcome listeners
and viversity. You want to learn

665
00:43:15.519 --> 00:43:17.159
more about Greg Melano his book or
the work Key and his team do at

666
00:43:17.159 --> 00:43:22.079
Fortuna Advisors. Go to Fortuna dash
Advisors dot com. Last week, if

667
00:43:22.079 --> 00:43:24.960
you miss the list show you always
catch to be yourcorded podcast, We're on

668
00:43:25.000 --> 00:43:29.440
the with Stephen Morris, a culture
brand and business consultant, talking about his

669
00:43:29.519 --> 00:43:34.119
new book called a Beautiful Business,
an actionable manifesto to create an unignormable business

670
00:43:34.239 --> 00:43:37.199
with love at the core. Our
conversation was both incredibly inspiring and an invitation

671
00:43:37.239 --> 00:43:42.000
to you to make your own beautiful
business by design and lift your stakeholders and

672
00:43:42.039 --> 00:43:45.000
community higher than you originally aimed to
do. Next week will be on the

673
00:43:45.039 --> 00:43:49.320
air with Melanie Pump, author of
dtalks Managing Insecurity in the Workplace. You

674
00:43:49.480 --> 00:43:52.960
learn how to recognize toxicity in your
workplace, how toxic work environments stifle innovation,

675
00:43:53.159 --> 00:43:57.960
collaboration, secession, planning, and
productivity, and how you can instead

676
00:43:58.000 --> 00:44:00.079
create a healthy and secure environment for
people will thrive. See you there.

677
00:44:00.119 --> 00:44:02.719
Remember that works at least a third
of a life. So let's work on

678
00:44:02.760 --> 00:44:07.719
Purpose. We hope you've enjoyed this
week's program. Be sure to tune into

679
00:44:07.840 --> 00:44:13.840
Working on Purpose featuring your host,
doctor Elise Cortez each week on the Voice

680
00:44:13.880 --> 00:44:20.000
America Empowerment channel. Together, we'll
create a world where business operates conscientiously,

681
00:44:20.679 --> 00:44:25.840
leadership inspires impassioned performance, and employees
are fulfilled in work that provides the meaning

682
00:44:25.840 --> 00:44:30.400
and purpose they crave. See you
there, Let's work on purpose.